Lords Sitting of 23 March 1995

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of St Albans.): The LORD CHANCELLOR on the Woolsack.
Lord Rathcavan Lord Rathcavan —Sat first in Parliament after the death of his father.

Shipbuilding: UK Competitiveness
Viscount Caldecote Viscount Caldecote asked Her Majesty's Government:
What action they propose to take to support the United Kingdom merchant shipbuilding industry so that it can compete more effectively in world markets.
The Minister of State, Department of Trade and Industry (Earl Ferrers): My Lords, the Government's policy is to create an economic climate which will offer companies in all sectors the opportunity to develop and compete in the markets of the world.
Viscount Caldecote: My Lords, I thank my noble friend for that rather sad and unsatisfactory reply. Is he aware that the average age of the world merchant fleet is now approaching 20 years, which means that there are many ships over 30 and 40 years of age which need to be replaced? That provides great opportunities which are being taken by other European countries. Germany has a forward order book of some 1.7 million gross tonnes; Denmark and Finland, 2.2 million gross tonnes; and the UK, under half a million gross tonnes —1 per cent. of the world market. Is the Minister aware also that no British yard felt able to tender for the new P&O liner "Oriana", which was built in Germany? Are the Government really satisfied with that position? Should not more be done—to take the words of my right honourable friend the President of the Board of Trade—to help the British merchant shipbuilding industry to win more orders?
Earl Ferrers: My Lords, I am sorry that my noble friend thinks that I gave him a sad and unsatisfactory reply. The Government wish to create a climate in which everyone can compete. Indeed, they are doing that. It is true that all shipbuilding industries have suffered from a depressed market but United Kingdom shipyards are now cost-competitive with other European Union yards. My noble friend asks why we cannot give more help. I can only assume that he wants to know why we cannot provide a subsidy or place orders to keep the shipyards going. You cannot place orders with companies on that scale without affecting adversely other companies. It is for individual companies to decide for which ships they will tender.
Lord Mason of Barnsley: My Lords, because of the ageing fleet, will the Government consider a scrap and build policy?
Earl Ferrers: My Lords, if the fleet is ageing, there are obviously opportunities but those opportunities have to be competed for with the rest of the world.
Lord Boyd-Carpenter: My Lords, does my noble friend not find it very depressing that the very large P&O liner "Oriana", referred to by my noble friend, should have been constructed in Germany whereas previously those large liners were built here?
Earl Ferrers: My Lords, I quite agree. It would have been very good if the "Oriana" had been built in the UK but if no company tendered for it, that was not possible.
Lord Stoddart of Swindon: My Lords, does the noble Earl have any evidence to show that the German shipyards which built the "Oriana" received subsidies, if not from national sources, then from all kinds of local sources? Has he investigated that? Has he any evidence of it? If so, will a complaint be made? If not, perhaps British shipyards can be helped in the same way.
Earl Ferrers: My Lords, I am not aware of any unfair subsidies being given to German shipbuilders. They probably have the same kind of subsidy which operates in this country through the shipbuilding intervention fund. That enables 9 per cent. of the contract costs for large commercial ships to be provided in the United Kingdom by the Department of Trade and Industry. As with all other European Union countries, German shipbuilders can have access to the same kind of funds if their government wish to provide them.
Lord Peyton of Yeovil: My Lords, does my noble friend not think it time that the Government overcame their rather detached attitude to the problem and examined carefully the practices which exist in other countries to encourage shipbuilding? Perhaps they might remind themselves from time to time that we remain an island.
Earl Ferrers: My Lords, that remarkable geographical interpretation is one I share. The Government are not detached in their attitude towards what they wish to do to help either business or, in particular, shipbuilders. There has been major overcapacity in shipbuilding throughout the world. Japan and Korea succeed in building far less expensive ships than we do. We must try to ensure that the climate in which our shipbuilders operate is as competitive as possible. We have achieved that.
Lord Haskel: My Lords, does the Minister agree that this Question sadly comes 10 years too late because during that time the British flagged merchant fleet has declined from 1,500 vessels to 250 vessels? Does he agree that that decline is one cause of our reduced capacity for building merchant ships? Would not our shipbuilding industry be helped if some encouragement were given to increasing the size of the flagged fleet?
Earl Ferrers: My Lords, I am unable to confirm or deny the figures which the noble Lord, Lord Haskel, has

1313
produced. I have no reason to believe that they are not correct. But there has been a great diminution in shipbuilding and maritime activity over the past 10 years or so. It may be that there will be opportunities to build ships in the future. However, people have been tending to use aircraft rather than ships and the shipbuilding industry as a whole has suffered.
Lord Clark of Kempston: My Lords, does my noble friend agree that one of the difficulties with the industry is the lack of harmonisation in capital allowances for corporation tax purposes? Would it not be a good idea to have harmonisation, especially as regards the European Community, so that we have a level playing field with the indirect subsidy given to foreign shipbuilders through taxation? Should we not perhaps follow their example?
Earl Ferrers: My Lords, I certainly take note of the suggestion made by my noble friend. However, from 1st January 1996, the OECD agreement states that all shipbuilding subsidies will be abolished. That places the commercial and the defence industries on equal footings, both in this country and in others.
Lord Bruce of Donington: My Lords, is the Minister aware that we have been listening to talk of creating the correct climate for at least 15 years? Does he not think that the explanation is now wearing a little thin? Will he consider—or advise his colleagues to consider—adopting a much more constructive and nationally oriented policy in relation to merchant shipping?
Earl Ferrers: My Lords, the fact that the climate is being created has not worn thin: that is why 40 per cent. of all the investment by Japan in the European Union comes to this country. Moreover, 43 per cent. of all the investment which the United States makes comes to this country. There is one very good reason for that; this country is competitive.
Viscount Caldecote: My Lords, can my noble friend explain why Scandinavian and German yards are so much more successful than ours if the subsidy is the same.
Earl Ferrers: My Lords, I cannot explain why; indeed, I would rather question whether that is in fact the case. It is certainly true that labour costs in shipbuilding yards in the United Kingdom are lower than they are in Germany.

Iraq: Kuwaiti Detainees
3.12 p.m.
Lord Molloy Lord Molloy asked Her Majesty's Government:
What steps they are taking to assist the International Committee of the Red Cross in its efforts to secure the return from Iraq of Kuwaitis, including women and children, seized by Iraq during its occupation of Kuwait.
Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, we
1314
raise this issue at the United Nations at every suitable opportunity—most recently on 13th March. We have made clear to the Iraqi Deputy Prime Minister that the lack of progress is unacceptable. We will continue to play a role in the Tripartite Commission and its technical sub-committee set up last December to speed up the review of ICRC case files on the detainees.
Lord Molloy: My Lords, I thank the Minister for her Answer. Is the noble Baroness aware that the specialist committee in the Kuwait Assembly is very appreciative of the endeavours of the International Red Cross and especially of the British Parliament—that is, both Houses and all parties? The members of the committee know that that assistance will continue. However, pressure must be maintained so that the loved ones of those people who were taken away in such a brutal manner can be returned to their homes and to their families.
Baroness Chalker of Wallasey: My Lords, I am aware of that appreciation. However, it is always nice to receive from the noble Lord the thanks of the specialist committee in Kuwait. While the ICRC is the key organisation for dealing with detainees, we are watching most carefully how the committee is getting on. I shall be talking with the committee tomorrow in Geneva. I am glad to say that there are some signs, for example, by their attendance at the Tripartite Commission and initial responses on 127 files, that Iraq is perhaps beginning to co-operate. Let us hope that that process continues.
Lord Avebury: My Lords, I welcome everything that has being done on behalf of the Kuwaiti detainees. Will the Minister consider referring to the ICRC the question of 1 million Iraqis, allegedly of Persian ancestry, who were expelled to Iran between 1980–90 and of the representatives of those families who, according to the UN rapporteur, Max van der Stoel, have been detained ever since as hostages in southern Iraq?
Baroness Chalker of Wallasey: My Lords, I shall certainly look into what the noble Lord has said.
Lord Wright of Richmond: My Lords, can the Minister give an assurance that the Government continue to support the ICRC, not only in the very important work that it is carrying out in Iraq and Kuwait, but also in such so-called "forgotten areas" of the world, such as Afghanistan and Liberia?
Baroness Chalker of Wallasey: My Lords, I can give the noble Lord, Lord Wright of Richmond, that assurance. I shall discuss those very matters tomorrow.
Lord Rea: My Lords, I have a question which is peripheral to the one on the Order Paper but, nevertheless, relevant to it. Can the Minister throw any further light on newspaper reports which appeared today which seem to show that there has been a coup attempt in Iraq, and that the son of Saddam Hussein has been seriously wounded and is now in hospital in Amman, Jordan?
Baroness Chalker of Wallasey: My Lords, I can give no confirmation or denial about those reports at this time. But, needless to say, I am as interested as the noble Lord in the matter.
Lord Molloy: My Lords, is the Minister aware that there is a feeling in Kuwait that the pressure exerted by the International Red Cross and all supporting governments and Parliaments, including our own, is beginning to have an effect? Surely that pressure must be maintained. Ultimately, I feel sure that the free world will show that it cannot be treated in such a way by an evil dictator.
Baroness Chalker of Wallasey: My Lords, I thoroughly agree with the noble Lord.
Baroness Blackstone: My Lords, as Iraq has attended the last two meetings of the Tripartite Commission—something I believe that the UN special rapporteur on Iraq has very much welcomed as a new development—can the Minister tell the House whether Iraq was asked to give an explanation at those meetings about the continued imprisonment of 600 or more Kuwaitis? Further, are there any plans to put pressure on the Iraqis in the context of the commission meetings?
Baroness Chalker of Wallasey: My Lords, I cannot give the noble Baroness an exact answer; but I hardly think that such meetings would have taken place without those matters being raised. They are part of the work of the Tripartite Commission. Certainly, one of the things that has happened is that the Tripartite Commission has been successful in cutting away some of the procedural undergrowth. That is how the new technical sub-committee has been able to speed up its work. It means that the committee will be able to take account of things that previously it could not.

Banking and Charitable Institutions
3.18 p.m.
Viscount Chandos Viscount Chandos asked Her Majesty's Government:
Whether, in the light of the collapse of Barings, they will introduce legislation to prohibit charities from owning banking institutions.
The Minister of State, Home Office (Baroness Blatch): My Lords, the Government share the wide regret at the financial difficulties of Barings and will study any views from the inquiry which has been commissioned by my right honourable friend the Chancellor of the Exchequer. Charity trustees are already under important duties of care in relation to the safe custody of their charities' property. The Government are not persuaded that new legislation to prohibit a charity from owning a bank would be appropriate.
Viscount Chandos: My Lords, I thank the Minister for her Answer. However, does she agree that day-to-day banking supervision can and should only be the protection of last resort, with proper accountability
1316
to shareholders being the primary discipline? Should not the Bank of England have recognised that the interrelationship between the trustees of the Barings Foundation and the past and present directors of the Barings group blunted that discipline and at the same time allowed a disproportionate share of profits to be paid to senior employees?
Baroness Blatch: My Lords, it would be quite inappropriate for me to speculate on any of the noble Viscount's points. As he knows, a review of all such matters is taking place at present. It is absolutely certain that the trustees do have a duty of care in such matters. As regards the underlying premise of the Question, Barings started off as a bank and set up a foundation over 200 years after its establishment as a bank. The idea of putting legislation in place which would prevent a bank from setting up a charitable foundation would simply not be sensible.
Viscount St. Davids: My Lords, does my noble friend agree that the matter that needs to be addressed is whether it is desirable for a bank to be owned by any single shareholder or group of shareholders who may not be able to increase the capital of the bank in a manner which is commensurate with the risks that the bank enters into? In the case of Barings, the risk was probably entered into involuntarily.
Baroness Blatch: My Lords, I am not able to say how Barings entered into that risk. All I know is that the trustees of the charitable foundation acted properly and were wholly unaware of the tragedy that was about to befall them. However, the relationship as regards the charitable foundation, the bank, the proper management of the bank—which I believe is what is at stake—and the proper relationships and line management that operate at any given time is really what is at issue, I hope that that will be looked at during the course of the investigations.
Lord Ashburton: My Lords, I declare an interest. I am the current chairman of the council of the Baring Foundation, which has indeed been grievously wounded by the collapse of Barings. I was also chairman of Barings plc up until 1989 and a non-executive director of Barings until last year. Do the Government agree that to lead a Question on shareholder responsibilities with an apparent assertion that the trustees of a charity are less capable than others of keeping pressure on management to do what they should do—to produce income by managing the asset well—and, furthermore, to use the Baring Foundation as an example, when several of us on the council have had, and have, intimate knowledge of Barings business and management, is less than convincing?
Baroness Blatch: My Lords, first of all, I note the noble Lord's involvement in these matters. I think the whole House will share the regret that this generous charitable foundation should have fallen so tragically. There is a criticism of the Baring trustees implicit in this Question. I would like to think that we could distance ourselves from that and say that the trustees of any charity have a duty to maximise income, to invest

1317
responsibly and to carry out their duties responsibly. It is those duties of care which would apply to any trustees of any charity.
Lord McIntosh of Haringey: My Lords, without in any way wishing to comment further on the efficacy or otherwise of the actions of the trustees of the Baring Foundation, does not the Minister agree that, as regards the public, the real scandal in recent weeks has been that the senior management of Barings have paid themselves £105 million in bonuses for profits in 1994 which are not there, whereas the Baring Foundation has had to notify its recipient charities that the money is not available for them?
Baroness Blatch: My Lords, I shall make no comment on the point that was made by the noble Lord. I do not wish to speculate on any outcome of any inquiry about the behaviour of Barings in this matter.
Lord Jenkins of Putney: My Lords, is the noble Baroness aware that nothing that has been said so far has removed the need for the Question that was originally raised by the noble Viscount, Lord Chandos?
Baroness Blatch: My Lords, I remind the House of the Question, which invites the Government to consider the possibility of introducing legislation,
"to prohibit charities from owning banking institutions".
As it relates to Barings, I am simply saying that Barings was a bank for 200 years before it set up a charitable foundation. It has been extremely generous to the charitable sector. We all regret the downfall of Barings Bank, but that is not an argument for putting in place legislation to prevent any bank from setting up a charitable foundation.
Lord Dubs: My Lords, does the Minister agree that, whatever the unfortunate sequence of events that overtook Barings Bank, the Baring Foundation has over the years played a first-class role in supporting many charities and much valuable work? Perhaps one of the other oblique lessons of this is that other merchant banks might be similarly generous in a charitable sense.
Baroness Blatch: My Lords, I can only agree with the noble Lord on that. However, I believe that there are two lessons which we can learn while we await the outcome of any review, and one is for charities not to become over-dependent on one source of income. That is important. The other lesson concerns diversification. The charitable foundation had begun to diversify, and it is because of that decision to diversify that £50 million has been saved, is invested and will be available to honour existing commitments. I must put on record that the new company which has taken over Barings has made an ex gratia payment to the Baring Foundation of £10 million, which will also help enormously.
Lord Burnham: My Lords, I am sure the whole House must have heard with great interest the comments of someone so intimately concerned with Barings Bank. But is it not the case that in spite of the Charities Acts of 1992 and 1993 there is still a real danger that trustees
1318
of charities may not be aggressive enough in their financial expertise and knowledge to own or in any way control the ownership of financial institutions?
Baroness Blatch: My Lords, I am not sure whether I agree with the word "aggressive". Certainly it is responsibility that we want in managing the aims and objectives of the charity, taking proper advice on investment policy, noting the whole issue of not becoming over-dependent and watching out for the proper relationship between a foundation and an institution.
Lord McIntosh of Haringey: My Lords, I hope that the House will allow me to say that I was puzzled by what the Minister said about charities not relying on a single source of funds. What does she suggest, for example, that the Rowntree Trust or the Gulbenkian Foundation should do?
Baroness Blatch: My Lords, what I was saying was that Barings appeared safe but nonetheless, when it went down, many charitable organisations that were so dependent on that one source of income were badly let down. If it is possible to diversify sources of income, I believe that should be considered.

Wage Levels
3.25 p.m.
Baroness Turner of Camden Baroness Turner of Camden asked Her Majesty's Government:
What steps, if any, they intend to take following the recent report that over 1 million people are earning less than £2.50 per hour; and whether they will reconsider their policies towards the wages councils and a national minimum wage.
Lord Inglewood: My Lords, workers at all levels have enjoyed an increase in real earnings since 1979. This has resulted from the Government's continuing policy of sound economic management. The country's improved competitiveness and productivity have brought about this welcome increase in earnings.
Baroness Turner of Camden: My Lords, I am sure the Minister will not be surprised to learn that I find that Answer very unsatisfactory. I drew the figures in my Question from the labour force survey which indicates a widening gap in the period to which the Minister refers in the wages of the lowest paid and the highest paid. Is he aware that we as taxpayers are now having to pay £2.44 billion in benefit to top up low pay and that this is really a subsidy to low paying employers? Would it not be better if there were an obligation upon employers to pay a living wage and so relieve the rest of us from having to pay this subsidy?
Lord Inglewood: My Lords, wages can only amount to what it is possible for an employer to pay in any particular circumstance. As the work that the Government have done on the earlier Trades Union Congress proposal for introducing a minimum wage has shown, if that were introduced it would be likely to lead to about ¾ of a million extra people unemployed. It

1319
would also lead to a substantial increase in public expenditure. That does not seem to me a sensible way to proceed.
Lord Clark of Kempston: My Lords, does my noble friend agree that if wages councils were re-introduced and we had a minimum wage, unemployment would increase, as it would if the social chapter were accepted by the Government? Does my noble friend also agree that, as regards the minimum wage, there is a certain reluctance on the part of the official Opposition to fix a rate?
Lord Inglewood: My Lords, my noble friend is absolutely right. It is interesting to reflect on what Mr. Tony Blair said in 1991 in a letter to the Independent. He wrote:
"I have not accepted that minimum wages will cost jobs. I have simply accepted that the econometric models indicate a potential jobs impact".
That seems to sum up the muddled thinking.
Lord Mackie of Benshie: My Lords, is not the Minister a little naive to say that employers will only pay what they can for labour? Is he not aware that a great many employers will only pay what they have to?
Lord Inglewood: My Lords, the noble Lord, Lord Mackie of Benshie, is right. You can only pay what you can afford, which is determined by what you have.
Lord Campbell of Alloway: My Lords, is my noble friend the Minister aware what sort of wages are referred to in the report? Are they casual wages by the hour? Are they wages by the day? Are they weekly wages? What wages are they?
Lord Inglewood: My Lords, the report to which I understand the Question refers was produced by the Labour Party. Therefore, it is a matter for the Benches opposite to elaborate. However, I understand that they are hourly wages.
Lord Eatwell: My Lords, as my noble friend made clear, the figures mentioned in her Question were produced by Her Majesty's Government, not by the Labour Party. Would the Minister like to withdraw his statement in answer to my noble friend that wages have increased at all levels? Is he not aware that the Rowntree Report on Income and Wealth demonstrated that for people in employment incomes have fallen for the lowest 10 per cent. and have remained stagnant for the next 10 per cent. of the labour force? Will he withdraw that false statement?
Lord Inglewood: My Lords, that is not my understanding.
Lord Molloy: My Lords, I served for many years on a wages council. Is the Minister aware that when this Government took the foolish step of abolishing wages councils they irritated many organisations on the employers' side? Here was a system whereby trade unions and employers came together and worked out some of their difficulties. Was it because they worked so admirably that the Tories got rid of them?
Lord Inglewood: No, my Lords, I do not accept that there is widespread support for wages councils. We
1320
abolished the wages councils in order to introduce flexibility into the labour market and thereby increase the potential for creating jobs and wealth for the country.
Lord Stoddart of Swindon: My Lords, in his reply to my noble friend on the Front Bench regarding the Rowntree Report the Minister said that that was not his understanding of the report. Can he say what is his understanding of the report?
Lord Inglewood: My Lords, the Rowntree Report is an interesting document which contributes to the debate in the country in general as well as in this House. It tries to focus on the problems of poverty in the country as it perceives them. However, in our view the report does not properly take into account many aspects such as the provision of education and healthcare which have meant that people's standard of living has increased.
Baroness Farrington of Ribbleton: My Lords, will the Minister confirm that the Government accept that wage levels of the order we are discussing are below the poverty level and that the Government themselves, through income support and family credit, subsidise those excessively low wages? Can he explain why, when a company is making enormous profits, the Government are prepared to use taxpayers' money to subsidise that employer who is paying wages below subsistence level?
Lord Inglewood: My Lords, in this context it is important to differentiate clearly between what people earn for doing a job and what may be provided by the welfare system so that the households of which they are part can have an adequate standard of living. Wages are determined by the marketplace. The level of income which is appropriate for households varies according to a variety of different criteria such as the number of people in the household. Therefore the two are calculated in a different manner.

Requirements of Writing (Scotland) Bill [H.L.]
3.32 p.m.
The Lord Advocate (Lord Rodger of Earlsferry): 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, on behalf of my noble friend Lord Balfour I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord Rodger of Earlsferry.)
On Question, Motion agreed to.

Consolidated Fund (No. 2) Bill
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read a second time.—(Lord Mackay of Ardbrecknish.)
Lord Boyd-Carpenter: My Lords, I take it that my noble friend the Minister is still adhering to the ban on debating the Consolidated Fund (No. 2) Bill. If that is right, I draw his attention to a sentence in the Bill itself in which it states:
"be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal".
I can understand that if we have a debate and pass the Bill our consent can be assumed. However, perhaps my noble friend will say how, if we are not allowed to make a debating speech on the Bill, we tender the advice which the Bill itself says we tender?
Lord Mackay of Ardbrecknish: My Lords, my noble friend answered his question by agreeing with me that the Lords spiritual and temporal will pass the Bill this afternoon. My noble friend returns to the subject regularly. Therefore he will not be surprised if I refer him to the Companion to the Standing Orders, which sets out the convention on the proceedings for the Consolidated Fund Bill. I remind him that that convention was endorsed by the Procedure Committee as recently as March 1994.
I appreciate that my noble friend is keen to discuss economic and industrial matters. I remind him that he will have such an opportunity next Wednesday on a Motion put down by my noble friend Lord Prior. In addition, there will be a full Second Reading of the Finance Bill before 5th April. My noble friend will get two bites at this particular cherry before the Easter break.
Lord Eatwell: My Lords, another small tradition connected with these Consolidated Fund Bills is that I usually rise to support the noble Lord, Lord Boyd-Carpenter, in his wish for greater time to debate economic matters. In this instance, as the party opposite has put down a debate for next Wednesday, when the weaknesses and shortcomings of the Government's economic policy will be fully exposed, I shall not make my traditional plea for more time.
Lord Campbell of Alloway: My Lords, surely the question is not what is in the Bill but what the House wants to do. My noble friend Lord Boyd-Carpenter wants to debate the Bill. Most of your Lordships do not want to debate the Bill. Is that not the end of the matter?
Lord Boyd-Carpenter: My Lords, if my noble friend is not going to answer that particularly silly intervention, will he answer the question that I asked; namely, how, if the Bill itself says that the consent and advice of the Lords spiritual and temporal has been given, that advice is to be given if we are not allowed to debate the Bill?
Lord Bruce of Donington: My Lords, I usually rise to support what my noble friend on the Front Bench has said on this matter. As one who profoundly disagrees with the uses to which the funds in the Consolidated Fund have been put, I view with some incredulity the ability of the noble Lord, Lord Campbell of Alloway, to conduct a canvass of opinion in this House as to whether your Lordships agree with him on this matter. I am quite sure
1322
that, with the aid of the noble Lord, Lord Cockfield, for example, and the noble and learned Lord, Lord Hailsham of Saint Marylebone, we could probably rustle up a majority in favour of a complete discussion of the Bill.
Will the Government think again about this matter in view of the pressure that is exercised from time to time and year by year and the eloquent phrases of the noble Lord, Lord Boyd-Carpenter?
Lord Hailsham of Saint Marylebone: My Lords, I have been referred to by name for some reason which I do not understand. Is it not the case that if the House passes the Motion now before it, it will he giving advice, whether after speeches by noble Lords or in the absence of speeches by noble Lords?
Lord Mackay of Ardbrecknish: My Lords, perhaps I may respond to this brief, interesting and totally unpredictable debate. My noble friend should bear in mind that the other place does not debate this Bill either, and that the matter has been referred, at his instance, to the Procedure Committee. As I mentioned in my original response to him, the Procedure Committee decided to make no change. If he wishes to carry on this discussion, the Procedure Committee is the right place to do that.
Lord Cockfield: My Lords, I believe that inadvertently my noble friend the Minister may not have given the House a full account of what happens in another place. The procedure there was changed many years ago. The Consolidated Fund Bill is now taken without debate; but it is immediately followed by a Motion for the adjournment of the House, on which extensive debate takes place.
Lord Simon of Glaisdale: My Lords, although as regards this particular Consolidated Fund Bill there is the opportunity for an economic debate next Wednesday and the debate on the Finance Bill shortly, that is not always so. For example, the next Consolidated Fund Bill will come to us at some time in the late summer. That is in the middle of a very long period when there is no debate on economic and financial matters. Perhaps I may venture to support what has been said by the noble Lord, Lord Boyd-Carpenter, and the noble Lord, Lord Bruce of Donington, that this matter should really be seriously considered again.
On Question, Bill read a second time.
Committee negatived; then, Standing Order 44 having been dispensed with (pursuant to Resolution of 22nd March), Bill read a third time, and passed.

