Lords Sitting of 4 May 1995

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Exeter): The LORD CHANCELLOR on the Woolsack.

Universities and Private Sector Finance
Lord Goold Lord Goold asked Her Majesty's Government:
To what extent they consider the private finance initiative will contribute towards meeting the future needs of British universities for capital investment.
Lord Lucas: My Lords, many universities have already attracted private sector finance for their major capital projects. We believe that private finance options should be fully considered for all capital projects undertaken by bodies in receipt of public funds, including higher education institutions. On that basis, we expect that private finance will make a substantial contribution to the capital investment needs of universities and colleges.
Lord Goold: My Lords, I thank the Minister for his reply. However, declaring an interest as the Chairman of Court of the University of Strathclyde, I ask whether he accepts that the cost of repaying capital and interest on borrowing for necessary building projects, which often cannot provide an income stream, will inevitably mean fewer recurrent funds being available for teaching and research. Will that not lead to a deterioration in the quality of university education?
Lord Lucas: My Lords, I do not accept that a university such as the one in which my noble friend plays a part is involved in a deteriorating quality of education. If anything, rather the opposite is true. But, to a certain extent, capital and income are interchangeable, as I am sure the accountants among us will agree. One can spend capital in order to avoid spending income and spend income instead of capital. The extent to which any university needs buildings will depend on what it wishes to do with them. The whole thing is a package. The private finance initiative is intended to take the best advantage of the best structure to find the money to educate our young people.
Lord Barnett: My Lords, I am grateful to the Minister for giving us a lesson in how to interchange capital and interest. I have done a little of it—not creatively, I hasten to add! Is not the noble Lord, Lord Goold, right? I am not opposed to the private finance initiative. However, are the Government saying that if money is required for both capital and interest, they will provide additional resources?
Lord Lucas: No, my Lords. What we are saying is that we will not tell universities, except within certain limits, how they should spend their money. They may use it as income or they may use it to finance borrowings to make capital investments.
Lord Morris of Castle Morris: My Lords, does the Minister agree that the private finance initiative may be appropriate for buildings like student residences where rents can be used to repay the capital, but that buildings devoted to pure research, to most contract-based research and certainly to all teaching purposes will simply not generate an income stream sufficient to repay the borrowing? Should not the HEFCs issue guidance to universities on how to avoid the seductive allurements of short-term solutions?
Lord Lucas: My Lords, universities are grown up people. They understand these matters. Yes, the HEFCs have limitations on the amount of income which universities can use for debt servicing. Otherwise, we leave it very much to universities. I should point out to the noble Lord that most of a university's income depends on getting students. That applies to accommodation income as much as to anything else. So there is risk in the provision of accommodation, just as there is in the provision of teaching facilities. Some of the most successful private finance initiatives by universities have come through the provision of laboratories for research jointly funded by industry which uses the product of that research.
Lord Gisborough: My Lords, will my noble friend say whether the finance initiative is flexible enough to meet demands for modest amounts such as £5 million or £10 million? Is he aware that some universities are worried that while it may be possible to arrange for larger loans, they will not be able to arrange loans of more modest amounts?
Lord Lucas: My Lords, clearly some sources of finance are closed to small institutions. If one wants to make a public bond issue in the UK capital markets, it must be of a certain size and £5 million would not be a viable amount. So a smaller institution may end up paying more for its capital. On the other hand, being a small institution may be an advantage in seeking joint ventures with industrial companies which are not looking to spend £50 million a time.
Lord Pearson of Rannoch: My Lords, does my noble friend agree that British universities might have a better chance of raising finance, both of a capital and an income nature, if the quality of education which they delivered—particularly in the teacher training, social sciences and humanities departments —were somewhat better than it is at the moment?
Lord Lucas: My Lords, my personal view of university education is that we have an extraordinarily good system which shows every sign of getting better year by year. Universities are putting a great deal of effort into ensuring that they improve the quality of their teaching. We applaud them for the efforts they are making and are pleased with the results they achieve. However, as in all aspects of education, we believe that there are opportunities for making this year better than last.

Mr. Gordon Foxley: Legal Aid
3.7 p.m.
Lord Boyd-Carpenter Lord Boyd-Carpenter asked Her Majesty's Government:
What was the total cost to public funds of the legal aid granted to Mr. Gordon Foxley.
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, the total amount of criminal legal aid paid so far to lawyers acting on behalf of Mr. Foxley is £160,228, including value added tax. No money has as yet been paid from the legal aid fund in respect of the civil proceedings between the Ministry of Defence and Mr. Foxley.
Lord Boyd-Carpenter: My Lords, I thank my noble and learned friend for that interesting Answer. Can he say whether payments of that size to those indulging in litigation at a cost to the taxpayer are common, or is this a rare example?
The Lord Chancellor: My Lords, first, one must remember that this was a criminal case brought against Mr. Foxley by the prosecuting authorities. Compared with recent examples which I have given in Answers to my noble friend Lord Boyd-Carpenter, the cost of this one is comparatively small. I inquired into the detail of how that could possibly come about. The answer was that the case was only over eight days, some of which were days when it was not possible for the court to sit. On one occasion, the trial had to be adjourned because of ill-health on the part of a juror. On another day, it was because of ill-health on the part of the defendant. So the total amount of work spread over those days was not as large as it might seem. However, the amounts are ultimately subject to taxation by the taxing masters of the court.
Lord Williams of Mostyn: My Lords, does the noble and learned Lord agree that there is significant public concern about moneys—however modest in the present case—being donated to people who are extremely wealthy, apart from being extremely dishonest and corrupt? Will the new regime which the noble and learned Lord envisages ensure that the likes of Mr. Foxley will not receive public money on this scale in the future? Can the noble and learned Lord assure the House that every effort will be made to recover from this man every single penny which he has received from public funds?
The Lord Chancellor: My Lords, there is no question of money having been donated from public funds to Mr. Foxley, or anyone else, in respect of legal aid. Mr. Foxley faced criminal charges before a criminal court and in accordance with the primary legislation approved by this House, and the secondary legislation made under that law, his means are assessed by the court. Legal aid follows on conditions related to that assessment if the interest of justice so requires. Subject to any changes that may be intimated in due course, that is the system at present and nothing that I have suggested would change it.
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I have recently made suggestions for bringing into account, for example, the equity value in a home which is more than £100,000. I made a change of that kind. However, the other aspect I have to emphasise is this. The Lord Chancellor and his officials are precluded from inquiring into the financial circumstances disclosed to the court of the legal aid authorities by the confidentiality provisions of the legal aid legislation. I am quite unable to find out, therefore, and it would not be proper for me to inquire into, the detailed circumstances of particular people. However, from what I have seen I have the impression that there may be some who are less than frank to the legal aid authorities in the detail of their finances. I have proposed, and I am pursuing, the setting up of a special unit to investigate the finances of such people. The difficulty is to give criteria in advance by which such a class of person can be determined. It is a difficult issue which I seek to address and I am sure that your Lordships wish to support me in that address.
Lord Clark of Kempston: My Lords, does my noble and learned friend agree that the cost to the taxpayer of legal aid is in some cases out of control? A member of a rich family, on paper, may not have many resources, but his family does. If there is some laxity in the instructions to the independent Legal Aid Board, why do we not change the rules?
The Lord Chancellor: My Lords, my noble friend will be aware that I have intimated that I propose to change the rules to give a discretion to the authorities with responsibility for adjudicating on the financial entitlement of people to take account of benefits supplied by members of their families or friends where those benefits appear to be of assistance to the applicant. At present, the basis is strict ownership and entitlement. I have sought to open a discretion. Some commentators have suggested that it will be difficult to apply. However, I believe that it is well worth making the effort for such application.
Lord Avebury: My Lords, regarding the information available to the authorities which have to determine the eligibility for legal aid, will the noble and learned Lord consider the precedent of the Drug Trafficking Offences Act in which the assessment is made by the court on the basis of the proceeds of the crimes that the person has committed rather than the actual value of assets available to him?
The Lord Chancellor: My Lords, I am aware in general terms of the provisions relating to the proceeds of drug trafficking. Those provisions are applied after a conviction. Legal aid is decided upon at the stage in criminal matters when a person has the presumption of innocence in his or her favour. Therefore, a degree of discrimination is required to apply suitable procedures after conviction.
Lord Elton: My Lords, is there now, or does my noble and learned friend intend there to be in the future,

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an offence of seeking to defraud the taxpayer by concealing resources, thus qualifying for substantial amounts of legal aid? If so, what is the penalty?
The Lord Chancellor: My Lords, yes, there is indeed such provision. There are, as usual, difficulties in bringing home to people what is said. It may be thought that people have money. It may be thought that they have resources. It may be quite another thing to prove such factors to the level of the criminal standard of proof.
Lord Boyd-Carpenter: My Lords, can my noble and learned friend say whether there have been any prosecutions of people who have concealed their means and have drawn large sums by way of legal aid at the taxpayers' expense?
The Lord Chancellor: My Lords, speaking from memory, I am not aware that people have been successfully prosecuted on that account for large sums. I perhaps need to refresh my memory; but I know that there are provisions for such proceedings. However, as I pointed out, the difficulty of proof is usually the obstacle to proceedings.

VE Day Celebrations
3.16 p.m.
Lord Sudeley Lord Sudeley asked Her Majesty's Government:
Whether, in the light of the role he played in bringing his country over to the Allied side, an invitation to the VE Day celebrations has been issued to King Michael of Romania.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, King Michael of Romania has been invited to the Guildhall banquet on 6th May and the thanksgiving service at St. Paul's Cathedral on 7th May in recognition of his positive wartime role.
Lord Sudeley: My Lords, I thank the Minister for her reply and warmly congratulate the Government on their positive response. Perhaps I may ask, first, why the Queen of Romania has not also been invited. Secondly, given that the King of Romania was ejected forcibly from his own country in 1989, do Her Majesty's Government agree that refusing entry to a Romanian national born of Romanian parents on Romanian soil is a violation of Romania's obligations under international conventions as a member of the Council of Europe? And, thirdly, do Her Majesty's Government agree that as Romania is now a member of the Council of Europe, investment from the West should be made conditional on the present Government of Romania improving their human rights record and renewing their commitment to ending intimidation and harassment of political opponents?
Baroness Chalker of Wallasey: My Lords, heads of government and heads of state have received invitations to the various celebrations of 50 years of peace. I understand that restrictions have had to be made to allow more veterans to attend events in the cathedral, in
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Hyde Park, and various events throughout the coming weekend. I believe that that was right. On my noble friend's other points, I shall write to him with a detailed answer.
Lord Molloy: My Lords, I hope that this House acknowledges the role and contribution of our Royal British Legion and that no one on either side of the Chamber despises our Royal British Legion. I hope that this House recognises what it has done in assisting our great country in times of stress. The statement made by the noble Baroness is much appreciated by our Royal British Legion.
Baroness Chalker of Wallasey: My Lords, as a member of the women's section of the Wallasey Royal British Legion, I know how much we owe to the work of the Royal British Legion. We have had a very happy partnership with the Royal British Legion over all the arrangements. Only yesterday the chairman of the Royal British Legion told my noble friend the Leader of the House how satisfied he was with those arrangements. He has seen what is planned for Hyde Park and again is satisfied.
Lord Mowbray and Stourton: My Lords, at the end of the war, by ousting his fascist government in Romania King Michael possibly saved the Russians three months' to six months' fighting. Is it not possible for the British Government to ensure that he receives some honour? The USA Government and the Soviet Government gave him honours at the end of the war in recognition of his great help to the Allies. Fifty years later, why cannot we do the same?
Baroness Chalker of Wallasey: My Lords, I note with interest what my noble friend says. This is obviously not a matter I can answer at the Dispatch Box. It is perfectly true. King Michael's wartime record was very honourable indeed. I shall look into the request that the noble Lord makes.
Lord Weatherill: My Lords, since we are slightly wide of the main Question, will the noble Baroness tell the House whether there is any truth in the rumour I have heard that the Poles who fought so courageously on the Allied side have not been invited to participate in the celebrations? I hope that that is not true.
Baroness Chalker of Wallasey: My Lords, I can assure the noble Lord that it is not true. I am sure that they will have a very prominent place in all the celebrations this coming weekend. Checking my list for names, I can immediately say that the Minister of Foreign Affairs of the Republic of Poland, Mr. Bartoszewski, will be attending this weekend and will be involved in all the events that are taking place.
Lord Finsberg: My Lords, is my noble friend aware that, although Romania is a member of the Council of Europe, it is subject to monitoring to make certain that it has carried out the commitment made before it became a member? I will see that the point made by my noble

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friend about King Michael is examined to see whether Romania, by the action it has taken, is in breach of the European Convention on Human Rights.
Baroness Chalker of Wallasey: My Lords, I am most grateful to my noble friend for that question. It is absolutely right that any countries which have had severe human rights problems are subject to monitoring. I look forward to hearing the results of his inquiries.
Lord Braine of Wheatley: My Lords, is my noble friend aware that there is no doubt whatever about the wholly honourable role that the King of Romania played at a very important stage in the war? Does she agree that it is sad that the kind of recognition asked for was not granted earlier?
Baroness Chalker of Wallasey: My Lords, there is nothing in what I have said to indicate, nor personally do I feel, any doubt whatever that King Michael's wartime record was honourable. Almost alone he led the coup against the dictator Antonescu which brought Romania on to the Allied side and, as noble friends said some moments ago, he may well have helped to shorten the war. However, at the Dispatch Box I cannot answer in the way my noble friend would like. I have said that I shall look into the matter. I shall do so and write to my noble friend.
Lord Shepherd: My Lords, is the noble Baroness aware that there is some anxiety that the celebrations this weekend seem to be dominated by London? Is she further aware that there is tremendous help, organisation and support within the small towns and villages throughout the length and breadth of the country? Once the celebrations are over, will it be possible for some information to be produced, through the press or television, on the way in which the general country has responded? London should not dominate the scene.
Baroness Chalker of Wallasey: My Lords, there will be plenty of events up and down the country. This is a national celebration. There are literally hundreds of voluntarily organised events. The Government have sought to support events in the four capitals of the United Kingdom. I am certain that the whole country will be able to join in the celebration of 50 years of peace. When we reach the VJ weekend, I hope that there will be even more opportunities for us to thank the veterans for our deliverance 50 years ago.

Spanish Strawberries
3.25 p.m.
Viscount Mountgarret Viscount Mountgarret asked Her Majesty's Government:
Why perfectly edible Spanish-grown strawberries were, on the instruction of government inspectors, banned from being sold because they were square rather than pointed.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe): My
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Lords, my noble friend is, I believe, referring to the examination by the Horticultural Marketing Inspectorate of a consignment of Spanish strawberries in Hull on 8th March. A significant proportion of the fruit was found to be white, rotten, hollow, or a combination of all three. Some of the fruit was also distorted in shape but that is allowed for in the legislation. It was the other defects that determined the inspector's decision to withhold a Class I or Class II designation from the consignment as a whole. On the inspector's advice, the consignment was re-sorted and the wholesome fruit legitimately sold on the open market.
Viscount Mountgarret: My Lords, I thank my noble friend for that very expansive response. Is he aware that the article in the Yorkshire Post, which is a highly respected daily newspaper not given to general tittle-tattle, suggests that it was the shape of the strawberries in that consignment that may have encouraged Her Majesty's inspectors to take their decision? Having said that, will be ensure that the whole question of inspection, environmental health, and so on is looked at with a view to examining the remit of those officials and at least give people the chance to make up their own mind on whether they wish to purchase fresh or rotten fruit? Can the decision not be left in their hands?
Earl Howe: My Lords, I can reassure my noble friend that the EC quality standards for strawberries and indeed other fruits permit defects in shape. The newspaper story to which he referred was incorrect. The point to note is that the quality standards that the inspectorate applied are applied to all stages of the marketing chain and not just to supermarkets. There is a value to consumers and traders in having a general level of assurance that produce is marketable and that the quality is consistent and predictable.
Lord Carter: My Lords, it is clear that the Government are in something of a jam over this. Is it correct that the inspectors did not insist that the strawberries were square but that they were flattened and not sufficiently strawberry-shaped?
Earl Howe: No, my Lords, that is not correct. The reason why the consignment was rejected was, as I said, that it was unfit to be marketed.
The Earl of Halsbury: My Lords, does the noble Earl agree that the references to the two-dimensional projections of a solid object are evidence of somewhat sloppy drafting? To be specific, to which of the five platonic solids—tetrahedron, cube, octahedron, and so on—is the ideal strawberry supposed to approximate?
Earl Howe: My Lords, I am not aware that Plato mentioned the platonic form of the strawberry.
Lord Skelmersdale: My Lords, has it occurred to the Government that the final cost to the consumer of fruit and vegetables depends far too much on the packaging? Does the Minister agree that that would be reduced if strawberries, carrots or whatever were more square in

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shape? Having said that, is he aware that the House will be well relieved that the consignment was rejected on grounds of quality and not on grounds of shape?
Earl Howe: My Lords, my noble friend makes a very good point about packaging. There is a general awareness that packaging is an expensive ingredient in the marketing chain. We certainly encourage retailers in particular—not that they need encouragement, because they undertake it of their own accord—to make sure that packaging is economical and subject to minimum waste.
Lord Mackie of Benshie: My Lords, is the Minister aware that the shape does not matter and packaging does not matter? Does he agree that what matters is the taste of the strawberry, and the taste of the Scottish strawberry is superior?
Earl Howe: My Lords, the noble Lord, Lord Mackie, is correct. That gives me the cue to say that over the past few years the British strawberry industry has been a major success story and, thanks to the innovation and skill of our breeders and growers, we can now grow strawberries from April till Christmas to a standard that cannot be beaten anywhere in the world. I commend to noble Lords some of our excellent British varieties such as Eros, Pegasus and Cambridge Favourite.
Lord Pearson of Rannoch: My Lords, does my noble friend agree that, even if the strawberries in question were condemned for their lack of quality rather than their shape, the same cannot be said for the London bus, our fishermen or lettuce growers? They are all facing genuine threat of extinction under the Treaty of Rome and the crazy bureaucracies in Brussels and in this country.
Earl Howe: My Lords, my noble friend highlighted a number of matters. The trouble is that many of the stories we read in the press are complete myths. Whether it is strawberries, the curvature of bananas, hairnets for fishermen, WI jam stalls or the Euro-lavatory, it seems that if one has a good story that can be dressed up so as to knock the European Union, it does not matter where the truth lies. Trivial as this instance may seem, the cumulative effect of such misleading stories can do great damage, and that is to be regretted.
Lord Geddes: My Lords, I congratulate my noble friend on failing to slip on a straight banana skin.
Lord Peyton of Yeovil: My Lords, will my noble friend agree that he is being slightly ungenerous in not congratulating our noble friend Lord Pearson on the extraordinary way in which he can propagate myths using all possible weapons?
Earl Howe: My Lords, I was merely seeking to ensure that the strawberry story was well and truly squashed!

Jobseekers Bill
3.32 p.m.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the amendments for the Report stage of the Jobseekers Bill be marshalled and considered in the following order—
Clauses 1 to 18,
Schedule 1,
Clauses 19 to 38,
Schedules 2 and 3.—(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

Deputy Chairmen of Committees
The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Lord Dean of Harptree, the Lord Geraint and the Baroness Nicol be added to the panel of Lords appointed to act as Deputy Chairmen of Committees for this Session.—(The Chairman of Committees.)
On Question, Motion agreed to.

Health Authorities Bill
3.33 p.m.
Read a third time.
Lord Carter Lord Carter moved Amendment No. 1:
After Clause 2, insert the following new clause:
("Report on implementation of Codes of Practice
—(1) The Secretary of State shall annually lay before both Houses of Parliament a report on the monitoring of the implementation of the Codes of Practice set out in subsection (2) as they relate to any function carried out before 1st April 1996 by a Regional Health Authority, District Health Authority or a Family Health Services Authority.
(2) The Codes of Practice referred on in subsection (1) are—

(a) the Code of Practice on Openness in the NHS;

(b) the Code of Practice on Access to Government Information; and

(c) any other Code of Conduct or Accountability.").

