Lords Sitting of 25 October 1995

Preamble
The House met at half past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Birmingham.

Lord Habgood
The Right Reverend and Right Honourable John Staplyton Habgood, lately Archbishop of York, having been created Baron Habgood, of Calverton in the County of Buckinghamshire, for life—Was, in his robes, introduced between the Lord Coggan and the Lord Walton of Detchant.

The Barony of Berners
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I have to inform your Lordships that Her Majesty has been pleased to determine the abeyance of the Barony of Berners in favour of Pamela Vivien Kirkham. The Barony fell into abeyance in 1992 on the death of her mother Vera Ruby, Baroness Berners. The noble Baroness now attends at the Bar with her writ of summons to take her seat.
The Baroness Berners The Baroness Berners—Took the Oath.

Water Supplies: Safeguards
2.50 p.m.
Lord Dubs Lord Dubs asked Her Majesty's Government:
Whether they propose to take any steps on behalf of consumers to safeguard water supplies.
The Minister of State, Department of the Environment (Earl Ferrers): My Lords, it is the responsibility of the water companies to safeguard supplies to their customers.
Lord Dubs: My Lords, does the Minister agree that that shows a rather naive faith in the water companies? Given that this summer some parts of the country came within a hair's breadth of running out of water supplies; given that the water companies have put up their prides by 67 per cent. in five years, which is well ahead of the rate of inflation; and given that the water company executives are probably the highest paid water company executives of any water supplying organisation in the world, private or public, surely it is up to the Government to ensure that, if we have a dry winter following a dry summer, something better can be done than simply saying, "Turn off the taps. It's someone else's fault".
Earl Ferrers: My Lords, the noble Lord, Lord Dubs, said that the Government were naive. I respectfully suggest that possibly the same expression could be used about the noble Lord. The fact is that we have had the hottest, driest five months for the past 200 years. The
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drought persisted in parts of the Pennines, the Lake District and Yorkshire, and in exceptional conditions of drought there are bound to be difficulties.
My right honourable friend the Secretary of State for the Environment has set up a body to look at the situation to see what lessons can be learnt from the drought. However, to say that the fact that it has not rained is the Government's fault or the water companies' fault is stretching things a bit far.
Lord Howell: My Lords, there was a time in days of yore when Ministers involved themselves in these matters and, perhaps I may say, with some degree of success. At the request of my noble friend Lord Callaghan, we left behind plans for national and regional grids in order to ensure that no such situation existed again. Is it not a great pity that when that Government went out of office the incoming Government scrapped all those plans, directly resulting in the serious crisis that we have had this year? Will we return to arranging some facilities for regional and national grids? There is no shortage of water in this country; there is just the problem of moving it about. The transportation of water is a matter on which the Government should exercise a superior judgment.
Earl Ferrers: My Lords, the noble Lord asks the Government to provide a superior judgment and yet he normally criticises the Government when they do that and says that they are not listening. I know that the noble Lord, Lord Howell, had the privilege of being Minister for Drought and then became known as the Rain Minister because, as soon as he took up that appointment, it began to rain. I thought that it began to rain then because a number of people came over from Africa and did a rain dance in Trafalgar Square. However, I should not like to detract from the noble Lord's participation in that.
There was an idea of a grid but the fact is that that would be an extremely expensive method of moving water. Also, recent demand has increased considerably, far more than was anticipated. Of course, demand increases at the driest time of the year. I am not trying to excuse the noble Lord's anxiety. We intend to look at what has happened, because it has had very serious consequences, to see what we can do to prevent it happening in future.
Lord Ezra: My Lords, the supply of water, whether privately or publicly owned, remains a matter of grave public concern. Whatever the ownership, we should look very seriously at that issue. I follow the line proposed by the noble Lord, Lord Howell. Is the House aware that, because a grid was installed in the Thames area, there was no shortage of water in the area this summer? Will the noble Earl assure the House that other water companies will place the same emphasis on the distribution of water as Thames Water appears to have done?
Earl Ferrers: My Lords, I am grateful to the noble Lord, Lord Ezra, for congratulating Thames Water. I am sure that Thames Water's action has helped the people in its area to be supplied with water. However, the noble Lord did not refer to the fact that in Yorkshire it has