Crown Agents Bill [H.L.]
3.40 p.m.
Baroness Chalker of Wallasey: 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.—(Baroness Chalker of Wallasey.)
On Question, Motion agreed to.
House in Committee accordingly.
[The DEPUTY CHAIRMAN OF COMMITTFES (Lord Ampthill) in the Chair.]
Clause 1 [Vesting of property, &c. of Crown Agents in a successor company]:
Lord Judd Lord Judd moved Amendment No. 1:
Page 1, line 16, after ("day"), insert (", and for a period of not less than five years following the appointed day,").
The noble Lord said: In moving Amendment No. 1, I hope that it will be convenient if I speak also to Amendment No. 3.
We have tabled several amendments on the Marshalled List today and I should therefore begin by setting out our intentions clearly so that the Committee is in no doubt about the choices before us. However, first, I must draw attention to the scrutiny committee report on the Bill. It makes for sober reading, raising as it does again anxieties about still more erosion of our parliamentary democracy.
I have yet to hear any satisfactory case made by the Government for removing the Crown Agents from the public sector. The Crown Agents are a classic example of the best kind of public enterprise, combining commercial success with public service in a way in which so many British institutions have done so well. Like the World Service of the BBC, the Commonwealth Development Corporation and the Royal Mail, the Crown Agents have set standards of integrity, efficiency and ethical business practice which do this country proud in the eyes of the rest of the world.
At the behest, I suspect, of her colleagues rather than by her own much respected judgment, the Minister has put before the Committee a misleading choice: to leave matters as they are or to privatise the Crown Agents. That misses the opportunity to follow what we believe to be the best course available for Crown Agents and indeed for other public sector corporations: to provide greater commercial freedom to do business without removing the security of public ownership or the advantages to the public interest of retaining such valuable assets as part of our national heritage.
That is why we have put down the amendments to Clause 1, the effect of which would be to insist that Crown Agents should remain as a public asset for a minimum period of five years after the passage of this Bill and that they should not be alienated even after that time without the positive assent of both Houses of Parliament. If the amendments are approved by the Committee, I believe that the worst aspects of the Bill will be dealt with in one fell swoop.
We have, of course, also indicated our support for other amendments to the Bill which at first sight may appear to have quite different effects. Some of those amendments provide explicitly for the transfer of ownership of the Crown Agents to a non-profit foundation operating within the private sector, while others provide only for greater parliamentary scrutiny of whatever the Foreign Secretary chooses to do.
The course that we favour is clearly to retain the Crown Agents within the public sector for a minimum of five years. However, as a backstop for that position, we believe that the foundation which the Minister herself has said is the Government's preferred option
1324
should be firmly written into the Bill as the organisational objective. In the cause of open government, and for the record, that will make plain how the Government want to privatise. Ministerial background briefings are no substitute for such a step.
Our third line of defence of the public interest is to insist that, however the Foreign Secretary disposes of the Crown Agents, he should have to obtain the consent of Parliament when his plans are finally revealed.
It is instructive to read again the Hansard report of the Second Reading debate. The Minister was pressed by a number of noble Lords to explain why Crown Agents should not be retained and given greater commercial freedom within the public sector. If I may say so, she went to extraordinary lengths to avoid answering that question. The Minister conceded our point that the chairman of the Crown Agents had himself expressed a preference for remaining in the public sector in the Crown Agents' annual report for 1993. That report was submitted to Parliament nearly a year after the Minister had announced the Government's own preference for privatisation, so it would be reasonable to expect the Minister to explain why the Crown Agents' advice has been ignored. We waited for such an explanation in the Minister's closing remarks during Second Reading, but none was forthcoming.
The Minister did say some things about the problems with Crown Agents operating as a public sector corporation. She said that the problem was that "Ministers interfere". But she failed to provide a single example of interference by herself or by the Foreign Secretary that has led to Crown Agents failing to take advantage of a business opportunity. On the contrary, she explained that other governments and aid agencies are very happy with the relationship between Crown Agents and Government Ministers and indeed are anxious that this should not change.
The Minister stated that Crown Agents:
"have always been the agents of what are now independent governments and, increasingly, aid agencies. In my discussions with other governments it has been clear that that is how it should be. Governments of all parties have also been careful not to interfere"—
the Committee may note those words—
"with the work that Crown Agents do for other independent governments".—[Official Report, 28/2/95; col. 1440.]
The Minister told the House that the Government could not stand back from detailed control if they continued to bear the ultimate financial responsibility. I frankly fail to see why not. The fact that the Government bear ultimate financial responsibility provides enormous reassurance to Crown Agents' overseas clients. It underpins a business which the Minister herself said possesses only modest assets and achieves only a modest profit which is largely made possible by the good management of their pension fund. Without government underwriting, there can be no guarantee of Crown Agents' success and ultimate survival in the open market. But that underwriting does not impose an obligation on Ministers to interfere unless they perceive that Crown Agents are incapable of managing their own affairs without cost to the public

1325
purse. All the evidence of the past 15 years is that Crown Agents are more than capable of doing their job without government subsidy or detailed control.
This House will consider next week a further Bill in the Minister's name to give greater commercial freedom within the public sector to the Commonwealth Development Corporation. We shall welcome that measure. It has met no opposition in another place. It sets out a formula to allow the CDC to do business with private sector clients in developing countries, free of unnecessary constraints by Ministers on its ability to borrow and invest.
When that Bill was debated in another place, the Minister responsible said that the Government had considered privatisation of the CDC, but having regard to the particular work that CDC does, they concluded that it would be better for it to remain in the public sector. The Minister refused to say why, of course, because the arguments for keeping CDC in public ownership would apply with equal force to Crown Agents. The Minister in this House will not say what is wrong with public ownership for Crown Agents; the Minister in another place will not say why public ownership is best for the CDC.
But wait. A Conservative Member in another place wanted to know whether the Minister was satisfied that the CDC would be,
"every bit as rigorous and aggressive",
in doing business in developing countries,
"as a genuine private sector investor would be when shareholders' money was at stake".
"Yes", said the Minister, no problem. The CDC is an extremely businesslike organisation, just like the Crown Agents, operating within the public sector. Unlike the Crown Agents, it is to continue to do so and its future is assured.
The Minister has not said so in the House, but perhaps the reason that she will not amend the 1979 Act to allow Crown Agents more freedom within the public sector is fear of Treasury rules. Indeed, it is hard to think of any other possible explanation.
The Minister does not dispute that a number of undertakings have been required by foreign governments, such as not to go for a trade sale, guarantees of continuing client confidentiality and,
"full assurances to the international clients of Crown Agents"
that the new owners,
"will maintain a continuity of principles and purpose with those of the existing corporation".—[Official Report, 28/2/95; col. 141.]
A privatisation hedged about with so many necessary precautions seems hardly worth the effort. The international clients of Crown Agents, like Crown Agents themselves, would no doubt be much happier if the Government left well alone and allowed the Crown Agents to continue as a public sector corporation with increased commercial freedom to do the job they already do so well. The five years we propose before a further transfer of ownership should allow Ministers to find the necessary formula to let that happen. After all, the Treasury rules which Ministers treat as sacrosanct may well have changed in five years' time.
If the Committee approves our amendments, the Government will have time to go away and think again. I earnestly hope that they will do so. I beg to move.
Lord Redesdale: I wish to speak in favour of Amendments Nos. 1 and 3, not because we on these Benches think that the Crown Agents' natural position should be in the public sector or the private sector, but because we are keen to ensure that the Crown Agents are in a position to act in the best interests of those whom they serve.
However, the problem we face with the Bill is that it seems to have been brought forward in a hasty manner and there is little to it. It is just a crude enabling Bill with little safeguard that Parliament would be able to see the final results of the changes and agree to them.
Amendment No. 3 is another amendment which follows the Delegated Powers Scrutiny Committee's resolutions on which I shall speak later. I support the amendments.
Baroness Elles: I regret that the noble Lord, Lord Judd, is still fighting his rearguard action for retaining the Crown Agents in the public sector. I thought that the overwhelming feeling during the Second Reading debate—certainly on this side of the House—was that we should support the Government in releasing the Crown Agents from the public sector. They should be privatised and be able to carry out full commercial activities for the benefit of both their own company, which would be formed, and of their clients as they increased throughout the world.
I suggest that Amendment No. 1 is a damper on any possibility of the Crown Agents benefiting from the Bill in order to carry on their new task as a privatised commercial company. I strongly urge my noble friend totally to reject Amendment No. 1, as I am sure she will.
I have some sympathy with Amendment No. 3. We shall wait during the proceedings on the Bill to hear more about the future status and framework under which the Crown Agents will operate. During the course of the Second Reading debate, the Minister undertook that through the proceedings of the Committee and Report stages and Third Reading we would be informed of further details about the future of the Crown Agents and their statutory framework. If we are not so informed, at some stage we must look for further debate in Parliament. I have always held that a vast amount of secondary legislation—whether it be European or British legislation—goes by without any democratic or parliamentary scrutiny. Thus I have a certain sympathy for the principle expressed in Amendment No. 3. I shall look to the Minister to give us the information that is required so that the amendment will have no justification, nor will it be needed in any way.
Lord Elton: There are two levels of parliamentary scrutiny for delegated legislation: the affirmative and the negative procedures. The affirmative procedure is more stringent than the negative procedure because with it matters have to be debated, whereas with the negative procedure a matter is only debated if required. I merely intervene to say that it seems odd that the noble Lord, Lord Judd, should rest so much weight on the report of

1327
the Delegated Powers Scrutiny Committee, of which I have the honour to be a member. He then put down Amendment No. 3 which attracts to a transfer of ownership—a lesser decision than the construction of the new company—a higher order of scrutiny for the initial formation than is proposed, even in Amendment No. 4 which, oddly, is not grouped with these two. It seems to me that, because he lays such weight on the report, he would have followed the advice of the Committee. I hope that my noble friend will bear that in mind.
Baroness Chalker of Wallasey: In responding to the proposal in Amendment No. 1 by the noble Lord, Lord Judd, my noble friend Lady Elles was absolutely right. The amendment strikes right at the heart of the Bill. I thought I explained carefully at Second Reading why I believe that it would be wrong for the Government to retain ownership of the Crown Agents. The Crown Agents' main work—of which we are all rightly proud—has always been as agents of the now independent governments and increasingly the aid agencies. The noble Lord, Lord Judd, used a quotation from one of my Second Reading speeches.
Governments of all parties have been careful not to interfere in Crown Agents, and I have been most careful as a Minister not to interfere, but to keep a watchful eye on what they are doing. Because they knew that I was keeping a watchful eye, I did not need to interfere, However, there was always the risk that one day I might interfere with Crown Agents.
The noble Lord, Lord Judd, made some play of the discussion at Second Reading and subsequent stages of the CDC Bill in another place. He sought to put CDC and Crown Agents in exactly the same category. Perhaps I may explain to him why I do not believe that the same situation applies. The Crown Agents and CDC have different histories. Their roles are very different. Legislation recognises the distinctive identity and purpose and provides for continued growth into the future for each of them. The job of CDC is to act as a catalyst for private sector investment in developing countries, showing others that they can invest profitably in poorer countries so as to energise the private sector to follow and make investments of its own.
The private sector CDC would be bound to take a very different attitude to profit and risk which would be incompatible with developmental objectives which the Government have set for it. So in that sense, if in no other, I think that I have explained the difference. As I said, Crown Agents' main work is as agents of now independent governments. The present Act still requires us—and would do, if the noble Lord had his way—to involve ourselves in business decisions. Therefore we have proposed the transfer to the private sector in order to strengthen Crown Agents' ability to meet the needs of their customers by removing unnecessary restrictions.
Crown Agents have spent a relatively brief period as a public corporation. I shall not go back to the pre-1979 situation—though I can if noble Lords require it. The regulatory framework of the 1979 Act was established to meet the problems and circumstances that were
1328
specific at that time. Things have now changed, and there is no reason why Crown Agents should continue to be owned by government.
I made it quite clear at Second Reading that the most appropriate framework of control would be provided by a foundation in the private sector. That would give Crown Agents' international clients the assurances that they require. So long as the Government continue to bear ultimate financial responsibility, Crown Agents would continue to be subject to those unnecessary constraints of one sort or another. Therefore we seek to give Crown Agents the power to make their own business decisions, including borrowing in the future. Without such a freedom, that relationship, the ability to decide on their own borrowing, would be limited.
The noble Lord, Lord Judd, seems to think that the Bill is driven by ideology, given the way in which he phrased his amendment. It is not. It is a measured and practical response to the changing business needs of Crown Agents. That is why, to keep up with the times, we have suggested the transfer to the foundation. That would give the Crown Agents a complete, modern and constitutional framework in which we can all have confidence.
I have to say that Amendment No. I, which makes the nomination of the company in which the assets of Crown Agents will vest on the appointed day subject to a delay of at least five years, really is an unsatisfactory and wrecking measure. I am surprised that the noble Lord has pursued it in this way. It would leave Crown Agents in limbo. They would not know what decisions they would be able to take at the five-year point or at some point thereafter, because the wording is "not less than five years". If the transfer of Crown Agents to the private sector is to be delayed for at least five years, as the noble Lord's amendment proposes, then we might as well not have the "not less than five years"; we might as well not have the Bill. That is of course exactly what the noble Lord wants.
I know that in the past Parliament has expressed concern about the control that can be exercised over companies in the public sector. But control over companies is less direct than the specific controls provided for by the 1979 legislation over the statutory corporation that the Crown Agents now is. That control, as the noble Lord, Lord Judd, rightly said, has to be exercised by the Minister through his shareholding and the other arrangements with the company.
All this is at one remove from Parliament and is less transparent. The same degree of control would be necessary while the company remained in public ownership, but the direct parliamentary control which Parliament normally thinks desirable just would not be there. Certainly, the provision of Amendment No. 1 would not give important customers like the Japanese Government the reassurance that they seek, and the reassurance which the foundation most clearly would offer, I cannot believe that this state of affairs is what the noble Lord had in mind when he tabled the amendment. But one never knows with the noble Lord. I join with my noble friends Lady Elles and Lord Elton: we should indeed oppose this amendment.

1329
Turning to Amendment No. 3, to which the noble Lord, Lord Redesdale, spoke in the main, and my noble friend Lady Elles, I understand the concern of noble Lords that we give Crown Agents the right start for a successful future while retaining their traditional standards of probity and impartiality. That is a common objective.
I also understand the desire to allow Parliament to look again at the details of the proposals for transfer. I have noted very carefully the report of the Scrutiny Committee on Delegated Powers. But as my noble friend Lord Elton said, it would have been much more logical had the proposals referred to the future foundation rather than the transfer in what is an enabling Bill.
I have considered very carefully whether an affirmative resolution procedure would be appropriate under Clause 1 of the Bill, but I do not believe that that is the right approach. We have taken the advice of government legal advisers, and they assure me that it would be quite unprecedented to proceed in that way. The Bill before us follows established precedents. The normal practice is to take enabling legislation when transferring organisations to the private sector. That approach is well tried and tested. It has been accepted by this House and the other place on every previous occasion. I do not believe that any of the arguments that have been put forward today convinced me that an exception should be made in this case. I shall be very open with noble Lords, as will the Government, throughout this procedure. Indeed, I can assure my noble friend Lady Elles that much more information about the intended ultimate owner will be available than would normally be the case with, for example, a trade sale, because there will be less commercial confidentiality.
As to the practical effects of the amendment, I believe that the practical effect of introducing an affirmative resolution procedure would be damaging to Crown Agents' interest. I believe it to be unnecessary. I have already assured the Committee that I shall keep Members fully informed, as indeed I shall Parliament as a whole, of our plans as we go forward. It is only fair to point out that privatisation negotiations are complex. Much of the information is normally commercially confidential and would not be disclosed in the way that has been suggested. But, because of pressures of other business, we know that obtaining parliamentary approval can be a long drawn out process. That could seriously hamper the proposed transfer. I would not want to put the future Crown Agents foundation in any jeopardy from that.
The main concern about this transfer of Crown Agents to the private sector was fully debated at Second Reading, and today we shall go through the amendments that are on the Marshalled List. I will consider the substance of the points during our negotiations on the transfer. But I am quite certain that it is not in Crown Agents' commercial interest for this House to sow the seeds of doubt or uncertainty about the Government's plans or the timing of when the transfer would take place. It is for those reasons that I urge noble Lords to reject Amendment No. 1 and, with it, Amendment No. 3.
Lord Judd: I always find the Minister personally irresistible. If irresistible charm were the basis of good government, we should have a very strong Government. Unfortunately, there is much more to the issues that are before us than the personality, and indeed the integrity, of the Minister, which we all greatly admire on this side of the Chamber.
That is the problem with this Bill. We have a skeleton Bill, an enabling Bill, which spells out absolutely nothing about what will happen. It invites us to buy a pig in a poke. And we have a lot of very well-intended and convincing arguments—indeed some on paper—and background briefings from a Minister whom we all love and admire. The problem is that the Minister may not always be there. Some of us who have worked for much of our lives in the realm of third world issues and development might sometimes wish in some ways that, if only she could somehow free herself of political allegiances, she could always be there in one sense, and that would be a wonderful element of continuity in government. But that is not, I think, likely to happen. The noble Baroness will forgive my saying that I sometimes wonder whether she does not toy with the idea herself. I cannot believe that, in the environment in which she lives, she does not. But I do not believe that it is likely to happen. Our function therefore, as responsible parliamentarians, is to ensure that whatever is being done is done in the interests of the nation as a whole, that it is preserving the assets of the nation, and that the dedicated work and effectiveness of the Crown Agents and their staff, to whom the Minister paid such fulsome tribute in the Second Reading debate, is not lightly thrown away or sold down the river.
It is for those reasons that some of us on this side of the Committee are a little perplexed. There is absolutely nothing in any of our amendments that does anything but write into the Bill all that the Minister said in her background briefings. We are trying to strengthen her position and want to reassure everyone that what she says is her objective and what she wants to see done can be properly done.
Let me deal very briefly with one or two of the points that she made. She said that CDC is different because it is a catalyst for development. I am sure she will agree that, as she herself emphasised—she has been at pains to underline the point—the Crown Agents' role is about supporting economic and social development. So that is a complementary function. It does not seem to me so self-evident as she seems to want to persuade herself that it is that they are in two completely different categories. It does not seem so at all. If the one is right in the public sector, the other sits naturally alongside it in the public sector.
The Minister has also emphasised that the main work of the Crown Agents is with foreign governments. That is obviously the case. I have not seen any evidence at all that foreign governments favour that change. All the indications are that foreign governments would rather things were left exactly as they are. She also made some play about her watchful eye. I repeat that if I were to have any watchful eye upon me, I cannot think of any other that I would prefer to have. The implication in saying that there is a watchful eye which provides

1331
discipline is that that watchful eye is necessary. The persuasive way in which she made the point underlines it. She cannot have it both ways. If this activity is to become at arm's length and still further removed from potential ministerial control, she will be removing the force of the watchful eye that she implied was necessary.
I noted the comments of the noble Baroness, Lady Elles, about her impression of Second Reading. That is her impression. My own antennae do not suggest to me that there is a militant feeling of commitment among her noble friends that this is a Bill that must happen at all costs. At best there is passive acquiescence in what is proposed. Certainly, it may be my own failing in this respect, but quite frankly I am mystified by the intervention of the noble Lord, Lord Elton. I do not see how the transfer of ownership is an issue of less importance than the structure of the company. It seems to me that the ownership is crucial to the future.
Lord Elton: I rise merely to point out that they were of equal importance. The noble Lord relied on the advice of the Committee, and the advice of the Committee was to have the negative procedure. He had proposed the affirmative procedure.
Lord Judd: On that point I did as the noble Lord said. I was grateful to the Committee for having alerted me. The more I looked at the issue, the Committee having alerted me, the more I felt that it was in the spirit of parliamentary control that the proper discharging of parliamentary responsibility to this fine and proven asset was to take the affirmative road.
No, I am afraid that I am as convinced as ever that the Bill has more to do with political manoeuvrings within the Government. It was some kind of ideological sop to the Right wing of the party opposite because they were denied seeing the Post Office moving into private hands. I do not believe that there is any pressure for this Bill within the Crown Agents or any pressure within the Government in terms of the Overseas Development Administration. It would be irresponsible of this House to pursue it. If we do so, we shall do our utmost in subsequent amendments to make the best of a bad job. The Minister says that the amendments that we are now debating are pointed at the heart of the Bill. It is a charge that I willingly accept. I am afraid that we must push this matter to a Division.
4.15 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 79; Not-Contents, 138.

Division No. 1

CONTENTS

Addington, L.

Bottomley, L.

Airedale, L.

Bruce of Donington, L.

Archer of Sandwell, L.

Callaghan of Cardiff, L.

Barnett, L.

Carmichael of Kelvingrove, L.

Beaumont of Whitley, L.

Carter, L.

Birk, B.

Castle of Blackburn, B.

Blackstone, B.

Chandos, V.

1332

Cledwyn of Penrhos, L.

Kilbracken, L.

Clinton-Davis, L.

Kirkhill, L.

Cocks of Hartcliffe, L.

Lovell-Davis, L.

David, B.

Mackie of Benshie, L.

Dean of Thornton-le-Fylde, B.

Mayhew, L.

Desai, L.

McIntosh of Haringey, L.

Diamond, L.

McNair, L.

Donaldson of Kingsbridge, L.

Merlyn-Rees, L.

Dormand of Essington, L.

Milner of Leeds, L.

Dubs, L. [Teller.]

Molloy, L.

Falkland, V.

Monkswell, L.

Farrington of Ribbleton, B.

Morris of Castle Morris, L.

Fisher of Rednal, B.

Nicol, B.

Gallacher, L.

Peston, L.

Gladwin of Clee, L.

Plant of Highfield, L.

Gould of Potternewton, B.

Prys-Davies, L.

Graham of Edmonton, L.

Rea, L.

Haskel, L.

Redesdale, L.[Teller.]

Hilton of Eggardon, B.

Richard, L.

Hollis of Heigham, B.

Ritchie of Dundee, L.

Holme of Cheltenham, L.

Sainsbury, L.

Houghton of Sowerby, L.

Seear, B.

Howie of Troon, L.

Serota, B.

Hughes, L.

Shepherd, L.

Irvine of Lairg, L.

Stallard, L.

Jacques, L.

Strabolgi, L.

Jay of Paddington, B.

Tope, L.

Jeger, B.

Tordoff, L.

Jenkins of Hillhead, L.

Turner of Camden, B.

Jenkins of Putney, L.

Wallace of Coslany, L.

Judd, L.

White, B.

Kennet, L.

Williams of Elvel, L.

Williams of Mostyn, L.

NOT-CONTENTS

Aberdare, L.

Denham, L.

Ailesbury, M.

Dixon-Smith, L.

Ailsa, M.

Downshire, M.

Alexander of Tunis, E.

Dudley, E.

Allenby of Megiddo, V.

Eden of Winton, L.

Ampthill, L.

Effingham, E.

Annaly, L.

Ellenborough, L.

Archer of Weston-Super-Mare, L.

Elles, B.

Elton, L.

Ashbourne, L.

Faithfull, B.

Astor, V.

Ferrers, E.

Blake, L.

Finsberg, L.

Blaker, L.

Gage, V.

Blatch, B.

Gainford, L.

Blyth, L.

Gardner of Parkes, B.

Boyd-Carpenter, L.

Gisborough, L.

Brabazon of Tara, L.

Goschen, V.

Bridges, L.

Gridley, L.

Brougham and Vaux, L.

Haddington, E.

Burnham, L.

Hailsham of Saint Marylebone, L.

Butterworth, L.

Cadman, L.

Halsbury, E.

Caithness, E.

Hanworth, V.

Caldecote, V.

Harding of Petherton, L.

Campbell of Alloway, L.

Hayhoe, L.

Campbell of Croy, L.

Henley, L.

Carnock, L.

Hogg, B.

Cart of Hadley, L.

Howe, E.

Chalker of Wallasey, B.

Hylton-Foster, B.

Chelmsford, V.

Inglewood, L. [Teller.]