The noble Lord said: My Lords, the first amendment stands in my name and that of my noble friend Lady Jay of Paddington. It is a further and last attempt—this being Third Reading—to try to stiffen the Government's resolve regarding openness and accountability.
As the Bill proceeded through both Houses we heard a great deal about openness and accountability. Amendment No. 1 seeks to put on the face of the Bill a mechanism which will allow Parliament to review annually the performance of the National Health Service in terms of the three codes listed in the amendment:
"the Code of Practice on Openness in the NHS; the Code of Practice on Access to Government Information; and any other Code of Conduct or Accountability".

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It applies to the officials who will be taking over in large measure the responsibilities that were formerly the function of the regional health authorities.
In the course of the passage of the Bill the issue of complaints was discussed. For instance, we know that complaints in regard to hospitals have risen by 133 per cent. since the year before the reforms. In 1990–91 hospital complaints numbered 37,350; by 1993–94 they had more than doubled to 87,184—according to government figures. I mention that because although machinery has been devised to deal with complaints—we discussed this in the course of our debates—there is still a problem. It is not clear how the new machinery will work in practice. An annual report on compliance with the three codes would help to show how the NHS in all its forms is dealing with complaints and other matters of concern to patients, particularly as it is the NHS Executive which will be responsible for monitoring the procedure.
I am sure that the Minister will not agree with me but anyone who spends any time around the health service knows that to a large degree public confidence in the service has been undermined and staff morale is very low. That is because it is market mechanisms rather than public scrutiny which is used within the service. That has removed accountability from the process. The RHAs, which are to be abolished from April 1996, though they are not perfect, allowed for a degree of accountability. A number of their vital functions have been transferred to central government.
I was struck by a recent article in a magazine called the Health Director, a journal for directors of NHS boards produced by the National Association of Health Authorities and Trusts. I shall paraphrase some of the remarks in the article to show why the machinery of accountability needs to be redrafted in the form we suggest. I remind your Lordships that this is an article written from within the health service and intended for directors of trust boards. It points out that the entire NHS reforms quickly ran into a communication mire. It continues,
"a new language of 'purchasers', 'providers', 'contracts' and 'extra-contractual referrals', which came across as meaningless bureaucratic twaddle … Yet inescapably throughout, there has been the imperative of the internal market, requiring trusts to compete with each other for patients; and health authorities and GP fundholders to shop around for the best deal. Encouraged to communicate with local communities, each part of the NHS has developed and honed its public relations skills and used them to establish its own position in the market".
The article is referring to hospitals, health services and the family doctor, not Tescos or Sainsburys. It continues:
"'Negotiation by press release' has become an essential addition to the skills of the modern NHS chief executive. Newspapers and airwaves buzz with NHS people, ever-available, buying, selling, criticising and marketing health services. And the public gets more and more confused by the messages and more and more dispirited as they listen to NHS people squabbling among themselves".
When one considers that those remarks come from within the health service and are written for a magazine aimed at directors of health service boards, one can see
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why openness and accountability are largely missing. Apparently a simulation exercise took place for officials regarding communication and,
"it becomes clear that 'the public', although in this case made up of NHS people, actually don't understand much of what is said, and much of what they do, they don't believe. They feel patronised and ignored, and quickly become genuinely angry and confused".
At Report stage I asked the Minister—and she was kind enough to reply to me—what would happen after the Government conducted their initial monitoring of the implementation of the codes of conduct and accountability in relation to public service officials. I asked when the exercise would be completed and whether the results of the monitoring would be made public. I said that I hoped that the Government would not wait to see the outcome of the exercise before deciding whether or not to publish the results. I am grateful to the Minister for replying to me. In her letter she said,
"I can confirm that this monitoring is almost complete and that the outcomes will be reported to the Secretary of State for Health in mid-May".
She concluded,
"It has not yet been decided how the results will be reported to a wider audience",
which rather confirms my suspicion that the Government are waiting to see what the monitoring exercise says before they decide whether or not to make the results public.
In Committee and on Report I gave a local example concerning hospital plans which I shall not repeat to your Lordships. I shall merely say that it is a classic example where the preparation of a secret business plan which was not made available to the people concerned has led to bitterness, distrust and disbelief in the whole operation in the area where I live.
I turn to the code of openness. I referred to this matter on Report but I think it is worth pressing the Minister again regarding the business of charging for information. The code says, entirely fairly:
"It is recommended that charging [for information] should be exceptional".
It says that the trusts and authorities may make a charge for providing information but are not required to do so. It is recommended that charging should be exceptional. It also suggests in the ground rules that there should be no charge for the first hour and a charge not exceeding £20 per hour for each hour thereafter. One can well understand how, with a small community that is trying to put together a scheme to save its local hospital, this could be a very useful weapon in the hands of the trust or authority concerned if it wished to stifle that group just by charging excessively for the information that is being asked for.
Finally, I wish to turn to the question of communication with the public and the media and the guidelines produced by the NHS Management Executive entitled Guidance for staff on relations with the public and the media. With regard to whistle blowing and the gagging of employees, the document states that,

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"any employee contemplating making a disclosure to the media is advised to first seek further specialist guidance from professional or other representative bodies and to discuss matters further with his or her colleagues and, where appropriate, line and professional managers".
One can see how that could be used to stifle employees.
For all the reasons I have given it is clear that there must be some means of monitoring these codes. I give credit to the Government for issuing the codes, but it is not just a case of having them available. We must see how they are actually working, how the health service is reacting to the codes and how it is performing against them. Although the Government are monitoring the code of practice on openness, is that information to be made available to the wider public? What we are asking for is an annual report to Parliament on how the three codes are working out in practice and what is happening with regard to openness and accountability. We want to see how this vast organisation is conducting itself in terms of the openness and the accountability which we all want to see. A report to Parliament would provide a mechanism to enable that to be done. I beg to move.
Lord Peyton of Yeovil: My Lords, the noble Lord has shown himself to be an avid reader of reports, in which case—I take that to be the case—he must be a very busy man indeed. I am glad to see him looking in comparatively good health compared with what one would expect.
It seems to me rather strange that the noble Lord should be so keen a reader of the reports when he is such a sharp critic of the contents of much of the literature, if that is the right terms, which is published on these subjects. However, there is one point on which I do rather warmly agree with him. I refer to the appalling jargon which is used in the health service today. They have gone into this proverbial market place and grabbed every epithet they could find and transferred them to the health service whether or not they fitted. Mostly, they do not seem to fit at all.
The noble Lord commented on the PR skills in the health service. The number of questions which are asked about the health service today and the number of people who go round scavenging for something that is amiss mean that the health service has every need of PR skills. Whether those skills are adequate, I do not know, but I would hazard a guess that they consume a great deal of time which might be better used in other ways.
If I may turn to the amendment, I wonder who will write these reports and who will read them. The noble Lord, Lord Carter, is a glutton for punishment. He indicates himself as the first victim of this shower. I hope he will have some pity on himself. Who will be available to write these reports and how much of their time will they take? Who will monitor the information? It seems that we have a passion in this country for looking over everyone's shoulders to see what they are doing. This constant desire to interfere and to question and to have a report must be one of the most foolish activities. It seems to be based on the idea that everyone is either incompetent or dishonest. I think that that is stretching things a little far.
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I am reasonably confident that anyone with my noble friend's intelligence and perception will wish the House to reject the amendment but I hope that she will pause in doing so to say a word about the time which would be taken if these activities were to be encouraged.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, with the advice of a Sir Ernest Gowers in Plain Words, I shall try to speak in a simple and straightforward way. The codes of conduct and accountability published in April 1994 by my right honourable friend the Secretary of State make clear the expectation that all those who serve the NHS will maintain high standards of corporate and personal probity. All members of health authorities and trusts are required to confirm their acceptance of the codes which include, among other things, a requirement to declare interests which may be relevant to NHS business.
We introduced these codes so that there would be no doubt about what is expected of NHS members; and having introduced them, of course we intend to monitor how they have been implemented until we are certain that the codes are being followed. It may also reassure your Lordships to know that there is already within the codes a requirement for every health authority and trust to present at least an annual report, a practice that is very often followed by industry and commerce. In that way its performance may be assessed by the NHS Executive on behalf of the Secretary of State, by the Audit Commission and its appointed auditors and also by the local community.
The code of openness in the NHS was published in April this year and will be implemented from 1st June. We shall also monitor the way in which this code is implemented in its early years until we are confident that we have achieved the culture of openness that we are seeking to encourage. Furthermore, there is already an important safeguard in the system since the Health Service Commissioner may investigate any complaints referred to him by the public about the withholding of information. He will publish his own reports on his findings.
The code of practice on open government applies to the Department of Health and will apply to the regional offices of the NHS Executive when, subject to this legislation, regional health authorities are abolished in April 1996. The code does not apply to the NHS and it is not therefore appropriate to consider its monitoring or reporting arrangements under this legislation.
The noble Lord, Lord Carter, raised the issue of complaints. I am sure he will be aware that the complaints procedure has recently been reviewed in line with the Wilson Report. It is because people are aware now that if they make a complaint some action will be taken that they are more encouraged to do so. That partly accounts for the increase in the number of complaints that are received. Indeed, we encourage people to tell local management what needs to be put right and what we can do better within the National Health Service. We tell them the routes open to them in order to make complaints.

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From my experience in the direct running of health services, we should always remember that the tributes always far outweigh the complaints. The noble Lord asked about charging under the code of openness. The code makes quite clear that charging should be exceptional. It also states in paragraph 10 that people may complain about the level of charges, which is of course also a safeguard. My noble friend mentioned bureaucracy. He is quite right in that it can grow surreptitiously. It needs to be constantly checked. The whole purpose of the Bill is to reduce bureaucracy by abolishing regional health authorities and a whole tier of administration.
We are committed to ensuring that the codes of openness, conduct and accountability become an established part of the NHS. That is best done through appropriate management actions guided, as necessary, by Ministers and not through the statutory mechanism that has been proposed in this amendment. Therefore, I ask your Lordships to reject it.
Lord Carter: My Lords, I am very grateful to the noble Lord, Lord Peyton, for his kind remarks about my ability to read government reports. I can assure him that I get some light relief from reading them. I also read the speeches of the noble Lord in Hansard. They soon send me to sleep.
I referred to the magazine called Health Director produced by the National Association of Health Authorities & Trusts. It refers to the PR skills of executives who negotiate by press release. I remind noble Lords of what happened in the Wessex and West Midlands areas. There were criticisms about national health procedures from the Public Accounts Committee. There was a great deal wrong. We hope that these codes will help to put these matters right. It will take some time, but if it saves the Government the sums of money which were lost in Wessex and the West Midlands, it will be time well spent.
I heard what the Minister said about monitoring, but it is the publication of that monitoring which is so important. I am willing to give way if the noble Baroness can tell the House what in fact the Government intend to do after they have monitored the performance against the codes. Do they intend to publish in full the results of the monitoring?
Baroness Cumberlege: My Lords, with the leave of the House, perhaps I may say that the Government have not yet decided on that matter. The first reports are coming through, but we would in no way want to be secretive. Local government is closely monitored and councillors do or do not declare their interests. The same principle will apply to the National Health Service.
Lord Carter: My Lords, I am surprised that the Government are unable to take a decision in principle before they have seen the results of the monitoring. However, they intend to make them public and that is significant. Of course the health authorities, the trusts and the department produce annual reports as regards their performance. But it is what is left out of the reports which is so important. How can one criticise an
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omission if it cannot be found? For all those reasons it is important to have a much firmer machinery to see that the codes are monitored and the results reported to Parliament.
The Minister mentioned complaints. Perhaps I may remind her of the things which have been left out of the recommendations of the Wilson Committee and the Acting on Complaints document:
"Publication of complaints statistics by trusts, health authorities and health boards; development of a system for recording and classifying complaints on a UK basis; that all the GP practices and trusts review their complaints handling on at least a quarterly basis and make an annual published report on these reviews to the relevant health authority or board or main purchasers; that organisations regularly find out what their users think about their handling of complaints; and that each Health Department publishes an annual complaints bulletin".
Those are the recommendations of the Wilson Committee to which the noble Baroness referred, but they were not included in Acting on Complaints. The answer which the Minister gave was unsatisfactory and I wish to ask the opinion of the House.
3.54 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 74; Not-Contents, 156.

Division No. 1

CONTENTS

Acton, L.

Jeger, B.

Addington, L.

Jenkins of Putney, L.

Airedale, L.

Judd, L.

Allen of Abbeydale, L.

Listowel, E.

Archer of Sandwell, L.

Lockwood, B.

Ashley of Stoke, L.

Longford, E.

Avebury, L.

Lovell-Davis, L.

Birk, B.

McFarlane of Llandaff, B.

Blackstone, B.

McIntosh of Haringey, L.

Broadbridge, L.

McNair, L.

Bruce of Donington, L.

Mayhew, L.

Callaghan of Cardiff, L.

Milner of Leeds, L.

Carter, L. [Teller.]

Molloy, L.

Castle of Blackburn, B.

Monkswell, L.

Clinton-Davis, L.

Morris of Castle Morris, L. [Teller]

David, B.

Diamond, L.

Nicol, B.

Donaldson of Kingsbridge, L.

Northfield, L.

Donoughue, L.

Perry of Walton, L.

Dormand of Easington, L.

Peston, L.

Elis-Thomas, L.

Rea, L.

Exeter, Bp.

Richard, L.

Ezra, L.

Falkender, B.

Rodgers of Quarry Bank, L.

Falkland, V.

Sainsbury, L.

Farrington of Ribbleton, B.

Serota, B.

Gallacher, L.

Shepherd, L.

Gould of Potternewton, B.

Smith of Gilmorehill, B.

Graham of Edmonton, L.

Stallard, L.

Harris of Greenwich, L.

Stedman, B.

Haskel, L.

Strabolgi, L.

Hayter, L.

Taylor of Blackburn, L.

Hilton of Eggardon, B.

Tordoff, L.

Hollis of Heigham, B.

Turner of Camden, B.

Howell, L.

Wallace of Coslany, L.

Howie of Troon, L.

Williams of Crosby, B.

Hughes, L.

Williams of Elvel, L.

Jay of Paddington, B.

Williams of Mostyn, L.

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NOT-CONTENTS

Aberdare, L.

Harlech, L.

Addison, V.

Harmsworth, L.

Ailsa, M.

Harrowby, E.

Aldington, L.

Henderson of Brompton, L.

Alexander of Tunis. E.

Hives, L.

Allenby of Megiddo, V.

Hogg, B.

Alport, L.

Hood, V.

Ampthill, L.

Hooper, B.

Archer of Weston-Super-Mare, L.

Howe, E.

Hylton-Foster, B.

Astor, V.

Iddesleigh, E.

Astor of Hever, L.

Inglewood, L. [Teller.]

Belhaven and Stenton. L.

Jenkin of Roding, L.

Bellwin, L.

Kinnoull, E.

Beloff, L.

Lauderdale, E.

Blake, L.

Lindsay, E.

Blaker, L.

Long, V.

Blatch, B.

Lucas, L.

Blyth, L.

Lucas of Chilworth, L.

Boardman, L.

Lyell, L.

Borthwick, L.

McColl of Dulwich, L.

Boyd-Carpenter, L.

McConnell, L.

Brabazon of Tara, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Brougham and Vaux, L.

Bruntisfield, L.

Malmesbury, E.

Burnham, L.

Manchester, D.

Butterworth. L.

Marlesford, L.

Cadman, L.

Merrivale, L.

Caldecote, V.

Mersey, V.

Campbell of Alloway, L.

Milverton, L.

Campbell of Croy, L.

Monteagle of Brandon, L.

Carnegy of Lour, B.

Mottistone, L.

Carnock, L.

Mountevans, L.

Chalker of Wallasey, B.

Mowbray and Stourton, L.

Charteris of Amisfield, L.

Moyne, L.

Chelmsford, V.

Munster, E.

Chesham, L.

Murton of Lindisfarne, L.

Clark of Kempston, L.

Nelson, E.

Clifford of Chudleigh, L.

Noel-Buxton, L.

Cochrane of Cults, L.

Norrie, L.

Coleridge, L.

Northesk, E.

Constantine of Stanmore, L.

O'Cathain, B.

Courtown, E.

Oppenheim-Barnes, B.

Craigavon. V.

Orkney, E.

Cranborne, V. [Lord Privy Seal.]

Orr-Ewing, L.

Oxfuird, V.

Cullen of Ashbourne, L.

Palmer, L.

Cumberlege, B.

Pearson of Rannoch, L.

Dacre of Glanton, L.

Pender, L.

De Freyne, L.

Perry of Southwark, B.

De L'Isle, V.

Peyton of Yeovil, L.

Dean of Harptree, L.

Pike, B.

Denham, L.

Plummer of St. Marylebone, L.

Digby, L.

Pym, L.

Dixon-Smith, L.

Rawlings, B.

Downshire, M.

Rennell, L.

Dudley, E.

Renton, L.

Eccles of Moulton, B.

Richardson, L.

Elles, B.

Seccombe, B.

Elton, L.

Shannon, E.

Faithfull, B.

Sharples, B.

Ferrers, E.

Shaw of Northstead, L.

Finsberg, L.

Shrewsbury, E.

Foley, L.

Skelmersdale, L.

Fraser of Kilmorack, L.

Stewartby, L.

Gainford, L.

Strange, B.

Gardner of Parkes, B.

Strathcarron, L.

Geddes, L.

Strathclyde, L. [Teller.]

Goschen, V.

Sudeley, L.

Gray, L.

Suffield, L.

Haig, E.

Swansea, L.

Hailsham of Saint Marylebone, L.

Terrington, L.

Teviot, L.

Halsbury, E.

Thomas of Gwydir, L.

1490

Trefgarne, L.

Westbury, L.

Trumpington, B.

Wharton, B.

Ullswater, V.

Whitelaw, V.

Vaux of Harrowden, L.

Wise, L.

Vivian, L.

Wynford, L.