Chesham, L.

Kinnoull, E.

Clanwilliam, E.

Knollys, V.

Clark of Kempston, L.

Lauderdale, E.

Constantine of Stanmore, L.

Lindsay, E.

Cranborne, V. [Lord Privy Seal.]

Lindsey and Abingdon, E.

Liverpool, E.

Crathorne, L.

Long, V.

Cullen of Ashbourne, L.

Lucas, L.

Cumberlege, B.

Lyell, L.

Dacre of Glanton, L.

Mackay of Ardbrecknish, L.

Davidson, V.

1333

Mackay of Clashfern, L. [Lord Chancellor.]

Rankeillour, L.

Rawlings, B.

McColl of Dulwich, L.

Renwick, L.

Merrivale, L.

Rodger of Earlsferry, L.

Mersey, V.

Roskill, L.

Middleton, L.

Saltoun of Abernethy, Ly.

Miller of Hendon, B.

Seccombe, B.

Milverton, L.

Shannon, E.

Monteagle of Brandon, L.

Sharples, B.

Montgomery of Alamein, V.

Shaughnessy, L.

Morris, L.

Shaw of Northstead, L.

Mottistone, L.

Simon of Glaisdale, L.

Mountevans, L.

Skelmersdale, L.

Mountgarret, V.

Soulsby of Swaffham Prior, L.

Mowbray and Stourton, L.

St. Davids, V.

Munster, E.

Strathcarron, L.

Murton of Lindisfarne, L.

Strathclyde, L. [Teller.]

Nathan, L.

Sudeley, L.

Nelson, E.

Terrington, L.

Noel-Buxton, L.

Teviot, L.

Norrie, L.

Thomas of Gwydir, L.

Northesk, E.

Trumpington, B.

O'Cathain, B.

Ullswater, V.

Orkney, E.

Vivian, L.

Orr-Ewing, L.

Wade of Chorlton, L.

Oxfuird, V.

Whitelaw, V.

Park of Monmouth, B.

Willoughby de Broke, L.

Plummer of St. Marylebone, L.

Wilson of Tillyorn, L.

Poole, L.

Wise, L.

Pym, L.

Young, B.

Quinton, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.22 p.m.
Lord Redesdale Lord Redesdale had given notice of his intention to move Amendment No. 2:
Page 1, line 10, at end insert ("and must be a company limited by guarantee").
The noble Lord said: I must apologise to the Committee. On looking at the amendment on the Marshalled List I see that there is a drafting error. Instead of reading "Page 1, line 18", it should read "Page 1, line 10". It does not change the substantive issue on the Bill.
The aim of the amendment is to find out why the Minister will not put on the face of the Bill the fact that it should be a company limited by guarantee.
The Deputy Chairman of Committees (Lord Brougham and Vaux): I am advised by the Clerk that Amendment No. 2 cannot be taken now; it should have been taken before Amendment No. 1. The noble Lord therefore will have to bring it back at Report stage.
[Amendment No. 2 not moved.]
[Amendment No. 3 not moved.]
Lord Redesdale Lord Redesdale moved Amendment No. 4:
Page 2, line 6, at end insert:
("() Any order under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.").
The noble Lord said: In moving Amendment No. 4 I shall speak also to Amendment No. 12 which is grouped with it. The two amendments seek to ensure that Parliament has the ability to scrutinise the eventual form
1334
of the successor company. They follow closely the recommendations put forward by the scrutiny committee which, in relation to Amendment No. 4, reads:
"The Committee therefore draws the power in Clause 1 to the attention of the House as the House may wish to consider whether the order nominating the successor company should be subject to the negative procedure to give the House an opportunity to debate the order should any member wish to do so".
In relation to Amendment No. 12 the committee said:
"The Committee notes that it is intended to use the power only once. However, it can be used to displace existing orders that are themselves subject to the affirmative procedure. The House may therefore wish to consider whether the affirmative procedure might be more appropriate for the exercise of this power".
I believe that the Minister covered some of the points as to why objection will be taken to the amendment. However, in raising the issue, the noble Baroness said that in previous enabling Bills the suggestions that I am putting forward were not seen to be appropriate. Perhaps she can advise us which former enabling Bills dealt with the issue. The successor company will be moved from the public to the private sector, but it will not be a trade sell-off; there will be no buyer of the company. This appears to be, therefore, a new form of enabling Bill. Perhaps the Minister can give us earlier examples if that is not so.
The Minister said that the Bill is being introduced for the good of the Crown Agents. The amendments seek to ensure that Parliament is given the right to scrutinise the orders. In the Second Reading debate the Minister said that it was not necessary to dot the "i"s and cross the "t"s. The amendment was tabled to enable us to see what the successor company will look like and what form it will take. We do not believe that the words are present in the Bill to enable us to dot the "i"s and cross the "t"s. I beg to move.
Lord Judd: I am happy to support the noble Lord on Amendment No. 4 on the grounds that I mentioned earlier this afternoon. I am convinced that simply because of the value of the asset, the commitment that has gone into it and its significance not only for the work the Crown Agents do themselves but also for the whole standing of the United Kingdom throughout the world, this is not something to be handled lightly behind the filing cabinets of Whitehall. It is something to be done openly; to be demonstrably well done and to be debated and scrutinised in this Chamber. Therefore I warmly applaud the amendment.
Baroness Elles: I wish to speak to Amendment No. 13 concerning the negative resolution on Clause 12(2).
Baroness Trumpington: I wonder whether my noble friend has made a mistake. Does she wish to speak to Amendment No. 12? My noble friend said Amendment No. 13, but that does not come within this group.
Baroness Elles: I apologise to the Committee. I wish to speak to Amendment No. 12 which is to be taken in conjunction with Amendment No. 4. I wish to refer the Committee to the Third Report from the Delegated Powers Scrutiny Committee which specifically says:
"Orders are not subject to Parliamentary control although they are statutory instruments by virtue of Clause 12(2). The House may consider that the propose to be achieved by orders under Clause 12(1) is sufficiently defined to make the absence of Parliamentary control acceptable".

1335
One would think therefore that the forceful arguments made by the noble Lord, Lord Redesdale, are inappropriate in this case.
Lord Simon of Glaisdale: We must realise that officials have to go on administering this Bill and other affairs, and that parliamentary control is an appalling nuisance to them. For centuries there has been tension between the Executive and the legislature and the officials are by no means to be blamed. A Bill is the worst thing from their point of view, with three Readings or more in each House with the possibility of amendments which are generally, in the view of Whitehall, ill considered, throwing them off their course. That is the worst thing. The affirmative resolution is next worst; the negative resolution follows after; and no parliamentary control is just heaven.
We have been through all this time and again. In the end, the opinion in your Lordships' House was so strong that the Jellicoe Committee advised the setting up of a scrutiny committee. That was the one proposal of the Jellicoe Committee as to which the Government expressed reservation. The reservation was a typical Whitehall reservation. It was quite understandable, as I said, but there is no reason why your Lordships should put up with it. We now have the scrutiny committee and it is most important that we should insist that when it draws a matter to the attention of your Lordships' House, in terms that are now significant in the signals it emits, your Lordships should follow the guidance of the scrutiny committee.
I respectfully agree with the noble Baroness, Lady Elles, that there is a distinction here, reading the scrutiny committee report, between the two amendments. However, in my respectful opinion we should certainly follow implicitly where the scrutiny committee disapproves of the absence of sufficient parliamentary control. I certainly support the second amendment.
4.30 p.m.
Baroness Chalker of Wallasey: In moving Amendment No. 4, with which Amendment No. 12 to Clause 13 is grouped, the noble Lord, Lord Redesdale, said that this was an unusual privatisation—I paraphrase his words—and that because there would be no trade sell-off there would perhaps need to be some further provision for examination. The very opposite may be true, because there are precedents in the field of privatisation legislation in which the Minister has been given power to amend primary and secondary legislation for consequential purposes by means of negative procedure orders. However, this is not one of those.
I understand very well what the noble and learned Lord, Lord Simon of Glaisdale, and my noble friend Lady Elles are saying and I have taken great care to note the recommendations of the Delegated Powers Scrutiny Committee in its third report. The concern which they have expressed by inviting your Lordships to consider whether the order nominating the successor company should be subject to the negative procedure is reflected in the noble Lord's amendment. But during this debate the case has been put under Amendment No. 4 for introducing the affirmative resolution procedure under
1336
Clause 1 of the Bill. In speaking to Amendment No. 1, with which Amendment No. 3 was grouped, I explained why I did not feel able to accept that. So the same considerations, needless to say, apply to Amendment No. 4. I think it would be inappropriate and unnecessary to accept that amendment. Although Amendment No. 12 goes less far in proposing the negative procedure, the principle is still the same.
Perhaps I may now focus my remarks on the comments of my noble friend Lady Elles and the noble and learned Lord, Lord Simon of Glaisdale. I understood well the report from the Delegated Powers Scrutiny Committee but I feel I should emphasise to the Committee that these are consequential matters. The power is there so that references to the Crown Agents in subordinate legislation can be removed or altered in so far as is necessary in consequence of the Bill—that is to say, in consequence of the fact that the Crown Agents will no longer exist as a public body. I can accept that at least one of the statutory instruments needing amendment was made by the affirmative resolution procedure. There may be others. But in these cases the amendments or the revocations are likely to be very minor indeed. Precedent on Bills such as this does not require the affirmative procedure for consequential matters even where a Minister is given the power to deal with primary legislation, as I cited at the beginning of my remarks to the noble Lord, Lord Redesdale.
There is sympathy for the principle that there should be appropriate parliamentary control over subordinate regulation-making powers. However, I am not convinced that a requirement for a debate in both Houses to approve the kinds of amendments and revocations which may be made by the power under Clause 13 would be appropriate. Your Lordships know that I am always happy to debate these matters and I shall be happy indeed to attend on a Friday to do so. I imagine that that is when such matters would be tabled in this House. But I foresee that there would be a need for a special introduction of Friday business if we were to have such debates on all the legislation—for if the procedure is carried out for this Bill, it will need to be carried out for a number of other Bills.
My problem is this. I do not know what more we would be saying than we were actually saying in our Second Reading debate. The order before us would be an order whose sole purpose would be to tidy up provisions of other statutory instruments referring to Crown Agents, the statutory corporation. Once the transfer under this Bill takes place those provisions would become ineffective because there would no longer be Crown Agents as such. Therefore, I have some real difficulty in deciding what might be then discussed.
Lord Simon of Glaisdale: Is not the noble Baroness being rather cavalier in referring to tidying up primary legislation when one considers the role of Parliament?
Baroness Chalker of Wallasey: I hesitate to differ from the noble and learned Lord, as he well knows, but in this case we are talking about the residual matters from other statutory instruments which would no longer have any force because the Crown Agents would not be there as such. That is why, worthy as the intention is

1337
that we have proper debate—with that I firmly agree—I do not think that debating all over again the issue of whether there should be a statutory corporation Crown Agents in the public sector, which is all I can see would be discussed if such an order came forward, would be appropriate. The decision would already have taken place by the passing of the Bill. We might have a lot of long silences.
Lord Judd: I am grateful to the noble Baroness for giving way. Perhaps I may probe two of the observations which she has made in her contribution. She earlier indicated that this is an enabling Bill. The Crown Agents are not any organisation. What we are saying is that before the final consequences of the Bill are clinched it is important that there should be proper parliamentary scrutiny and debate.
The second matter is related to what the noble Baroness has just said. I shall be fascinated to hear more from her about it. I could hardly believe it when she argued that it was because of the pressure on parliamentary business and the possibility that we might have to meet on a Friday that we could not take a particular course. Surely, it is the significance of the issue and not the convenience of the House which is important.
Baroness Chalker of Wallasey: I am very happy to meet on a Friday. I spent 18 happy years meeting on Fridays in another place. Therefore, while I know it will not please some Members of the Committee, I am very happy to meet on a Friday. That is not the reason I would give against this particular amendment.
The third report of the Delegated Powers Scrutiny Committee makes clear that Clause 13(3), with which Amendment No. 12 deals, allows the Secretary of State to make such amendments or revocations of any subordinate legislation as appear to him to be necessary or expedient in consequence of the Bill. That of itself may seem to be a subject for further investigation in the mind of the noble Lord, Lord Judd, as regards what is happening to the Bill. But that is not the procedure. This matter relates to subordinate legislation related to the Crown Agents Act 1979; it is not dealing with the transfer of the Crown Agents to a foundation. If the noble Lord were making the case on that I would understand him better. I do not believe that that is the point.
I return to what I was saying earlier in trying to address the proposal of the scrutiny committee. It suggests that affirmative procedures may be appropriate to the order-making power. That suggestion is based on the proposition that the instruments being amended may have been subject to the affirmative procedure themselves. Indeed they may have been. At least one, but I believe not many, of the orders which we shall need to amend was subject to the affirmative procedure. It was the second banking co-ordination directive, as I am sure the noble Lord, Lord Judd, will probably remember from his own personal experience.
The reference to the Crown Agents was included in that directive expressly as a minor or consequential amendment. It was hardly the reason why the order was
1338
subject to affirmative procedure. In short, I believe it is fair to say that the fact that the order to be amended was subject to a particular procedure does not mean that an amending order should be subject to precisely the same procedure. We should be looking at what procedure is appropriate for the amending order.
Let us suppose that the order we make under Clause 13 would give us something to debate on a Friday or on any other day, although I find it hard to think of an example—
Lord Judd: I am grateful to the Minister for giving way. I am certain that she is one of those in the Government most in favour of transparent and open government. I ask her to read very carefully in the Official Report the past three or four minutes of her contribution. Having read it, I ask her to persuade herself that that is a contribution which the wider public, of whose assets we are the trustees, would see as a good example of open and clear government as regards what is being done.
Lord Elton: Perhaps I may helpfully extend the interruption to give a personal view on Clause 13. The Select Committee's recommendation, as my noble friend said, was that where an affirmative order was about to be rescinded the House would wish to consider whether that order was appropriate for that procedure. The House has considered it. My noble friend has been extraordinarily helpful and has made the question transparent by indicating the solitary order which has been through the affirmative process and which would be swept up in the future procedure. That seems to answer a good deal of the Committee's concerns, but I can only speak for myself. I am a great deal happier to take part in this debate in the light of my noble friend's assurance than I was earlier. I find what she said very reassuring.
Baroness Chalker of Wallasey: I am delighted that I have satisfied one out of three customers on this matter. Although I do not know, I suspect that I may not yet have satisfied the noble and learned Lord, Lord Simon of Glaisdale.
Perhaps I may make one further point about Clause 13(3). It provides only that the Secretary of State, as I said just now, has power by order to amend or revoke subordinate legislation if it appears to him to be necessary or expedient in consequence of the Bill. I am sure that the noble and learned Lord, Lord Simon of Glaisdale, knows far better than I that the subordinate legislation has the meaning given in Section 21 of the Interpretation Act 1978 which is,
"Orders in council, orders, rules, regulations, schemes, warrants, byelaws and other instruments made or to be made under any Act".
So the Bill we are debating today in Committee includes already provisions to deal with consequential modifications of statute law where these have been identified as necessary. But, following precedent in other legislation, this provision provides the necessary safeguard which will allow the Secretary of State to amend or revoke the subordinate legislation where that might be necessary as a consequence of this Bill.

1339
Therefore, any order made under this subsection by the Secretary of State would be subject anyway to the negative resolution procedure. As I have managed to identify for my noble friend Lord Elton the one piece of secondary legislation that could be covered by this matter, I hope that I may have satisfied the Committee that Amendments Nos. 4 and 12 are really not necessary and that they should be rejected.
4.45 p.m.
Lord Redesdale: I thank the Minister for her reply. Considering the complex nature of the argument and also the clear recommendations from the scrutiny committee, I hope that the noble Baroness understands that we may come back to this matter at Report stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Lord Rea Lord Rea moved Amendment No. 5:
After Clause I, insert the following new clause:
("Transfer of ownership of the successor company
.—(1) The Secretary of State may by order transfer ownership of the successor company only to a foundation, which shall be constituted as a company limited by guarantee.
(2) The Memorandum and Articles of Association of a foundation formed under subsection (1) above shall be contained in any order which may he issued under that subsection, and Schedule (Memorandum and Articles of Association) has effect for the purpose of supplementing the provisions of this section.
(3) Shares in the foundation formed under subsection (I) above shall be issued only to members of the said foundation, who shall be appointed by order by the Secretary of State.
(4) No order shall be made under this section unless a draft of the statutory instrument containing the order has been laid before Parliament and approved by a resolution of each House.").
The noble Lord said: In moving this amendment I should also like to speak to Amendment No. 13 which is consequential. I shall also speak to Amendments Nos. 10 and 11 which refer to the title of the Crown Agents and are dependent in part on Amendments Nos. 5 and 13.
Amendments Nos. 5 and 13 have three effects. The first is to seek to encapsulate the type of non-profit, development-oriented foundation which the Minister has described as the Government's own preferred option and to write the intended new owner of the Crown Agents, which is the foundation, on to the face of the Bill. In other words, it is to put heart into the legislation. The amendments also have the effect of subjecting the process of transfer to such new owners to further parliamentary scrutiny so that both Houses shall be satisfied that the terms of the transfer protect the public interest and the work of the Crown Agents. They also have the effect of insisting that the initial members of the foundation should be appointed by Ministers accountable to Parliament rather than by the present Crown Agents who hold their posts only by courtesy of ministerial appointment.
As regards the first of those effects, we who are moving the amendment are seeking to do only what we feel should properly have been done by Ministers themselves. As I said on Second Reading—and a number of noble Lords said the same—I still do not
1340
fully understand why that has not been done. There are different views in the House about whether the privatisation of the Crown Agents is necessary or appropriate—we have had that debate—but I believe that noble Lords will have given a widespread welcome to the Minister's categorical assurance on Second Reading that the Government have rejected the option of a trade sale of the Crown Agents. There will also be general agreement that, if the Crown Agents are to be privatised, the new owners should be the type of the foundation which the Minister has described.
However, we do not believe that it is enough for the Minister simply to indicate her intentions in such a general way. There appears to be no good reason why the Government should not spell out their intentions in detail and include some definition of the proposed foundation on the face of the Bill. They have not done so. We have not attempted to do so in full in the amendments, but they lay down some minimum requirements which we believe should be included in the Bill at this stage. I hope that if the amendments are passed, the Minister will come back to the House with further amendments that will put meat on the bones which the amendments offer.
The Bill as it stands at present takes a public sector corporation, which is accountable to Ministers and to Parliament, and replaces it with a company wholly owned by the Crown and entirely at the disposal of the Foreign Secretary and the Chancellor of the Exchequer. The Bill also provides the means for Ministers to dispose of the successor company without further reference to Parliament, If the Government should have a change of heart about their preferred option after the passage of the Bill but before the appointed day, as the Bill stands at the moment, there is nothing that Parliament can do to hold the Government to the preference which the Minister stated on Second Reading.
If the Bill is to be passed, it should cover not only the initial transfer from the existing corporation to the Foreign Secretary, but also the next stage of the transfer from the Foreign Secretary to the new owners in the private sector. It should spell out that the new owners should be a foundation and committed to developmental objectives. It should require the constitution and membership of the foundation to be approved by Parliament before the transfer takes place. We have already discussed that point to some extent and I am sure that we shall continue to do so.
We are also concerned that the new foundation should continue to operate on the terms, and with the purposes, set for it at the outset. The Minister has spoken of the Foreign Secretary retaining reserve powers for an initial five-year period to ensure that the principles and purposes of the foundation are not changed within that time. That implies some degree of continuing accountability to a Minister who is accountable to Parliament, and is therefore welcome. But we should go further and insist that the assets acquired by the foundation should not then be disposed of to another body without explicit parliamentary consent.
Likewise, the amendments seek to clarify the position as regards the appointment of members of the foundation. It appears at present that the Government's intention is that the initial members should include the current Crown Agents. That is right because they have done a good job, and should continue to do so with our support. However, it also appears that other members are to be appointed by the Crown Agents, who are ministerial appointees, rather than by Ministers themselves which, to say the least, is an odd way of doing things.
We therefore propose that the appointments should be the clear responsibility of Ministers, who are accountable to Parliament. If the Minister is prepared to take responsibility for appointing the present Crown Agents to the new foundation, there is no good reason why the Government should not equally be responsible for the other members also. The Government's proposals appear to create two classes of foundation member: the first to be appointed by Ministers, with the second group being appointed by the first group. That is illogical, inconsistent and, we feel, unwise. It would be much simpler and clearer if all members of the new foundation were appointed in the same way and by the same people. The amendments will give effect to the Government's preferred option while improving accountability.
Amendments Nos. 10 and 11 refer to the name "Crown Agents". As it stands, the Bill offers any potential purchaser of the Crown Agents not only the property, rights and assets of the existing public sector corporation, but also its name and everything that goes with it. Of course, plenty of private sector companies use the word "Crown" or something of the sort in their name. There are some excellent establishments which I and, I am sure, other Members of the Committee visit on occasion which boast titles which include the word "Crown" or something of that sort, such as "The Rose and Crown" or "The King's Head". Perhaps noble Lords on this side of the Committee should be the ones to use "The Rose and Crown". We know the Conservative Party to be deeply in debt to the Royal Bank of Scotland, its major creditor, but we know—at least we hope—that the Royal Bank of Scotland does not claim other than a commercial relationship with Her Majesty's Government.
The Government are right to recognise that the name "Crown Agents" falls into a different category. The good name and reputation of the Crown Agents are universally agreed to be their major assets, and the fact that their good name specifically asserts a close connection with Her Majesty's Government is of vital importance.
The very fact that provision for the transfer of the name is spelled out in the Bill, when provision for the transfer of everything else is not, affirms the Government's recognition of that reality. Ministers know as well as anyone else that the Crown is seen as the ultimate guarantor of the integrity and financial security of the corporation, and that that is part of the
1342
reason why so many overseas governments and aid agencies trust the Crown Agents to look after their precious funds.
The Crown Agents should keep their name, even if they go into the private sector, as long as there remains a real connection with the Crown. That is why we want to make the continued use of the name conditional on a continued link with Her Majesty's Government, as spelled out in our new clause and schedule, through the requirement to adhere to the purpose and principles approved by Parliament and the requirement to seek parliamentary approval for any further transfer of ownership.
We do not want to see the good name of the Crown of the United Kingdom put up for sale to the highest bidder. We do not want to see that good name become a tradable commodity. Furthermore, we do not believe that it would be right for the Crown Agents to continue to call themselves such if they were to desert the developmental objectives and the non-profit constitution to which they are now dedicated in order to go into the private sector.
We therefore propose in the amendments that the name "Crown Agents" should be available to the successor company as long as it remains wholly owned by the Crown. It should be available to the foundation which we and the Minister have described, and to any subsidiary company, but it should not be available to any other buyer in the event that the foundation proposal does not come to fruition. It should not be available to any multinational conglomerate which might obtain the assets of the foundation at any future stage. It should continue in use only so long as the successor company and the foundation adhere to the purpose and principles which govern the work of the Crown Agents. I beg to move.
Lord Redesdale: I rise to support the amendments, the spirit of which is quite clear. However, I should like to ask one brief and specific question of the Government with regard to Amendment No. 5. At column 1410 of Hansard, the Minister said on Second Reading:
"We envisage that the foundation will be established as a company limited by guarantee".—[Official Report. 28/2/95; col. 1410]
I know that the amendments are broad in their aims, but I should like to ask the specific question: will the Government bring forward an amendment to add the words, "The successor company should be a company limited by guarantee"?
5 p.m.
Baroness Elles: In the light of what was said by the noble Lord, Lord Rea, perhaps I may ask my noble friend a question. As I read the Second Reading speech of my noble friend the Minister the way in which the structure would be set up and the relationship between the Government, the foundation and the operating company were clear. Will my noble friend confirm that for a considerable time the Government will be a shareholder in and a member of the foundation? Will the foundation he the sole shareholder in the operating company?

1343
I believe that all the anxieties expressed by the noble Lord, Lord Rea, in his speech and in the amendment were catered for by my noble friend when she explained the statutory framework.
Lord Judd: Before the noble Baroness sits down, will she respond to the point that has been made? If the proposals are so evidently sensible, in the name of open government, why on earth not put them on the face of the Bill?
Baroness Elles: We have heard many speeches from many noble and learned Lords about the unreasonable length of endless Bills, statutory instruments and every kind of legal instrument. I believe that anything that can shorten a Bill, and taking the word of the Government as stated in this Chamber, is sufficient. I am all for as short a Bill as possible and I accept the word and undertakings of my noble friend on behalf of the Government.
Baroness Chalker of Wallasey: I understand the Committee's anxiety to know more about the details of the proposed foundation. I explained on Second Reading that the foundation will be independent of government and that its members will not be appointed by Ministers. Therefore, the premise on which the noble Lord, Lord Rea, moved the amendment was not entirely right. I had made the point on Second Reading. I also said that the foundation will own all the shares in the company which will operate the Crown Agents' business. I further said that it is likely to take the form of a company limited by guarantee. In response to the noble Lord, Lord Redesdale, I do not see the need for an amendment on the matter.
I further said on Second Reading that the foundation will not distribute dividends to its members and that its objectives will encompass the social, ethical and developmental principles on which the Crown Agents' business is based. I went on to say that the members of the foundation will need to discuss and agree with government the terms of transfer of the business once Parliament has agreed to the arrangements set out in the Bill.
Since Second Reading we have received significant expressions of interest about the membership of the foundation. The Crown Agents board and I envisage that the core of the membership of the foundation will be a group of what I would term "enduring institutions". Those could include, for example, the British Consultants Bureau, the British and international chambers of commerce and various chartered institutes as well as a range of non-governmental organisations which are concerned with developing countries and overseas aid. There may also be a number of companies which have no conflict of interest with the Crown Agents' business. However, it is too soon to name individuals. In saying that, I am trying to give the noble Lord, Lord Rea, a feel of what has happened since Second Reading.
Although this is not, and will not be, a trade sale, it is essential to ensure that full confidentiality for Crown Agents' clients is maintained throughout the process of transfer and thereafter. It would be quite wrong and
1344
unfair for the Crown Agents foundation were that not to be so. However, I shall continue to provide information to the House as the Bill progresses and as more information comes forward. The proposed memorandum and articles of association will be made available to Parliament, as will the information memorandum which is to be provided for prospective members of the foundation.
We have already discussed why it is not appropriate to introduce an affirmative resolution procedure into the Bill. It is for essentially the same reason that putting the foundation on the face of the Bill is unnecessary and, I believe, the wrong approach. It would be unprecedented and would add nothing of substance to the Government's proposals.
There is, however, a new provision in the proposed new clause which I was surprised to see. Subsection (3) would have the effect of creating a new quango. It is a different situation for the Opposition to be proposing an amendment which creates a new quango. Therefore, I was most gratified to note the confidence that the noble Lord, Lord Rea, has in the judgment of the Secretary of State in selecting foundation members. Of course, I tease, but it is worth teasing the noble Lord on that point.
That is not how the Government propose to proceed. I have said many times that this will be an independent foundation. I have greater confidence than the noble Lord, Lord Rea, in the integrity and judgment of the initial foundation members to organise themselves and to manage the Crown Agents' affairs without government intervention. But time will tell.
The noble Lord spoke also to Amendments Nos. 10 and 11. We agree that the Crown Agents' name is a most valuable asset and should be preserved for use by the ultimate owner of the successor company in the private sector. It is well known that it is our intention that this shall be a foundation. But the reasons why it is inappropriate to put the foundation on the face of the Bill in this way have been well rehearsed.
I have said that the foundation will be a company limited by guarantee. I also said that the memorandum and articles of association will commit the company to a clear social and developmental purpose. A few moments ago I said we would make those available to Parliament. Therefore, the foundation's membership will be entirely tied up on the basis of preserving the Crown Agents' developmental role.
I know that a number of Members of the Committee would like us to consider further the means to protect the nature of the foundation, including possible charitable status and government membership of the foundation. Were that to be so it would be only for a limited period of time.
The name "Crown Agents" does not necessarily imply a connection with the Government or the Crown, any more than having a nightly tipple at the Rose and Crown means that it has anything to do with someone called Rose or the Crown. The name "Crown Agents" embodies the traditional virtues of probity, impartiality and integrity, and is recognised worldwide. It is right that the name can be used by the ultimate owner of the successor company.

1345
I am at one with the noble Lord in having at heart the best interests of the Crown Agents. However, I hope that I can satisfy the Committee that the unique ethos of the Crown Agents will be preserved and enhanced by the route that the Government propose. Like my noble friend Baroness Elles, I do not believe that the provisions in Amendments Nos. 10 and 11 are necessary in legislation of this kind.
Perhaps I may say with regard to Amendment No. 13 that it was very interesting to read the Opposition's thoughts about what should be in the memorandum and articles of association, as set out in the proposed new schedule. Certainly, that will give us food for thought. But in view of all that I said on Second Reading and with what I have wearied your Lordships today, I really do not believe that we need paragraph (a) because I have said already that there will be no distribution of dividends to shareholders.
That also links up with the question of how surpluses would be used. I made it clear on Second Reading that they will be used solely in pursuit of the social and developmental objectives of the foundation. Those will be drawn up tightly in the memorandum of association. Therefore, I hope that the Committee will agree that Amendment No. 13 is really not necessary.
It will be for the members of the foundation to make sure that the objectives of which we have spoken are strictly observed. But to give a little more comfort to the noble Lord opposite, I should tell him that it is our intention to ensure that the objectives cannot be changed for a period of perhaps five years. I am open to suggestions about the length of time but I believe that that is the right way to start off the Crown Agents foundation.
It will not surprise the Committee to know that the provisions of paragraph (b) of Amendment No. 13 are not acceptable because they go too far by proposing that the sale of the successor company should be subject to parliamentary control for an undefined period in the future. That really is a classic example of the nanny state at work. The reason for the Bill is to give Crown Agents more freedom to exercise their commercial judgment and not to provide more apron strings. I am certainly not going to agree that they should have more apron strings.
With regard to paragraph (d), the successor company and its subsidiaries will be required to pay over the surpluses to the foundation appropriately, and the foundation will distribute them in accordance with the objectives. Therefore, any surpluses will be distributed by the foundation, and not the successor company.
I realise that the noble Lords, Lord Rea and Lord Redesdale, and in particular the noble Lord, Lord Judd, will be disappointed but I do not believe that this group of amendments is necessary at all and I urge the Committee to reject it.
Lord Rea: As always, the noble Baroness is very persuasive but she has not persuaded me or other Members on this side of the Committee that our amendments are not the way forward.
1346
It is not necessarily the intention that these amendments should be the final version of how the foundation should be described. They were put forward as an encouragement to the noble Baroness to come forward with what she believes to be better proposals which are more acceptable to the Government. In tabling the amendments, we were trying to demonstrate that these matters are not dealt with in the Bill as it stands.
When speaking to the first amendment the noble Baroness, Lady Elles, said—at least as we understood it—that the further elaboration of the Government's future intentions in that regard should come before Parliament. The passage of this Bill provides a golden opportunity for the Government to describe their future intentions either by agreeing to an amendment similar to that which we propose or by tabling their own amendments.
I do not believe that the noble Baroness is being logical when she describes what is to happen next but refuses to put that on the face of the Bill. She said that it is not intended to alter the objectives of the foundation for three years. But where do we see that on the face of the Bill? It may be that there will be a change and a less sympathetic Minister takes her place. That may mean that the Crown Agents will go in a very different direction indeed.
We shall not divide the Committee on this amendment. However, I ask the Minister earnestly to make proposals before Report stage so that we can have more than just a feel, as she said, for what is in her mind. We need to have evidence written on the face of the Bill which will provide some substance rather than statements which we have to take on trust. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.15 p.m.
Clause 2 [Provisions with respect to capital structure]:
Lord Judd Lord Judd moved Amendment No. 6:
Page 2, line 13, leave out subsection (2).
The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 8 and 9. The purpose of these amendments is to obtain a clearer indication of the Government's intentions than is presently contained in the Bill.
I am sure that the Minister will understand that on these Benches, we are not altogether convinced that there is a clear unanimity of view in the Government about the future of the Crown Agents. We believe that there are different schools of thought which are pursued quite actively. The Minister knows that we identify with her objectives. We have no doubts as to her good will and intentions. But we are worried about those who may not share those intentions. We beg her to see that everything for which we are arguing today aims to strengthen rather than undermine her position.
Our proposed amendments to Clause 2 remove all reference to Ministers imposing an assumed debt on the successor company. The Government are already claiming immediate repayment of the remainder of the

1347
debt which the Crown Agents assumed on their incorporation. We believe that Ministers should not saddle a new company with a further initial debt unless they can justify it and specify the sums involved at an early stage. This would be the appropriate time for them to do so.
Members of the Committee on all sides have already made clear their anxieties about the initial capital structure of the new company. They have also expressed deep anxieties about the security of the Crown Agents' staff and the pensions of past and present employees. When I re-read the Second Reading debate I was struck by the Minister's forceful proclamations of intention. One of the most moving and powerful passages in her remarks was about the courageous, loyal and outstanding service of Crown Agents' staff in the past. Therefore, that is not something that we should treat lightly. The anxiety which we wish to highlight in the amendments is in relation to the connection between pension funds and the capitalisation of the new company.
The most recent figures in the 1993 annual report value the assets of Crown Agents at just under £16 million. The same report gives the market value of the pension scheme's assets in March 1990 as nearly three times that figure; the surplus value today after pension liabilities are taken into account may be as much as twice the value of the Crown Agents themselves.
So we are bound to wonder which privatisation represents the greatest loss to the public purse, that of the Crown Agents' business or that of the Crown Agents' pension funds? I want to ask the Minister this direct question: is the provision for imposing an assumed debt intended to recoup the loss to the public purse of the value of the pension fund by extracting interest payments equivalent to the savings made by Crown Agents by virtue of their continuing pension contributions holiday? Indeed, if we want to give a fair wind to the enterprise in its new form—something in the interests of all parties—we must consider the implications of resources for necessary restructuring to meet the challenges ahead. I would be grateful if the Minister could answer my question in her reply. I would ask the Committee to consider whether that amounts to funding privatisation of Crown Agents from the pensions surplus that rightly belongs to the past and present staff of Crown Agents, in spite of the tightening up of pensions rules currently being considered by Parliament.
At the end of the day, what matters is this: the financial viability of the Crown Agents if they are removed from the public sector. While I fully appreciate the tremendous work being done by Crown Agents and their capacity to make the most of fresh, commercial opportunities, I am not as sanguine as the Minister about the certainty of the business making great profits in the private sector at the same time as adhering to the social and developmental objectives which the Minister so rightly underlined. We should not saddle them with any extra debt burdens if we are to oblige them to venture on to the risky path of operating in the open market with a well-defined social purpose.
There is one other related point which the Minister may wish to address while we are considering the question of initial capitalisation. At present, part of the remit of the Crown Agents is to obtain the best possible deal for clients in the use of their funds. That is the attraction of working through them. It is no doubt why this highly efficient business returns only a very modest profit and would not break even at all without the benefit of the pension contributions holiday to which I referred.
How will that change the foundation that the Minister envisages? Will the foundation she intends to create still be free to obtain the best available return for itself, or will it be obliged to obtain the best possible deal for its clients? I suggest that it cannot do both. Will the purpose and principles to be enshrined in its constitution include a duty to make only sufficient profit to fund its ongoing work, or will it be free to maximise its profits at the expense of those governments and agencies that it currently serves?
The amendment I wish to move to Clause 3 removes subsection (2) which prohibits the Foreign Secretary from directing the successor company to issue securities in the company to him once the company has ceased to be wholly owned by the Crown. The intention of the amendment is to explore just how the Government intend to maintain reserve powers in the foundation for a five-year period after privatisation of the successor company.
The Minister said that that is the Government's intention in order to ensure that the foundation continues to adhere over that short period to its initial commitment to developmental purposes and principles. Indeed, the noble Baroness re-emphasised that point during today's deliberations. The most obvious formula for doing so is for the Secretary of State to hold some type of golden share in the foundation and to be able to increase his shareholding if the foundation strays from the agreed path. Yet the subsection that we are considering appears to rule out that option. If the Government's intention is not to hold a golden share and retain the option of increasing it, how will they exercise the reserve powers to which the Minister referred?
Again, I should be grateful if the Minister would address that point in her reply. In another context, bearing in mind the firm strictures of the scrutiny committee, I hope that Members of the Committee will agree that the Bill should not refer to the point at which the successor company has ceased to be wholly owned by the Crown without first spelling out the details of how that transfer of ownership is to be conducted. I beg to move.
Lord Redesdale: I should like to speak to Amendment No. 7 which is really a probing amendment. I admit that the way the amendment is phrased would not suit legislation, but the aim is to raise a few questions that I hope the Minister will be able to answer. In fact, all the amendments in the group deal with the debt that the Crown Agents will inherit. Before we reach the next stage of the Bill's proceedings, could the Minister give an indication of the amount of interest to be paid by the Crown Agents as part of their penalty for

1349
realising their debt too early? It is rather unusual that the Crown Agents, which are being put into the private sector by the Government, should then suffer a penalty clause for actually having to repay the loan; indeed, they have to do so by law. That is the aim behind the suggested removal of lines 16 to 18 in Clause 2.
The amendment also puts forward the question of how the Crown Agents will pay the outstanding debt to the Consolidated Loans Fund. Is it the Minister's intention that the pension contributions paid by the Crown Agents, which are now being used for restructuring the company (as regards the pension contributions holiday) should be used to pay off the outstanding debt to the loans fund?
Is it the Minister's intention—and this is the heart of the amendment—that the successor company to the Crown Agents should have a financially firm basis? Does the noble Baroness envisage that money will flow from the Crown Agents over a long period of time to the Treasury, as I believe will most likely happen, or, most unusually, will money actually flow from the Treasury to the Crown Agents to start it up? I return to the point that was raised earlier; namely, that we are dealing with a slightly strange enabling Bill. I believe that it is an unusual enabling Bill. We are privatising a company which will produce no dividends for shareholders.
I have one further question to ask the Minister which is raised by the amendment. The Minister mentioned that the holding company may have charitable status. Can he give some indication of whether the members of the foundation—that is, those who are now keen to become such members—would also be keen to become charitable trustees? I believe, although perhaps the Minister will be able to give me some indication in this respect, that charitable trustees should manage their money in the way that would give the best return on the assets of the charity. That could come into conflict with the set aims of the foundation. I realise that I have asked the Minister many questions. However, that was the purpose behind the amendment. Unless those questions are answered, I fear that we may have to bring forward many more amendments at the next stage to clarify the position.
5.30 p.m.
The Viscount of Oxfuird: I, too, wish to speak to Amendment No. 7. During the Second Reading debate I referred to the remarks of my right honourable friend the Foreign Secretary, who described the Bill as "privatisation to preserve", and extended them to describe it as privatisation to preserve and enhance. I believe that emphasises that this is a rather special form of privatisation.
The new body created will not be the property of private shareholders like British Telecom or British Airways, with full commercial freedom to go to the market to seek additional equity or funding, but a foundation—a company limited by guarantee—which will be unable to distribute profits or assets to guarantee members, but equally—I repeat and re-emphasise this—
1350
will have no access to further equity capital. That is why we must be so careful to ensure that the new body starts off with an adequate balance sheet to see it through the many uncertainties which will inevitably lie ahead.
It is my view, however—which I should like to urge upon my noble friend—that the Bill should not demand the repayment of the commencing capital debt but should reinforce the balance sheet of the new body by converting that debt into permanent capital. If early repayment of the outstanding debt is forced upon the new body, and if further debt is imposed upon it, then that would weaken the balance sheet significantly. In transferring the Crown Agents' activities to an independent foundation we are doing nothing to alter their fundamental nature and should therefore not expect any dramatic changes in the level of profitability that the new body is likely to achieve. In making these points I realise that the Treasury has a real responsibility to protect the interests of the taxpayer.
In any organisation the Treasury role is usually a difficult and an unpopular one. But the role of the Treasury is only one of the factors that we in Parliament must consider and support. Very often there are wider issues that must also be considered. It is therefore vital that we should ensure that the new body is born with financial muscle, in the tangible form of a strong balance sheet, to be commercially viable.
It was Walter Bagehot who said in the 19th century,
"The Crown is, according to the saying, the `Fountain of Honour': but the Treasury is the 'Spring of Business"".
If we can achieve a strong financial base for the new foundation I am sure that it will succeed. If not, we risk seeing our fledgling body swept away and destroyed early in its young life. I very much hope that commercial reality will overcome the problems of short-term expediency and that we shall finish up with a new foundation with the strength and financial viability to sustain itself for the years to come. May the Treasury act as a spring.
Baroness Chalker of Wallasey: This is an interesting debate. I hope that I can set at rest the fears, worries and conjecture of the noble Lord, Lord Judd. I understand that he must probe these matters. However, I have made it quite clear on all occasions when we have discussed this—both privately and at Second Reading —how important the pension arrangements are to the Crown Agents' pensioners. I have told many who have asked that the past contribution made by the Crown Agents' pensioners is safe. The pension funds are held in trust and there is no way in which I believe there should be any reduction in the assets that are held by the trustees when the business transfers. What I think is perhaps being overlooked in the debate on these issues is that the Bill already provides for continuity of treatment of employment for pension purposes. That is most important and I am delighted that it is there on the face of the Bill. The Crown Agents have no plans to alter their present pension arrangements. The security of the trust-based schemes will be further protected by the provisions of the Pensions Bill which has now completed its passage through this Chamber.

1351
The other matter that the noble Lord was concerned about was the value of the pension surplus to the business in allowing a contributions holiday. Of course that will be taken into account in our decision to ensure value for money for the taxpayer from the transfer. But that does not mean that there will be some great raid on a pensions fund, as the noble Lord seemed to think. Of course he has at the back of his mind—as I well know from Second Reading and other exchanges—the situation that obtained towards the end of the 1970s before the Crown Agents Bill was made law in this country. Of course there were lessons that we learnt from that inappropriate capital structure. I can assure the noble Lord, Lord Redesdale, and my noble friend Lord Oxfuird that we are determined to give the new Crown Agents a fair start. That is most important. I would not be standing here today if I thought that this Bill would do anything different. I can agree with the noble Lord, Lord Judd, that the Crown Agents should not begin their new life overburdened by debt. We want the new company to have the capacity to invest, to grow and to produce benefits for the foundation. I would say to the noble Lord, Lord Redesdale, that I do not think that if the foundation decides to become a charity there would be any conflict of interest. We have already discussed the memorandum and articles of association that are likely to be those of the foundation, although they are not finalised yet, as the Committee is aware. But there is no way, given that the social and developmental purposes of this foundation will be written into the memorandum and articles, that that would be at variance with what charity trustees would expect from the foundation were it to be made a charity.
When looking at this question of dealing with debt, of course all governments have to consider questions of value for money for the taxpayer. But it would be premature to take a decision now on what the right balance would be. I certainly would not be in favour of enshrining this in legislation. As my noble friend Lord Oxfuird said, we want a strong balance sheet. We want to reinforce the position of the Crown Agents. Therefore I can see no worries such as have been alluded to by Members of the Committee in this short debate.
Certainly there are no arguments of principle as to why Crown Agents should not have debt in the balance sheet. Very few companies would be in that position. But the decision about all of this must really turn on the needs of the business. We are taking professional advice on this and indeed on the make-up of the new Crown Agents' capital. We shall certainly take the views of the current board fully into account in arriving at this decision. I think the Committee will have realised that the board has an influential voice already. Its members are certainly the closest to the business. While the Government as the owner would have to have the final say, there is no way that I shall not listen with the greatest of care to, and probably take the advice of, the Crown Agents.
A number of other detailed questions were asked. Perhaps I may say to the noble Lord, Lord Judd, in answer to his question about how the government would keep reserve powers, that in a sense he has misunderstood the clause. If it were thought necessary
1352
for there to be a golden share, it would be a government share in the foundation. The foundation is not dealt with in the Bill. The successor company is referred to in Clause 3; but that issue is not dealt with in detail. I shall look again at the point that the noble Lord made, and at my answer to him. I want to be sure that the foundation will have the right balance when it takes over from the Crown Agents. To make sure that that balance is right and the foundation gets a good start, we have to ensure that the issue is dealt with properly.
The noble Lord, Lord Redesdale, asked me some detailed questions. He asked what penalty there would be on the repayment of the National Loans Fund debt. I said at Second Reading that that would be at a fixed rate of interest. Certainly, the loan that remained in Crown Agents in 1989 was understood to be then and remains now at that fixed level of repayment. However, the actual amount will depend on the difference between the interest rate on Crown Agents' debt to the National Loans Fund and the National Loans Fund's lending rate on the day appointed for the vesting of the new company. Therefore I cannot be as definite as the noble Lord would like me to be at this point because I do not know when the vesting day will be. I shall not speculate on interest rate movements between now and the appointed day. However, I can say that if the vesting day was now, the penalty repayment would be approximately £200,000. I am advised that that is a rough indication of what the penalty would be.
I spoke at Second Reading about the possibility of charitable status. Nothing has changed since we discussed the issue at Second Reading. It is not a matter solely for the Government. It will be a matter for the foundation. I made that clear at that time. If the foundation wishes to seek registration as a charity, it must look very carefully at forms of regulation. That is a matter that we are looking into with advisers at present. However, nothing has changed since we last discussed the matter some weeks ago.
There are still plenty of answers to be sought. I shall certainly keep noble Lords advised on this particular issue as we proceed with the Bill.
In moving the amendment, the noble Lord said something which struck me as strange. Perhaps I misunderstood him. I do not believe that we could transfer the successor company or find new owners in the form of a foundation unless it were financially viable in the broadest sense. That is why I can give the assurance that my noble friend Lord Oxfuird sought. However, that is not something for which one can legislate. I believe that on reflection noble Lords will understand that. Obviously, viability will depend on the efforts of the management in taking advantage of the new opportunities which the change of status offers. That is a matter on which we shall have further discussions between now and Report stage.
Regarding Amendment No. 9, I have already said in answer to earlier debates that the period of government ownership of the successor company will be limited. That is why, as we have already discussed, the Secretary of State needs special powers over the company in connection with the vesting which takes place on the appointed day. It is not right that those powers should

1353
continue longer than necessary for the simple purpose of setting up the opening balance sheet of the company in a way which matches the assets and liabilities of Crown Agents. Therefore, I do not believe that Amendment No. 9 is necessary in any sense.
I do not believe that the Government should retain ownership of the successor company. The setting up of the foundation is a means to an end. We have already been over the arguments earlier today, and we certainly did so at Second Reading.
Members of the Committee may wonder why I am unwilling to accept their amendments; but they have said that they are probing amendments. I believe that Amendment No. 9 is intended to give the Secretary of State special rights in the successor company, even when it is not wholly owned by the Crown. I am not sure what that would achieve or what it was intended that it should achieve. It is unlikely to be acceptable to the new owners such as the foundation, which will have a wide range of membership.
I hope that I have quietened the fears and answered the questions of the Committee. I shall consider again the comments made by Members of the Committee. However, I do not believe that Amendments Nos. 6, 7 and 9 are necessary. Amendment No. 8 is of course consequential on Amendment No. 6.
I repeat that we are determined to give the new Crown Agents a fair start and to give the foundation a good start in order to produce benefits for the work that it does in line with its social and developmental purpose. I hope that in the light of what I have said the noble Lord, Lord Judd, will not press his amendment.
5.45 p.m.
Lord Judd: Of course I am grateful for the characteristically considerate way in which the Minister responded to the amendments. At the risk of tedious repetition—although I do not believe that this is a matter on which we can be tedious—I say again that on this side of the Chamber we have no doubts about the intentions and good will of the Minister. We take at face value all that she says she wants to see the Crown Agents go on to achieve and the role she wants to see them fulfil. However, as I have said in other debates today, that is not the point. The point is that we are not discussing the Minister; we are discussing the Government and the arrangements that are laid down in legislation concerning the future of the Crown Agents.
Perhaps I may deal briefly with some of the points that have been raised in this interesting exchange. First, all the members of staff will be immensely reassured and will place great weight on the categoric assurance that their pension fund is safe and there is no question of it being interfered with in any way. That is certainly reassuring news for them, although it could be argued that that could not have happened anyway because of new legislation. It was good to hear the Minister emphasise that point.
On the question of the golden share and the foundation, I hope that the Minister will consider not only the discussion on this particular set of amendments
1354
but the discussion in general before Report stage. She is a very fair-minded person and will accept that there is at least some room for misunderstanding. There may be, however unintentional, some ambiguity about what she has said today. On the one hand, what she said today will be taken as an attempt on her part to reassure everyone that for the next five years the Government will keep a very firm controlling hand on the tiller, or at least will be ready to take the tiller, to ensure that matters are going in the direction intended. However, she seems to have said that that reassurance is regarding the successor company while arrangements are made for the foundation to take over. That is not quite the same message. From the Minister's other observations, people may have received the message that the Government are intending to ensure that those five years—
Baroness Chalker of Wallasey: I apologise to the noble Lord for intervening but I wish to make sure that he and I understand exactly the same point.
My comment about the following five years concerns the fact that there should be no change in the memorandum and articles of the foundation—the objectives. That may be the area in which the Government should have that reserve, But I do not believe that any foundation would be terribly happy, having taken the successor company into the foundation, to have the Government watching over it at every turn. That would not be much better than the current situation which we seek to improve.
When we spoke of a five-year watching brief over the memorandum and articles of association of the foundation, or indeed the specific social and developmental objectives, that was the bottom line. I do not believe that it would be right for the Government to interfere with the work of the foundation, even though they may be one of the members of the foundation in the future. However, I shall consider carefully all our debates and make sure that that factor is clear beyond peradventure.
Lord Judd: I thank the Minister for that observation. However, perhaps I may ask again. It is always good for all of us to read what we said in Hansard, albeit somewhat inhibiting. However, to read what she said will increase anxiety. She states, on the one hand, this and, on the other hand, that. She states that, on the one hand, the Government will keep an eye on things and make sure that everything goes the intended way for at least five years; but, on the other hand, the Government are anxious not to spell out or reveal any specific arrangements to ensure that that is so. We who are unashamedly doubting Thomases want not only to hear the intention but to see the mechanism that will be available. The Minister has said nothing that has reassured us on that.
Regarding the pension fund and the contributions holiday, the Minister skirted round a problem which causes anxiety. In my informal contacts with Crown Agents, I find it interesting that at all levels of senior management and staff there is a shared view that they want a strong future together. There seems to be an enlightened, shared view that one of the advantages of the contributions holiday is that resources were available