Wade of Chorlton, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
4.2 p.m.
Schedule 1 [Amendments]:
Baroness Jay of Paddington Baroness Jay of Paddington moved Amendment No. 2:
Page 5, line 21, at end insert:
(" "(c) other persons with professional expertise in and experience of social care," ").
The noble Baroness said: My Lords, this amendment seeks to ensure that the new health authorities must secure advice from people with social services expertise and experience in the same way as they will be required to take advice from healthcare workers.
On Report, I moved an amendment to make the chairman of the relevant social services committee a full member of each health authority board. In reply, the noble Baroness, Lady Miller, said that that would not accord with the Government's wish that non-executive members of health authority boards should all be generalists (col. 755 of the Official Report of 24th April). The noble Baroness restated that the Government are opposed to representatives of any outside bodies serving on health authorities. Although we do not agree with that position, I acknowledge that the Government will not at this stage be moved from it.
However, throughout our debates on the Bill and at other opportunities in your Lordships' House, great emphasis has been placed on the need for co-operation and collaboration between local health and social services agencies. Ministers have often spoken of their ambition to move more and more health services out of hospitals and into the community, and to improve health education and promotion through the so-called "healthy alliances" between different types of agency. Those goals will be smoothly and properly achieved only by formally establishing strong working links between health and social services authorities.
I expect that in reply the Minister may repeat what the noble Baroness, Lady Miller, said on Report: that mechanisms such as joint consultative councils already exist and that, in general, it is best to rely on good practice and the local development of good personal relations. However, as we discussed on Report, joint consultative committees have a very limited power and agenda. The noble Baroness, Lady Miller, and I discussed our relative experiences of serving on such committees—hers was happier and more fulfilling than mine. Whatever the relative personal experiences, I am not sanguine about leaving very important matters, such as continuing and community care for the elderly, the mentally ill and the young disabled solely to the insubstantial hope of good practice in every health authority or to the rather frail mechanisms of organisations such as joint consultative committees.
The boundaries of health and social care are becoming increasingly blurred. The confusion about financial responsibility for different services is creating tensions and difficulties in many areas across the country, and in many areas local authorities often resent what they see as an additional burden on their tight budgets. If health and social service agencies are arguing about their relative responsibilities, the people who are suffering are their clients, their patients. I was talking this week to an executive director of a London health authority who was pleased by the development of good informal relations with social services colleagues in her borough, but she cautioned me at the same time that that was by no means universal. In her graphic phrase, "There's war out there".
We have a duty in framing the legislation to try to do everything that we can to ensure that the services that are often needed by the most vulnerable members of our society are delivered to a high standard throughout the country. If every health authority is required, as it would be by the amendment, by statute to take advice from social services, that would go some way towards establishing national standards of care.
The Government clearly think that it is essential that health authorities receive advice from people with experience and expertise in healthcare—from general practitioners, nurses and midwives among others. That is contained in the provisions of Schedule 1(3) as it now stands. Amendment No. 2 would strengthen the pool of professional advice available to health authorities by including those with the kind of social services experience and expertise that will be essential for the development of the National Health Service. I beg to move.
Baroness Cumberlege: My Lords, I welcome this opportunity to debate an important aspect of health authority responsibilities: that of working with statutory, voluntary and private social care organisations to secure effective and co-ordinated provision for a range of needs.
I have made clear in previous debates that the Government are committed to close working between the new health authorities and local authorities on many issues, but especially on community care. There are mechanisms already in place to help health authorities and local authorities to comply with their statutory duty of co-operation. In particular, there are the joint consultative committees. I appreciate, however, that the noble Baroness has highlighted that there are mixed views on this, but joint consultative committees will continue after the reorganisation and we expect that their work will be made considerably easier by the streamlining of local NHS authorities in this Bill.
The high priority that the Government give to co-operation on community care issues is reflected in a great deal of guidance issued in recent years. The guidance issued in February on
"NHS responsibilities for meeting continuing care needs"
reinforces the need for effective local and health authority collaboration. Specific guidance on joint commissioning is being issued to local authorities and health authorities shortly. The guidance has sought to clarify the responsibilities of the different agencies and to ensure that they evolve effective means of working together.
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This amendment deals with a particular aspect of that co-operation: securing professional advice. Your Lordships will be aware that we have been consulting on draft health service guidelines on the importance of health authorities involving professionals in their work and some ways in which they might do that. The draft guidelines carefully distinguished between involvement of staff working in the NHS (who would often be directly approached for advice) and involvement of staff working for other agencies, such as local authorities, where the normal protocol would be for the approach to be made more formally and as part of an inter-agency agreement.
We fear that the amendment might have the effect of clouding the respective role of health care and social care authorities. The Bill currently makes clear that health authorities must make arrangements to take advice from health care professionals. I think that there would be a danger of undermining the role of, for example, social services departments, if health authorities were also required to take advice from social care professionals. The correct route for that advice, in so far as it affected health care, would be through inter-agency working. We must maintain parity of roles to avoid placing obligations on health authorities, which might result in their second guessing the social care agencies. I therefore invite the noble Baroness to withdraw the amendment.
Baroness Jay of Paddington: My Lords, I am grateful to the Minister for that reply. The only phrase which surprised me slightly was the one about clouding the boundaries between social and health care, because it seems to me that in the development of health and social services, particularly in the fields of continuing and community care, we are seeing the clouding of those boundaries with what I had thought were intended to be positive results.
I am aware, as I said when moving the amendment, that there have been considerable difficulties about financial responsibilities between local authorities and health authorities. To describe the merging, as it were, of social and health care as clouding the boundaries in a pejorative sense is surprising. There will obviously be some further development of inter-agency working. The purpose of the amendment is to give that structure a formal mechanism and to ensure that all health authorities, both good and bad, would be forced to take the appropriate advice to help them through their new responsibilities for community care on both sides of the fence.
However, it is something upon which, in a sense, we shall never agree, because it concerns the formality of mechanisms and the understandings that we on this side of the House would like to see in regard to representation on health authorities of people with additional responsibilities which affect health care. As I say, this reflects a fundamental difference, but at this stage of the Bill I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Jay of Paddington Baroness Jay of Paddington moved Amendment No. 3:
Page 5, line 24, at end insert:
("(1 A) Every Regional Chairman shall make arrangements for securing that they receive from universities with undergraduate medical and dental schools advice appropriate for enabling the Health Authorities in their region effectively to exercise the functions conferred or imposed on them under or by virtue of this or any other Act." ").
The noble Baroness said: My Lords, this amendment too is concerned with professional advice. In earlier debates, we on these Benches, the noble Lord, Lord Walton of Detchant, and others, expressed concerns about the possibility that links between academic medicine and the health service will be seriously weakened by the new arrangements proposed in the Bill. Potentially, the weakest link in the chain is at the regional level, and yet that is the crucially important level at which the academic world of medicine should be concerned with the health service.
That is where, until now, postgraduate medical deans have been full members of the RHAs, and where the complicated, but nonetheless essential, joint funding arrangements between the university medical schools and the NHS have been managed. The Department of Health now funds directly a large number of academic posts across the country. In some medical schools, I understand as many as 40 per cent. of clinical academic posts are funded through the health service. That is obviously of great mutual benefit to all the institutions involved and it is of great benefit to the patients and users of the health service. The link contributes greatly to this country's tradition of excellence in academic medicine and NHS care.
The universities have been given undertakings that that form of funding (support for those clinical posts) will continue, but precisely how the systems will be managed is still in doubt. There are no clear provisions in the Bill to create statutory mechanisms to organise joint funding nor to create joint working arrangements to ensure that the views and ideas of the medical and dental schools are available automatically to the NHS.
As so often in the Bill, the Government seem to be relying upon the development of good practice to solve everything. In Committee, I drew attention to correspondence earlier this year between the Secretary of State for Health and the chairman of the CVCP. The Secretary of State said that the regions had been reminded to take account of the views of university's inappropriate circumstances, but Dr. Edwards, chairman of the CVCP, writing in March replied that that was not good enough and,
"given the very great uncertainties ahead, it is our view that a formal mechanism which is clear and unambiguous needs to be in place from the start".
The Minister has told your Lordships that since then informal discussions have taken place to try to resolve that issue, but, so far as we know, nothing has yet been agreed about regional arrangements—certainly nothing appears on the face of the Bill. On Report, the noble Lord, Lord Walton, said:
"Surely it is not beyond the wit of man to devise a mechanism whereby universities can play a major statutory, advisory role at regional level"—[Official Report, 24/4/95; col. 749.]
1494
I can only echo those words. Amendment No. 3 is designed to assist the wit of man to achieve precisely that purpose.
We know that the Government will not accept outside representation on the management boards of the new regional offices, but, as the Minister said on Report, regional chairmen will have a special responsibility even in that area. Amendment No. 3 seeks merely to bind those regional chairmen to securing advice from the universities in the same way that the local health authorities will be statutorily bound to involve local health professionals under Schedule I. In that way, the regional chairmen will have a formal stimulus to establish the kind of mechanisms the Minister commended on Report, to include the vital contribution of university representatives. I beg to move.
4.15 p.m.
Lord Addington: My Lords, I support the amendment which has to it the name of my noble friend Lady Robson. To suggest that the new health authorities receive advice from the academic medical establishment is not unreasonable or radical. As the noble Baroness said, to rely on good practice taking place in the future is chancy, because it may not take place. By having on the face of the Bill, "you shall consult" overcomes that problem, and will result in that necessary contact. I support the amendment strongly.
Baroness Cumberlege: My Lords, the amendment seeks to place a formal requirement on regional offices to set up liaison arrangements with universities. It would not be workable in its present form, and, more importantly, it is entirely unnecessary. I fully understand the reasons why the noble Baroness has tabled the amendment. I know it reflects the more widespread concern that the relevant interests of universities and their medical and dental schools might somehow be overlooked after RHAs have been abolished.
I can reassure the noble Baroness that there is no need for a new statutory provision to ensure that that does not happen. Effective liaison arrangements, both formal and informal, are currently in place, even though most of them are not required by legislation. Indeed, the recent report from the Joint Medical Advisory Committee of the Higher Education Funding Councils presents a very favourable picture of the effectiveness of liaison between NHS trusts and medical schools. There is no reason why that should be undermined once RHAs are abolished, nor will we allow it to be.
I have previously referred to the 10 key principles in your Lordships' House, during debates on the Bill. They provide a very clear and firm statement of the need for effective liaison. The Joint Medical Advisory Committee's report says that they are working well. The amendment proposes a statutory provision which is so vague that I believe it might well undermine the effectiveness of the 10 key principles. People might say, "We meet our statutory requirement, why should we comply with the 10 key principles as well?" We would not want that to happen.

1495
My right honourable friend the Secretary of State has also made it clear to the regional chairmen, who are all members of the NHS Policy Board, that she expects them to take a particular interest in ensuring that there is good liaison between the NHS in their region and universities. Any problems will then come swiftly to our attention and can be dealt with quickly and effectively.
Finally, I should also report that a meeting has been arranged between senior people in the Committee of Vice-Chancellors and Principals and senior officials of the NHS Executive (including the chief executive) on 9th May. They will discuss the question of appropriate arrangements for effective liaison between regional offices and universities. I am sure that that meeting will be constructive and productive.
I hope that I have made it clear that the amendment would not be workable and is in any case entirely unnecessary. I invite the noble Baroness to withdraw it.
Baroness Jay of Paddington: My Lords, I thank the Minister for that reply, in particular for the information about the further meeting between the CVCP and the Department of Health on 9th May. We have had lengthy discussions about the subject during the various stages of the Bill. It is unfortunate that the final meeting to resolve the matter will take place after the Bill has passed all its stages in another place and in this House.
The arrangements are of great concern to the academic medical community and, as I have stressed several times in this House, to those of us who are anxious about the excellence of patient care. It is unfortunate that such important matters have been left until the last minute before being resolved and that they will be resolved when we will be unable to discuss them in the course of dealing with this legislation.
However, on the understanding that progress is being made towards an agreement with the Committee of Vice-Chancellors and Principals, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness McFarlane of Llandaff Baroness McFarlane of Llandaff moved Amendment No. 4:
Page 19, line 32, at end insert ("including at least one officer who is a registered nurse and who has had, in the twelve months immediately preceding his or her appointment, experience of managing services to patients.").
The noble Baroness said: My Lords, I rise to move the amendment standing in my name on the Marshalled List. To do so may appear to he tedious in the light of the lengthy consideration given to the principle of professional representation and related amendments at each stage of the Bill. However, I have looked at the Minister's replies to the amendments, pleading not for professional representation but for a representation of the expertise that nurses bring to health authorities. In every case, the replies were in terms of professional representation.
I am the first to agree—as we did after the Second Reading and the Committee stage—that to plead for professional representation of every profession in the health service would be impossible. But it is the expertise which nurses bring to a health authority for which I plead.
If no obligation is laid on the authorities to include within their membership a registered nurse who has experience of managing services to patients that would create a notable departure from historical precedents. Your Lordships' House will know that since the days of Miss Nightingale the history of the health services of this country has been punctuated by a succession of redoubtable ladies—and in some cases gentlemen—who have managed those services with great expertise. They achieved national eminence as a result.
Since the first National Health Service reorganisation in 1974 each district health authority has had an executive nurse director. To manage the service without a lead nurse at each level would be departing from historical precedent. The chief nurse has not been in lead positions on health authorities as a professional representative. She has been there as an indispensable contributor to the work of the health authorities at every level. The reasons for that were well rehearsed during previous stages of the Bill. They include the size of the nursing service; its sophistication and complexity; its specialist roles; its intimate impact on patient care and on all other services; and the intricacies of skill mix.
Nurses provide 80 per cent. of the direct patient care and the cost of the nursing service is 40 per cent. of current National Health Service expenditure. It is unthinkable to leave the policy decisions of that great resource to the vagaries of personnel or lay managers, or even to the directors of public health who have no special knowledge of the manpower and legal requirements of the service. At district health authority level I have witnessed attempts at that and I have been appalled at the outcomes and failures in patient care that have resulted.
The Minister herself has endorsed the crucial contribution of nursing to the purchasing function. On Second Reading she expressed the view that she would be very surprised if the majority of health authorities did not appoint executive members with nursing experience. I refer your Lordships to col. 70 of the Official Report of 6th March.
Current evidence appears to be to the contrary. At the beginning of the year the Royal College of Nursing conducted a survey which revealed that only half of the district health authorities and the family health service authorities currently have nurses in executive positions on their boards. More significant is the Government's own research, Creative Career Paths in the NHS. A study by consultants for the NHS women's unit reported in March this year and showed that only 58 per cent. of the purchasing organisations surveyed had a nurse at director level.
For the purposes of our argument today, these trends can only impoverish the health service further as it diminishes the number of those who are available to take executive roles on purchasing authorities. I believe that the real argument for an executive member with experience of managing services to patients lies in the necessary expertise that they bring to the work of the authority. That was amply illustrated by the study commissioned by the nursing directorate of the NHS Executive. It took the form of structured interviews with chief executives and nurses working in purchaser organisations. It listed the contribution that nurses can

1497
make to purchasing. To summarise: they can challenge clinical practice because they are clinically credible; they can challenge the basis of prices because they have a breadth of practical experience across clinical areas, understand how nursing costs are calculated and have experience of managing budgets; they can evaluate alternatives because they have worked at the sharp end of "care"; they can interpret users' needs; and they can contribute to quality because they have working experience of setting up quality standards in processes and procedures and see quality from the users' point of view.
I spoke to an executive nurse on a health authority and I asked her what contribution she makes to the work of her authority in purchasing. She stated that she is able to give advice on nursing skill mix changes being proposed by a provider unit. She is able to provide a nursing focus on complaints and untoward incidents. She leads the quality standards programme for the health authority. She facilitates the involvement of users in commissioning and contributes to health needs assessment work. She advises on value for money in contracts. She contributes specialist knowledge and expertise in contracting for different care groups, and so forth. It is difficult to conceive how a health authority can function adequately without such expertise at its immediate disposal and not just at an advisory level.
I conclude by quoting the secretary to the Welsh Board of the Royal College of Nursing. She states:
"There is no doubt that the proper exercise of those statutory functions of the Authority which relate to nursing or midwifery practice or to the protection of the public will continue to require the expertise and vigilance of the most senior of nurses and for which that nurse will be accountable to the United Kingdom Central Council which endorses, strongly, the claim now being made".
I beg to move.
4.30 p.m.
Lord Addington: My Lords, this is a reasonable amendment which provides that representatives of the nursing profession shall be included on all health authority boards. As the noble Baroness has just told us, nurses provide over three-quarters of the actual contact with patients and are involved at virtually every level of treatment. However, a survey conducted at the beginning of the year showed that half of the boards currently do not have a member of the nursing profession in an executive position.
It just does not seem to make sense that there is no representative of the nursing profession, which has most of the direct contact with patients. I suggest that the Government should look again at this matter because it is not sufficient to say that they would expect there to be some form of representation for the profession which provides the majority of contact with patients.
Lord Carter: My Lords, on these Benches, we are pleased to support this amendment. In moving the amendment, the noble Baroness, Lady McFarlane, set out the arguments extremely clearly. Perhaps I may repeat the crucial statistic which she mentioned. Nurses are the largest professional group in the health service, providing
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80 per cent. of direct patient care. The noble Baroness explained why the profession should be involved in the way which the amendment proposes.
Like the noble Baroness, I noticed the remark which the Minister made on Second Reading to the effect that she would be very surprised if the majority of health authorities did not appoint executive members with nursing experience. We need something rather stronger than ministerial surprise in this instance.
On a previous amendment I quoted from an excellent article in Health Director, which is produced by the National Association of Health Authorities and Trusts, by Mr. Ian Wylie who is head of communications at the King's Fund. He gives a very good summary of the operation of the health service. He says:
"The present operation of health services involves a constant and complex interaction of six elements: professionals. purchasers, providers, patients, public and politicians".
I notice that it is also rather alliterative. He goes on to say:
"Each of these six parts must work with and influence each of the others to reach a balance which is the best solution for healthcare. As health services cannot function without an effective interplay of the six partners so the communication processes for health services must also involve all partners".
It would seem to me that if it is to involve all those partners, the paragraph sums up the situation extremely well. If there is to be an effective interaction and interplay between all parties, there should be a means of ensuring that nurses are represented.
I do not believe that other professionals would be offended if the nurses were represented because of the very vital role which they play in terms of their skill and expertise and the sheer weight of their involvement—80 per cent. of direct patient care. I hope that the Minister will feel able to accept the amendment.
Baroness Cumberlege: My Lords, first, I thank the noble Baroness for giving me notice of this amendment. I should like to take this opportunity to apologise to her for stating at an earlier stage in the passage of the Bill that she was a vice-president of the Royal College of Nursing. In fact, she is a fellow of the Royal College which, in my view, is a much more exalted position because it must be earned professionally.
Perhaps I may also thank the noble Lord, Lord Addington, for filling in for the noble Baroness, Lady Robson, at very short notice.
We have debated the question of nurse membership at each stage of the Bill's passage. I recognise that the continuing debate is not just special pleading for a particular group. It reflects the very real conviction that the involvement of nurses in purchasing will lead to better services for patients.
It is easy for me to talk about the essential contribution which nurses make to the work of health authorities—and I strongly believe that nurses have distinctive experience to bring to bear on purchasing. But words need to be backed up with actions. The Government have demonstrated in many material ways that they value nurses, and trust their professional skills; for example: our nurse prescribing initiative extends the role and influence of nurses. We believe it will be shown to bring genuine benefits both to patients and staff.

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Over £400 million has been made available to support the introduction of Project 2000, which is achieving higher standards of education and training for nurses. Project 2000 students are educated to become flexible, innovative and accountable practitioners in both hospital and community settings. Better trained nurses means better care for patients, and, as the Royal College of Nursing reminds us, as did the noble Baroness today, nurses have 80 per cent. of direct patient care. Practice nurse numbers have grown significantly over the past 12 years. They have significantly enhanced the skills of primary care teams.
The Changing Childbirth initiative is helping midwives to strengthen their position in the routine care of women during labour. The Government have provided significant funding for the initiative, including support for a full-time implementation team; for 14 development projects last year; and £1 million for further investment this year. NHS trusts have created new opportunities for nurse leaders with the establishment of executive director posts.
Those initiatives, more than anything I can say today, speak of our commitment to the nursing contribution. I believe that they should reassure nurses that we mean what we say in the draft guidelines on professional involvement which we issued earlier in the year. The guidelines call for nurses to be involved in planning and purchasing of health services, in clinical effectiveness strategies, in the inspection of nursing homes, child protection, midwifery supervision, Mental Health Act responsibilities and many other areas. They point out that nurses are playing a key role as health authority employees. The new statutory duty to involve professionals, introduced in another place, will enhance that role. Perhaps I may quote briefly from the draft guidelines:
"The skills and knowledge which nurses bring include an appreciation and clear understanding of health care drawn from practical experience across all clinical areas, an ability to challenge clininal practice and an understanding of … how staffing and skill mix can be fine-tuned to achieve optimum use of resources."
The guidelines make clear that the regional offices will he monitoring the arrangements made by health authorities to ensure that they command the confidence of the professions locally. If the new arrangements do not command the confidence of the nursing profession, I can assure your Lordships that the regional offices will take action.
The noble Baroness, Lady McFarlane, mentioned the IHSM survey. We are not complacent about the findings of that report, but I should like to point out that the figures are moving in the right direction. The 58 per cent. of purchasers with a nurse at director level compares with only 40 per cent. in the 1992 survey.
We recognise that the noble Baroness is proposing an amendment which she feels will guarantee a full nursing contribution to the work of the new health authorities. Although I fear that we shall not reach full agreement on this issue, I hope that I have been able to convince her that our disagreement is about the appropriate means, not about the desirable end. I have emphasised in previous debates that membership is not the only or, we believe, the most important way to achieve a nursing input. I have
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spoken before about the role of nurses as health authority employees, as expert advisers, as members of review teams, and so on.
We agree with the noble Lord, Lord Carter, that a broad and integrated involvement is what we will be looking for and we believe that it is more effective than relying on a single nurse member. Three of the five executive posts are already filled—by the chief executive, director of finance and director of public health. We believe that we must leave it to the judgment of the chairman and the non-executives to fill the remaining two executive posts with the officers whose skills best match local needs. I regret, therefore, that I cannot support the amendment.
Baroness McFarlane of Llandaff: My Lords, I thank the noble Baroness for her personal generosity and also for the many things which she has done personally for the profession and the contribution which she continues to make in that direction.
However, I do not believe that the catalogue of measures to which she has referred, such as Project 2000, dear as that is to my heart and, I know, to hers, really answers the question about having a nurse with expertise on every health authority. But I take the point that she has made and am reassured to a certain extent.
I shall watch developments with interest because, at present, I do not think that I can put a vote of confidence in the membership of the health authorities. But, at this stage of the proceedings, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Cumberlege Baroness Cumberlege moved Amendment No. 5:
Page 30, leave out line 13 and insert:
103.—(1) The Employment Protection (Consolidation) Act 1978 shall be amended as follows.
(2) In section 29").
The noble Baroness said: My Lords, in moving the above amendment I shall speak also to Amendments Nos. 6 and 7. We discussed at Report stage the future arrangements for the contracts of registrars and senior registrars. As I explained then, the employment contracts of these staff are currently held by regional health authorities and need to be held elsewhere when RHAs are abolished.
There are in fact a number of staff whose contracts of employment are at present held by regional health authorities and who are undertaking rotational training programmes which require them to move regularly between different NHS employers. Clearly, when RHAs go, new arrangements need to be made for these staff.
Junior doctors and dentists in the registrar and senior registrar grades are the largest group affected. Others affected include clinical psychology trainees, finance and general management trainees and some pharmacy and scientist training grades.
While the contracts of these staff are held by regional health authorities, they can move between different NHS bodies as part of their training without losing the employment rights which depend upon serving a period of continuous employment. The most obvious place for contracts to be held in future is with the NHS trust or other NHS employer. The provisions in Schedule 2 to the Bill

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ensure that there is protection of continuity for staff who move from RHAs to other NHS bodies on 1st April 1996. However, without the amendment, the continuity of employment of those trainees would be broken on any subsequent moves between NHS employers.
It is an important matter. The Government recognise that the way the contracts are handled in future could affect those employment rights which depend upon serving a minimum period of continuous employment. For example, both protection against unfair dismissal and the right to return to work after maternity leave depend upon having served two years with one employer.
Staff in these training grades must move regularly between employers in order to gain a high standard of professional training. We need to ensure that there are no obstacles to discourage them from moving. That is what the government amendments are designed to achieve.
The Government have made clear that their preferred option for these staff is for their employment contracts to be held by their employer—usually an NHS trust. That is consistent with the treatment of other staff. It is consistent with the principle that personnel issues are generally best managed at local employer level; and with trust freedoms to determine the quantity and type of resources that they employ.
Devolving contracts to employers is still a matter for discussion with the various professional bodies representing such staff. I hope that the amendment will offer them a significant reassurance. It enables the Secretary of State, by order, to specify particular groups of staff undergoing professional training which involves moving between NHS employers. For these staff, employment with successive employers as part of their training programme will be treated as continuous employment for employment protection purposes. In other words, the employment rights of these staff will be exactly the same as if their contracts had continued to be held by the RHA.
I am aware that particular concern has been expressed that transferring junior doctors' contracts to NHS trusts might cause problems for maintaining the required level or standards of training. We have just completed consultation on a discussion document which sets out the various options and possibilities for the employment arrangements of junior doctors, including their contracts. That is set in the context of an overall strategy for the organisation and management of postgraduate medical education. The document was issued widely to representatives of the medical and dental professions, to the education bodies and to employers' representatives. We will take careful account of the comments received before final decisions are taken. The amendments do not in any way pre-empt that consultation, or the various discussions going on with professional bodies. They simply ensure that, where trainees are employed by more than one NHS body during their training, continuity of employment can be safeguarded.
Your Lordships may wish to know why we thought it appropriate to specify in subordinate legislation the categories of staff to whom the new paragraph is to apply. It is to enable us to ensure that the necessary protection is provided not only to the grades currently employed by RHAs but to any equivalent successor grades which may
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in future replace them. I should, however, make clear that the intention is not to extend further the employment rights of these staff but to preserve their existing rights. We have no plans to use the power to provide for categories of staff not currently employed by RHAs.
I will now turn to the amendment tabled in the name of the noble Baroness, Lady Jay. That amendment seeks to provide for postgraduate deans to be health service employers for the purposes of the government amendments. I can assure your Lordships that NHS authorities listed as employers in the government amendment encompass the full range of potential employers for the staff concerned after 1st April 1996.
I would be entirely inappropriate for deans to be added to the list of employers. They are not health service bodies. No other individuals are statutorily designated as employers within the NHS; nor are any other NHS staff employed by individuals in the way that the amendment would suggest. The postgraduate deans will themselves be employees of one or more other bodies. Decisions are yet to be made about the various options in our discussion document, but there is even a possibility that the deans might in future be employed outside the NHS.
I hope that I have made clear that the amendment would not be workable and that, therefore, the noble Baroness will consider withdrawing it. I invite your Lordships to agree to the government amendments which, we believe, provide a helpful and necessary safeguard. I beg to move.
4.45 p.m.
Lord Rea: My Lords, I should like to take the opportunity to speak to Amendment No. 7 which is included in the current group of amendments. We tabled the amendment in order to allow us to continue the discussion on postgraduate and continuing medical education. In fact, at each stage of the Bill in this House the matter has been discussed. We need to continue to discuss the matter because, despite what the Minister said, we are still not quite certain about how the Government intend to safeguard the training component of the contracts of junior hospital doctors, notwithstanding the issue of a document during the Committee stage giving options for postgraduate, medical and dental education.
As the Minister said, even while the Bill has been going through the House, consultations and discussions are still taking place with universities, the British Medical Association, postgraduate deans and Royal Colleges. We do not yet know the Government's intentions. It would he useful to us if the Minister could, perhaps, expand a little on how far those deliberations have gone and tell us about the Government's current thinking on the matter.
To allow the contracts of junior hospital doctors in training posts—that is, registrars and senior registrars, as they will be in a unified grade in future—to be held by a regional "post-graduate Dean", as suggested in the amendment, would ensure that contracts were drawn up so as to allow adequate time and facilities for post-graduate studies to be made available, as is the case at present. I understand that it is the Government's intention that regional postgraduate deans will remain in post, possibly partly university funded and partly NHS

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funded, and that they will work in conjunction with the regional offices of the National Health Service Executive, which will be the successors to the regions.
I also understand that postgraduate deans will continue to have a supervisory role in the educational part of junior doctors' contracts. However, a drawback to that arrangement is that the postgraduate deans will, at least in part, become civil servants if they are employed through those offices and that they will, therefore, lose some of their independent status.
However, we feel that by relinquishing overall administration of the junior doctors' contracts to a trust—as the noble Baroness has said—or possibly a group of trusts, as the Government amendments would allow, the postgraduate deans will lose their bargaining power on behalf of junior doctors. For example, if a trust is hard pressed financially or it has an increased workload, it will be tempted to cut down on the time allowed for training activities and to increase pressure on junior doctors to carry out purely service activities. That is likely to occur partly because of the move—it was a welcome move—to reduce the hours of junior doctors, especially for house officer and senior house officer grade. This will increase the pressure on registrars to perform faster and to see more patients. That tendency is already occurring because of the increasing use of technology and more rapid turnover through hospitals.
There is a real need for a powerful independent voice from postgraduate deans to ensure that these pressures do not squeeze postgraduate medical education out of junior doctors' timetables. It would be some comfort if the noble Baroness could state that the contracts for junior doctors in training could be uniform nationally so that individual trusts could not modify them to suit their own needs, with adverse consequences for training. The British Medical Association is keen that contracts should be established on a national basis. It states:
"The reason that national terms and conditions of service for junior doctors was agreed at the time of the NHS and Community Care Act was because it was feared that juniors would be particularly vulnerable to exploitation by trusts. It is essential that all junior doctors continue to be employed on national pay and terms of service, and there must be no question of any local deviation".
That, unfortunately, would appear to be possible under the arrangements that are being developed. The amendment allows contracts to be held by a postgraduate dean. I agree with the criticism that the noble Baroness has put forward about employment by a single person. That was suggested simply in order to stimulate discussion at this stage of the Bill. But in order for that to function a supportive administrative apparatus would have to be in place. That should not be difficult because the structure is there in the regional health authority set-up. That structure could be transferred to a special health authority. In fact a special health authority is one of the bodies mentioned in the noble Baroness's amendments. That is the British Medical Association's preferred approach.
The BMA proposes,
"a special health authority arrangement for holding contracts of postgraduate deans which could assume responsibility for all doctors in training within the region. It would have the benefit of establishing
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a clearly identifiable purchaser of medical education and training within the existing NHS system of management, with clear lines of accountability".
This would preserve the strategic planning function of the present regional structure with regard to manpower planning and training needs for future numbers of consultants, as well as preserving the degree of independence for postgraduate deans which they need in order to protect the interests of junior hospital doctors.
Baroness Cumberlege: My Lords, perhaps I could reassure the noble Lord, Lord Rea, that it really would not be proper for individual deans to be employers. Nor would it be appropriate for the contracts of junior doctors, or indeed other trainees, to be held in the same place as the deans' contracts. Deans may be employed in the regional offices as part of the Civil Service. It would not really make sense for the junior doctors, for whom the deans are responsible, also to be civil servants. Alternatively, the deans may be employed—as I have said already—outside the NHS. It would not be proper or sensible for staff providing essential NHS services to be employed outside the service.
I think the noble Lord also asked about safeguards for training. These will be achieved through educational contracts between the deans, trusts and junior doctors. The deans, of course, will also continue to fund 50 per cent. of the basic salary costs, as they do now. With regard to the consultation document, it was drawn up in close collaboration with the deans. We have had 100 responses to the document. We have not yet had a full opportunity to consider them all. I have listened carefully to the points made by the noble Lord, but of course those points do not affect the government amendments which are before your Lordships this afternoon.
On Question, amendment agreed to.
Baroness Cumberlege Baroness Cumberlege moved Amendment No. 6:
Page 30, line 21, at end insert:
("(3) In Schedule 13 (computation of period of employment)—

(a) in paragraph 17(1) (provisions of Schedule to relate only to employment with the one employer unless any of paragraphs 17(2) to (5), 18 and 18A apply), for "and 18A" substitute "to 18B", and

(b) after paragraph 18A insert—

"18B.—(1) If a person employed in relevant employment by a health service employer is taken into relevant employment by another such employer, his period of employment at the time of the change of employer shall count as a period of employment with the second employer and the change shall not break the continuity of the period of employment.
(2) For the purposes of sub-paragraph (1) employment is relevant employment if it is employment of a description—

(a) in which persons are engaged while undergoing professional training which involves their being employed successively by a number of different health service employers, and

(b) which is specified in an order made by the Secretary of State.

(3) The following are health service employers for the purposes of this paragraph—

(a) Health Authorities established under section 8 of the National Health Service Act 1977,

(b) Special Health Authorities established under section 11 of that Act,

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(c) National Health Service trusts established under Part 1 of the National Health Service and Community Care Act 1990,

(d) the Dental Practice Board, and

(e) the Public Health Laboratory Service Board."").

[Amendment No. 7, as an amendment to Amendment No. 6, not moved.]
On Question, Amendment No. 6 agreed to.
Baroness Cumberlege: My Lords, I beg to move that this Bill do now pass. I am glad to sum up at the end of your Lordships' consideration of this Bill. I will say just a few words, following the model of concise debate which has characterised the Bill's progress. Though concise, the debate has also been constructive and well-informed and we have benefited again from the great depth of experience and commitment to the NHS which exists in your Lordships' House.
This has also been, by and large, a most good-humoured debate. Perhaps that reflects the measure of agreement between us on one of the central measures, the replacement of district health authorities and family health services authorities by the new health authorities. The noble Baroness, Lady Jay, and the noble Baroness, Lady Robson—who I am disappointed is not able to be here this afternoon for very good reasons—together with their teams have pressed the Government vigorously on many points of important detail. I am glad that they have, nevertheless, been able to welcome the new authorities, since they are also welcomed throughout the National Health Service. I should particularly mention the noble Lord, Lord Carter, whose detailed knowledge has been so necessary in showing us all how to move amendments, and whose inquiring mind was so impressive when we discussed the details of the Local Government Finance Act.
The new health authorities will have real influence and a vital role. They will be responsible for ensuring that the entire health needs of their population are met. For the first time, responsibility for primary and secondary care will be brought together within one authority—and planned together in a coherent and co-ordinated way. The noble Lord, Lord Rea, has been probing throughout on the subject of primary care and education. I have, I hope, been able to reassure him that health authorities will pay great attention to developing primary care teams in their areas and forging partnerships with professionals, including both fundholding and non-fundholding GPs. My noble friend Lady Gardner also made an important contribution on this subject, ensuring through her amendment that we remembered the importance of all the primary health care professions.
The abolition of RHAs has caused more debate in your Lordships' House. But the reasons for removing RHAs are clear and compelling. Such large, bureaucratic organisations are no longer needed at regional level. Many of their functions can now be transferred to the new health authorities, closer to patients. Their removal will streamline central management, reducing waste at the centre —and the NHS Executive regional offices will provide a strategic overview where that is still needed.
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This Bill will lead to substantial savings and there will be re-investment directly in patient care. There has, perhaps, been a certain amount of confusion about the amount of these savings, particularly during the debate in another place. So let me confirm the good news again: we estimate that savings of £150 million will be achieved every year once the Bill has been fully implemented in 1997–98. The majority of the savings—some £100 million per year—will come from RHA abolition.
The noble Lord, Lord Walton, and my noble friend Lord Jenkin have ensured that we did not overlook the essential partnership between the universities and the NHS. The highest standards of education and research must be maintained and I am glad to have been able, today, to set out clearly our plans for junior doctors' contracts. As always the membership of the new health authorities has been a matter of particular concern. We have debated that issue again today. My noble friend Lady Cox and the noble Baroness, Lady McFarlane, have, as ever, been powerful advocates for the nursing profession's contribution and we have noted with care the points they have made.
My noble friend Lord Elton broadened our debate by adding a second language during our discussions on membership when he reminded us that expressio unius, exclusio alterius—a point with which we agree.
We are committed to appointing the best people to serve on each health authority. The new appointments procedures introduced by the Government will help to ensure that. I should particularly like to put on record today my appreciation of all existing members of regional health authorities, DHAs and FHSAs who have served the NHS with such commitment and dedication. It is they who often have to take the most difficult decisions, and I am aware that they seldom receive sufficient recognition for all the work that they do.
Finally, I have stressed today and on several other occasions the need to ensure that the new authorities are open and accountable. I can assure your Lordships that the core values of openness, probity and accountability remain at the heart of the management and operation of the NHS. This Bill will move decisions closer than ever to patients, ensuring that as much of the work as possible takes place at local level, It will streamline central management so that as much money as possible is spent at local level on patient care. The NHS Executive, both centrally and in the regional offices, will oversee health authorities and provide leadership and a strategic overview to the whole NHS.
I should like to conclude by expressing my gratitude to all noble Lords who have taken part in our consideration of the Bill over the past few weeks. Your Lordships' scrutiny of the Bill has been genuine and courteous as well as thorough. I wish to thank especially my noble friend Lady Miller, who unfortunately is unable to be with us today due to a prior commitment, for easing my burden during the past few weeks. Her contributions have been many and valuable.
I have not been able to mention all noble Lords who have taken part in the debates on the Bill, but I would not wish to end without mentioning the contribution of

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my noble friend Lord Lyell, who ensured that even the finest details of the Dartford-Thurrock Crossing Act did not pass unscrutinised.
We have discussed the Bill thoroughly. It marks a logical and positive step for the NHS. I commend it to your Lordships' House.
Moved, That the Bill do now pass.—(Baroness Cumberlege.)
5 p.m.
Lord Rea: My Lords, with the permission of the House, perhaps I may ask the noble Baroness a question, about which I have given her notice, concerning the future of the research and development programmes that are at present managed by the regions under the regional directors of research and development. Those directorates have grown in importance since Professor Michael Peckham was appointed Director of Research and Development, largely as a result of your Lordships' Select Committee report.
When the regions are replaced by the regional offices of the National Health Service Executive, how will the regional directors of research and development be affected? If they are to be part of the regional offices they will technically become civil servants, as will the regional directors of public health. That will have the drawback that they could come under pressure only to commission or fund research which is acceptable to the government of the day. During the deliberations of the Select Committee the importance of independent, and sometimes uncomfortably targeted, research was made clear. Such research is often critical of certain established practices and therefore positively unpopular.
The Select Committee recommended that National Health Service research and development should be administered through a special health authority. That was not accepted and the directorate of research and development was created instead.
I should like to suggest that the idea of a special health authority should be re-examined. Such a body could act as the administrative base for all regional directors of research and development to allow them a degree of independence from the National Health Service Executive.
I do not expect the noble Baroness necessarily to agree with that suggestion, but I hope that what I have said will allow her to say what the Government's plans are for this important but so far little discussed activity of the regional health authorities which are to be abolished by this Bill.
Baroness Jay of Paddington: My Lords, I am speaking to the Motion that the Bill do now pass.
When we discussed the Bill at Second Reading I suggested five basic tests for any change in the National Health Service: does it improve the effectiveness of the service? Does it improve efficiency? Will the change lead to greater equity? Will it lead to greater accountability? And will it improve the overall health of the nation's population?
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At Second Reading I argued that this Bill failed all those tests. Nothing which has happened in our subsequent debates on the detail of the legislation has changed my mind. Although the Government see this as a measure which is primarily designed to dismantle bureaucracy in the NHS, we on these Benches remain convinced that the Bill is a threat both to public accountability and to standards of excellence in the health service.
From these Benches we voiced particular concern about the abolition of the regional health authorities. The Government have insisted that that is simply the removal of an unnecessary tier of administration. However, as your Lordships know, the extraordinary growth in NHS management has not been at that level but further down the line in individual trusts and purchasing authorities. Staff numbers in the regions have actually gone down since the so-called reforms.
From these Benches we have moved amendments to try to protect the special strategic functions of the regional health authorities, particularly those of public health, and to maintain the links between the universities and the NHS. The noble Lord, Lord Walton, has been particularly concerned about the future connection between the university medical schools and the health service. But none of the amendments —neither those which the noble Lord proposed nor those that we proposed from these Benches—was accepted.
Equally unsuccessful were the attempts from all parts of the House to establish professional membership of the health authorities. At Committee stage the noble Baroness Lady Gardner of Parkes sought to include health professionals working in primary care. My noble friend Lady Dean of Thornton-le-Fylde wished to include health visitors. The noble Baroness, Lady McFarlane of Llandaff, who rightly tried again this afternoon, moved amendments to include the invaluable contribution of nurses at board level in the new health authority.
From these Benches we have tried to improve the general openness and public accountability of the health authorities. We moved amendments to make selection procedures for members more rigorous and objective. Again, all were rejected, despite the fact that during the passage of the Bill the committee on standards in public life chaired by the noble and learned Lord, Lord Nolan, has already been critical of the new arrangements proposed in February by the Secretary of State for Health.
I should like to thank my noble friends Lord Cledwyn of Penrhos and Lord Prys-Davies for diligently keeping the red dragon flying and eloquently trying to pursue the special concerns of Wales, They, too, have been disappointed, as was the noble Baroness, Lady Robson, who sought a strategic health authority for London to try to sort out the continuing agonising problems of health services in the capital.
The noble Baroness, Lady Robson, was very helpful in supporting many of the amendments from these Benches, despite her ill health during the proceedings of this Bill. I should like to thank her and her noble friends Lord Addington and Lord Tope for their contributions.
Above all, I must thank my noble friends Lord Rea and Lord Carter for everything they have done to advance our arguments so powerfully and, to my mind, so