1355
which could put the enterprise in a strong position to face the future with regard to finance, necessary restructuring, and so on. The anxiety is that any undue financial obligations which the new arrangements inherit will be at the expense of such essential operation. Therefore it is important for the Crown Agents—I am sure that the Minister will consider the issue; I hope that she will come back with convincing observations at Report stage—to have strong reassurance on that point. I detect that there is real anxiety on that score.
My last point relates to the issue of charitable status. The Minister said today that that would be up to the foundation to decide. I am sure that the Committee realises that that factor is central to what disturbs us. There is a big difference between being a charity and not being a charity. If we wish to know what we are making possible for the future of the Crown Agents, this is the time at which we should be clear as to whether the body will be a charity. It has tremendous bearing on what we do now.
To state that the Government will have available a guiding hand on the tiller if things begin to go off course but also that it will be up to the foundation to decide whether it will be a charity seems to be having all things all ways. Some clarification on the point at Report stage will be immensely helpful.
I conclude by saying that it is always good to have exchanges with the Minister. I enjoy them more when they relate to issues on which we broadly see eye to eye—the challenges of humanitarian assistance and development, and so on. I find it uncomfortable when I am not reassured by the position that she takes. In a complex way, I find myself more uncomfortable because I am usually reassured by her. In the exchanges between the noble Lord, Lord Rea, and the Minister, I felt that the strange element in the relationship was that she was very persuasive yet she did not persuade. It was an interesting contrast between style and substance. That aspect slightly worries us on this side of the House. We hope that we can help to persuade the Minister by putting forward arguments and suggestions regarding arrangements which underwrite the observations that she makes.
I hope that some way down the road we shall not be saying, "Here we are with another Minister and a foundation that we did not envisage in those exchanges in March 1995. And if only we and the Minister, who shared so much, had at that stage buttoned up the position, we would not be in this situation". I hope that we shall not face such a predicament.
I have heard what the Minister said; we shall consider it hard. I hope that she will consider carefully what we said. We may return to some of the issues at Report stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 7 and 8 not moved.]
Clause 2 agreed to.
Clause 3 [Initial Government holding in the successor company]:
[Amendment No. 9 not moved.]
Clause 3 agreed to.
Clauses 4 and 5 agreed to.
Clause 6 [Use of "Crown Agents" as part of company name]:
[Amendments Nos. 10 and 11 not moved.]
Clause 6 agreed to.
Clauses 7 to 12 agreed to.
Clause 13 [Consequential amendments and repeals]:
[Amendment No. 12 not moved.]
Clause 13 agreed to.
Remaining clauses agreed to.
Schedule 1 agreed to.
[Amendment No. 13 not moved.]
Remaining schedule agreed to.
House resumed: Bill reported without amendment.

Royal Assent
The Deputy Speaker (Lord Skelmersdale): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:
Consolidated Fund Act,
South Africa Act.

Sugar Regime: Select Committee Report
6 p.m.
Lord Middleton Lord Middleton rose to move, That this House takes note of the Report of the European Communities Committee on the Reform of the EC Sugar Regime (Fourth Report, HL Paper 28).
The noble Lord said: My Lords, the sugar regime within the common agricultural policy remains virtually unchanged since it was introduced 27 years ago. The reforms which are considered in our report are those proposed by the Commission and, as drafted, will have the effect only of ensuring that the Community can perform its obligations under the GATT agreement. The proposals were not finalised until late November last year and the Council has given them only preliminary consideration. Sub-committee D's inquiry was carried out so that our report on the regime and on the reform proposals could be made before decisions were taken in Council.
During our inquiry we had the advantage of the expert assistance of Mr. Ian Sturgess of the Department of Land Economy at Cambridge, as our specialist adviser. Our thanks are due to the many witnesses who gave evidence, both oral and written, and I am grateful for the highly professional work of our Clerk, Mr. Mitchell, and for the support of my colleagues.
It will be apparent from our conclusions that we consider the Commission's proposals to be inadequate. The regime is overdue for reform, with or without the GATT agreement. The fact that these GATT-driven proposed changes are the minimum necessary demonstrates once again the painfully slow path towards CAP reform being taken by the Community.
The details of the existing sugar regime are quite complicated and are set out in Part 2 of the report. The main features are: price setting, import levies, production quotas and export refunds. Sugar within the Community is produced from beet grown under a system of national quotas. Annual output of white sugar under the system is about 16.2 million tonnes. In the UK production and marketing are organised by British Sugar, which allocates the national quota among growers and owns the refineries. The regime also undertakes under the Sugar Protocol of the Lomé Convention to buy and import, levy free and at a guaranteed price, about 1.3 million tonnes of raw cane sugar from certain African, Caribbean and Pacific states and India. About 85 per cent. of the ACP quota is refined in the UK by Tate & Lyle.
Under the regime, market prices are supported by intervention prices which are set both for raw cane sugar and for white beet sugar at a level normally well above world prices. Intervention prices are maintained by export restitutions.
Surplus sugar in the Community has not been stored, thereby creating extensive sugar mountains, but it has been dumped onto the world market at prices subsidised by the producers themselves by means of levies. The regime is therefore considered to have been budget-neutral, which explains the lack of pressure for reform in contrast to that on the other CAP regulated commodities, such as milk, beef, grain, oil and protein Crops.
There is something to be said for a system which makes relatively small demands on the Community budget, which has guaranteed a regular supply to consumers, which has made the sugar beet crop one of the most profitable for growers and which has maintained a stable and prosperous countryside in many parts of the Community.
In the UK both beet growing and processing have become very efficient and productive in recent years. Much money has been invested in the beet industry and employment created, both directly and in the ancillary industries.
Raw cane sugar imports have provided an assured market to certain third world countries whose economies might collapse without that outlet. Where we have a high level of investment in a thriving and efficient industry—as is certainly the case in the UK—we must have very good reasons for recommending policies which might upset a complex industrial structure. We have therefore to look at the effect of the present sugar regime.
First, the quota allocation has been more than generous, so that, with the exception of Portugal and the UK, all member states have quotas which meet or exceed the amount they consume. Taking account of cane imports, the Community currently produces some 17.8 million tonnes of which it consumes 11.9 million tonnes. The balance of 5.9 million tonnes is for export, the greater part of which is subsidised. This dumping amounts to more than 25 per cent. of the whole of the world free market in sugar.
Secondly, over-production and subsidised exports from the Community have a depressing effect on the world sugar market. Estimates vary between a 5 per cent. and a 20 per cent. lowering effect on world prices, which is not helpful to the economies of cane sugar-producing countries outside the Lomé Convention.
Thirdly, sugar quotas are handed out to member states irrespective of whether they are geologically or climatically suited to beet growing. Despite national grant aids, Italy and Spain can barely meet their national quotas. So the system does little to encourage efficient production.
Fourthly, the EU intervention price for sugar over the past 15 years has on average been about double the world price. Consumers in the Community therefore pay very dearly for stable prices and secure supplies. For industrial sugar users, high input prices mean reduced competitiveness.
Fifthly, the Community's beet price paid to producers has to be high enough to pay for levies which go to pay for the export restitutions. In effect, therefore, it is the consumers who pay ultimately for the over-production and subsequent dumping on the world market.
Sixthly, it is arguable whether it is beneficial in the long run by such means as the Lomé Convention artificially to stimulate production in the ACP countries, thereby locking them into cane growing and making them economically dependent on one crop.
Lastly, enlargement of the EU to include the central and eastern European countries is high on the Community's agenda. In our October debate on our report on trade with eastern Europe it was clear that any strategy for enlargement that was not based on thorough reform of the CAP would be futile. It would be quite unrealistic to suppose that the EU's current sugar regime, even modified by the proposals under review, could be extended to cover the large potential beet production in Eastern Europe.
For all those reasons, there is a powerful case for reform of the sugar regime. The questions, therefore, are: how far do the Commission's proposals satisfy the Community's obligations under GATT? How far do they go to achieve the kind of radical reform that we have so often called for, now and in the past? Our report concludes that the answer to the first question is: most of the way; the answer to the second is: not at all.
The 1994 GATT agreement on agriculture covers the period 1995 to 2000 and does not challenge the system of quotas and guaranteed prices. The Community's obligations under the agreement fall under three headings: domestic support; market access; and export competition. Under all these headings the obligations are already met, or will be met, without difficulty.
However, the GATT requirement that the present variable import levy will be replaced by a tariff, to be reduced over five years, will have the effect of drawing the EU sugar market more closely to the world market. This could mean that, towards the year 2000, some Community countries will be obliged to import, or the Community will have to reduce its support prices. The Commission proposes that provision should be made to

1359
enable beet quota levels to be reduced year by year to stay within the GATT commitments. But annual adjustments will not provide a sound base for long-term investment in the industry.
In addition, the proposals are that storage payments on what is known as C sugar should be discontinued; that preferential imports of raw cane sugar to Community refineries should be guaranteed; and, lastly, that national aids to the beet sector in Spain, Germany and north Italy should be phased out while allowing a 50 per cent. reduction only for the rest of Italy.
We conclude that, while we endorse the last three of the Commission's proposals—except for the concession to Italy—we take the view that the proposals, as a package, amount to no more than minor modifications to the existing regime. They amount to the bare minimum that is necessary to perform the EU's GATT obligations up to the year 2000. The opportunity to reform the sugar regime has not been seized. As we say in Part 5 of the report, which summarises the opinion of the committee, by continuing to insulate prices within the EU from the forces of the world market, the regime is a major source of instability in world prices. The quota reductions proposed by the Commission will not come near the 20 per cent. reduction, which would still leave the EU self-sufficient in sugar. There are no specific proposals for a reduction in export subsidies, and no concessions are made to the increasing demand for sugar substitutes.
Most importantly, consumer interests appear to be totally disregarded and the challenge presented by the future accession of the CEE countries is ignored. As we say at the end of our report, the adverse effects of the sugar regime on consumers and users, on world trade and on economic efficiency should be tackled by phased price cuts and with, where appropriate, phased compensation to growers. Substantial cuts should be made in the quotas, so as to penalise high-cost production, and they should be planned now, before they become inevitable. We also put forward the suggestion that, while a quota system persists, serious consideration should be given to mechanisms for making the quotas tradable among growers of sugar beet.
I am sorry to end on a rather sour note, by saying that my committee found the Commission's arguments for justifying inertia to be unconvincing and unsubstantiated. I beg to move.
Moved, That this House takes note of the Report of the European Communities Committee on the Reform of the EC Sugar Regime (Fourth Report, HL Paper 28).—(Lord Middleton.)
6.13 p.m.
Lord Mottistone: My Lords, I should like to thank my noble friend Lord Middleton for so clearly introducing the report and for so clearly explaining the problem that the European Community sugar policy presents both to other producers in the world and to its own consumers. I have to declare an interest as a parliamentary adviser to the Biscuit, Cake, Chocolate & Confectionery Alliance, which in its turn advises me and
1360
which is a leading member of the United Kingdom Industrial Sugar Users Group, which gave important evidence to Sub-committee D.
It was my privilege to be a member of that sub-committee from the mid-1970s to the mid-1980s. During that time one of our important reports was on EC sugar policy, in March 1980. I am delighted to see that the noble Lord, Lord Mackie of Benshie, is to speak later, because he was also a member of that sub-committee at the time in question. This time I hope that the noble Lord agrees with much of what I have to say.
Our recommendations at that time, which included a reduction in prices and a reduction in production, were very similar to those of today-15 years later. In 1980, the Community was also castigated for a deliberate policy of high prices towards other sugar exporters, which it was stated appeared to be one of selfishness and cynicism. My noble friend Lord Middleton did not actually use those words, but much of what he said would endorse that earlier report. Indeed, that is reflected in paragraph 75 of the report that we are now debating.
Turning to the report, it is particularly worth noting the written part of the Tate & Lyle evidence on pages 34 and 35 of the Minutes of Evidence. It commits it, on the public record, to favouring a market-oriented reform of the regime and defines the way in which it believes such a reform can be achieved without damaging its competitive position. Clearly Tate & Lyle would not say that if it thought that the reform would adversely affect the market for ACP sugar producers.
On another point, I understand that it is suggested that the users are benefiting by the price stability that is provided by the regime. The UK (UKISUG) representatives gave very effective answers to that in answering questions Nos. 190 to 197 on pages 58 and 59 of the Minutes of Evidence.
The sub-committee's conclusions are eminently sensible, and are consistent with a long series of reports on sugar in the Community by the Court of Auditors; in academic studies by Professor Tangermann and Professor Marsh; earlier opinions of the European Parliament; and the last UK Monopolies and Mergers Commission report, to name but a few. The real problem is to discover how we convert such a mass of common sense into something which is politically practicable.
The weight of lobbying on behalf of the status quo is indeed impressive. Clearly, the very facts that only 4 per cent. of arable farmers have a sugar quota and that having such a quota is so profitable mean that there are very prosperous farmers sharing and defending the privileged position that the regime provides for them. A number of the major European beet sugar processors are farmers' co-operatives—most notably, SudZucker, which owns Sucreries Tirlemont, as well as over a third of German production, and has been vertically integrating by buying German sugar, confectionery and ice-cream manufacturers. Such firms are unlikely to take a political line that would discomfit their members. Having said that, however, it is surprising that the other 96 per cent. of arable farmers are not vigorously demanding their share of this bonanza.

1361
Similarly, it is surprising that countries that would gain substantially from liberalisation, such as France, Belgium and the Netherlands, have been so complacent. Clearly, if farmers had property rights in their quotas and could sell these across national boundaries, as the sub-committee proposes, these countries and the UK would tend to accrue more quota since they are the sensible places to grow sugar beet in the European Union, and their farming industries are, in general, appropriately capitalised and have appropriately sized farms. One has to wonder at their reluctance actively to seek reform. Your Lordships may know that the Budget Committee of the European Parliament is seeking to include, in its Amendments Nos. 1 to 4, in the parliament's Agricultural Committee's opinion a proposal that the new regime should be for two years rather than for six years. I suggest that this is an excellent opportunity to keep the campaign for sugar reform going.
I strongly support that proposal. It would indeed be helpful if Her Majesty's Government were to agree to take up this point if and when the parliament carries it. Can my noble friend the Minister tell us whether our Government will take any action to support those amendments of the European Parliament and have plans for action thereafter?
In conclusion, I congratulate the Select Committee and its Sub-committee D on once again providing an excellent report. Above all, I pray—and I mean that I pray, because there does not seem to be any other way of achieving it—that the summary in paragraph 80 of the report becomes a reality well before the end of this century.
6.20 p.m.
Viscount Waverley: My Lords, I also should like to be associated with previous remarks in thanking the noble Lord, Lord Middleton, and his committee. Sugar is an important subject. There are many interested parties to the regime, not least Tate & Lyle. But I believe that the committee and the Minister understand their position. The committee accepted a written submission from the ACP London Sugar Group but did not examine the ACP issues in any great detail. I regret that. I believe that it might be helpful to address the concerns of ACP sugar producers. I am chairman of the Lomé Parliamentary Group and am committed to the welfare of our friends in the developing world.
Sugar producers are often responsible for the greater part of the foreign currency earnings of their countries. I need not remind your Lordships that those nations in most cases do not have a lot going for them in terms of revenues. We in Europe, as good citizens of the world, must ensure that equitable arrangements are entered into. Life can be hard when earnings from sugar are affected. If we abuse the trading advantage, it will come back to haunt the United Kingdom and our European partners.
There are two key issues with the ACP: agree additional quantities and determine what minimum price will be paid. However, price is the real issue. The
1362
European Union needs as much ACP sugar as possible but seeks to acquire those additional quantities at what may be unrealistic rates. In ACP countries there is a clear need for stable export earnings, which in any case have been substantially eroded since 1986. New arrangements are overdue. I urge HMG to use their all within Community institutions to secure additional access for the ACP at the full domestic rate. The UK is by far the most important market for ACP sugar, although France, Finland and Portugal are also significant customers.
It is appropriate to remind your Lordships that the protocol was signed when world market prices were between two or three times higher than today's equivalent. The protocol clearly states that:
"the Community would undertake for an indefinite period to purchase and import specific quantities of cane sugar which originate in the ACP states and which these states undertake to deliver, at a price within the range of prices applicable within the Community".
The sugar protocol is about trade, not aid. It is an equitable trade instrument based on a long-standing mutual interdependence between ACP suppliers, the cane sugar refiners and European consumers. I submit that the price at which sugar is traded under the protocol is not a "privileged price", as the report concluded. It is based on the same price as we afford to our own farmers. Indeed, the amount is less because the price of sugar in the Community is ex-factory for EU producers, including the French overseas departments.
A key consideration is that ACP producers have to bear the costs of inland and ocean freight in transporting the sugar to the European markets. The socio-economic importance of the sugar protocol to the ACP sugar producers is immense. The sugar industry directly employs 35 per cent. of the active working population in Swaziland, 14 per cent. in Mauritius and more than 12 per cent. in Fiji. Sugar accounts for 97 per cent. of agricultural export earnings in Barbados, 98 per cent. in Fiji and 74 per cent. in Swaziland; and the sugar industry represents 30 per cent. of the total GDP of Guyana.
The report concluded that it is not in the long-term interests of the ACP to put all their eggs in one sugar basket. The ACP sugar industries understand that and continue to explore further possibilities for diversification. However, nothing is as suitable as growing sugar cane in the fragile ecosystems of the ACP countries.
European consumers pay a fair price for sugar and European taxpayers pay a relatively small and, more importantly, a very stable amount of money to run the policy. The total quantity agreed under the sugar protocol has not changed since 1974, although the refiners' needs have increased. There now exists in the EU a sizeable deficit of raw cane sugar for refining, mainly in Portugal. Since 1984 the ACP have asked that the import arrangements for Portugal, especially as regards the four traditional ACP suppliers to the Portuguese market, be included in the sugar protocol or a similar arrangement. But to date, despite repeated

1363
requests and joint declarations, the arrangements for Portugal have remained, in the vernacular, "transitional".
The ACP is not seeking to supply additional sugar for which there is no market or no need. The need has been clearly identified in the four refining member states, as explained in the Commission's proposals. Furthermore, we should recognise that the ACP is not trying to elbow aside domestic sugar production. It has only asked to supply what cannot be produced domestically, including the raw cane sugar produced in French overseas departments, although there is no doubt that the ACP states have more than enough sugar available fully to meet the required amount. There is now a very great advantage in GATT for European sugarbeet growers and processors to import as much ACP sugar as possible. The Minister will be aware of the technical reasons for that, arising from the agreements reached during the Uruguay Round of multilateral trade negotiations.
Just as the EU needs ACP sugar, there is a clear need in those countries for a stable level of export earnings from sugar, and those earnings have been eroded substantially since 1986. The new arrangements are now well overdue. I urge HMG to use the full weight of their power within the Community institutions to secure the additional access for the ACP at the full domestic price.
To conclude, I have two questions for the Minister. I have not given advance warning; so I would, of course, accept a written reply, although an answer now would be helpful. First, what is the criteria that the Commission will adopt in setting the price for the additional quantities? Secondly, will the Minister confirm that compensation will be paid to ACP sugar cane producers and associated industries if the Commission, in line with HMG policy, cuts sugar prices by 12 per cent. in the next three years?
6.30 p.m.
Lord Reay: My Lords, I strongly commend the report to anyone who happens to require an introduction to the arcane subject of the European Community's sugar regime. It provides a lucid exposition of the matter, which owes much to the masterly grasp of the subject possessed by our specialist adviser, Mr. Sturgess, of the Department of Land Economy at Cambridge University.
The European Community's sugar policy is one—I was going to say of hideous complexity; but in fact it possesses a certain beauty, so intricate is it; so balanced between so many interests; so discreet in its operation and so expensive in the elements from which it is constructed. As one discovers this extraordinary bureaucratic artefact, like some antique clock still in working order, one is tempted to say, "If it works, why fix it?" But, like an antique clock, while it can with loving care and expensive maintenance be made to function, cheaper and more efficient alternatives are today available.
In an era of CAP reform and of pressures for further reform, the European Community's sugar regime is an anomaly. Sugar has already become much more profitable than other crops, at the consumers' expense,
1364
with farmers, we heard, queueing up to apply for quota. The European Community consumer pays twice the world price for sugar and perhaps two-thirds above what he or she would pay if European Community and world prices were allowed to find their natural relationship. Such an expensive regime at once provokes competition and requires it to be suppressed. Import levies keep out imports. The development of alternative sweeteners is precluded by extending the quota regime. That is a particularly pernicious, even obscurantist, development, which prevents the consumer from benefiting from trends towards substitutes—perhaps healthier substitutes—and penalises European Community manufacturers in world markets. It is indeed one of the mysteries of the regime that it attracts so little odium.
As our report shows, despite sometime claims by the regime's protagonists that it is budget neutral, in fact it costs the budget around 1 billion ecu per year. But the bulk of the costs—including the costs of the export refund levy raised on B quota producers—are met by the consumer, not the taxpayer, as my noble friend Lord Middleton explained. Community sugar exports, of which over half are subsidised, now account for about a quarter of the world market. That depresses the world price and hence the incomes of farmers in other parts of the world, in particular developing countries, including ACP producers.
The solution to that waste of resources is a gradual reduction in support prices. If that were carried far enough the need for quotas would disappear. That is the route the Government would like to go down and I hope that they will not be pushed into abandoning that course prematurely because of insufficient support in the Council at the outset. The Commission proposes quota reductions as and when required to enable the Community to meet its agreed GATT commitments. As the government letter of response to the report notes,
"a mechanism which would distribute quota cuts fairly and rationally between member states is very difficult to devise".
There are in fact strong arguments for excluding the United Kingdom from the first round of quota cuts. The UK is one of the few member states whose B quota is set as low as 10 per cent. of its A quota, yet whose beet sugar industry's efficiency, measured by yield, is today among the top four in the Community. But to demand exemption when sacrifices all round are being sought is of course not an easy diplomatic task. Moreover, Tate & Lyle, who would much prefer, I understand, an unregulated market in which cane was able to compete freely with beet, is adamant that the Commission's proposals unfairly penalise cane at the expense of beet and threaten cane refiners' supplies. The Government will need to press that case too.
Where I do not entirely go along with the committee is in the hopes it pins on making quotas transferable. I have objections on two grounds. First, by creating capital value, it would reinforce a vested interest. Secondly, I doubt that it is politically practicable. It would be a major innovation to allocate quotas to farmers rather than, as at present, to member states and, through member states, to processors. And I have difficulty in seeing governments agreeing to the sale of quotas across member states' boundaries; yet only if

1365
such transnational transfers are allowed can any serious improvement in efficiency be attained. It is between member states that levels of efficiency vary dramatically, not within member states. Within member states, processors must to some extent be free to offer quotas to the more efficient farmers. I should welcome the Minister's views on that subject, in particular his opinion on whether internationally tradeable quotas are feasible or even in what, or any, circumstances in his view desirable. I shall also listen closely to what my noble friend Lord Marlesford says, who, judging by the forceful case he put in committee, is likely to disagree with what I say.
The committee and the Government are, I believe, right to be much disappointed with the Commission's proposals. As the Government said in their reply,
"inertia will send the wrong signals to producers",
and,
"do nothing to pave the way for the changes that the accession of Central and East European States would require".
Or, as the committee put it in paragraph 61,
"The next 3-4 years offer a breathing space but unless the Community takes advantage of this by anticipating change it will again be defending a highly protective regime against further demands for liberalization".
The Government have a right to be proud of the role that they played in securing the reforms in the CAP which have already been achieved. I am inclined to agree with what the Minister of Agriculture said earlier this week in another place when he suggested that the supertanker (the CAP) has begun very slowly to respond to a change in course. But, as the Government are the first to recognise, nothing like enough has been achieved. The Government must persevere on all fronts, all guns blazing. They have right firmly on their side; and history; and Sub-Committee D.
6.37 p.m.
Lord Marlesford: My Lords, sugar is no novice to political controversy. I believe that Benjamin Disraeli, early in his career, once started a speech in another place with the words, "Sugar, Mr. Speaker", and was howled down and unable to continue. When I listened to the noble Viscount, Lord Waverley, with his most fluent advocacy of the cause of the cane sugar producers, I remembered reading not so many years ago that wonderful history of the Caribbean by Dr. Eric Williams in which he describes how the cane sugar lobby—the West Indies sugar lobby—was the strongest lobby there had ever been in the House of Commons, much stronger than the National Union of Mineworkers ever became. He also advises us that he discovered that in the early part of the 19th century, when the German chemists were working on the possibility of beet replacing cane as an economic source, the sugar lobby, pace the British Government, tried to bribe the German chemists to falsify their results. History tells us that it was an offer that was contemptuously discarded—obviously not an efficient effort at bribery.
Now we are faced with looking once again at a part of the common agricultural policy, and once again we are reminded that in so many ways the CAP is, as the
1366
Chinese once said of Hong Kong, a problem left over from history. There is a tremendous reluctance, as Marx used to teach us, that anyone should ever disturb a cosy status quo which they have enjoyed or are enjoying. What we have tried in an extremely modest way to do is to look a little bit at changes which may be able to be made.
I do not think there is ever any point in trying to reform the CAP by saying what it ought to be. We must always start from where it is and see whether we can, step by step, make some marginal improvements to it. I should like to focus—in this, my noble friend Lord Reay will not be surprised, although I hope that he will not be disappointed by what I say—on the recommendations in paragraph 78 of the sub-committee's report, which proposes that while sugar beet quotas exist they should be the transferable property of growers. That point was referred to by my noble friend Lord Middleton at the end of his speech and also by my noble friend Lord Mottistone, I felt with some approval. I shall take a few moments to put to your Lordships, and particularly to my noble friend the Minister, a little of the thinking, of some of us at least, behind the objective.
Presumably, one of the prime objects of CAP reform must be to reduce the cost of that policy to the consumer and to the taxpayer. That must mean that agriculture should be as efficient as possible, which means that subsidies through support prices should be as low as possible. That must mean that gradually the higher cost producers, and therefore those who are least efficient, should give way to the lower cost producers and those who are more efficient. Obviously—this is the basis of the CAP—that must involve a fair deal for the less efficient producers; those who might lose out. They must be compensated. Indeed, the whole CAP is based on compensating people, largely by letting them continue to do things that it is not economic for them to do.
If one starts from the proposition that what we do not want is further burdens on the taxpayer and the consumer, it is obvious that that compensation should not come directly from the taxpayer or the consumer. It should come from the more efficient producers. That is why I should like to see a system set up whereby the efficient producers paid the less efficient producers for selling them the right to produce. The great precedent for this, where it has worked really well, is in the case of milk quotas in this country.
Milk quotas were created from nothing when it was decided that it was necessary to limit milk production. Perhaps here I should declare an interest because, although I am a farmer who does not grow sugar beet, I am a farmer who produces milk. Milk quotas were created from nothing. They are an asset of considerable financial magnitude. Often the value of the milk quota is greater than the value of the land. An economist would ask the question—I would not presume to answer it: I wish the noble Lord, Lord Peston, were here to do so, but there are probably other noble Lords who can—who has actually created that financial asset; from whose pocket has it come? I would suggest that it is the same as the story of the Englishman who goes on holiday to a remote island where he is much esteemed.