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persuasively. My noble friend Lord Rea has brought all his practical experience of working in the NHS for many years to our debates. His particular knowledge of primary care and the issues which confront general practitioners working in the inner city has been vital.
My noble friend Lord Carter has been my essential coach on the Bench. His encyclopaedic understanding of the health service and of previous legislation, as well as of the procedures of your Lordships' House, has been invaluable. He has guided me patiently through the legislative jungle and saved me from many transgressions.
I should like to express the thanks of all of us to the Minister and her noble friend Lady Miller. They have been helpful and detailed in all their replies to our debates. The Minister has been particularly kind in writing fully to me and my noble friends about matters which could not immediately be resolved on the Floor of the House. We are very grateful to her.
In conclusion, I wish it were possible to send the Bill on its way with our best wishes. However, I am afraid that I still think this is a very political Bill, driven more by ideology about developing the health market than real concern about the state of our greatest public service.
As we are finishing our deliberations on a political day—I only assume that the absence of other noble Lords from the Chamber is because they are all actively involved in the local elections—I feel justified today in repeating the words of my right honourable friend the Leader of the Labour Party:
"We must wait for a general election to renationalise the National Health Service".
Lord Addington: My Lords, on the Motion that Bill do now pass, first I thank the Minister for her kind words about my noble friend Lady Robson, who is unable to be here. I also thank the noble Baroness, Lady Jay, for her kind comments about my noble friend and myself.
What we object to most about the Bill comes in its first line:
"An Act to abolish Regional Health Authorities".
We do not believe that they should go because we need co-ordination and planning for health authorities, as, indeed, for all other public services. On strategic planning, the planning authority for London should have been put into the Bill. As the noble Baroness, Lady Jay, mentioned, my noble friend Lady Robson tried to have it included. As it was not seen fit to do that, this must go down as an opportunity lost.
One final point should be raised. With this legislation, it has been suggested that community health councils should not be expanded to an unmanageable size. At Committee stage my noble friend Lady Robson made inquiries about the matter but the Minister said that she did not believe that that would happen. However, we have no guarantee that it will not.
Bearing those points in mind, I hope that the Bill is considerably more successful than I suspect it will be, taking into account the gaps and certainly the lack of an
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overview and strategic planning. I hope that those shortcomings will not severely damage the National Health Service.
Baroness Cumberlege: My Lords, perhaps I may start by responding to the noble Lord, Lord Rea, and his anxieties about the regional directors of research and development.
In the new system, the regional directors will be members of the top management team in the new smaller regional offices. That means that they will become civil servants, but it also means that their influence and their profile are likely to increase. The NHS research and development programme has formally committed itself to openness in its operation and the reporting of all its findings. That will remain the case. The content of the research carried out will, as now, be determined on the advice of the central research and development committee and the regional research and development committees. Bringing all of them together within the NHS executive will, we believe, improve the efficiency and cost effectiveness of the programme. The directors work as part of the national research and development strategy. We believe that this arrangement is a good one and, of course, it will continue. I think that the noble Lord, Lord Rea, has nothing to fear.
I was interested in what the noble Baroness, Lady Jay, said about her template of five important key areas: effectiveness, efficiency, equity, accountability and the improvement of the health of the population. We believe that the Bill will go some way towards improving all those five counts, but, of course, only time will eventually tell.
As I understood it, the policy of the party opposite is that we should reduce bureaucracy. Indeed, there has been a suggestion that something like 800 administrators could go. I find it surprising that with that policy the same party should so champion the regional health authorities. I chaired a regional health authority and enjoyed doing so, but I recognised that the whole system had a stultifying effect on innovation, new ideas and imagination. It lengthened what could be quite quick decisions because of the red tape involved. The measures in the Bill before your Lordships will free up a great many people within the health service. I am convinced that it will result in a far better National Health Service for the people of this country.
I commend the Bill to the House.
On Question, Bill passed and returned to the Commons with amendments.

Commonwealth Development Corporation Bill
5.15 p.m.
Lord Inglewood: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord Inglewood.)
On Question, Motion agreed to.

Commonwealth Development Corporation (No. 2) Bill [H.L.]
5.16 p.m.
Lord Trefgarne: My Lords, I beg to move that this Bill be now read a second time. This is a short Bill, but is nonetheless extremely important to the work of the Commonwealth Development Corporation. Its aim is simple and straightforward. It is to ensure that CDC continues in the ever-changing global economic environment to provide the most effective economic assistance and advice to developing countries. I shall say more about the specific provisions contained in the Bill in a moment, but first I want briefly to set out the reasons why I am bringing the Bill forward and why I very much hope that it will command the support of every noble Lord.
That there is overwhelming support for CDC among your Lordships is obvious. We have just seen the Government's own CDC Bill make swift progress through its Committee stage following a Second Reading debate back in March when CDC was praised by speakers from every corner of the House. We are all keen that CDC continues to promote development in countries around the globe. None of us wants it to be hampered in doing so by outdated legislation.
It may be that your Lordships would have expected the provisions I am bringing forward today to be incorporated in the Government's Bill. I would have been delighted if that had been possible. Unfortunately, as was foreseen during our Second Reading debate, the matter of extending and clarifying CDC's powers cannot be addressed in that Bill because of the narrowness of its scope. A change to its Long Title would have been necessary and I am well aware of your Lordships' reluctance to take such a step. That is why I now seek to address this important matter by means of a Private Member's Bill.
Recognition of the need for the legislation long pre-dates the passage of the Government's current Bill. The quinquennial review of CDC, conducted in 1993, identified a number of constraints which Section 2 of the 1978 Act placed upon the corporation's activities and recommended that legislation should be introduced to extend CDC's powers. The relevant provisions of Section 2 have been in substantially the same form for almost 40 years during which time concepts of what constitutes sound economic development have changed, as have the needs and nature of developing countries. My Bill seeks to update and clarify CDC's powers so as to reflect those changed circumstances.
I hope and believe that my Bill will have the general support of everyone in this House and that it can progress smoothly through its remaining stages and on to the other place. I am most grateful to my noble friend Lady Chalker for being here today to respond personally. I greatly look
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forward to what she has to say and hope and expect that she too will be able to give her support and encouragement.
Having said that, I have no doubt that there may be need for some amendments in order to make the Bill as effective and workable as possible. I should welcome the prospect of such amendments. I know that discussions have already taken place between my noble friend's officials and the CDC about various detailed elements in the Bill. I trust that those will continue in a constructive vein with the urgency that is necessary to allow the Bill to be considered in the other place before the Summer Recess.
Perhaps I may now turn to the specific provisions contained in the Bill. CDC normally conducts its business through incorporated joint venture companies to which it provides financial assistance by way of share and loan capital, thereby spreading risk with other investors and achieving more development than if CDC funded projects entirely on its own. I am advised that the wording of Section 2 of the 1978 Act envisages CDC's investment funds passing directly or indirectly to a project company for the promotion of new or the expansion of existing enterprises and that CDC's funds should be applied primarily to additional assets or capacity, and I emphasise the word "additional". These requirements inhibit CDC purchasing existing shares, securities or assets. This severely limits the role that the corporation can play where host governments are divesting themselves of enterprises or where a project involves buy-outs, buy-ins and rehabilitation.
Indeed, the transfer of ownership itself is sometimes the very step which releases energy for growth in enterprise and thus CDC needs the freedom to apply its funds to the purchase of existing shares, securities and assets, provided, of course, that the economic benefit test can be fulfilled. By adding the words,
"regeneration or reconstruction (including corporate and financial reconstruction)"
to subsections (2) (a) and (b) of Section 2 of the 1978 Act, I propose to cure this limitation. I am told that this new power will be particularly relevant in South Africa, and, as a matter of interest, is a power already enjoyed by most comparable development financial institutions—for example, the IFC.
Effective money and capital markets help to improve business access to finance, savers' access to savings opportunities and thereby the efficient allocation of scarce funds into productive investment. That coincides closely with the CDC's fundamental purpose of developing the economies of host countries, but it needs to be included as a specific power. The amendment proposed in Clause 1(4) (bb) will enable CDC, for example, to undertake the promotion of country or sector funds, investment in quoted or unquoted equities and the formation or encouragement of stock or securities exchanges or dealings mechanism. The subsection would also have the effect of allowing CDC to promote and manage such funds.
I am further advised that CDC currently may only undertake consultancy which is directly related or incidental to its projects or can be regarded as an activity incidental or conducive to the exercise of its powers.

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CDC's expertise, even without finance or management, can make a significant contribution to development in countries in which it operates, and Clause 1(4) (bbb) is designed to correct that omission. Clause 1(5) contains formal consequential provisions with which I shall not detain your Lordships.
I hope that I have been able to explain the straightforward nature of this small but important Bill. I hope that the need for it is clear to every noble Lord. I hope, too, that it will attract widespread support. Without it, there is a real risk that the CDC will be increasingly constrained in its efforts to achieve its economic development objectives. That is something I am sure none of us wants to see. I commend the Bill to the House. I beg to move.
Moved, That the Bill be now read a second time.—(Lord Trefgarne.)
5.23 p.m.
Lord Redesdale: My Lords, I support the Bill. The additional powers that the CDC will gain under this brief Private Member's Bill will be useful. The Bill allows the CDC to invest in funds and to buy shares in companies, as the noble Lord pointed out. That is particularly important as the past five years have shown a massive increase in the amount of private investment in companies in developing countries. Indeed, on a global scale, the private capital which is being pumped into those companies far outstrips, and is far more important than, any aid that one country can give to another.
The importance of the Bill is that the CDC will be able to invest in a company, and the money that it invests will attract others to invest in the same company. Therefore money supplied by the CDC will draw in a large amount of investment. Obviously investing in developing countries is a risk business. But CDC involvement in the companies, and with the CDC having some control over the way in which those companies' money is being managed, would give great confidence to people to invest.
The noble Lord also mentioned that the Bill would be helpful in South Africa. Regarding transfer of ownership—I refer to management buy-outs—the Bill gives black businessmen and entrepreneurs an ability to buy into companies for which they now work which they have not had previously. I hope that the Government will give the Bill a fair wind. I hope, too, that the Bill has the desired effect.
5.25 p.m.
Viscount Waverley: My Lords, I, too, support this Private Member's Bill for reasons that I shall outline. Ultimate success will depend on Opposition support, as opposing the Bill at this stage would destroy effectively the chances of its passing through its stages in another place.
I spoke at some length at Second Reading of the Government's Bill and see no benefit in re-emphasising examples of the corporation's excellent work. I shall, therefore, confine my remarks to illustrate why the Bill has merit. Importantly, it adopts recommendations contained in the quinquennial review which were not included in the Government's CDC Bill. Secondly, while
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CDC's function is economic development, it is operating in the private sector and therefore needs to have similar tools to other private sector investors.
The corporation has hitherto concentrated on businesses involved in primary agricultural production. That sector is not the most profitable and carries high risk. CDC's current strategy is to improve the profitability on its agri-businesses by investing more in downstream processing and marketing. That can often be done most effectively by participating in existing businesses. And that is where the difficulty lies.
At present, there are statutory constraints limiting CDC's freedom of action. Indeed CDC's policies in South Africa are concentrating on assisting disadvantaged black entrepreneurs in dismantling large corporations seeking to divest their non-core operations. CDC is investing in a fund to meet this objective, which is to be encouraged. But operations will be constrained without the legislation proposed by the noble Lord, Lord Trefgarne, which clarifies CDC's powers.
It is now recognised that financing economies through the development of local capital markets provides for a more stable and cheaper source of finance than reliance on bank finance or foreign investors. Recent events in Mexico illustrate that.
This legislation will allow CDC's newly-formed financial markets department to expand its role to include stimulation and effective development of local financial markets. Those three issues illustrate the necessity, in my view, for this Bill to be enacted.
I should be pleased to hear of unequivocal support from the Government, and recognition from the main Opposition party that the Bill is necessary for CDC's future activities.
5.30 p.m.
Lord Broadbridge: My Lords, I congratulate the noble Lord, Lord Trefgarne, in bringing forward this valuable—nay, essential—Bill, which, I understand, together with the main Bill, substantially adds to and rounds off meeting the aspirations of the CDC. Last August, as a member of the Commonwealth Parliamentary Association delegation to Zambia, I was able to see the CDC at work on the ground, as it were. Indeed, I had a most comprehensive and useful briefing from the CDC before leaving England. I have also lived and worked in Nigeria for a period and that is another country in which the CDC is working.
In general, but in particular as a result of my visit to Zambia, I believe that the CDC's range of powers needs to be further clarified and, in particular, extended to enable it fully to follow through its strategies, which are, of course, developed in discussion with the ODA and the Treasury. The pace and nature of the economic environment across the world has radically changed since the CDC Act of 1956, some 40 years ago, which was, after all, set only 10 years after the end of the Second World War and in the midst of independence movements among the countries of our former empire, in many of which the CDC now operates.

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The economies of the developing countries are becoming more and more dependent upon the inflow of private capital. In the case of Zambia, historically the country has been saved from bankruptcy by the support of the World Bank, IMF, ODA and CDC. The average GDP last year was 40 American cents per person per year. The principal economic activity is the mining and downstream production of copper, cobalt and their derivatives by the state mining corporation. It is now intended to privatise that activity, firstly to enable its expansion and secondly to give an injection of adrenalin to management and staff.
CDC clearly has a major role to play in facilitating such processes and to do so it needs to be able to operate freely in financial markets. The transfer of ownership itself, as the noble Lord, Lord Trefgarne, said, is frequently a step which releases energy for growth in an enterprise. CDC therefore needs the freedom to apply its funds to the purchase of existing shares, securities and assets. That is an objective of the Bill.
The CDC has been consistently advised that the present Act envisages CDC's invested funds passing directly or indirectly and only to project companies for the promotion of new enterprises or the expansion of existing ones. CDC's funds have to be applied primarily to additional assets or capacity. That requirement for additionally generally precludes CDC's purchasing existing shares, securities or assets and therefore severely limits its role in privatisations, management buy-ins and rehabilitation projects, which are a particular feature of CDC's intended activities in Africa. The Bill will liberate that situation.
It is now widely accepted that the development of money and capital markets is a key component of the successful development of a country's economy. CDC's fundamental purpose is the development of the economies of host countries. It follows that the promotion of money and capital markets by CDC in host countries is consistent with CDC's fundamental aim. CDC lacks a power to do so. But this Bill would bring CDC's powers in that aspect of the financial sector into line with the activities that the International Finance Corporation and the European Bank for Reconstruction and Settlement are permitted to undertake.
Finally, as has already been mentioned, there is the subject of consultancy. CDC currently undertakes consultancy provided only that it is related directly or indirectly to CDC projects. The staff of CDC have a vast store of diverse experience and expertise. That expertise, if used in additional situations where CDC finance and management are not playing a part, could make a huge contribution to development in countries in which CDC operates. It would be so-called "dry" consultancy and would be made available on a fee charging basis with full cost recovery, so that it would not be subsidised by CDC's other operations. As a former marketing and financial consultant with Peat, Marwick, Mitchell, who has lived and worked on assignments in countries such as Egypt, the Lebanon and Nigeria, how could I disagree? The Bill will make such work possible.
In conclusion, I wish the main Bill well but feel that it is only one half of the corporate walnut. In order that the tree may grow big and strong, any tree man will tell you
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that you need both halves of the walnut. I firmly believe that this Bill is the other half. Let us therefore put them together. I support the Bill.
5.34 p.m.
Lord Judd: My Lords, I too should like to congratulate the noble Lord, Lord Trefgarne, on having raised what is clearly an important issue. He was right to emphasise the goodwill that exists in all parts of the House towards the CDC. It has a fine record in the third world, and one in which we all take pride. I assure the noble Lord that, in considering the Bill, should we decide—we have not as yet made any such decision—on reflection that some amendments might be appropriate to strengthen it, they will be brought forward in the spirit of constructive contribution to the concerns that he expressed.
When a Bill is put forward, it is important to probe the rationale behind it and the implications which may be within it. First, I am not quite clear why there is such urgency; nor am I altogether clear why the Government are so fullheartedly in support of it, thereby implicitly also in support of the urgency, if they themselves did not see fit in such an important matter to cover this ground in the Bill that they were drafting. This is a constructive occasion and I do not want to be mischievous; but I find myself a little confused by government policy towards the agencies for which it is responsible at the moment. I find it interesting, to say the least, that we have the Crown Agents being put into a privatised form and that in their privatised form they are to be responsible for services largely to the public sector in the third world. We are told that the CDC is to remain in the public sector and is increasingly to be responsible for servicing private developments in the third world. At first sight, that is not altogether logical. Perhaps the Minister will be able to put us straight later. To find the Government so readily endorsing a new Bill brought forward by the noble Lord, when presumably they had been putting a lot of thought into what they wanted in their own Bill, does not altogether engender confidence about the firmness of hand in this particular area.
Let me make it quite clear that we all accept that the private sector has a vital part to play in development. We all want to see that private sector in the third world being a genuinely indigenous private sector and not a dependent private sector; hence the need to ensure the accumulation of capital within the developing countries themselves and to avoid a situation in which they are utterly dependent on foreign investment controlled from outside. But in doing that, and if the CDC is to play a fuller part in doing that, we have to examine the changes in emphasis which will come about—it is a change of emphasis—in the contribution being made by CDC to the whole process of development.
I want to put on record how much I appreciate the very helpful and full way in which the CDC has gone out of its way to brief me and my colleagues and make itself available, which is commendable. In writing to me the CDC referred to the need, which was emphasised by the noble Lord, to get away from the development concepts of the 1950s. It also referred to the changing environment in which the CDC operates. For those of us who spent much of our lives working in development on third world

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issues, those statements are incredibly generalised. What characterises most developing countries are the differences between them and the circumstances which are special to each of them. Therefore, if we are to establish a case for that change of emphasis, it would be very useful to hear a somewhat more detailed analysis of precisely what those general observations mean and how the change will be applied in specific circumstances.
What has always impressed me most in the record of the CDC is that its preoccupation has been to get close alongside professional management in terms of management expertise—hands-on management expertise—in building the real economy, in widening the base of self-supporting producers in any particular developing country and in extending the range of people able to participate in the real economy.
As the Bill goes forward we shall look to be reassured as to how we shall avoid the tendency, with the new potential being opened up by the Bill, for the CDC to become increasingly preoccupied with the financial side of management as distinct from its "hands-on" approach to management, to which it has made an outstanding contribution. It would be sad if, by taking on what is arguably an important task, something on which its record is proven were allowed to wither. We shall want to hear more about the balance and about how the finest proven record can be maintained.
In saying that, I should like to emphasise that we are not suggesting that it is not important for the economies of third world countries to take off; of course that is crucially important. We are asking how far that take-off and the role of the financial markets in promoting it are the responsibility primarily of the CDC, and why the CDC needs to take on more responsibilities in that area when the IFC, the EBRD, and others with that specialist experience are available. We seek more information on the rationale and analysis behind the Bill and more detail about how it will be applied.
In that context it may be possible for the Minister to give us a categorical assurance this evening that some way will be devised which ensures that the priority for investment will continue to be the existing recipient countries and that we will not find ourselves careering off to eastern Europe or something of that kind. Anything that the Minister can say in that regard will be helpful. We must remember that the resources available for new investment have been generated from the existing countries in which the CDC is operating.
I spoke of change of emphasis and perhaps I can say a brief word in relation to the change of expertise. I emphasised that the tradition of the CDC has been particularly in relation to "hands-on" management. How will the necessary financial skills be developed to extend its responsibilities into the new roles? All of us—I am not trying to make points; I am trying to look at the situation objectively—will recognise that in recent months it has been dramatically brought home that there are great hazards in the world of international finance, even in the world of well-established merchant banking. We shall need to know a great deal more about how the composition of the board will change to incorporate the kind of experience and disciplines that are essential.
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We congratulate the noble Lord, Lord Trefgarne, on bringing forward the Bill. It raises important points for examination. We shall look at them constructively during the course of our deliberations. We shall only introduce amendments if we really feel that they will help. Above all, we shall look at the Bill as we do anything else brought forward in the context of aid and development; that is, in the context of the Minister's declared commitment to the priorities she herself stressed in development policies. Those include the needs of the poorest, which is what our aid programme is all about. In other settings the noble Baroness emphasised the importance of development programmes which insist on international management of the environment; on occasions she emphasised the importance of human rights and democracy in development policies.
We are all agreed that the CDC is a powerful instrument. How will this Bill strengthen and assist the Minister in fulfilling her objectives, which we applaud, in those three contexts? It is exciting to hear that the Bill will help in South Africa. But will it help the poorest? Will it extend the number of people participating in the real economy? If so, how? What about Gaza and the West Bank? Those areas were discussed when the last CDC Bill was being debated in this Chamber. The guidelines and schedules which the Minister may want to introduce will be most important.
Finally, lest there be any misunderstanding—I would hate that—on this side of the House we have terrific respect for the record of leadership and integrity of the CDC to date. But when considering legislation of this kind it is important to bear in mind not only what is possible in the present situation with the present human chemistry; not only what is unthinkable in the present situation with the present human chemistry; but also what may be opened up to a completely different set of players—cowboys or whatever—were they to arrive on the scene. It is the duty of the House to be deeply and convincingly reassured on issues of that kind.
5.45 p.m.
Baroness Chalker of Wallasey: My Lords, it may be for the convenience of the House if I now contribute a few words about the Government's attitude to this Commonwealth Development Corporation (No. 2) Bill. I must say straightaway that I am most grateful to my noble friend Lord Trefgarne for his explanation of the Bill; it was very clear. And let me say, so that it is beyond doubt, that we welcome the Bill very much indeed. The House has just discharged the Committee stage of the Government's CDC Bill. I hope that it will not take long before that Bill completes its remaining stages. It contains important provisions on increasing the CDC's borrowing limits and we want those to come into effect as soon as possible.
During the debates on both Bills, we have heard sound support for the CDC in all parts of your Lordships' House as well as in the other place. That confirms the high and well-deserved reputation to which the noble Lord, Lord Judd, referred. It also confirms the desire on all sides for the CDC to continue to perform its extremely valuable work in promoting development. Indeed, the combination of the two Bills will help unshackle where shackles exist,

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the ability of the CDC to contribute still further. That was the very point made by the noble lord, Lord Redesdale, in welcoming the Bill.
As my noble friend Lord Inglewood said during the Second Reading of the Government's Bill, it is important to give the CDC an answer to its needs as swiftly as possible. The Government's Bill deals with CDC borrowing limits. At the time that that Bill was drafted it was not possible for it to deal with the issues which are now the subject of the No. 2 Bill. Some specific points in relation to legal powers were still under consideration when the Government's Bill was introduced. That is why I can wholeheartedly welcome my noble friend's Bill.
In the No. 2 Bill my noble friend has put forward the measures that the CDC needs to carry out the policy objectives contained in the quinquennial review and which the Government have set it. There is no doubt that my noble friend's Bill updates and improves the whole way in which the CDC can operate.
A number of questions were asked in relation to the CDC and the Bill. My noble friend Lord Trefgarne explained that after the Government's CDC Bill had been introduced we concluded that it was not possible to add additional measures to it within the Long Title of the Bill. In coming to that decision I had in mind the feelings which have often been expressed in your Lordships' House; that is, that your Lordships' House is reluctant to extend the scope of Bills. That is why a Private Member's Bill provides a good opportunity to bring forward those additional measures which the CDC will find so useful. I very much welcome the interest that is being taken beyond government circles in the future of the CDC. That is entirely healthy. It is very good that these issues are now included in the Bill before the House.
As my noble friend said, it is important that the Bill should leave the House in a shape which enables it to be dealt with speedily so that the CDC may have the increased adaptability to deal with very new situations. I am happy to ensure, as far as I am able, that that is achieved. My noble friend spoke about the control of powers in his Bill. There is a well established system by which the Government and CDC discuss and agree the way in which the CDC's statutory powers will be exercised. For example, I have set a strategic target for the proportion of new lending in poor countries. We shall look with CDC at how the powers in the Bill may affect targets and the setting of appropriate limits and guidelines. As an example, we would expect the CDC not to use powers to provide consultancy services to set up a major consultancy business in competition with existing firms. It has better things to do with its money. I can assure the noble Lord, Lord Judd, that the government guidelines for CDC I announced last year—that at least 70 per cent, of new investment should be in poorer countries—will continue. There should be no diversion of activity to middle income countries. We shall watch that most carefully. Nor is there any change in the objectives for the CDC. What we are after, and what my noble friend's Bill does, is to give us a better way to fulfil the existing targets and to give CDC a greater degree of flexibility, which it needs.
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The noble Lord, Lord Judd, took some pleasure in teasing me a little, as I knew he would, as to why CDC is being retained in the public sector when the Crown Agents are being transferred to the private sector. The real reason behind that is a practical one. The Crown Agents and CDC have very different histories. Their roles are different. The legislative proposals we have brought forward recognise the distinctive identity and purpose of each organisation and they provide for continued growth into the future both for CDC and Crown Agents. I have explained in our debates—and may have to do so again later tonight—that the Crown Agents have spent a relatively brief period as a public corporation. They are a trading body, albeit with a distinctive and important ethos. It is that very ethos we are seeking to preserve through our proposals for transfer to a foundation in the private sector. There are good reasons why the Crown Agents should no longer continue to be owned by government. We have rehearsed those reasons on previous occasions in debating the Crown Agents Bill.
On the other hand, the CDC has a distinctive role as part of the British aid programme. CDC acts as a catalyst for private sector investment in developing countries because it shows the way in which others can invest profitably in poor countries. In Paris only yesterday we were debating among the 24 OECD countries the risks involved in development. Development is of itself a risk business. A private sector CDC might take a very different attitude to profit and risk from one that is in the public sector. That attitude might be incompatible with the developmental objectives set for it by government. That is why we have judged that continuing public sector status is the right answer for CDC.
The noble Lord, Lord Judd, asked how CDC will cope with its new risks. That is very much a matter for the board of CDC. I do not try to second guess the board. There are not likely to be precise board changes that will in any way affect this. The CDC has the professionals. We seek to work with them and to help them where they need assistance, which is not very often, into new areas of operation. But we shall be looking not only at where they operate but how they operate. We will trust their commercial judgment unless there is very good reason to discuss something to the contrary with them.
I very much welcome my noble friend's willingness to consider the possibility of amendments at a later stage. No doubt the noble Lord, Lord Judd, will find some ingenious amendments to put down to the Bill. I think my noble friend understands that there are some points of drafting and construction which I would like to have looked at by the experts. These are very technical issues. I want to get the legislation right, as I know my noble friend does, and I want to do that while we have the chance to do so. We shall be very happy to work with my noble friend on these issues as speedily and as co-operatively as possible.
The CDC operates within a planning framework for its activities agreed with government. That is exactly what we revised last year following the quinquennial review. The new powers proposed in the Bill will be exercised within that framework. It will be adapted to take account of the scope offered to CDC to extend its activities in particular ways. Subject to those points, I am happy to

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confirm that the Government accept this measure in principle. I encourage your Lordships to give it a Second Reading.
5.56 p.m.
Lord Trefgarne: My Lords, I am greatly obliged to my noble friend Lady Chalker for her encouragement for the measure. Indeed, I am grateful to every noble Lord who spoke during the course of our short debate. They were, broadly speaking, in support of the measure. I recognise that the noble Lord, Lord Judd, was not able to give quite such unequivocal support as emanated from other noble Lords, but the noble Lord speaks from a wealth of experience and knowledge in these matters and I look forward to having his constructive contribution when we reach the next stage. I shall certainly be very happy to deal with some of the specific points he raised. That is the right word, is it not? The noble Lord was looking for specific examples of where the corporation might improve its mode of operation and its area of activity.
That said, I again thank your Lordships. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Crown Agents Bill [H.L.]
5.58 p.m.
Read a third time; an amendment (privilege) made.
Baroness Chalker of Wallasey: My Lords, I beg to move that the Bill do now pass. During the earlier stages of the Crown Agents Bill we had a very thorough debate on a number of key issues. Those included the corporate structure of the proposed foundation and operating company, aspects of the financial arrangements for the new business, the use of the Crown Agents' name and the legitimate interests of Crown Agents' staff and pensioners.
In discussing these matters I have been struck by the high degree of good will and support for the Crown Agents evinced by all sides of the House. I speak for all of us in your Lordships' House in commending the Crown Agents on the quality and relevance of their services to development and the transparently honest and impartial way in which they conduct their business. It is those qualities which the Government wish to preserve. I was gratified two days ago to hear from clients of the Crown Agents their conclusion that this was a very good organisation. They said how much they welcomed the foundation which Crown Agents will become. So with that knowledge and with the debates which we have had, I believe it is clear to your Lordships why the Government have - proposed this transfer to a newly created independent foundation tailor-made for Crown Agents.
I recognise that it is the desire to be sure that the best possible arrangements will be put in place for Crown Agents that has prompted some noble Lords, including the noble Lord, Lord Judd, to press for greater detail of the Government's plans to be included on the face of the Bill. My noble friends Lady Elles and Lord Oxfuird have also pressed me for assurances both in the Chamber and
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outside. Others have been moved by recommendations of the Delegated Powers Scrutiny Committee to propose that, before the transfer to the foundation takes place, Parliament might have the opportunity to debate the detailed arrangements.
I can assure the House that I have listened with the greatest care to these arguments. I sought to explain why we do not feel able to accept them. However, your Lordships will know that I am determined that the Government will do their very best for the Crown Agents. I have not sought to give your Lordships easy answers, but I readily acknowledge the complexity and the importance of the legal and financial issues which we are discussing with our professional advisers and the Crown Agents themselves.
In the course of our debates I have given the House repeated assurances about the Government's plans. We have undertaken to keep Members of this House and of another place fully informed of the details of the transfer agreed. That will include making available copies of the memorandum and articles of association of the foundation and the information memorandum for prospective foundation members. I am confident that by these means we can provide your Lordships with a clear picture of the Government's proposals before the transfer takes place.
Perhaps I may say how grateful I am to all noble Lords who have spoken on this Bill, but particularly to the noble Lords, Lord Judd, Lord Rea and Lord Redesdale, and also to my noble and loyal friends Lady Elles and Lord Oxfuird, who have taken the keenest interest in the provisions. AH have really sought to improve the Bill by means of probing amendments.
My colleagues and I will indeed bear their concerns very much in mind when deciding on the arrangements which will shape the future of the Crown Agents for many years to come. I am confident that the Crown Agents will have continuing success, which will be all the stronger for the interest and commitment which your Lordships have shown in the Crown Agents, not only during the passage of this Bill, but which they have demonstrated in debate after debate.
Moved, That the Bill do now pass.—(Baroness Chalker of Wallasey.)
Lord Judd: My Lords, perhaps I may start by making a small procedural observation. As I understand it, the theory is that Bills introduced first into this House are normally the less controversial ones. That must involve a certain amount of subjectivity of judgment. I am not altogether convinced as to how uncontroversial this Bill really was. I am also intrigued to know how that will be seen in history and in the light of experience.
The second point I must make is my appreciation of all those who have helped. I do not believe that they always get the public acknowledgment that they deserve. I put on record my appreciation to our own researchers in the opposition who, with incredibly limited resources, do such an extended and extraordinary job. On this particular occasion they have been valiantly and extensively assisted by Lewis Macdonald.
Perhaps I may also put on record my real appreciation to my noble friend Lord Rea who has brought not only his considerable experience to bear, but who has also brought

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a lightness of touch and a sense of humour which we should hear more of in our deliberations in this place. Perhaps I may also say how much I have enjoyed working with the noble Lord, Lord Redesdale. I do not know what wider lessons are to be drawn from that, but on occasions it would not have been possible to get a thin sheet of paper between us in our concerns and outlook towards what was at stake in the Bill. That has been a good experience and I say thank you for that.
Of course, our thanks are also due to the Minister. She has been her usual friendly, disarming and courteous self. She has done her best to suggest that she actually believed in this Bill. I do not think that she convinced anybody on this side of the House that that was the case. It would have been an absolute denial of her common sense and pragmatism, but she loyally got on with the job in making the best of a difficult brief.
I suspect that the Minister agrees with us that it is an unnecessary Bill. She has referred to how overjoyed she was recently to talk to clients who were so well satisfied with the outstanding services which the Crown Agents had provided and how pleased they were. I noticed the emphasis she put on the word "foundation" which will be handling affairs in future. I congratulate the Minister on that. It is a rescue operation in which she seems to be very successfully engaged.
We still have not seen the memorandum setting out how the foundation will operate, so to that extent we are still being asked to buy a pig in a poke. There are comparisons with what was preoccupying the House yesterday in the Jobseekers Bill. What is really very worrying in this Bill, as in the Jobseekers Bill, is the whole range of issues on which the Delegated Powers Scrutiny Committee has concentrated. This Bill says absolutely nothing in its text about how it will implement the intentions which the Minister has repeatedly put before the House. All that is left to delegated legislation, subject to the negative procedure. As was brought out in relation to the Jobseekers Bill yesterday, that disenfranchises this House because of the convention that, by the negative procedure, we cannot make a stand against the introduction of orders. I suggest that it is highly dubious in terms of the other place, because there all records show that it is virtually impossible to get a serious debate by that procedure.
This has been a skeleton Bill and we have been put in the position of being dependent on the Minister to provide what she says she is intent on delivering. In saying that, we recognise the tensions which must exist in the real world. In the past year or so we have seen the tensions between trade and development interests. It is possible for them powerfully to coincide, but it does not always happen. Like the Bill we were considering a moment ago, in this Bill we need reassurances that the Crown Agents will be able to deliver in terms of their primary objective of working within a framework of commitment to development.
I conclude on this note. I would be happier if, even at this eleventh hour, the Minister could give us an unqualified assurance—not just express an intention—that it is the Government's determination that the Crown Agents will, in perpetuity, remain subject to a non-profit-making
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foundation; that they will be dedicated to developing humanitarian priorities; that the title and all that is inherent in it will be protected; that they will have adequate financial resources for the task; and that the role of the staff and the excellent record of staff relations will be maintained. Such solemn undertakings from the Minister will do a great deal, I believe, to facilitate deliberations in the other place but, of course, it is essential that the memorandum should be available without delay so that we can know what it is that we are facilitating.
As I said on the earlier Bill, we are not considering watertight issues. We are considering issues that are part of the Government's overall strategy towards aid and development. This side of the House is faced with an extraordinary paradox. We respect the Minister and we believe in the Minister's commitment, but we see an aid budget which is falling as a percentage of GNP; we see an aid programme diverted increasingly to eastern Europe at the expense of the developing countries; and we see an aid programme which is subject to unwholesome pressures from those primarily concerned with trade at any price, irrespective of its implications for development.
In that context, I am sure that the Minister will understand why we want to see watertight reassurances that the intentions are not simply good intentions on her part, but something that can be guaranteed whoever may fill her post in the future. However, I thank the Minister for the way in which she has approached our deliberations. I personally always enjoy debating with her in your Lordships' Chamber.
Lord Redesdale: My Lords, like all noble Lords, I thoroughly support the work of the Crown Agents. However, perhaps the best way that I can describe the Bill is to say that it is a bit like the spectral figure of the headless horseman which haunts the moors above Elsdon in Northumberland. Many people who have seen the spectral figure have been able to describe the horse. They have even been able to describe the body that is on the horse, but they have not been able to describe its head. We are left feeling slightly uneasy about the Bill because certain issues that need to be considered have not been covered.
The Minister has given us as much information as she can, but she has left out such issues as the corporate structure and the question of debt or equity. She has been unable to put flesh and blood into the Bill by putting the word "foundation" on the face of the Bill. Noble Lords on this side of the House believe that the Minister will achieve what she has set out to achieve in the Bill. If things happen in the way in which the Minister has suggested, I believe that we shall have a very valuable institution. However, I hope that some of the issues can be discussed further in another place.
6.15 p.m.
The Viscount of Oxfuird: My Lords, I have nothing but praise for my noble friend the Minister and I am amazed at how accessible she is. It does not matter where she is—Paris, Downing Street, or in her car—she always manages to keep in touch. We are exceedingly lucky.

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I have had some thoughts on the Bill and wonder whether we have asked ourselves the following questions, which I should like to put to the Minister: do members of the Treasury travel with my noble friend on some of the terrifying journeys that she undertakes? Do they share the dangers and the uncivilised circumstances that my noble friend has to put up with in her job? Have members of the Treasury ever been seconded to the Crown Agents to see how they work? When they have done all that, perhaps they might understand some of the important observations that have been made in your Lordships' House.
It is only by understanding to the fullest extent the problems of others that it is then possible to instigate the principles of total quality management. Surely the Bill has the objective of prevention, not detection. Until it is viewed in that light, the survival of the new Crown Agents must cause some concern to us all, particularly as regards their constitutional and financial position.
We must again consider the question of charitable status. I am concerned that all the potential good that is determined by the Bill's structure could be of no avail if charitable status were imposed on the Crown Agents. It must not be imposed. The lawyers are divided and the Charity Commissioners are against it. Charitable status must not be imposed.
We must now rely on another place to take up the battle. We must keep on keeping on to ensure that the Crown Agents are not left in a limbo of indecision. As so many have said, the Bill as it stands does not achieve its intentions for the Crown Agents. Indeed, it does not achieve the intentions of my noble friend as it stands at the moment; and it definitely does not appear to achieve the intentions of the majority of your Lordships.
We have but one opportunity left to us and I hope that when the Bill comes back we shall see some changes which I know that everybody will welcome. In the meantime, we can do nothing but wish the Crown Agents, who have become friends over these weeks, God speed.
6.16 p.m.
Baroness Elles: My Lords, I should like to take this opportunity to congratulate my noble friend the Minister on having carried the Bill this far without altering a comma or full-stop. The noble Lord, Lord Redesdale, had a rather romantic vision of the Bill. I am afraid that I have a more housewifely image: it is like gruyere cheese, totally wholesome but full of holes. I believe that that description fits the Bill.
I should like to comment on two major points that have been made throughout the passage of the Bill and on which we might be able to conclude with some kind of agreement. I turn first to the foundation. My noble friend has given us considerable information about the foundation and we on this side of the House have no doubt whatsoever that her word will be kept and that what she has said will be implemented. Although to me it is perfectly anomalous that we should have spent so much time discussing the foundation without defining it in statute, I have no doubt that the foundation will be set up exactly as my noble friend told the House.
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We have been told that the setting up of the foundation is unique, so I wonder how we can sometimes be told that nobody will want to create a precedent. There is no precedent because, as we have been given to understand, the foundation is a unique creation.
I must say from this side of the House how much we all welcomed the idea of open government. Regrettably, I do not think that this is a good example of open government—after all, a foundation is being created, but we are not allowed to see that stated on the face of the Bill.
With regard to charitable status, I am sure that my noble friend the Minister will have received much legal advice on this point. I am sure that she will have wished for that famous one-armed barrister who cannot say, "On the one hand, it is this but, on the other hand, it is that". I am sure that my noble friend will wish that she had been given a satisfactory conclusion. As a modest barrister myself, I understand that there is absolutely no objection to whether the foundation is or is not granted charitable status. It is entirely a political decision. Presumably, the Treasury will decide whether the foundation is to be given charitable status. In my view, how that decision should be taken is not a legal matter.
The Government are seeking to retain some measure of control over the Crown Agents, presumably carrying on a "nanny" policy of passing it to the Charity Commissioners. That is surprising considering that the numerous privatisation measures which the Government have so far undertaken have proved to be a great success.
I should like to draw attention to the words of my noble friend the Minister when she said:
"Certainly the Government would intend to be a member of the foundation with power, for a limited time, to ensure that no substantial changes could be made in the objectives of the foundation without prior government agreement".—[Official Report. 28/2/95; col. 1442.]
The only purpose of granting the Crown Agents charitable status would be to protect the objectives, but that point is already covered for at least the next five years without the necessity of such status.
With the successful record of privatisation over the years I am surprised that the Government have not been able to see that the Crown Agents, who have performed magnificently over the past few years and about whose efficiency and effectiveness no one in the House has any doubt, should not have that measure of control held over their heads when they launch forth as a highly successful commercial and trading operation. I can only say in conclusion that I wish my noble friend well and thank her for her great contribution to the way the Bill has been handled in this House and hope that, when it is dealt with in another place, the comments made during the Bill's passage will be taken on board.
Baroness Chalker of Wallasey: My Lords, I thank noble Lords for the general welcome they have given the Bill. I do not believe that it is as controversial as the noble Lord, Lord Judd, sought to make out. While I understand that he must oppose, it has been an interesting example of how the Liberal/Labour friendship pact is building up yet again.