1367
By the end of his holiday he writes a cheque to pay for everything that he has enjoyed. The cheque is treasured and passed from hand to hand but never cashed. The question is, "Who paid for the Englishman's holiday?" The answer is that no one pays. It is a very efficient way of creating an asset as a means of getting greater economic efficiency. Of course, had milk quotas been produced and not been made transferable, production would have been frozen into an inefficient and undesirable pattern. So transferability and tradability were absolutely crucial. The system has worked well.
We have already had a response from my right honourable friend the Minister of Agriculture to the sub-committee's report. It was a little lukewarm to our proposal for transferability of sugar beet quotas. First, there is a vested interest. Currently, the sugar beet quotas are effectively the property of the sugar producers. It is they who allocate to the farmers the right to produce sugar. It is not something which is of any particular value to them at the moment but they have a relatively arbitrary right, although in practice it continues to go to those who occupy that piece of land, to decide who produces sugar. I would suggest that it is perfectly practical to transfer that right, without disadvantaging the sugar refiners, to the sugar beet growers.
My right honourable friend said:
"there is nothing in the existing Community rules to prevent a sugar processor, subject to any agreement he may have concluded with growers, from allocating contracts in such a way as to maximize efficiency".
That suggests—perhaps my noble friend will enlighten us—that it would be technically feasible and would not be against Community rules to do it. My right honourable friend the Minister also said:
"To negotiate the necessary change in Community rules on quota allocation would obviously be difficult".
That is a challenge to the Government: any reform of the CAP is axiomatically difficult, My right honourable friend went on to make the following comment. This is a little more depressing. I have such high regard for my right honourable friend. It is so uncharacteristic that I almost wonder whether he wrote the words himself. He said:
"Even if there were a prospect of achieving it, we incline to the view that assigning quotas to growers instead of (or in addition to) processors might increase the difficulty of doing so. It might also make more difficult the eventual abolition of the quota system, if that seemed obtainable at some future date".
That is a statement where the ideal is seen as the enemy of the practical. It is saying: how should the sugar regime —how should the CAP even—be reformed overall?—and do not let us take any step which might possibly hazard that. That is not an approach to reform. I am saying that the more efficient we can make agricultural production within the CAP the lower, by definition, the price we have to pay to the producers and the lower, therefore, the subsidy; and in many cases the better it will be for the noble Viscount and his interest.
1368
I conclude by saying that I hope that the Government will take this seriously and perhaps move on to discussing the matter at least with their colleagues in Europe.
6.48 p.m.
Lord Mackie of Benshie: My Lords, I have enjoyed the debate, or parts of it, so far. I enjoyed the speech of the noble Lord, Lord Marlesford. He talked a certain amount of sense. I should like to open my remarks by congratulating the noble Lord, Lord Middleton, on his report. It bears all the signs of his long experience; the old fox—I beg his pardon—the old hand at work, taking in the practicalities of the political position, which is essential.
I take a slightly different standpoint from the noble Lord, Lord Mottistone, who has been advocating for years the rights of that wonderful, altruistic body, the manufacturers of biscuits and anything which uses sugar. To hear him speak, one would think that farmers were the most appalling profiteers, rolling in luxury, while the poor manufacturers were having a terrible time doing their duty—
Lord Mottistone: My Lords, not all; 4 per cent. of them.
Lord Mackie of Benshie: My Lords, however, I believe that the original purpose of the CAP was right and proper. It provided a degree of security in order to secure the production that we needed for food security in the European Community, as it was then. What has happened is that as time has gone by the market has been forgotten. I believe in the market, but I also believe in some form of protection for the primary producer who normally cannot organise himself in the way that the manufacturer and the buyer of his produce can. What has been wrong is that, as the European Community has grown, the economic facts have been ignored and for political reasons time and again agriculture Ministers have ignored the advice of the Commission and put up prices to a level where we have production on a scale which has done great harm to the producers in New Zealand, Australia and elsewhere.
I still believe in protection for primary producers, but in a sensible way and not in the way it has gone on in the European Union to date. We are now in a position where something must be done about it because of the GATT reforms and the enormous cost of paying the large subsidies required.
We have also got into a situation where the social effects of removing subsidies altogether would be devastating in many areas. To that end, the report has very sensibly advocated that compensation be paid where that is going to occur. I believe that farmers in this country have a very good case for holding on to the quota they have. We have to make the quota system work. That means a constant effort by Her Majesty's Government and other sensible people to get the quota cut to a size where we no longer export subsidised sugar onto the market. Twenty five per cent. of world trade comes from the European Community and, as has been

1369
said already, that has done great harm to the ACP countries and developing countries producing sugar. The system can be made to work to a degree.
We should not forget that sugar beet is a very useful crop. It did more to transform the county of Norfolk, of which I know a little, than any other crop. It has all the virtues of going down deep and aerating the soil. It is only a part of a rotation. It cannot take up the major part of anyone's land. In that regard, talk from the noble Lord, Lord Mottistone, of sugar beet farmers revelling in wealth is a little out of place. To compare sugar beet with winter wheat, as the Ministry does here, is quite wrong. There is nothing easier to grow that winter wheat. One sows it and sprays it and then the great combine lashes into it and it is taken away. It is one of the most mechanised and easy crops to grow. One can use a large proportion of one's land for winter wheat. It can be grown as a single crop quite successfully.
Sugar beet is an entirely different thing. It is a major consumer of labour. There are costs of every kind. Sugar beet has to be dug up in appalling weather. It has to be taken to the roadside and loaded. One has to hold up the noble Lord, Lord Middleton, when he wants to go to the station. It is a different crop with a different concentration altogether to winter wheat. It is ludicrous to show in a table how much more profitable it is to grow beet than winter wheat. Of course, it is more profitable.
If one wants to take it to a ridiculous level one should consider the strawberry grower. In a good year he can take in something like £5,000 to £10,000 a acre. That is more profitable than growing winter wheat. Therefore, I do not believe that that particular argument washes.
The other point concerns crying over the poor consumer. I know that if one takes each item and says that it is only a small part of the budget one comes to a ridiculous point. But in fact in Britain, according to the table, the price of sugar to the consumer in American cents is 42.64. In all the other EU countries it appears to be more, but it is only half of what it is in Tokyo and less than what it is in Washington DC, where it is 43.09 cents compared with 42.64 cents in London.
Sugar appears to be very cheap in developing countries and in Brasilia which grows a lot of cane sugar. When it comes to the manufacturers screaming about price, as they do frequently, the fact is that if one takes any object in the shops nowadays and looks at what sum goes to the farmer as a proportion of the price, it is immensely small.
Taking all these factors into account, the Government should be doing their absolute best to see that the total quota ABC—it is a ridiculous computation, although I know the difference between ABC—in this country is held on to. It fulfils the objectives put forward by the noble Lord, Lord Marlesford, because it is competently produced and is doing a good job for this country. When one looks at the proportions in the other table, one can see that, apart from Portugal, this country produces less from the consumption of sugar than any other country in the EU. I hope that there will be a hard fight by the Government on that point.
1370
I must take up the point of saleable quotas. They have distorted the position in potatoes and milk in quite an extraordinary manner. What the noble Lord said about the quota being worth more than the land is true in many cases. We appear to have got into a ridiculous position. It is true that if we had tradable quotas throughout the whole Community they would end up where the most efficient farmers and processors are. It would also be very difficult for the processor because one cannot buy a quota to grow sugar beet unless the processor in that area is willing to take it. So one really cannot have the same freedom as one has with milk, because milk can be produced and plenty of people are willing to buy it.
Lord Marlesford: My Lords, I thank the noble Lord for giving way. He is absolutely right. That is one of the factors which determines the price of the quota and who will buy it. Nobody would buy a quota if they were not able either to grow the crop efficiently or to deliver it. As I have said, that can determine the price of the quota. It is economic market forces at work.
Lord Mackie of Benshie: My Lords, I accept that. Nobody will buy a quota at a peak price if their local factory will not process the product. The opportunity for farmers in Scotland to grow beet was removed. That could have been done with great efficiency in the east of Scotland, but the factory was taken away from us. The poor Scottish farmer is left with winter wheat and similar crops. That is not very good for us.
I like the report in many ways. It points out many useful and sensible things. I do not think that politically it is possible for us to have a fair system of free trade and open competition in this. I believe that there will be some form of allocation of grant in this business for some time to come. The European Union must get the price down to a reasonable level. There is no doubt that Poland and Hungary will push for membership—rightly so—and very much sooner than some people think. They will also become efficient producers very much quicker than we have assumed in the past. As I have said, I like the report, but I do not think that the wish expressed in it will come true in terms of moving on to a system of open competition. We must therefore make the best of the present system and ensure that it works sensibly.
I hope that the Minister will be sympathetic to the British farmer. Last month the Foreign Secretary made a speech to the German Society for Foreign Affairs in which he stated:
"If Poland, Hungary, the Czech Republic and Slovakia were to join the Union tomorrow, with the Common Agricultural Policy and structural funds operating as they do today, the bill would be around 100 billion DM a year.
Neither Britain nor Germany would be willing to pay. So we must get on and reform the CAP and adapt the structural funds. This will not be easy. The beneficiaries of the status quo will protest. But their protests cannot be allowed to obstruct enlargement".

1371
If that is the attitude and if the Foreign Secretary has any influence, I hope that at least the Minister will endeavour to protect British interests as far as he can.
7.3 p.m.
Lord Carter: My Lords, I join other noble Lords in congratulating the sub-committee and its chairman, the noble Lord, Lord Middleton, on producing an excellent analysis of a complicated support regime. We have had an extremely interesting debate. In a debate on sugar we have had references to antique clocks, Karl Marx and Benjamin Disraeli.
I should say immediately that the European Commission can hardly be accused of a burst of frenetic activity in the way in which it has approached reform of the regime. As I understand it, the future of the regime is now not likely to be discussed until the meeting of the Council of Ministers at the end of May. Indeed, there could well be further delay after that. It would be helpful if the Minister could say something about the timetable and whether the target date of 1st June will be reached.
When considering this regime and others, I sometimes wonder whether the Eurocrats have any concept of commercial reality or the rhythm of the farming seasons. I suppose that a bureaucracy that announces a reduction in the set-aside percentage for the current season in December—some two to three months after winter-sown crops are planted—can hardly be expected to announce its proposals for the reform of an important crop regime in a timely fashion.
The committee draws attention well to the way in which sugar quotas have worked to the disadvantage of the UK in terms of the amount that has been allocated. I have to say on that point that the performance of the Government in 1981 over sugar beet quotas and in 1983 over milk quotas betrays a certain failure in negotiating on behalf of the British position. I put it no more strongly than that.
The report analyses well the substantial imperfections of the sugar regime, especially as far as consumers are concerned. I shall return to the question of tradable quotas at farm level later, but I must point out that I find one statement regarding the effect of the regime a little hard to follow. I refer to paragraph 12 on page 8 which states:
"since quotas cannot be sold, high cost production is maintained in some regions and the total cost of EC production is unnecessarily high".
There is a problem here which applies to all of our reports. When we talk about a "region", it would be helpful if it could be made clear whether we are talking about a region within a country or a region of the European Union. There is obviously an important distinction. As we know, the location of sugar beet growing in the UK is largely a matter of distance from the nearest factory. Sugar beet is a bulky crop to transport. There are large areas of the country in which it cannot be grown because there is no factory to take it within an economic distance.
Unless I am missing some obvious point, I cannot see why the making of quotas which would be tradable within the UK would have much effect on either the
1372
efficiency of the process or the cost of production at farm level. The argument might stand up if quotas were tradable across national boundaries, but I suspect that that would produce as many problems as it would solve. Anyway, it is politically a non-starter. The noble Lord, Lord Reay, made that point. As I have said, I shall return to the point about tradable quotas at farm level later.
The arguments for an increase—or at least for no cut—in the UK quota are persuasive. In the real world of EU negotiations, with trade-offs and deals on the side, I wonder how easy it would be to achieve that when it is proposed by the Commission to phase out national aids in Spain, Germany and northern Italy and to reduce them by 50 per cent. in central and southern Italy. In passing, I cannot help but admire the sheer chutzpah of the Commission in making a 50 per cent. distinction in aid levels between different areas of Italy. As your Lordships will know, chutzpah is defined as "shameless audacity".
The committee makes short work of the argument that we need a sugar regime of the sort proposed to ensure stability in the market and security of supply. I am sure that that approach is correct. It is interesting to note, purely historically, that the main reason that we have a sugar beet industry at all in this country is founded on the arguments about security of supply and providing employment, which were adduced in the 1930s. Obviously, security of supply became extremely important during the war, but that is now a piece of history.
I am almost convinced by the committee's response to the Commission's argument that the regime must be maintained intact to provide the machinery to meet the European Union's obligations under GATT. The reason that I am not completely convinced by the committee's argument is the uncertainty over exactly how the GATT commitments will be achieved in the European Union and the possible effects of the accession of the eastern European countries at some time in the future. One can see—albeit extremely reluctantly—why the Commission wants to avoid a root-and-branch reform in that uncertain situation. It is the natural reaction of the bureaucrat. I still think that the Commission is wrong, but I think I can understand its nervousness and its wish to make haste slowly in that respect.
The committee is certainly correct in accepting the Commission's assertion that the existing sugar regime, or something like it, can exist alongside the regimes for the combinable crops—cereals, oilseeds and proteins. In terms of its production and marketing characteristics, sugar beet most resembles oilseed crops. It is a pure industrial crop, with animal feed byproducts. It is grown and stored on the farm and moved to comparatively few processing plants. As we know, as a source of farm income, it has worked extremely well for those growers who have been allocated a quota.
I am surprised that the committee was surprised by the Commission's failure to mention the consumer interest. I am tempted to ask in the jargon, "What's new?". When was the Commission last concerned about the consumer interest in almost anything it does in the CAP?

1373
I am always sceptical of price forecasts as a result of changes in the European support policies. In that context, it is instructive to look back at the forecasts made in 1992 for 1994 and 1995 prices as a result of the MacSharry reforms. We know that as regards most agricultural products prices are much higher than were then forecast. In this country that was largely due to devaluation and not to the effect of reforms. However, as regards a regime that subsidises the product as heavily as does the sugar regime, there must be some effect on world prices if it is reformed.
At paragraph 65, the committee makes the point that without a sugar regime, which is extremely unlikely, users could buy sugar at a price 40 per cent. below the present price. However, I do not see that the committee describes the mechanism by which such a reduction would be passed on to the final consumer, bearing in mind the concentration in market power in the sugar industry. The committee is right to point out in paragraph 66 that the regime encourages high cost production in unsuitable regions. I repeat that we should always define what we mean by "region"—
Lord Middleton: My Lords, perhaps I may explain. Regions are not coterminous with member states' boundaries. For instance, the noble Lord mentioned the difficulty in respect of Italy. One region of Italy grows sugar beet easily and profitably but another region could not be a worse place to grow sugar beet. We refer to that as a region.
Lord Carter: My Lords, that explanation was extremely helpful and it is as I understood the position. However, reading the report quickly one may think that the regions were national and not across the Community. Throughout its existence a feature of the CAP has been that it has not led to the encouragement of efficient production in the right areas, or regions, and it is hardly surprising therefore that that is built into the sugar regime.
The committee is right to point out the Commission's failure to deal with the possible effects of the accession of the central and eastern European states and the effect of that on the sugar regime. I suspect that the real reason for the Commission's omission is that it does not have the first idea about how to deal with the problem. The noble Lord, Lord Mackie of Benshie, referred to the Foreign Secretary saying that the cost of accession would be about £50 billion. That can be compared with what was said only this week by Mr. William Waldegrave in the agricultural debate in the Commons. Referring to the accession of the eastern European countries, he said:
"It is not so much pressure from the financial guideline as currently drawn that will help us in that regard; our first calculations show that the entry of at least the so-called Visegrad Four countries could probably be financed within the guideline on present, post-MacSharry policies. However, there would none the less be a large increase in cost".—[Official Report, Commons, 21/3/95; col. 172.]
I believe that that is the first time the position has been expressed by the department. I can see that the noble Earl the Minister is surprised and obviously communications within the department are not good. I
1374
believe that the Minister is saying that because of the savings within the budgetary guideline, if we are below it, the cost of eastern European entry could be met and we could remain within the guideline.
I considered the effect of that statement on the sugar regime and others. I believe that when in 1999 we renegotiate GATT the eastern European countries will not by then have joined. Perhaps within the GATT negotiations it would be feasible to begin to build in the effects of the accession of the eastern European countries within the early years of the next century. I do not expect the Minister to reply to the point tonight. When one compares the figure given by the Minister of Agriculture for the cost of the eastern European accession, those given by his colleague the Foreign Secretary and others that are being mentioned, it is obvious that no one has the first idea what the actual cost will be.
The Minister made much of the analogy of the tanker—that the agricultural policy is slowly changing course—and that was picked up by the noble Lord, Lord Reay. Perhaps it is changing course but the oil slick is certainly not getting any smaller.
I was interested to note that at paragraph 73 the committee flirted once again with a variant of the bond system. It suggested that producers leaving the industry could be compensated by a buy-out scheme financed by the industry. It is certainly an interesting variation of the traditional idea of the bond, which would be financed by taxpayers. But when the committee refers to "the industry" it actually means the consumer. That point was made in opening by the noble Lord, Lord Middleton.
The committee's conclusion in paragraphs 74 to 80 was an excellent summary. However, I wonder whether it has really thought through the political agricultural and economic results of the tradable quotas which it suggests at paragraph 78. For once I shall pray in aid the Government's view as set out in their response to the report. I shall not quote it in full because that was done by the noble Lord, Lord Marlesford. The Government state:
"we incline to the view that assigning quotas to growers instead of (or in addition to) processors might increase the difficulty of doing so".
That is, of improving the regime. They continue:
"It might also make more difficult the eventual abolition of the quota system, if that seemed obtainable at some future date".
I wish to deal with the interesting points that were made by the noble Lord, Lord Marlesford, on the tradability of quotas. First, that will do nothing for new entrants. If one has to buy a sugar beet quota, it will be extremely hard for a new entrant to join the regime. We know that the price of a quota is an artificial price for a bureaucratic construct. From my experience, I argue that the ability to buy quota—of course, I refer to milk quota—is not related to efficiency but to one's command over capital and income stream, Often, that has as much to do with inheritance as with efficiency.
I was interested to hear the noble Lord's analogy—I do not believe that it would be rude to describe it as his free market ideology—which was expressed by proving that there is such a thing as a free lunch. He appeared

1375
to imply that although the capital asset would be created, it would be done without any real cost to anyone. Money used to buy quota is not available for what I would describe as "useful investment". It is merely a money transfer between farmers with no obvious effect on agricultural production and investment. It is a money transfer for the exchange of an artificial licence to produce.
There is a great deal more to be done on the proposal before one can agree with it. However desirable it may be in theory—and I emphasise "in theory" - if we were to give sugar beet quotas a monetary value, and if they were to be tradable across national boundaries, it would in practice create distortions between farmers, regions in each country and member states.
Lord Marlesford: My Lords, I was trying to make the point that the price paid for the quota is part of the profit that a more efficient producer can make compared to a less efficient producer. Therefore, that profit is being, as it were, shared. The level at which the quota reaches its price depends on many factors. One of them is the price at which one can sell the production. If there is greater production by more efficient rather than less efficient producers, a lower price can be paid to all producers. Therefore, all I am saying is that that would be a means of enabling cuts to be made in the support price for the product.
Lord Carter: My Lords, I understand the argument entirely but the fallacy is the assumption that efficiency gives the producer command over the income stream which enables him to buy the quota. In fact, milk quotas have shown that the ability to buy quotas depends on whether you are an owner/occupier who has inherited the farm and have no rent to pay or if you have heavy borrowings and so on. I believe that we should leave the point now and perhaps discuss it outside the Chamber. But I am not convinced on the argument that we should not be storing up trouble for the future if we were to make the quotas fully tradable.
With that one proviso on the committee's report, I repeat my congratulations to the committee and its chairman—the noble Lord, Lord Middleton—on producing an excellent report.
7.20 p.m.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe): My Lords, I should like to begin by echoing the comments of other noble Lords and by congratulating my noble friend Lord Middleton and the committee on the thoroughness of their analysis of what is a complex regime and the Commission's associated proposals. The committee took evidence from the wide spectrum of interests involved in the sugar sector and, although faced with a large number of often conflicting arguments, it has succeeded in producing a report which sets out clear views on the regime, the Commission's proposals and ideals for change. The Government welcome the report and agree with its underlying theme that the sugar regime badly needs to be reformed.
1376
Before discussing the substance of the report, perhaps I may respond to the noble Lord, Lord Carter, by bringing your Lordships up to date with developments in Brussels on the Commission's proposals. At the time the proposals were issued, last November, it seemed there would be pressure on the Council to take an early decision. In the event, that timetable slipped, but the indications are that the Presidency will be seeking to press towards agreement at next week's meeting of the Agriculture Council. The debate we are having today is therefore very timely and will contribute to the Government's preparations for the Council negotiations.
The Government have long been critical of the sugar regime, which, as my noble friend Lord Middleton said, has changed little since its introduction in 1968. High support prices in the Community encourage the production and export of a large surplus and work against the interests of both domestic and industrial consumers. Further, the quota regime does not reflect the relative efficiency of production among member states; nor does it encourage efficiency. We had hoped that the Commission would have taken the opportunity of the current review to undertake a thoroughgoing reform of the regime.
Therefore, like the committee, we were disappointed by the limited nature of the Commission's proposals. Those do little more than introduce provisions to enable production quotas to be cut, if necessary, for GATT purposes and modifications to elements of the cane sugar supply arrangements necessitated by the end of the Portuguese transition period. In particular, the proposals make no recommendations for any reductions in support prices.
The Government agree with the committee that reductions in price are necessary to reduce the imbalance with other arable crops, to benefit consumers and to respond to GATT pressures. The minimalist approach adopted by the Commission will send entirely the wrong signal to producers who will have to face up to continuing GATT pressures and, as the report points out, the prospect of the accession of Central and Eastern European states. It can not be right to encourage producers to believe that the regime can continue unchanged indefinitely.
The main elements of the GATT agreement to affect sugar are requirements for a 36 per cent. cut in the level of export refund expenditure; and a 21 per cent. cut in the volume of subsidised exports compared with the 1986–1990 base period. That means that, in the year 2000–01, expenditure will be limited to 497 mecu and volume to 1.277 million tonnes—excluding a quantity equivalent to ACP imports.
It is difficult to predict exactly how these limits will affect the sugar regime because of the number of variables affecting EU consumption and world prices. Depending on assumptions used, production cuts needed can range from minimal to over 500,000 tonnes. The Commission has taken the optimistic view that the effect will be minimal. GATT also requires a 20 per cent. reduction in border protection, which may, in the latter years of the GATT period, lead to pressure on Community prices—but again, as the noble Lord, Lord