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Many noble Lords who spoke in today's debate have made kind comments to me. It was not a case of making the best of a difficult brief. I can genuinely tell the noble Lord, Lord Judd, that. This is a good organisation which needs to be freed up, but freed up in such a way that it fulfils the important social and developmental objectives we all share. I must have given assurances about the Government's intentions so many times that the Hansard writers will be looking to see whether a comma or a dot in my assurances has been altered.
Unqualified assurances are never given by any government, as the noble Lord, Lord Judd, knows well. I have thought back to some of the things he said many years ago, and I do not remember him ever giving an unqualified assurance. He will understand that I will not guarantee that, in a fast-changing world, the Crown Agents, or any other body, can be left unchanged in perpetuity. That is not the world in which the Crown Agents live, and it is certainly not the world in which people in developing countries live. Everyone has to earn their way. The Crown Agents must do so too. They must trade fairly and profitably. They will be controlled by members of the foundation.
The memorandum and articles of association will be produced as quickly as possible and without delay—whatever that means in the noble Lord's view. I do not intend to hang about with the matter, because this particular horseman is not headless. I know that the noble Lord, Lord Redesdale, was looking for a head, but if the horse is the foundation, I am happy because that horse will have a head and a tail and all that is necessary that goes between the two.
The noble Lord, Lord Judd, mentioned some of the debates we had previously. I do not want to repeat myself endlessly. Suffice to say that I should put on record that one of the reasons why the aid budget as a percentage of GNP is not increasing is that the GNP itself is going up, even though at the same time the volume of aid is gradually increasing. It may not be by as much as he and I would like, but that is happening.
I turn now to the comments made by the noble Lord, Lord Redesdale, my noble friend Lady Elles, and other noble Lords, about the foundation being on the face of the Bill. Anyone who has followed our proceedings knows that we intend the eventual owner of the Crown Agents in the private sector to be an independent foundation. There is no doubt about it. It is unnecessary for the foundation to be on the face of the Bill, as I have said so many times.
Lord Judd: My Lords—
Baroness Chalker of Wallasey: My Lords, the noble Lord is only going to ask me a question that he has already asked five times at each stage of the Bill. It would be unprecedented to put the foundation on the face of the Bill, and that is why I have not been seduced into agreeing with the noble Lord, Lord Judd.
Lord Judd: My Lords, I am extremely grateful to the Minister for giving way. She suggests that I was being unreasonable in the number of assurances I sought and for seeking to discover length of operation covered by
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those assurances. For the sake of the record, will she please repeat that she is giving us an assurance that it will be a foundation?
Baroness Chalker of Wallasey: My Lords, yet again, I give an assurance that this foundation will be a company limited by guarantee whose social and developmental objectives will be defined clearly in the memorandum and articles of association which I shall forward to the noble Lord as soon as they are finished. It will not distribute dividends to its members; it will be the sole owner of the operating company whose profits it will use in pursuit of its developmental objectives. I do not believe that I can be clearer than that.
I can understand why my noble friend Lady Elles described the Bill as a Gruyère cheese, but, of course, it is a very special cheese—for a very special organisation and a unique foundation. I hope that in its future life the Crown Agents will be an example to other bodies of how such an organisation can operate with those social and developmental objectives about which we have all talked.
The noble Lord, Lord Judd, tried to draw me down the path of a debate which was held in your Lordships' House yesterday. That is another issue upon which we have debated, and I explained, I think in Committee, why the affirmative resolution procedure would be inappropriate. I shall not go through all those debates again.
There are other concerns which my noble friends Lord Oxfuird and Lady Elles expressed again tonight. They relate to charitable status. While charitable status remains an option for a structure which will enable the foundation to fulfil its social and developmental objectives, the Crown Agents must be enabled to operate and trade commercially through the operating company.
I know that for some, charitable status has attractions, including oversight of the trustees by the Charity Commissioners, but I noted that my noble friend Lord Oxfuird said that the Charity Commissioners would be against it. There is, as my noble friend Lady Elles said, a divergence of views among lawyers. She went on to say that this was not a lawyer's but a political decision, and she is right.
There is another aspect though that I would ask my noble friend to consider. It is that prospective members of the foundation will have their own views, and those views should also be taken into account before a final decision on charitable status is made.
We have had good debates about an important organisation which is respected by all and which has gone from strength to strength over recent years. It is important that it is enabled to have the right structure for the years ahead so that it may be further strengthened to help all those aspects of development which are so dear to your Lordships' House. I commend the Bill to the House.
On Question, Bill passed, and sent to the Commons.

Hallmarking
6.30 p.m.
Lord Slynn of Hadley Lord Slynn of Hadley rose to ask Her Majesty's Government whether, in the light of the Second Report of the European Communities Committee on the Hallmarking of Precious Metals (HL Paper 7), recent negotiations on the directive in the Council suggest that sufficient consideration has been paid to the consumer interest.
The noble and learned Lord said: My Lords, in this country, at any rate since the reign of Edward I, the importance of protecting purchasers of gold and silver products has been recognised.
"All that glisters is not gold,
"Often have you heard that told",
may only have been written some 300 years later, but it explains why the Goldsmiths Company at its hall, and subsequently for six centuries in total, other assay offices throughout the country have been astute to verify that gold and silver objects were up to the standards required.
The presence of the hallmark has been an assurance of that standard. Since 1973 the Hallmarking Act, which gives effect to the 1972 Vienna Convention on the control and marking of articles of precious metal, has laid down rules requiring the presence of certain marks on gold and silver objects. Your Lordships are very familiar with those marks and therefore I do not need to identify them.
Other member states of the European Union have different rules. Largely they are strict rules which seek to provide adequate protection for customers. But they vary in their certification procedure, in their standards of fineness and in their inspection procedures. It is with the certification procedure that my Question is firstly concerned.
Some states have, as we and France have, a system of compulsory marking by a third party. Others such as Belgium provide that there is an option to have gold and silver products marked by an independent party. Yet others permit marking by the manufacturers, as does Germany.
It is generally accepted that in an internal market these different practices and procedures are capable of providing a barrier to the free movement of goods. They are barriers to the traders and to the would-be purchasers of the goods. There is widespread, if not universal, support for the view that the harmonisation of these procedures in the member states would help to remove those difficulties and barriers and that a directive is the best way to achieve that.
The question, however, is: what is the best method to adopt and how much discretion should be given to manufacturers, to sponsors, in the various member states which is consistent with—that is the important point—adequate protection of the customer? The Commission produced a draft directive initially putting forward three options for manufacturers and importers to adopt. I mention that because it is necessary to understand why the matter has become of importance. The first is that manufacturers should set up a quality inspection system which would have to be approved by a certification body.
Their systems would be subject to regular inspection by the certification body and they would put their mark and the fineness mark on their products.
The second proposed method is that the manufacturer should strike the mark on the gold and silver objects once his protection methods have been accepted as achieving the requirements of the directive. He would not have to allow regular inspections. There would be only random inspections by a certification body and he would only have to produce records to show that his methods complied with the directive.
The third proposed method is that the manufacturer should be able to submit to an independent body every one of his products for testing, or he might supply a percentage of those products on a statistical basis. He would put on his manufacturer's, or his sponsor's, mark. The body carrying out the checks would put on the fineness mark. Your Lordships will readily recognise that the third option comes closest to the assay system which we have known for so long in this country.
The Select Committee, which looked at the directive, reminded itself that under the Treaty of Rome, as amended by the Single European Act and the Maastricht Treaty, measures of approximation of national legislation must contribute to:
"the attainment of a high level of consumer protection".
The Commission appears to be proceeding on the basis that the three options give the same degree of protection. The Select Committee reached the opposite view; it does not consider that the three methods give the same degree of protection. It is satisfied that the verification by an independent body—by an assay office or a similar body— gives a higher degree of protection.
It is important that any directive which is adopted by the Community should not require the abandonment by any member state of its existing high standards of consumer protection. Secondly, it should require throughout the Community a sufficiently high degree of protection to the purchasers and dealers in gold and silver products and, of course, products in other precious metals.
The second proposal that I have described, which is known as Annex IV, plainly is not the equivalent of the hallmarking system or of a system of independent checks. Like the European Parliament Committee on Consumer Protection, the Select Committee recommended that that should be deleted from the directive as an option.
The first proposal chronologically, Annex III, gives more protection in that the quality control system envisaged requires prior approval and is subject to regular inspection. However, the Select Committee believes that it is essential that there should be added protection if the mark of the notified body, the supervising body, were also struck by the manufacturer. That is objected to on the basis that it would reveal the national origin of the goods. We consider that when dealing with articles of precious metal that is wholly justified.
Furthermore, we believe that it is essential that the supervisory body, called the notified body, should be subject to approval or accreditation and that that should be provided for in the directive. It is possible that a system of mutual recognition can be set up as an alternative. However, the Select Committee believes—and it is

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almost incontrovertible—that if that were done a plethora of questions would be raised as to the marks and the fineness standards.
Negotiations have been proceeding since the directive was first published. Members of the Select Committee and I are extremely grateful to the noble Earl, Lord Ferrers, for his replies to our report and our recommendations and for the way in which he has kept us informed. The matter is of great concern to manufacturers and traders in gold and silver products as well as to those who purchase them. The need for their protection is paramount and I have tabled this Question this evening in order that the House may be informed of the developments in relation to those negotiations and as to the success of attempts to ensure adequate customer protection.
6.40 p.m.
The Viscount of Oxfuird: My Lords, we are grateful to the noble and learned Lord, Lord Slynn, for initiating this important debate. I would also like to congratulate Sub-committee E of the European Communities Select Committee, which he chairs, for producing such an excellent report on the hallmarking of precious metals, which has helped to cast light onto some extremely complex and seemingly controversial issues.
Before I start my remarks I should declare an interest in that I hosted last year a reception for the British jewellery industry to mark the centenary of the National Association of Goldsmiths. I do not, however, hold any brief for the jewellery industry nor do I receive any remuneration from it. This happens to be a trade and industry subject in which I have an interest.
Noble Lords who have read the evidence submitted to the sub-committee will have noted a divergence in the views of the assay offices and the jewellery industry representatives. It is in support of the viewpoint of the industry that I should like to speak tonight, though I shall confine my remarks primarily to the issue of consumer protection, which is the subject of the noble and learned Lord's Question.
The whole matter of hallmarking was considered in great detail in the Stone Report that was published in 1959 at a time when serious consideration was given to abolition of statutory hallmarking, leaving the consumer to rely, as is normal for most consumer products, on existing trade descriptions legislation. At that time the jewellery industry in the United Kingdom strongly supported the assay offices in their fight for the retention of statutory hallmarking, which led to the Hallmarking Act 1973 and the establishment in 1974 of the British Hallmarking Council.
So what has happened to cause the industry to change its position? There are three main reasons. The first is the creation since then of our single European market and the need arising from that to harmonise all such legislation on a European-wide basis.
The second is a realisation that came about during the Thatcher years that it is wrong to protect manufacturing industry in the UK behind artificial trade barriers and it
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must be recognised that the British compulsory hallmarking system does impose a very real barrier to trade. It is greatly to the credit of the jewellery manufacturers in this country that they reject such featherbedding.
The final reason is a series of European Court of Justice judgments, most recently the Houtwipper judgment of 15th September 1994, which have put United Kingdom legislation out of line with European legislation. That has led to great confusion for jewellery retailers and consumers since the law is no longer clear. It has also placed the regulatory authorities in an almost impossible position.
I should like to quote from two paragraphs of advice given by the trading standards body, LACOTS, on 20th October 1994:
"Authorities will therefore need to have mind to the decision in Houtwipper when exercising their enforcement responsibilities under the 1973 Act. In particular, authorities will need to be aware that articles imported from other member states may be put straight onto the market without re-marking if they have been equivalently marked by an independent body in the originating member state. Obviously it will be for the courts to decide what constitutes an equivalent mark.
LACOTS believes that the current absence of any definition as to the equivalence of different marking arrangements is likely to complicate the enforcement task."
When the law is unclear, and the enforcement task is therefore difficult, the consumer is at risk. The Houtwipper judgment probably means, subject to a ruling from our courts, that goods marked in EU states with an established statutory hallmarking system—that is, France, Ireland, Spain, Portugal, the Netherlands, Austria and Finland—or that have been marked by a third party in states with a voluntary hallmarking system—that is, Sweden, Belgium and Denmark—can now be sold legally in the UK.
For the consumer that presents great difficulty. Pre-Houtwipper it was possible to explain our hallmarking regime as defined by the 1973 Act on a single A4-sized notice that is displayed by law in every retail outlet. Now the consumer is potentially faced with literally hundreds of different marks—all of them apparently legal—for which there is no single reference work. Indeed, one needs a small library of reference works, many of them very difficult to obtain, to begin to get a clear picture.
Under those circumstances the possibility of fraud is very greatly increased and that concerns established jewellery retailers very much because it might bring their whole trade into disrepute.
Those who argue for the retention of compulsory hallmarking only, as some noble Lords may do this evening, claim that they do so to protect the consumer but, as I hope I have demonstrated already, our law has now become so confused that just preserving the status quo actually leaves the consumer at risk.
The United Kingdom jewellery industry has come to the view that the only way forward is to seek a European directive on precious metal marking as quickly as possible and its case was argued very strongly in a letter from the chief executives of the British Jewellers' Association and the National Association of Goldsmiths that was published in The Times on 30th March.

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Work has been proceeding in Brussels and in the European Parliament for three or four years now to find a directive acceptable to all EU member states. Much of that work was considered at a key meeting of the Council of Consumer Affairs Ministers on 30th March where the United Kingdom was represented by my noble friend the Minister. At that meeting a text was considered which represented a great deal of work that had been undertaken by the current French EU Presidency, the Commission and others.
One of the main areas within the proposed directive which is proving difficult is the question of manufacturers' marking. That is the system employed in the home markets of Europe's two largest jewellery manufacturers—Italy and Germany. Already the Germans and Italians have conceded that manufacturers' marking with no intervention by a third party—the system which they currently utilise in their home markets—will be outlawed under the directive since manufacturers' marking would be regulated by notified bodies appointed by the EU governments. The debate is now centred around the wording of the directive annex that defines the degree of notified body regulation. Of course, the text that was considered on 30th March was a compromise text which gave nobody everything that they wanted.
I believe, however, that the text that was put forward was probably more favourable to the United Kingdom than to any other member state of the Union because it allowed us to retain our traditional hallmarks under a voluntary rather than a compulsory regime so the traditional marks that we have grown to know and love for upwards of 700 years would not disappear; it allowed us to retain all of our traditional finenesses with the exception of Britannia silver, which is hardly used today; and it proposed a regime of notified body regulation so that unrestricted manufacturers' marking would not have been possible.
I realise that my noble friend the Minister is in the middle of a series of extremely difficult and complex negotiations with our European partners and I do not wish to say anything this evening that will make his task more difficult. Indeed, I should like to congratulate him on the progress that he and his predecessors have already made in negotiating a draft that takes into account many of the issues that troubled us in the United Kingdom when the first Commission draft was published in 1993.
In conclusion, however, I urge the Minister not to hold out for too long and to suggest to him that, by accepting a form of wording for the directive broadly similar to that which was tabled on 30th March, he will have done consumers in this country a great service since he will have removed a major area of confusion which at this very moment is putting their interests at risk.
6.50 p.m.
Lord Broadbridge: My Lords, tonight's debate is very timely coming so soon after the visit of the noble Earl, Lord Ferrers, to Europe on 30th March. I thank the noble and learned Lord, Lord Slynn of Hadley, for introducing the debate. I also congratulate him as chairman, together with his colleagues, on an excellent and explanatory Select Committee report on hallmarking published last January.
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I declare an interest in that I am an amateur silversmith and have had a hallmark registered at the London Assay Office for some 20 years. I am a Liveryman of the Goldsmiths Company (whose Clerk tells me that he is gratified by the firm line taken in Europe by the noble Earl, Lord Ferrers, after our visit to him at the DTI), and I collect early English spoons on a modest budget.
Hallmarking has been with us in this country since, as we have heard, 1300 when a statute passed by Edward I required that all silver articles were to be of the sterling standard, the same as the coinage, but also that they were to be assayed or tested by the wardens of the Goldsmiths Guild, as it then was, and marked with a leopard's head before they left the hands of the workers. Further, gold articles were to be 19 and one-fifth carats. That was 695 years ago, and assaying and hallmarking have continued here ever since.
As a general principle, it is surely with some trepidation that hallowed practices should be abandoned and then only if they do not meet present requirements. Hallmarking's primary purpose, as we have heard, is to protect the consumer interest, and surely the present is the very age of consumer protection—a time when every-day labelling is becoming more informative. Indeed, in the retail grocery market, manufacturers and own labels are falling over each other to try to give the most information. Last month the Co-operative Society announced a radical advance with an intention to give environment information too. How perverse it would be, therefore, to abandon a 695 year-old hallmarking system which does just that. Not only does it protect the consumer interest, but it serves the interest of the trade itself as it creates a favourable image and shields the honest manufacturer from unfair practice by less scrupulous competitors, both at home and from overseas imports.
A hallmark is a complete fingerprint. In 1300 the place of assay mark was first made with the leopard's head. In 1363, distinctive and registered makers' marks were added. In 1478 a date letter, changed annually, was added. Finally, in 1544, a sterling mark of quality was added: a lion passant, but rampant for the Edinburgh Assay Office. Thus in that year of 1544, 451 years ago, the four distinctive marks of the fingerprint were in place—town, maker, standard of metal and date.
In general terms there are, as we know, three possible options as a starting point for a draft EC directive, although things have changed a little, as the noble and learned Lord, Lord Slynn of Hadley, said. First, the marking of articles by the manufacturer; secondly, testing and marking by an independent laboratory—the equivalent of a state assay office; and, thirdly, marking by the manufacturer following testing or quality control surveillance by an independent laboratory. Of these, only the second option fully accords with the UK criteria for hallmarking; that is, compulsory independent testing and marking.
I believe that in general there are two principal criteria for consumer protection: a statement of what the article consists of and a statement of who made it. Applied to precious metals—that is, gold, silver and platinum—and the consumer interest, I believe that there are two essential aspects to the marking of those metals; first, what the marks are and, secondly, who puts them on and under