1377
Carter, said, much depends on the level of world prices. Like the committee, we believe that it is better to prepare now for those changes by planned reductions.
We agree with the committee that the prospect of accession of the Central and East European States to the Community should have been considered by the Commission. Their accession would require major changes to Community agricultural policy as a whole. That is essentially because of the very significant budgetary consequences of applying the CAP in its present form. Further, the CEE countries, under GATT, have only very small entitlements to make subsidised exports. It is difficult to consider in isolation the detailed effects on sugar of absorbing these countries into the Community, but accession will clearly put more pressure on the regime.
We share the committee's conclusion that there should be a planned, phased reduction in support levels. In Brussels we have argued for a 12 per cent. price reduction over three years, followed by a review. In answer to my noble friend Lord Mottistone, I should say that we share the view that a 6-year regime as proposed is not satisfactory. However, I would say to the noble Lord, Lord Mackie, that we do not agree that price reductions should be accompanied by compensation to growers. We believe compensation should be considered only as a transitional measure to enable growers to adapt to sudden and significant reductions in prices. We see no need for it at all if prices are reduced gradually over time. For sugar, it also has to be remembered that there is a considerable margin for price cuts before compensation could even become an issue. Before the 1992 CAP reform package introduced the concept of compensation, cereals prices were cut significantly whereas sugar prices changed little. Therefore, sugar has more than a little catching up to do.
Sugar prices are seriously out of line with those for other crops. Including agrimonetary changes, sugar prices have been cut by only about 4 per cent. since 1985. Cereals prices have seen cuts by around 19 per cent. before compensation was offered under CAP reform. Therefore there is scope for price cuts before the question of compensation need arise.
It is said that the sugar regime is self-financing. It is true that levies on growers and processors cover the costs of disposing of surplus quota sugar with the exception of a tonnage equivalent to imports—essentially sugar brought in under preferential arrangements, mainly from the African, Caribbean and Pacific countries and India. Similarly, storage aids are covered by levies on sugar when it is first marketed. The net budgetary cost is therefore relatively low. However, as many noble Lords have said, the cost is passed on to consumers in the form of higher prices.
The noble Lord, Lord Carter, wondered how any price cuts might be passed on to consumers. It would be surprising if competitive pressures did not result in the benefit being passed on to consumers in the form of lower prices. The Consumers in Europe Group, in its submission to the committee, indicated clearly that consumers would pay less for both sugar and products containing sugar—such as biscuits, drinks and
1378
confectionery—if prices were cut. Obviously, where sugar is only one of several ingredients, that would contribute to keeping down end product prices but would not lead to substantial price cuts.
My noble friend Lord Reay made some wise comments about quota cuts. The committee recommends a cut in the overall Community quota of up to 20 per cent. However, as the report notes, and as the noble Lord, Lord Mackie, will doubtless be pleased to hear, quota cuts are not our preferred method either for adjusting the regime to meet GATT commitments or as an instrument of reform. The Government believe that action on prices is a better means of discouraging surpluses and of directing production towards the more efficient producers and member states. Mechanisms for distributing quota cuts among member states tend to be arbitrary and based on criteria which disadvantage the UK. However, if there have to be quota cuts, we share the Committee's view that they should be based on member states' past performance and levels of self-sufficiency, which supports our argument in Brussels that cuts in the UK quota are unjustified.
The committee suggests that consideration should be given to the idea of a right of quota ownership for growers and then making that quota transferable. That point was raised especially by the noble Lord, Lord Carter, and by my noble friends Lord Reay and Lord Marlesford. Certainly it has theoretical attractions as a means of facilitating a more efficient allocation of production. However, I have to say that we have doubts whether such changes would really be practicable or lead to lower costs and thus lower prices. It would require fundamental changes to the regime and add yet another layer of rules and regulations. As my noble friend Lord Reay pointed out, it would imbue quota with capital value, and would make simplifying and dismantling the regime at a later date even more difficult.
If the object is to move production towards the more efficient, the Government believe that the most effective means is to bear down on support levels and allow the market to operate. It is high prices and the quota system as such which allow inefficient production to continue. I should tell my noble friends Lord Marlesford and Lord Reay that the alternative is for the contract arrangements between processors and growers to be modified to allow more flexibility. That could be done under current rules with the agreement of both parties. I see that my noble friend wishes to intervene. I give way.
Lord Marlesford: My Lords, I am much obliged. My noble friend said that it is desirable to "bear down" on the less efficient producers by price. The answer is that one would have to compensate those people who are forced out by cuts in prices experienced right through Europe up until now. Further, if one had to compensate them, one would have to do so with someone's money. The advantage of the quota system is that compensation comes from those who remain in the business rather than the taxpayer or the consumer.
Earl Howe: My Lords, I understand my noble friend's point. However, I have already argued that we do not believe that compensation would be warranted if

1379
price cuts took place gradually over a period of years. If there were a sudden cut in price, I agree that there would be a case for compensation. However, there are other difficulties involved.
Introducing transferable grower quotas would require fundamental changes to the regime, since quotas are expressed in terms of sugar and are allocated to member states, which then distribute them to sugar processors. Sugar processors contract with growers for the quantity of beet needed to meet the national sugar quota, and that varies from year to year according to growing conditions and productivity improvements. Clearly, the determination of growers' quotas would not be straightforward and would involve government, growers and processors in a bureaucratic exercise which is currently settled by commercial contracts.
My noble friend Lord Reay asked what the Government's view was on the international transfer of quotas. As my right honourable friend said in his reply to the committee's report, the movement of sugar and sugar beet production across national frontiers to more productive areas would be needed to make a real difference to the overall efficiency of production. To negotiate the necessary change in Community rules on quota allocation would obviously be difficult. The Government have not yet achieved that in any other sector where quotas apply. Moreover, to echo a point made by the noble Lord, Lord Carter, it is also not clear that giving a right of ownership to a transferable quota would create any increase in real wealth as less resources would be available for land, machinery and inputs. So, it is purely a point of economics. Capital would be tied up in quota and, if anything, I believe that that would, in turn, increase pressure to maintain prices at high levels to maintain the asset value of the quota. I do not believe that it would act as a depressant on price levels.
The committee also suggested that quota auctions and industry-financed restructuring schemes should be examined. Indeed, my noble friend Lord Marlesford spoke eloquently in favour of that broad idea. Again, I would agree with my noble friend that such schemes have attractions as a means of shifting production to the more efficient. But we have doubts about the negotiability of cost-effective schemes. As the committee acknowledges, there are strong producer interests in the regime and it would be difficult to avoid an outcome which did not impinge on consumers or the budget. That is a further reason why price reductions remain our preferred method of adjustment.
As regards the Commission's proposals, we welcome the Committee's support for the modifications to the cane supply arrangements, which should benefit both our refining industry and developing country suppliers. The noble Viscount, Lord Waverley, dwelt particularly on the ACP countries. Perhaps I may make a few points about the sugar protocol. Neither the GATT Uruguay Round nor the review of the regime will affect the provisions of the Lomé Sugar Protocol, which is of indefinite duration. Clearly, if EC prices change, the price to the ACP will have to be negotiated with that in mind. However, that is fully consistent with the protocol provisions. As my noble friend Lord Middleton said,
1380
that gives the ACP countries the right to export 1.3 million tonnes of cane sugar to the EC every year at zero import levy and annually negotiated prices which, in practice, have been equivalent to the EU intervention price. But it does not guarantee any particular level of income. In addition, the ACP countries will be able to benefit from additional access provisions under the Commission's proposals, although the supply terms have yet to be determined.
Although the Commission has indicated that priority will be given to ACP supplies as far as possible, the proposal does not exclude imports from other countries. However, as the noble Viscount said, it is clearly in the EU's interest to obtain the bulk of the supplies from ACP, since the Community's GATT export commitments are calculated net of a quantity equivalent to ACP and Indian imports.
The Commission's proposals define refiners' maximum needs, but do not guarantee a definite supply. They provide for arrangements to import a shortfall calculated according to a set formula. That is an improvement on the current arrangements. But it is not possible for the EU to dictate to the ACP/Lomé countries how much they should send or to whom. The formula will also not take account of any further substitution of raw cane sugar for refining with raw cane sugar for direct consumption, whether from ACP or DOM suppliers. If imports of such direct consumption sugar continue to increase, there will be a deficit of sugar for refining.
The noble Viscount, Lord Waverley, asked whether the ACP producers would be compensated in the case of price cuts. I should say that we will continue to support the ACP case for the right to supply more sugar to the EC cane refineries at preferential terms of access. But if EU prices are cut, import prices also need to be cut to maintain the viability of our cane refining industry. As for Community producers, as I have said, we do not agree that there is a need for compensation.
The noble Viscount also asked what criteria the Commission will adopt in setting the price for additional quantities. That will be a matter for negotiation. Obviously, the price will need to be sufficient to attract the suppliers in order to secure the necessary supplies at reasonable cost. I am afraid that that is as far as I can go at present.
We also agreed with the committee that storage refunds for non-quota "C" sugar should be abolished as proposed by the Commission. Like the committee, we are not convinced that abolition will affect security of supply. We agree with the Commission that the aid is unnecessary and acts as a stimulus to non-quota production. Its abolition will reduce storage levy charged, which should feed through to lower prices to consumers, which we would welcome. We believe that the decision to carry forward non-quota sugar should be a commercial judgment and not related to the availability of subsidy. Abolition of the refund should not affect the security of supply, since processors will still be able to carry over non-quota sugar if they wish and already existing Community regulations require processors to hold a minimum level of stocks, as a

1381
contingency measure, in addition to normal stocks. We also have an alternative source of supply in the form of refined cane sugar.
On national aids for the beet sector, we agree with the committee that aids in Spain and Germany should be discontinued and there should be no prolongation of any of the Italian aids. In conclusion, I am grateful to the committee for its report. The broad thrust of what the committee has recommended is very much in line with our own thinking. We too are frustrated by the lack of significant change proposed by the Commission, but I am bound to say that, sadly, this reflects the attitude of the majority of member states. But the recent GATT agreement has forced the Commission to look at the sugar regime and propose the introduction of some curbs to it. The pressure to change the regime will not go away and we will, in the current negotiations and in the future, maintain our efforts to seek greater rationalisation. I should like to thank the committee for the opportunity its report has provided for this helpful debate, which ensures that a close examination of the sugar regime is not overlooked.
7.40 p.m.
Lord Middleton: My Lords, I thank my noble friend the Minister for his reply on behalf of the Government and I thank noble Lords who have taken part in this debate. I took the vulpine attribute of the noble Lord, Lord Mackie, to myself as a compliment. I am grateful to him. I have a great respect for foxes. I note with much interest that there is little difference between the Select Committee's views about the sugar regime and its reform, and those of the Government. We agree that Community production should be curbed through the price mechanism. In view of the political practicalities, the committee recommends quota reduction in addition. How much emphasis should be laid on either of these control methods is hard to judge at this stage. The Government will go hard for price control, and they may well be right, if they can get it. If our report and this debate contribute in even a small way to giving added weight to pressure upon the Community to speed up CAP reform, then our efforts will not have been in vain.
On Question, Motion agreed to.

Pylons in the Vale of York
7.42 p.m.
Lord Crathorne Lord Crathorne rose to ask Her Majesty's Government under what conditions they would refuse permission for a 400 kilovolt line of pylons to be constructed between Lackenby and Shipton in addition to the existing 400 kilovolt line.
The noble Lord said: My Lords, I am most grateful for the opportunity to ask the Question on the Order Paper about the 400 kilovolt pylons which the National Grid wants to construct between Lackenby and Shipton. The matter has been raised on five occasions in another place but this is the first opportunity we have had in this House to discuss the issues involved. I realise that my noble friend sitting on the Front Bench will not be able
1382
to get into the detail regarding this specific application but I am sure he will be able to deal with a number of general issues which the application raises.
First, I must in the tradition of the House declare an interest. I live on an agricultural estate in the north-east and some of the pylons which are the subject of this planning application will run over land owned by a trust controlled by my family. However, I should like to emphasise that this is not a NIMBY question. We already have pylons in our backyard—14 of them in fact. The new proposals would add another five to our overall total.
No one chooses to have pylons running across his land; but in this case the degree of local opposition from individuals and organisations goes far beyond a general dissatisfaction with pylons. This opposition stems from the very basic fact that there is no proven need for this line which would run in parallel with the existing 400 kilovolt line.
The problem goes back to the moment that planning permission was granted for the construction of a gas fired electricity plant by Teesside Power Ltd. (TPL)—sometimes called Enron—at Wilton on Teesside. In September 1990 before the then Secretary of State gave planning consent for this power station, the Office of Electricity Regulation issued a derogation to the National Grid Company. This means that part of the planning standards could be disregarded for the connection. Shortly after this, the National Grid Company came to a commercial agreement with Scottish Power and Scottish Hydro-Electric to increase the transmission capacity from Scotland to England. NGC concluded that it would need further capacity and lodged an application with the North Yorkshire County Council for the line which is the subject of my Question tonight.
The existing line has a capacity of over 5,000 megawatts. In fact, no part of the National Grid has a greater capacity than this. TPL, since it started operating in April 1993, has put about 1,000 megawatts of its output down this existing line. The Scottish connection brings to the north-east only 240 megawatts. Very simple arithmetic shows that there is still a very substantial additional capacity on the existing line, so why is there a need for a second line?
The security backup requirements in case of a double circuit failure are seen by many people to be unnecessarily high. The average failure over the whole National Grid is one minute per year per customer. I remind your Lordships that there are over half a million minutes in every year. The existing Yorkshire line which has been in existence for 23 years has not failed once since its construction. Are we really going to have this line foisted on us for this contingency?
Since TPL started putting electricity into the existing line, there have been no problems relating to the line. The setting of the security standards is the responsibility of OFFER, the electricity industry watchdog run by Professor Littlechild. Last month he published the outcome of the review on NGC security standards. The review was conducted by NGC itself and it took two years to report back regarding its own transmission standards. Professor Littlechild made it clear in his

1383
statement that although he is not minded to change the planning standards in the short term, he is not satisfied with the existing standards as a whole.
Perhaps we may now turn to what I believe is the National Grid's real reason for wanting this second line. This is that two other gas fired generating stations are under consideration for the north-east; namely, Flotilla and Neptune. Indeed NGC has already entered into agreements for connection into the grid of these two stations should they be built. This is in spite of the fact that no formal planning application has yet been made. In the north-east we very much hope that these stations will never be given consent. In any event, the possibility of these two additional stations should not be taken into consideration in relation to the application we are discussing tonight. If that point is accepted by the Secretary of State, it is hard to see that there is sufficient justification for granting permission for this second line of pylons to be built.
The Government should not grant permission and should discourage remote generation of electricity. It is extraordinarily wasteful in two ways. First, the power loss that results when electricity is transported several hundred miles before it reaches the consumers is great. In the case of TPL, the power loss is about 6 per cent. and with the Scottish exports around 10 per cent.
Secondly, remote generation runs counter to the Government's own policy of the creation of combined heat and generation plants when both the electricity and the by-product of heat are sold. TPL was indeed meant to be a CHP station but the problem is that there is no market for Enron's heat in that location, and from my home I can see the great steam clouds rising daily from TPL just five miles down the road. About 50 per cent. of the energy from the gas used disappears with the steam into the atmosphere and it really is a terrible waste of a finite fossil fuel resource.
The 1989 Electricity Act makes remote generation the easiest option for a company considering building a power station. Building near the source of the fuel and then asking National Grid for a connection (which it is legally bound to give) almost regardless of where the electricity is needed, is, sadly, the easier option. But it is not the best option. It is much more efficient to pipe the gas to the point where the electricity is needed and then build your much smaller power station or stations in an area where both the electricity and the heat are marketable.
Although some undergrounding of gas pipes may be necessary, there is a national gas grid with substantial spare capacity. Combined heat and power plants can be very small and, for example, a few miles from where I live and from the TPL station, the Darlington Memorial Hospital opened a one megawatt power station last December. This provides the base load for both the electricity and the heat for the hospital. Such schemes should be encouraged. More are needed in areas of high consumption, particularly in the south.
I hope that from my remarks tonight your Lordships will understand why people in the north-east feel so strongly about this issue. Mr. John Greenway, the Member for Ryedale, in his adjournment debate in
1384
another place last week said that this was the most strongly felt public anger that he had ever known in his constituency.
When the public inquiry was held in 1992 more than 8,000 objections were lodged, and REVOLT, the group formed to fight the pylons, gave such effective evidence throughout the inquiry that the inspector, Mr. Graham, expressed his admiration for the work it had put in and the degree of expertise it had shown.
NGC's argument relied on the fact that it merely wished to fulfil a legal duty as the company saw it. Despite all the submissions about the environment, the possible ill-effects on health created by electromagnetic fields and the more environmentally friendly solution of undergrounding the cables, the DTI inspectors ended by siding with the National Grid company.
The Secretary of State's response was that he was "minded" to grant consent for the pylons once the wayleaves had been obtained by NGC. If landowners and occupiers of land are unwilling to grant wayleaves voluntarily the National Grid may seek the power to impose wayleaves. At the wayleave hearing, two thirds of those affected did not sign an agreement with the National Grid, which shows an extraordinarily high level of dissatisfaction with the National Grid proposals.
That is not the full extent of the dissatisfaction. The real figure is substantially higher as there were many who signed, myself included, who would much rather not have done so but whose hands were tied in one way or another, for example, by legal constraints.
The saga continues. A further public inquiry is now under way at Northallerton, examining alternative proposals for two sections of the proposed power line, where the issues are being raised again in evidence to the inspectors.
The electricity industry is in a state of flux, transition and uncertainty. It is clear that the privatised energy utilities are capable of delivering greater efficiency at lower prices. I mentioned earlier that Professor Littlechild is looking into security standards. He is also to look, with Ofgas, at the relative pricing of electricity and gas transmission lines. He will look at the whole question of the pricing of transmission and price control by NGC. The advances in superconductivity will enable undergrounding within a decade at lower cost and lower energy losses. There is still more to be done on the effects of electromagnetic fields on our health.
Finally, I feel strongly that the views of those affected should be taken into account by the Secretary of State. It may be a little time before he has to make a decision. I hope that he will look at the wider context and will come to the conclusion that the application should be rejected in the present circumstances and that the application should only be considered concurrently with that for any Future power station which would create the need for the line.
Before I sit down, I should like to thank those Peers who have put their names down to speak in the debate and also my noble friend on the Front Bench who will answer. We look forward very much to hearing what he has to say.
7.53 p.m.
The Marquess of Downshire: My Lords, I am glad that my noble friend Lord Crathorne has asked this particularly pertinent Question as it gives me the opportunity to underline what he said in a few words and to demonstrate the difficulties that individual electricity transmission schemes can face when there is no overall plan to guide those responsible for the National Grid.
It is all very well for the DTI to encourage the conversion of gas into electricity, which is in essence the embryo of the problem which has surfaced in this case, but the power so generated must surely travel over a minimum distance in order to obtain the maximum benefit. The proposed power line is nearly 50 miles in length. For most of that distance the transmission lines travel above ground through an area known as the Vale of York.
The landowners with whom the National Grid is treating are almost universally opposed to the pylons, despite the apparent generosity shown by the size of the compensation offered. There have been a great many objectors, including local authorities and other institutions.
To return to the subject of compensation, although I understand that negotiations between the National Grid and landowners have so far remained amicable, there could come a time, and it will surely come, when the pylon builders' purse runs out and compulsory purchase arrives. Surely there then arises a more potent conflict of interest—the invocation of public power in order to provide private profit.
I therefore earnestly entreat my right honourable friend the Secretary of State to look very hard at all the facts, not least the possibility of yet another line of pylons marching across unspoilt country. Although in this case agricultural land is not being removed, a substantial amount will be sterilised, thereby taking the land in question out of production. The farmers, landowners and others, from whatever walk of life, are not in the business of allowing unnecessary power lines to intrude. Surely those who come after will not thank them for that form of legacy.
7.57 p.m.
Lady Kinloss: My Lords, I am delighted that the noble Lord, Lord Crathorne, has given us the opportunity to debate this Question this evening, which he has explained so clearly.
I find myself speaking for the second time in less than three weeks, begging the Government to listen to the voice of the people in North Yorkshire, and hopefully not to turn a deaf ear this time.
1386
A great part of North Yorkshire is built up of small farms. Two thirds of the farmers have already refused to reach any agreement with the NGC. They have been offered money, in some cases more than £40,000, which they have refused. Their feelings must be very strong indeed for this to happen.
In 1992, more than 8,000 objections were lodged when the public inquiry was held. Since then a petition of more than 12,000 signatures has been lodged with the right honourable Gentleman the President of the Board of Trade. Much of the proposed line goes through open countryside, in which it will be visible for many miles around, especially at the height which has been proposed of 80-foot pylons. Can the Minister confirm that, should these pylons be erected, they will be of that height? I am sure that, living in Cumbria, the noble Lord will appreciate the worries of local people about their countryside, of which they are justifiably proud. Once you destroy an environment it can never be completely restored. It was of much of this area that Tacitus spoke 2,000 years ago and said, "that they had made a desert and called it peace". Do the Government wish to repeat the occasion?
The objections to these huge power lines have as their bases the environment, agriculture and the apparently unresolved question of whether there is a danger to health, whether human or animal.
The noble Lord, Lord Crathorne, has already mentioned the possibility of building two gas-fired generating stations, so I hope that the House will forgive me if I repeat some of what he said. The NGC has already entered into agreement with two other gas-fired generating stations for the north-east coast, Flotilla and Neptune, which are under consideration for connection into the grid. Whether or not those generating stations are to be built with private money, there have not yet been any formal applications for planning consent for either Flotilla or Neptune. Surely this is putting the cart before the horse.
No need for these power lines has yet been proved. I understand that instead they could put gas lines underground to a point where they wish to put a gas-fired generating station in the south, where the electricity is needed. So why not do this?
The regulator, Professor Littlechild, is conducting further inquiries over the pricing structure, so surely it would be sensible to wait before erecting any further power lines. The present line is the most powerful in the National Grid in the country and is not running to full capacity. Why erect those power lines before they are really needed, when perhaps in 10 years' time, or even less, it may be decided that nuclear power or some other form of power is better and cheaper?
What kind of environment are we leaving to future generations? Why do the Government not listen to the voice of the people in North Yorkshire? May I hope that they will do so?
8.1 p.m.
Lord Middleton: My Lords, I listened with great interest to what my noble friend Lord Crathorne said about the proposed 400 kilovolt line of pylons in North

1387
Yorkshire. I have not so far taken part in the public debate about the project. It is a debate that has rumbled on for about four years. Many of the arguments are highly technical and I am not qualified to speak on such matters.
Nevertheless, to the layman, on hearing my noble friend tonight there seemed to be five good reasons that the Government should not be in a hurry to give consent to the construction of this power line. First, there is the doubt as to whether a new power line is needed in addition to the existing line over roughly the same route. Secondly, new technology seems to be on the horizon and, if there were even a remote chance of 150 foot high pylons becoming obsolete in the near future, there must be a doubt hanging over the building of 50 miles or so of the old type.
Thirdly, there appears to be a case for paying attention to growing evidence of damage to health from exposure to electro-magnetic fields generated by power lines. Fourthly, as we have heard, the environmental damage would be considerable. The proposed route will grossly disfigure some of the prettiest parts of north Yorkshire and will be in full view from the North York Moors National Park. Fifthly, as my noble friend Lord Crathorne said, there is great public opposition to the project and there is a feeling of being bulldozed into accepting an invasion into property and amenity that may well turn out to be wholly unnecessary.
If I am told that delay would not be acceptable and that there is a hurry to get started because there is an extremely expensive gas-fired power station at Middlesbrough without the means to distribute its current, then I would have to compare the situation with the building of the Brabazon aircraft, which was built at Bristol just after the war without airfields on which to land.
Years ago, I attended an inquiry about pylons. They were bitterly opposed by all witnesses except one. He was a retired admiral whose great pleasure it was to sit looking down a line of pylons because they reminded him of the Grand Fleet at sea in line ahead. I do not expect that argument to be advanced this time. However, I support my noble friend in asking the Government to think very hard before launching this deeply unpopular proposed construction.
8.4 p.m.
Lord Marlesford: My Lords, I am grateful to my noble friend Lord Crathorne for giving us the opportunity to discuss this important subject. As I understand it, it will be quite difficult for the Minister to reply directly on this specific project since it is under investigation through the public inquiry procedure. Reading, as I have done, the debate on the same subject in another place, it seems to me that he may speak somewhat more generally on the problems involved in undergrounding wires. I am rather glad of that because, although I have been to the area to which my noble friend refers, I do not know it as well as I should.
The debate gives me the opportunity to speak perhaps rather generally on what I regard as an important subject. I should at once declare two interests: first, as
1388
a member of the board of the Eastern Group, which is the biggest of the regional electricity companies in this country; and, secondly, as chairman of the Council for the Protection of Rural England. With both hats on, I take a considerable interest in undergrounding wires.
When electricity was first produced, it was such an exciting event that its arrival by any means was acceptable. Indeed I suspect, although I do not remember the moment, that it was probably fairly prestigious to have wires approaching the premises where one lived or worked rather as, somewhat later (a period that I do remember) television and masts had the same attraction. However, things move on and there is no doubt that wires generally have grown like Topsy and now provide an unattractive feature—very intrusive to much of the landscape and countryside.
We know that the costs of undergrounding are great. The question must always be whether they are costs which can and should be paid. The costs vary a great deal with the line concerned. I understand that the line which my noble friend discusses is a 400 kilovolt line. The cost of undergrounding such a line is approximately 20 times the cost above ground. At the lower voltages the ratio is much smaller. For the 11 kilovolt line which will serve a small community, the cost is 2.3 times greater. For the 400 volt line which will go to ordinary properties the cost is approximately 1.7 times greater. It is very much more economic.
Having said that, we must consider carefully before new lines are put up, in particular when, as appears in this instance, they are dual lines. When I was a member of the Countryside Commission I remember the application for Sizewell B. One reason that the Countryside Commission did not oppose Sizewell B was that Sizewell A, which was already in an area of outstanding natural beauty, had erected for its service pylons which, with extra wires on them, were adequate to carry the power from Sizewell B also. That was a very good reason. We might have taken a very different view on the building of Sizewell B in the area of Sizewell A on the Suffolk coast, but given that the power station was there, and that the pylons could cope with Sizewell B, there was good reason to have Sizewell B.
As your Lordships perhaps know, the output of Sizewell A is some 430 megawatts, and that of Sizewell B some 1200 megawatts, making 1630 megawatts. I hope that my noble friend Lord Crathorne has pursued in some detail whether it is necessary to have those additional pylons, or whether it might not be possible to put more wires on the same pylons, as was done at Sizewell. That seems to be a perfectly reasonable request to make.
I should like to say a few words about what can be done much more easily. For that purpose I take the experience that I have had through Eastern Electricity. A programme has now been in force for three years whereby the company specifically sets aside money for undergrounding low voltage wires in designated areas; that is national parks, areas of outstanding natural beauty, heritage coasts, conservation areas and special landscape areas. So far the company has spent £½ million on undergrounding; the value of the undergrounding that

1389
has taken place is at least double that because others have contributed to the cost. So far, 18 villages in Suffolk, Norfolk and Essex—all in designated areas—have had their low voltage wires put underground. In 1995–96, £¼ million has been allocated for the same purpose and it is hoped to extend the scheme in the eastern area to Cambridgeshire, Hertfordshire, Buckinghamshire and Bedfordshire.
The method of choosing where the undergrounding should go, assuming that designated areas are involved, is that the parish councils will decide that they find the wirescape intrusive. They will apply to the district council to be included in a list which will be submitted to the county councils. The county councils will then submit their list to Eastern Electricity and eventually a judgment will have to be made as to which ones are included in the programme.
The effect is dramatic in hugely improving the view of the areas. Villages such as Maldon, Cavendish, Aldeburgh, Burnham Market, Stoke by Nayland and even the little village of Marlesford in which I live, have benefited from the scheme. I can assure noble Lords that if they went to those villages and saw the pictures of before and afterwards, they would realise the benefit.
The expenditure does not only come from Eastern Electricity. There is no point in an undergrounding project unless British Telecom puts its wires underground at the same time. It is expected to do so and has done so. The county councils and district councils contribute, and even the parish councils contribute their widow's mite, in order to show that they are serious about the matter. The National Trust has contributed in certain cases; so have English Heritage, the Countryside Commission and some of the local preservation societies. I hope that other regional electricity companies will now follow suit. So far, they have not and I suggest that those noble Lords who have an interest in the subject and know of designated areas where the wirescape is intrusive should, perhaps through the parish council chain, put pressure on regional electricity companies to set up similar programmes. They can well be afforded.
One point I wish to make is that it would be desirable for the regulator to allow such amenity expenditure to be a deductible cost—which it is not at the moment—for the purpose of working out the economics of the price of power. I recognise that undergrounding low voltage lines may not be much comfort to my noble friend with his 400 kilovolt wires, but it is still a step in the right direction.
I believe that one day there will be greater scope. In the long run, probably when we are no longer around, with the further development of nuclear and solar power as well as superconductivity, we shall probably be in the happy position where power is either produced on the spot where it is needed or it may be produced in a series of nuclear or solar power stations perhaps miles away on a desert coast. The power could be transmitted throughout the world by undergrounded superconductivity lines.
1390
Meanwhile, I suggest that the Government should do all they can, through the planning system, to encourage the most careful assessment of routes and the review of existing lines which are often no longer acceptable. Perhaps other electricity suppliers could be persuaded to follow the example of Eastern Electricity in introducing a serious programme of undergrounding throughout this beautiful country.
8.14 p.m.
Lord Gisborough: My Lords, with the leave of the House, I wish to support my noble friend. My noble kinsman mentioned the effect on the plain of Northallerton. It is a wide plain below the national park and there is no doubt that a large number of wires would be unattractive and visible from a long way.
It cannot be disputed that the proposal has caused great concern to people in the area and there has been a great deal of interest and opposition to it. Not many years ago large pipes were put in underground carrying either gas or oil from the north-east coast to Lancashire. It surprises me that when a pipe is clearly economically viable for chemical firms, it should not be viable to carry gas to the area where the electricity is needed and where there will be no loss of gas, as opposed to the large loss described of electricity.
I look forward to the Minister's reply, but I understand that one of the lines of wires will be taken down by Enron and a much bigger line substituted which will look worse than the line already there. But at least there will only be one line, not two. It will be interesting to see whether the Minister confirms or denies that. I support my noble friend and look forward to hearing what the Minister has to say.
8.16 p.m.
Lord Peston: My Lords, we are all indebted to the noble Lord, Lord Crathorne, for putting down the Question and to noble Lords who have contributed to our discussion. I must be honest and say that when I first saw the Question and was told that I had to deal with it, I took the rather cynical view that it was just a bunch of rich landowners objecting to damage to their property consequent on economic advance. I wondered why I should bother. However, as the noble Lord, Lord Crathorne, pointed out, this is not a NIMBY Question, nor a rich landowner matter, as I discovered by going into it in detail.
What I find most impressive is the scale of the objections to what is proposed. So far as I can see, they appear to cover virtually everyone in the area. All the local authorities are unhappy, the Council for the Protection of Rural England and the national parks people are unhappy. The farmers are certainly unhappy and the noble Lady, Lady Kinloss, drew to our attention that to a considerable degree we are discussing small farmers. Most of the ordinary people in that part of the world are unhappy, and I understand that for once even the local media are united in saying that it is an undesirable state of affairs. I am happy to add that so

1391
far as I can see there is no party aspect to the objections. Everyone who is aware of the proposal says that there is something wrong.
We start from the point raised by the noble Lord, Lord Crathorne, that there seems to be no proven need for the line in the first place. In my judgment, a proven need would have to consist of two parts. We would need a full economically sound assessment of what is required, but equally that must be coupled with an environmental assessment. In other words, one cannot take a narrow view of such a development and whether there is a simple pay off. We must calculate—and in my judgment it can be done—the effect on the environment and weigh everything in the balance. We must ask what are the economic benefits, net; what are the environmental disbenefits; do the former outweigh the latter? Even if we do that, we still have to deal with the question that if there are gainers and losers, will the gainers not be obliged to compensate the losers?
That takes me to an altogether more fundamental point which is more general than the specific case but the specific case enables us to discuss it. It is the point of compulsory purchase, to which the noble Marquess referred.
If the relevant utilities are public utilities, whether national or municipal, one can put up quite a good case for compulsory purchase. But once those utilities are in the private sector, as they are, I can see no economically sound case whatsoever for compulsory purchase. It seems to me that what follows in that case is the need for the two parties—those who wish to build the pylons and those whose land those pylons will cross—to come to some mutual agreement so that each benefits. If they cannot reach some mutual agreement, then there is no case for building these pylons or anything else. In other words, one of the things that the Government have to face up to is that once you privatise, you really do have to privatise.
The Government say that they believe that markets, and not politicians, should decide how much energy, and of what kind, should be produced or consumed, and by whom. If the Government believe that, their view is completely incompatible, as a matter of logic, with compulsory purchase. If markets are to decide this, then markets are to decide it; and they must fully compensate all those who are affected. If the people who wish to build the line cannot then do so, it should not be built.
Lord Marlesford: My Lords, I was fascinated by the noble Lord's analysis. But does he think that, had the principles that he now enunciates been around 150 years ago, we would ever have had a railway system in Britain?
Lord Peston: My Lords, it is a point that is often raised. The noble Lord is aware that, since I teach this subject, this is not the first time that the point has been made to me. But, with respect, if he wishes to go into the question of the building of the railways, it has to be asked whether they did not do some damage to our environment, much of which turned out to be irreparable. Did not many people suffer who were not compensated? One of the points about those developments in the 19th century is that we have learnt
1392
since then that we wish to get the benefits of economic progress—I certainly do—without excessive cost in terms of damage to the environment.
Bearing in mind a point which I believe the noble Baroness, Lady Kinloss, and the noble Marquess, Lord Downshire, were guiding us towards, much of the damage that occurs is irreversible. In other words, once some of these environments are ruined, there is no way of recapturing what was there before. My point is that one has to think about these matters. One cannot just plough ahead.
This relates to another matter which we were guided towards by several noble Lords who spoke. Permission was granted by the Secretary of State for Energy (as he then was) for the building of a large generating station. That, I assume, was looked into very carefully indeed. But what puzzles and indeed distresses me is that if one is giving permission for the building of a generating station and assessing that, it follows, again quite logically, that the simple question ought to be asked: how shall we get the product of this generating station to those who will use it?
Lord Gisborough: My Lords, I am grateful to the noble Lord for giving way. I am not sure, but I think that he will find that no permission was necessary, because planning permission has been devolved to the industrial area.
Lord Peston: My Lords, that may be the case; I am indebted to the noble Lord. I was under the impression that permission had to have been granted. I am talking about the building of the power station. I am not saying that the power station should not be built, nor that transmission lines should not be built. I am simply saying that I should like all those decisions to be taken first as a whole and, secondly, taken rationally.
To return to the point that was made by the noble Lord, Lord Marlesford, we certainly could not take the view that no one will ever build another power station or another transmission system. What we want to know is whether the decision is a rational one.
A further consideration, about which the Minister will perhaps tell us, is: what is it that the inspectors looking at this matter may take into account; and what is it that they do take into account? Are they specifically limited; and therefore do the Government not have a special responsibility in matters of this kind to look beyond what the inspectors look at? I have no idea how the inspectors have reached their conclusion. My concern—which I take it is also the concern of the noble Lord, Lord Crathorne—is to say that the inspectors do not run this country. Others have to take relevant decisions. What concerns me is whether the Secretary of State, the right honourable friend of the noble Lord the Minister, is able to take account of the objections and the concern in the area.
I conclude by drawing the attention of the Minister to the precise wording of the Question asked by the noble Lord, Lord Crathorne. I am not sure whether it was meant to be quite as precise as it is—sometimes one

1393
puts down a Question simply in order to have a general debate. The Question is, to me at least, remarkably interesting. What the noble Lord asks is:
"under what conditions they would refuse permission".
In other words, he asks a quite specific Question. He does not, I take it, want a blah, blah, blah Answer. He wants the answer to the question: will you tell me under what conditions you would refuse permission? I therefore hope that the noble Lord the Minister will give us a precise Answer to the precise Question that the noble Lord, Lord Crathorne, put down.
8.25 p.m.
Lord Inglewood: My Lords, I must begin by congratulating my noble friend Lord Crathorne upon raising this issue for debate here today so soon after the Adjournment debate in the other place last week. I welcome, too, the opportunity to hear the views that he put forward, and those of the other noble Lords and the noble Baroness from Yorkshire—including Yorkshire's Lord Lieutenant—as well as the views of the others in this Chamber, who (like myself) do not come from Yorkshire.
I am sure that the House will appreciate that I cannot discuss the merits or otherwise of the particular project to which my noble friend refers, which is the proposal by the National Grid Company (NGC) to install an overhead power line about 75 kilometres long from Teesside south through the Vale of York. But I note that it would be one of the largest overhead line developments of recent years and it is entirely appropriate that it should receive detailed scrutiny, both through the planning process and in this House and the other place, where several debates have been held during the long history of this project. As noble Lords explained this evening, this matter has clearly generated a great deal of local concern. That is something of which we are aware and we will take it into account when coming to a conclusion.
Two small points were raised which perhaps I can answer most appropriately here. I was asked about the height of the pylons. I understand that they are likely to be between 40 and 45 metres, which is the main type, and that is normal in this sort of scheme. Secondly, it was asked whether it was possible that the existing line could somehow have extra wires attached to it. I understand that it is the view of NGC that simply adding more wires to the existing line is not a feasible option.
All aspects of the project have been, or still are, the subject of statutory proceedings, the reports of which my right honourable friend the President of the Board of Trade will be considering carefully when making his decisions. I must therefore limit my remarks to general matters and not the particular issues that have been raised at the public inquiries and local hearings. That may mean that I cannot give my noble friend as full an Answer as he would like. Some of the points that he raises are the subject of submissions at the inquiries. Nonetheless, I and my colleagues will take note, as I have already mentioned, of the points which he and others raised.
1394
My noble friend asked under what conditions the Government would refuse permission for the overhead line proposal in Cleveland and North Yorkshire. He will doubtless appreciate from what I have just said that I cannot comment in relation to these specific applications made by NGC. But I can nonetheless set out examples of cases which could arise in which consent might be refused. I hope that in doing so I shall answer the point that was raised by the noble Lord, Lord Peston.
The general position is that all but the most minor of overhead line developments require the consent of my right honourable friend the President of the Board of Trade under Section 37 of the Electricity Act 1989. Consent carries with it a deemed planning permission. That consent might not be granted in a case where an applicant has failed to comply with his duty towards the preservation of amenity as required by Schedule 9 to the Electricity Act. Another instance might be a case where my right honourable friend the President of the Board of Trade takes the view that the adverse environmental effects of the project are such that he considers consent should be withheld. He may reach such a view as a result, for example, of the inspector's recommendations following a public inquiry; of an Environmental Statement supplied with the application; or, in the absence of that, of the department's own findings and conclusions. In cases of this kind it will then be for the applicant, if he still wishes to pursue the matter, to modify the proposal to make it acceptable.
As my noble friend will be aware, the inspectors who conducted the 1992 public inquiry into the NGC's applications for a new transmission line in Cleveland and North Yorkshire recommended against consent being granted for two of the five proposed routes in their entirety, and against consent being granted for parts of each of the remaining three routes. My right honourable friend the President of the Board of Trade indicated in his provisional response to the NGC that he was minded to accept the inquiry inspector's recommendations on this point. That is why further inquiries are currently under way into possible alternative routes for those sections of the line which the inspectors did not like.
At this point I intended to spell out in a little more detail the history of the project. But, bearing in mind the hour and the time—I am sure that noble Lords are fully aware of the facts—I propose to leave out that part in order to answer more fully some of the points that have been raised. There have been queries about the need for the new line. The inspector's 1992 inquiry in fact considered a number of options presented by the NGC for maintaining the security and stability of the grid system, as required by the terms of its operating licence. This was in the light of the new source of generation by Teesside Power Ltd, exports from Scotland through the recently upgraded Scottish Interconnector and expected future growth in generation. My right honourable friend the President of the Board of Trade agreed with the inspectors that none of these options is as economically attractive as the proposed overhead line. He will consider carefully any new recommendations which the inspectors at the current inquiry may make. But he must confine himself to legally relevant matters at the time.

1395
The NGC operates an integrated transmission system which is of benefit to all parts of the country. The inquiry inspectors took the view that this particular line was needed for the NGC to maintain its system to the standard required under the terms of its operating licence. In his letter of 12th May 1994, my right honourable friend the President of the Board of Trade accepted that, while a single circuit line might be sufficient for immediately foreseeable needs, the double circuit line which has been applied for would not only minimise any need for further reinforcement in the future but would also enable NGC to comply with its statutory requirement to encourage competition.
On the subject of security standards of the grid system, it is currently the position that the NGC has a temporary derogation from the normal security standards as required in its operating licence. On the question of whether this derogation should be made permanent, Professor Littlechild, the Director General of Electricity Supply, has recently said that he was not convinced that it would be appropriate to change NGC's planning standards at this stage. He added, however, that he would keep the matter under review during the development of NGC's transmission service activities and the review of NGC's transmission price controls. This advice, published by OFFER on 24th February, is available to the inspectors at the current inquiries. Above all, it has to be appreciated on this subject of security standards that overhead line proposals must be considered by my right honourable friend the President of the Board of Trade in the light of standards as they exist at the time his decision regarding consent is taken.
The view has also been expressed that the Government should be actively encouraging the building of new power stations near to where the power is required. The Government believe that choice of location, along with other matters such as choice of fuel and indeed the timing of new capacity, is a commercial matter best left to the companies concerned. That choice will then be subject to detailed scrutiny in the consent process. Issues relating to the impact of a proposed generating station on the particular locality are then key matters for consideration by my right honourable friend the President of the Board of Trade, before deciding whether or not to grant consent and deemed planning permission.
It is important that companies are given correct pricing signals about the cost of locating in particular areas. The predominant power flows on the transmission system are undeniably north to south and this is now reflected in the clear cost signals given to prospective new generators by the use-of-system charges introduced in April 1993. While higher charges for use of the grid system were continued for generators in northern zones, payments rather than charges were introduced for generators in southern zones. The objective was for a greater share of the costs of transmission reinforcement to be borne by those generators whose developments have brought about the need for it.
All infrastructure involves long-term investment, and transmission is no exception. Companies cannot afford to base their appraisals on short-term considerations. At the 1992 inquiry the inspectors considered whether new
1396
developments in superconducting cables would provide an alternative to the overhead line. They concluded that superconducting cables were not commercially available or proven and were not a practical option at present. If there is new information about need or options which has become available since the first public inquiry, it is right that that should be put to the inspectors at the current inquiry. It has always been made clear that new material would be fully considered.
The proposed overhead line would cost about £½ million per kilometre The cost of underground cable providing the same capacity would be about £12 million per kilometre But cost is not the only disadvantage of underground cables. It takes much longer to find and repair faults on underground cables and thus increases substantially the time the circuit would be out of service. Furthermore, they preclude most forms of development on large swathes of land and also put limitations on the use of such land for agriculture.
On the question of whether power station proposals should take full account of the environmental implications of consequential and related transmission requirements, this is not regarded as a matter legally relevant to the decisions of my right honourable friend the President of the Board of Trade on NGC's current applications. Where a power station developer is also proposing to construct overhead lines connecting to the National Grid, it would of course be a requirement on him to include an assessment of those lines as part of his assessment of the power station project. But this was not the case here. As the inquiry inspectors acknowledged, the proposed new line will serve the needs of projects other than the Teesside power station. I do not believe that it would be reasonable to require the developer of an individual power station to provide the necessary information for the environmental assessment of further developments which are only partly influenced by his own project. That would impose unreasonable demands and cause considerable delay for applicants.
Lord Peston: My Lords, I am sorry to interrupt the noble Lord, but I find that remark astonishing. The noble Lord says that he does not "believe". Is he saying that that is a matter of law or a matter of his judgment? It would seem to me obvious that if you are building a power station, the question of how you get the product to market has to be answered. That has a community aspect and we ought to answer it in terms which are convincing to the community. Is he saying that I am wrong because it is a matter of law that does not arise or for some other reason?
Lord Inglewood: My Lords, the key characteristic here is that where you have a power station which has to lock into the National Grid, that itself is clearly part of the project which is under consideration. Where the ramifications of the joining of the power station to the grid in conjunction with other things that might happen elsewhere in the future might have an impact on other parts of the grid, that is not a matter to be taken into account at the original planning permission stage.

1397
Current procedures, under which individual developments are considered as separate applications, operate satisfactorily. I do not concede that there is any need to change them.
I recognise the importance of combined heat and power. It is the Government's policy to encourage combined heat and power and combined heat and power is growing. But it is a commercial decision for operators whether to operate in this way and where they want to locate. ENRON is operating a station in a combined heat and power mode. The maximum supply to ICI has been 380 tonnes per hour of steam, which is roughly half of ICI's total requirements, with the minimum being 80 tonnes per hour. Even if ICI does not require steam, the link is used for 50 tonnes per hour just to keep it in operation and good condition. The electrical efficiency of the plant is a little over 50 per cent, but when running on full steam output to ICI that rises to over 90 per cent.
The majority of those who have made representations to my right honourable friend the President of the Board of Trade, either in correspondence or through the inquiries and hearings, have expressed concern about adverse health effects. In particular, the public is concerned about health risks as a result of studies published in other countries concerning a possible association between electromagnetic fields and cancer.
My right honourable friend the President of the Board of Trade can only take into account the most current and authoritative evidence, including advice from the Department of Health and the National Radiological Protection Board, which is available to him at the time he makes his decision. This applies in the case of any overhead line decision and such decisions are being taken every day.
The National Radiological Protection Board's current advice is that it has considered all the available information and has concluded that the evidence does not establish that exposure to electromagnetic fields is a cause of cancer, although it does provide some evidence to suggest the possibility exists, which justifies moving forward with research. The significance of an
1398
epidemiological study depends, among other things, on the strength of the association, the presence of a dose-relationship, supporting experimental evidence and a credible biological explanation. These tests for causality are not satisfied for a link between electromagnetic fields and cancer and the NRPB do not therefore recommend the adoption of quantitative restrictions on human exposure to electromagnetic fields. Should the NRPB's advice change before my right honourable friend the President of the Board of Trade reaches any decisions on this project, he will of course take the new advice into account.
As I indicated, my right honourable friend the President of the Board of Trade has yet to receive and consider a number of reports by independent inspectors on different aspects of this project. Indeed, some of the inquiries have not yet finished. He is also obliged to consider any relevant new evidence which he receives before he makes his decisions. Equally, he cannot take into account other matters. If he takes into consideration any such new evidence or new matter of fact which disposes him to disagree with recommendations made by any of the inspectors, he must, under the relevant rules of procedure, give the parties involved an opportunity of asking for the reopening of that inquiry.
I should like to conclude by assuring my noble friend and the House that no decisions on the various individual applications before my right honourable friend the President of the Board of Trade will be taken until he is satisfied that he has all the information before him to enable him to take that decision properly, and that he will take all relevant matters into account. Furthermore, as the House will realise, my right honourable friend the President of the Board of Trade cannot take a decision which will in any way restrict his discretion in relation to any other decision.
I am sure that we all agree that this debate has been helpful. I thank all those who have participated and contributed and in particular my noble friend Lord Crathorne for raising the subject for debate.
House adjourned at twenty minutes before nine o'clock.