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what conditions. I start first with what the marks are. To my mind, our present system in this country is ideal. It lacks nothing and nothing could reasonably be added that would be beneficial. But a number of EC countries do not mark precious metals nearly so informatively. I would argue to the Government, who seem to be sympathetic, that anything less than our full set of four marks would be to the detriment of the protection of the public and the trade.
It is one of those curious accidents of fate that a system started as long ago as post-medieval times is nonetheless ideally suited to modern times and the requirements that a manufactured article should clearly state what it is made of, who made it, and where and when. Anything less is partial and, for all practical purposes, ranges between the flawed and the totally inadequate. I urge Her Majesty's Government to strive to continue the complete fingerprint which historically has been, and continues to be, the glory of English silver and gold and, more recently, of platinum.
My other concern is who does the marking. The alternatives are an independent authority as in this country, at present in London, Birmingham, Sheffield and Edinburgh, or by the manufacturer. It is to me regrettable that in a number of EC countries, such as Italy and Germany, the maker also does the marking. Human nature does not change, and very large sums of money are involved. I take just one element of the total market to illustrate the point. If the, say, 30 million adults in this country buy the customary gold ring for the man and an engagement and wedding ring for the lady, spending, say, £300 between them, that represents £9 billion over about 50 years, or £180 million a year.
To put that into context, I wish to speak of baked beans. At my local supermarket, the current price of a standard-sized tin of baked beans is 24 pence. So that expenditure is equivalent to 750 million tins. If just 1 per cent. of those were substandard—an approximation to the Assay Office experience, coming mainly from imported goods—that would amount to 7,500,000 tins and give rise to a very great commotion, or what the French in an admirable word call "brouhaha".
As I was saying, with the marking of precious metals very large sums of money are involved. That is endorsed by the fact that, today, counterfeiting or transposing a hallmark carries a maximum penalty of 10 years' imprisonment. The penalty for infringement of the laws of hallmarking has always been severe. At one period in the 18th century, the death penalty could be invoked for forgery, although the pillory combined with the severing of ears was more common. My point is that if makers have been prepared to take great risks in the past, surely in an unregulated market they will do so now in view of the sums of money involved.
Moreover, marking one's own production is to me an unregulated market. For example, if one of your Lordships buys a fairly heavy signet ring for £200 in the belief that it is 18-carat gold and it is in fact only 9 carat, then he has only half the gold that he expected. He has been swindled out of approximately £100 and an unscrupulous maker has pocketed it. But how many of us by simple inspection could tell 18 carat from 9 carat? Ah, but there are watchdogs, some of us may feel. Yes,
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indeed; but, first, the London Assay Office alone has handled around 50,000 items a day. Secondly, such consumer watchdogs are hardly geared to the examination of precious metals, an extremely exacting art developed over centuries. For example, the Consumers' Association laboratories may be well equipped to examine a tin of a baked beans or the fireproofness of a sofa. But are they really likely to be prepared to equip themselves with furnaces and crucibles and, more important, the skills to use them correctly? I am sure that they are not.
I deprecate maker marking even with independent quality control surveillance because I believe that, in the real world, some people are always prepared to take risks to make money at the expense of the public where large sums are involved and the public are unable to judge the quality of what they are being offered. That is the observed position throughout history and, surely, the present-day City financial pages, and others, almost daily attest to the fact that human weakness continues.
In conclusion, therefore, I once again urge Her Majesty's Government to maintain our present practice of independent Assay Office testing and marking the quality of precious metals offered for sale rather than the various alternatives. The latter is to offer temptation to the unscrupulous, and offering temptation is bad law.
7 p.m.
Lord Lawrence: My Lords, I would like to thank the noble and learned Lord, Lord Slynn, for asking this Question, and for producing this report with his committee as it enables me to sing the praises of the Assay Office. I have a slight interest to declare because I particularly like early metal and also antique base metal. I possess a passing interest in hallmarks. It is always fascinating to look at a hallmark and to discern the year an article was made, its town of origin and possibly its maker.
However, the most important mark on the hallmark is the standard. Britain has produced a long tradition of absolutely marvellous quality control with silver, gold and precious metals. In Europe other countries with a high standard are Ireland, Holland and France. France has a hallmarking system that has been going even longer than the British one. Although the French have impossible hallmarks, they have a system of producing fine metal. Portugal, Spain, Italy and Germany are traditionally much less careful with their metal control. They have a city state tradition and guilds which were started comparatively early on but which have not been running for a continuous period of time. Augsburg is a good example in Germany where the craftsmen displayed craftsmanship of superior quality. The masterpieces which they presented to the guild to become a master were absolutely terrific but their quality control in the metals was doubtful. There has been a long tradition in this area of wonderful craftsmanship but not terribly good quality control of the metals used. Perhaps that has something to do with the attitude of Germany today as regards wanting to produce peculiar metal standards but marvellous workmanship.
The English guilds have, on the other hand, had a tradition whereby the master works presented to become a guild member were not necessarily as beautiful and wonderful as those produced in Augsburg, but they were

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always of the highest possible standard. I hope that the ability to take articles to an independent body to be marked and assessed will continue. There seems to be a fraught effort to try to organise inspection of factories and places of manufacture. That process seems to be incapable of monitoring factory outputs at all times.
I am afraid that previous speakers have already said most of the comments that I wish to make. However, after 700 years of a guild that became the Assay Office and which has produced a high standard of work in this country, I hope very much that that will be allowed to continue for many years to come.
7.3 p.m.
The Viscount of Falkland: My Lords, I wish to congratulate the noble and learned Lord on his clear introduction to his Question and indeed on the quality of the report of his committee. I cannot claim to match the expertise that has already been shown in this debate. This is rather a sensitive issue for me in that I have had two burglaries and have lost almost all of the little that remained of my family's silver, some of which went back a considerable time. I was, however, left, to my relief, with four rather attractive wall sconces of the 18th century.
It was rather a case of shutting the door after the horse had bolted but I went to have them valued for insurance purposes. To my surprise they were valued rather low. The jeweller who did the valuation told me that they should not be offered for sale because they had not been assayed. What had apparently happened was that silver plates in the family had been given to a local jeweller who had made them into attractive wall sconces. Without the assay mark it is illegal to offer those pieces for sale. The jeweller told me that if I wished to sell them I would, of course, have to submit them to the Assay Office and that would be a long, involved and perhaps costly business. I had no intention of selling them so I returned them to where they now hang on the wall. I hope that the next burglars who come to my home do not take them. Whether the previous burglars left them because they were so expert that they knew they could not sell them, or whether they were just hung rather high on the wall, I do not know. But let us hope the burglars do not read Hansard.
I have some familiarity with the markings on precious metals. As a young man I was able to supplement a meagre income working in a publisher's office. Someone who was an old soldier in the field of heraldry told me that there was a good way of finding out how pieces of silver had originated, whether they had been given as wedding presents and at what time. I learnt how to use the books on heraldry in the British Museum library. That, together with a basic knowledge of hallmarking, enabled me to offer a service to jewellers. I offered a service for £20 a time and that covered one page of information in small print. Provided there was some crest or armorial bearings on the piece of silver and a hallmark that I could read, I was able to tell a jeweller pretty accurately the occasion on which that piece of silver had been given, whether it was given as a wedding present, a christening present or
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whatever. The fact that I was given £20 in the late 1950s for such work suggests to me that the information I provided added significantly to the value of the items.
But, to return to the subject that we are discussing this evening, the draft directive is, quite understandably, an attempt to harmonise trade in this area and to reduce the barriers to trade in precious metals. The European Commission has produced three options which were so well described by the noble and learned Lord, but none of them is satisfactory. I think that noble Lords have been very kind in their remarks. None of the options suggested reaches, in any measure, the high level of protection for consumers that we already have. Perhaps the European Commission considers that that protection is too high. The noble Lord, Lord Broadbridge, highlighted the fact that no protection is too high in the area of precious metals, and I agree with that. There is too much opportunity for dishonesty and fraud. As the noble Lord so rightly pointed out, we have developed over 700 years a system which is demonstrably the best in protecting consumers against receiving short measure in this area of trade.
I am sure that the noble Earl will be able to reply to this Question to our satisfaction. I know that he has put a lot of work into it. Perhaps he will be able to reassure us as regards the future of the attractive lion passant which appears on sterling silver. I understand that that is under some threat if the European Commission's intentions are taken to the extremes that we fear. The marks which appear on antique silver particularly and antique gold items are not merely fingerprints—as I believe other noble Lords have said—but are extremely attractive. They have heritage value. I say that as heritage spokesman on these Benches. They add interest and value to these items.
The Vienna Convention of 1975, which has been signed by about 10 countries, has worked satisfactorily with agreement on equivalent standards. However, the European Commission has not recognised that fact.
This has been a most informative and expert debate. The report itself will become a classic of its kind. I have not read all of it in detail, but I was greatly impressed by those parts that I have read. I expect that it will become standard reading for students of antique silver, gold and other metals.
I look forward to the noble Earl's reply. Speaking personally, even if I do not speak entirely for colleagues on these Benches, I hope that we shall be able to retain our distinctive, valued and attractive hallmarking system, at least for the foreseeable future and perhaps for much longer than that.
7.11 p.m.
Lord Peston: My Lords, I too wish to thank the noble and learned Lord, Lord Slynn of Hadley, for asking this Unstarred Question. I join with other noble Lords in congratulating him on the excellent report of his committee.

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My interest in this subject is not of long standing. It started with a Question which the noble Baroness, Lady Gardner of Parkes, asked on 3rd March 1994. She asked what was happening. To quote my own words—if that is in order —I said then:
"I am stupefied by the suggestion of a desire for some form of harmonisation. Does the Minister not recognise that we have an extremely satisfactory system of hallmarking in this country which protects the consumer?"—[Official Report, 3/3/94; col. 1127.]
I understood from the Minister's reply that that was also his view. If I read paragraph 23 of the Select Committee's report correctly, that is also the DTI's view. This is a rare occasion on which I wish strongly to support the view of the Minister's department. As I understand it, the department is not convinced of the need for a directive. That is still my view. As noble Lords know, I speak as a very ardent pro-European.
I do not accept—and I was surprised that the noble Viscount, Lord Oxfuird, accepted—that our high standards of hallmarking are a barrier to trade. I have spent most of my academic life studying the economics of free trade and sometimes the flaws associated with it. However, the notion that a country setting a high standard of consumer protection is acting in restraint of trade is simply ridiculous. It is wrong. I normally agree with most of what the noble Viscount says on most subjects, but I was surprised that he said that our system led to featherbedding. I do not accept that for one moment. I believe that the noble Lord, Lord Broadbridge, was right when he said that it led to high standards and consumer protection. Indeed, the noble Viscount himself made the valid argument, which I believe to be overwhelmingly correct, that if we go down the path the Community wants, that will lead to a state of affairs which is so complex that the consumer will cease to be protected.
If it were up to me, I would maintain the status quo. I would do so on the grounds of good free trade and good consumer protection. However, if I read the Select Committee's report correctly, we shall not be allowed to keep the status quo. The Select Committee recommends:
"continued efforts to negotiate an acceptable Directive with a really effective method of control so as to protect the consumer".
I accept that, and I would welcome it if I thought it were possible. However, I do not believe that it is possible. Therefore, although I do not want anything that I say to be interpreted as remotely undermining the very hard task facing the Minister, I believe that it is all a waste of time. If I had my way we would simply retain the present system, which is of long standing and offers protection to consumers in our country.
I pay tribute to the work of the local authority trading standard officers who enforce the hallmarking legislation. Their work is supported by the technical and analytical expertise of the assay offices. That is allied to point-of-sale information available to the consumer. In other words, in terms of consumer protection, what we have is what we want and what we need.
The problem for the Minister—and this is why I look forward to his reply—is whether, in negotiating with his colleagues, he can find an approach which does not water
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down the system we have and which does not lead to an outcome which is so complicated that the consumer ends up with a worse state of affairs than we started with.
As I understand it, there is still everything to play for. I ask the Minister whether I am right that there is everything to play for and that we have so far made no concessions. If that is true, I urge him, first, not to make any concessions; and, secondly, to prolong the process as long as he possibly can. Prolonging the process indefinitely would be the best way of approaching the matter.
Harmonisation is desirable in many areas. However, a form of madness is overwhelming the Community so that harmonisation has to be achieved in everything. Free trade is prayed in aid, as if it were the same as harmonisation. As an academic economist, I can assure your Lordships that it is not.
We should not be bewitched by the desire for harmonisation. For once, we ought to argue strongly that consumer protection in this area is paramount. Protection against fraud is of the greatest importance. The British system is precisely the one which achieves those desirable ends.
7.17 p.m.
The Minister of State, Department of Trade and Industry (Earl Ferrers): My Lords, the House will be grateful to the noble and learned Lord, Lord Slynn of Hadley, for asking this Question this evening. I know how much our hallmarking regime is valued by people in this country. I share that respect for the system.
The House will also be grateful to the noble and learned Lord for having chaired, with his legendary clarity and competence, the Select Committee which considered the handling of precious metals and which produced such a valuable report. As the noble Viscount said, it will-be a classic. He is right.
The noble and learned Lord explained the position concerning hallmarking admirably. An interesting aspect of your Lordships' House is that there is always someone who is an expert. We have heard from several experts this evening. I knew that it was not unknown for some Members of your Lordships' House to own a bit of gold or a bit of silver. I knew that it was not unknown for some of your Lordships to know a bit about gold or silver. However, until the noble Lord, Lord Broadbridge, spoke, I did not know that we had a practising silversmith in your Lordships' House. That is an added advantage. The noble Lord is lucky to be a member of such a distinguished livery company as the Goldsmiths Company. I was fascinated that in his advocacy of the hallmarking of gold and silver he should enter into the realm of baked beans. It was rather difficult to understand the analogy, although I realise that it was an imaginative way of making a point.
The noble Lord, Lord Peston, in his usual succinct way, said that the whole thing was a waste of time. I thought that that was a little—not facile—perhaps simple. I do not mean that the noble Lord is simple, merely that his argument was simple. He asked whether there was everything to play for. The answer is that there is. He asked whether any concessions were made. The answer is no. The position is that the directive has been taken away and is being considered by the Commission, as a result of

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the discussion which was held in March. The noble Lord, Lord Peston, said, in his curiously avant-garde way, "Let's take it away for ever and not see it again". Life is not as simple as that, as I hope to show him.
The marking of articles which are made from precious metals, in order to indicate their precious metal content and who made them, is one of the oldest forms of consumer protection we have. A number of noble Lords said that the tradition had been practised in the United Kingdom for 700 years, going back to the reign of Edward I. Your Lordships' Select Committee put it succinctly, stating that the purpose was,
"in order to discourage goldsmiths from deceiving the public".
So they did pretty funny things in those days too.
A number of other European member states also enjoy a long-established tradition of independent hallmarking. Other member states have equally long traditions but ones which are totally different from ours where the manufacturer marks his own products. The two traditions are in fact diametrically opposed. One is hallmarking carried out independently of the manufacturer and the other is marking by the manufacturer himself. The proposed directive seeks to find a way of accommodating those extremes. Even if it did not satisfy the noble Lord, Lord Peston, it would satisfy the jewellery industry about which my noble friend Lord Oxfuird was concerned and to which he rightly drew your Lordships' attention. Trying to accommodate those extremes is not easy. We can accept and, indeed, prefer independent hallmarking. We can accept manufacturers' marking provided that the process used has been assessed and has been approved by an independent body and provided that the process is subject to regular inspections. What we cannot accept is marking by the manufacturer without any prior approval by an independent third party of the methods which he uses and where the process is subject only to random inspection.
The difficulty arises in Europe because those countries which have traditionally had a manufacturers' system of marking with which they are content view the imposition of the approval of their methods by an outside certifying body as an appalling and additional bureaucratic burden. They will have to create, in their view, a new tier in their states.
We are always saying that we want less bureaucracy in Europe. Oddly enough, they say exactly the same. But we are the ones who, in their eyes, are pushing for more bureaucracy in their states. That is the difficulty. United Kingdom marks are known the world over and they are universally regarded as marks of excellence. Assay Office marks—the leopard's head for London, the anchor for Birmingham, the rose for Sheffield and the castle for Edinburgh—are held in considerable affection and esteem. They impart their own cachet to a particular article which has been made from a precious metal.
I believe that I can satisfy the noble Viscount, Lord Falkland, that the lion passant would be allowed to continue as the directive allows for traditional marks as long as they do not confuse. United Kingdom hallmarking requirements are governed by the provisions of the Hallmarking Act 1973. Under that Act no article may be offered for sale in the United Kingdom which is described as gold, silver or platinum unless it bears an approved
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hallmark. That means a mark which is struck by one of the four United Kingdom assay offices; a mark which was struck in Dublin before 1st April, 1923; or a mark which is struck in accordance with the provisions of the International Hallmarking Convention. That convention provides a mutual recognition of marks which is based on rigorous criteria, such as methods of marking and assaying. But not all European Union member states are party to the International Hallmarking Convention.
There are three approved hallmarks. They are the Assay Office mark; the standard of fineness mark; and a date letter. There are four recognised standards for gold, two for silver and one for platinum. In addition, all articles must bear a sponsor's mark. This will indicate who is the manufacturer or the sponsor—for example, the importer. The sponsor's mark may be struck either by the sponsor or by the Assay Office. The sponsor's mark must in any event be registered with the Assay Office.
The draft European Union directive seeks to harmonise the arrangements in the various member states for marking precious metal articles. It is an Article 100a directive, which is about the free movement of goods between member states. It does not invoke Article 129a of the Treaty of Rome, which is all about consumer protection. That is important and it is the reason we think that the directive is fundamentally flawed.
My noble friend Lord Oxfuird said that hallmarking was a barrier to trade. That is a perfectly tenable argument, but the European Court has recognised that barriers to trade can be justified in the interests of consumer protection. Recently, there was a celebrated case to which my noble friend referred—the Houtwipper case—which involved a Dutch trader who attempted to sell unmarked silver articles which had been imported from another member state in contravention of Dutch hallmarking law. In its judgment, the European Court of Justice said that the marking or re-marking of such articles by the importing member state was not contrary to Article 30 of the Treaty of Rome. It also said that member states which themselves practised independent marking were obliged to accept, without marking or re-marking, articles which had been marked on a similar basis in another member state. That was an important judgment.
The proposed draft directive is what is called a "new approach" directive. This form of directive has been applied to products such as toys and weighing machinery. We do not think that the new approach directive is suitable in the case of precious metal articles. We are not concerned here with whether an article meets established standards such as standards of safety with a notified body which acts as the supervisory authority. What matters in the hallmarking issue is, first, that the article should be of the quality which is ascribed to it; and, secondly, that the consumer receives a watertight guarantee of that quality.
The Government cannot accept that self-certification by manufacturers would offer United Kingdom consumers an adequate level of guarantee. It would lack the imprimatur of an independent body behind it. It would be seen by United Kingdom consumers as a backward step and a marked lowering of standards and of consumer protection. It is for those reasons that the Government rejected the current draft of the directive at the Consumer Council on 30th March. Subsequent correspondence

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which has, curiously enough, found its way into my office has confirmed that the public on the whole believe that it was the right thing to do.
The noble and learned Lord's committee has produced a thorough scrutiny of the European Commission's proposal. I wish to offer the Government's thanks to the noble and learned Lord and his committee for having done that in a remarkable way. It was a most welcome contribution to the debate on an important subject. It was particularly helpful that it provided valuable support for the Government's negotiating position. I have already made a response to the noble and learned Lord's report, but there are just two points which I wish to highlight. First, there is the need for a directive which provides "a really effective system of consumer protection". The Government are determined to argue vigorously for that and we will not approve measures which compromise the high standards which are present in the United Kingdom.
The second point is related to that and concerns the question of the alternative manufacturer marking system—the system which is approved by and regularly inspected by an outside body. That system is incorporated in the directive and is based on product quality assurance. That is a matter which we would be prepared to consider further, especially if it were to include the stamping of the mark of the notified body on the metal and if there were to be established criteria for the assessment of notified bodies.
I agree with the noble and learned Lord, Lord Slynn, that a mark by a notified body would add to transparency and would make it easier to trace articles. Unfortunately—it is a regrettable factor—this option does not seem to command much support among those member states which already practise manufacturers' marking.
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The Government's position on the directive is not totally negative. For example, there are advantages in harmonising the standards of fineness used throughout Europe. That was one of the recommendations of the noble and learned Lord's committee.
I was glad, if I may say so, that my noble friend Lord Oxfuird put the position of the jewellery industry so clearly. We understand the desire of the British jewellery industry to enjoy the clarity which harmonisation would bring whereby jewellery imported from another member state does not have to be subject to a further test. Without harmonisation—it is a point the noble Lord, Lord Peston, may like to consider—there is always the danger, as my noble friend said, of confusion as to what does and does not need to be hallmarked as well as to what different hallmarks mean. There is advantage for harmonisation provided that the harmonisation does not lower the quality of the consumer protection.
At present, under United Kingdom law, unless jewellery which is imported from member states carries the mark of the International Hallmarking Convention, it has to be subjected to further certification before it can be sold in United Kingdom shops. The judgment of the European Court in the Houtwipper case will mean that jewellery imported from member states which have an independent hallmarking system can now be sold without additional certification. Jewellery which is imported from other member states must continue to be subject to further certification by a United Kingdom assay office. That is obviously untidy; some might think it wrong. The difficulty arises in trying to find a fair and equitable solution. In the Government's view the protection of the consumer must remain the prime concern. We do not believe that the directive, as currently drafted, addresses that concern adequately. We will not agree to any directive which falls short of that important principle.
House adjourned at twenty-seven minutes before eight o'clock.