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been the driest year for years. It has rained in other parts of the country but in one particular part of Yorkshire it has not rained, and it is that part which has been worst affected.
Baroness Lockwood: My Lords, is the Minister aware that in parts of Yorkshire there is still a threat of water being available only on alternate days? That is likely to disrupt the whole education system and economy of the area. Does the Minister think that it would be in the interests of the country as a whole to have a grid distribution system rather than industries closing and schools and universities closing departments?
Earl Ferrers: My Lords, the noble Baroness makes a reasonable point, but that kind of decision cannot be taken on this occasion because whether or not to put in place a grid is a major decision. That cannot be taken overnight. It must be part of a strategy. The noble Baroness is right that some parts of Yorkshire have had and are still having a bad time; in particular, Halifax and Bradford. There was an application for an emergency drought order, but the hearing was postponed. Another drought order also enabled additional water to be taken from the River Wharfe. Since then, it has rained. The noble Baroness shakes her head but it has rained. We are monitoring the situation very carefully and it may he that there should be other methods of increasing the water supply.
The Countess of Mar: My Lords, has the noble Earl had time to apprise himself of an incident about which I have written to him which took place at Somerton on 13th August 1995 when some 100 gallons of lindane and 5 gallons of very toxic mercury seed dressing were tipped illegally into a watercourse? The local authority was warned about that in June this year. The caller to the local authority was referred to MAFF, the Health and Safety Executive and ADAS and referred back to the local authority which said that it had no power to act. Which authority is ultimately responsible for dealing with such a situation? What power of enforcement is there, because it was only through the prompt action of local residents that a severe pollution problem was avoided?
Earl Ferrers: My Lords, as befits the noble Countess, she has asked a very penetrating question of which she was good enough to give me notice. I have done my best to find out the answer. As the noble Countess has explained to the House, the answer is a good deal more complicated than might appear. I should be grateful if the noble Countess would allow me more time to look into this issue and write to her about it because, in the time available, I have not been able to find out the exact chronology of events.
Lord Williams of Elvel: My Lords, does the noble Earl recall that, on privatisation, the Government acting, as always, on behalf of the taxpayer forgave £5 billion of debt owed by the industry to the taxpayer? Does the noble Earl further recall that the Government gave a "green dowry", as it was called, of £1.5 million? Can the Minister tell the House how much of that money,
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taxpayers' money, has been distributed to shareholders in the new industry and how much has been used as suggested by my noble friend Lord Dubs?
Earl Ferrers: No, my Lords; I cannot answer that question without notice. The original Question asks what the Government intend to do to "safeguard water supplies" and does not mention the financial affairs of the water companies.
Lord Birkett: My Lords, as it is plain that times of exceptional drought are precisely when exceptional water supplies are needed, and if it is true that in many places it is not the levels of water in the reservoirs but the pipes, pumps and pressure involved in delivering it which are the problem, will the noble Earl use his best endeavours to persuade the water companies to put that right?
Earl Ferrers: Yes, my Lords. It is perfectly true that there is a certain amount of leakage. Indeed, one hears all sorts of figures put forward; for example 25 per cent., and so on. However, it is worth remembering that, even in the most sophisticated and modern set-up like that in Tokyo, the leakage is never below about 15 per cent. Therefore, there will always be leakage. My right honourable friend has told the water companies to draw up very special plans to reduce the leakages. If those plans are not sufficiently strong, he will take steps to ensure that they are stronger.
I should remind the noble Lord, Lord Birkett, that, before privatization—and this is not a political point; it is merely a fact—£1,500 million per year was invested by the water boards, and the figure is now £3,000 million after privatisation. Moreover, £24,000 million is expected to be invested over the next 10 years. So a lot is being done.

French Nuclear Tests
3.1 p.m.
Lord Archer of Sandwell Lord Archer of Sandwell asked Her Majesty's Government:
Whether they have made representations to the Government of France with a view to their discontinuing nuclear testing.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, no. We understand the deep concern that the French decision has caused, particularly in the south Pacific. But the international community's first priority must be the conclusion of a comprehensive test ban treaty. We do not believe that the present limited series of French tests should damage the prospects for that.
Lord Archer of Sandwell: My Lords, is it not clear beyond argument that anything which diminishes respect for the Non-Proliferation Treaty and for the test ban negotiations is likely to lead some of the more macho among the non-nuclear powers to repudiate the treaty and to acquire their own nuclear weapons? Surely that would make the world not more secure but

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substantially less so for all of us. Is not that danger exacerbated if Britain by silence appears to condone further testing?
Baroness Chalker of Wallasey: No, my Lords; I really do believe that the noble and learned Lord has not got it right on this occasion. The decision is for the French Government; it is not for the British Government. It is not for us to comment on a French decision affecting their defence requirements or how they decide to meet them by testing. The French have repeatedly stated their commitment to the comprehensive test ban treaty negotiations. It was reiterated on a number of occasions by no less than President Chirac in announcing his decision to test. There is absolutely no reason why a limited programme of tests should affect the prospects for successful negotiation of the comprehensive test ban treaty.
Baroness Blackstone: My Lords, I am quite amazed by the Minister's Answer. Is it not outrageous that the Government, as a depository government of the Non-Proliferation Treaty with a duty to uphold its terms, have sat back and done nothing to condemn French testing in the Pacific despite the fact that resumption of testing is totally contrary to the spirit of the commitments made at the conference in May to extend the Non-Proliferation Treaty?
Baroness Chalker of Wallasey: My Lords, not for the first time the noble Baroness, Lady Blackstone, has got it wrong. The French testing is consistent with the Non-Proliferation Treaty. There is no comprehensive test ban in force. France is not in breach of the NPT or any other international treaty obligations. The French Government have made it absolutely clear that they will limit the number of tests to the minimum, that they will give up testing when a comprehensive test ban treaty has been concluded, and that the current tests are designed to put France in a position to sign the comprehensive test ban treaty in 1996.
The other very good news—which has no doubt passed the noble Baroness by—is that we said only last Friday that, together with the United States and France, we shall sign the protocols on the South Pacific Nuclear Free Zone Treaty in the first half of 1996. We have made clear that it is our wish to respond in a practical way to the concern of all those in the south Pacific and elsewhere on nuclear testing.
Lord Chalfont: My Lords, does the Minister agree with me that while there may be seriously-held arguments about whether or not people should have nuclear weapons, the worst of all worlds would be a country having nuclear weapons in its deterrent which had not been fully tested for reliability and accuracy? Is that not even more important if France is to be asked to sign the total test ban treaty in 1996?
Baroness Chalker of Wallasey: My Lords, not for the first time the noble Lord, Lord Chalfont, is absolutely right. What we want is an effective and viable comprehensive test ban treaty. We have made clear our support for an absolute "zero yield" ban on tests, as have the United States and the French governments. We hope that we can very quickly get an effective, verifiable
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treaty. The verification regime must be that which gives us an effective deterrent against testing without being disproportionately costly or intrusive. It will not surprise the noble Lord, Lord Chalfont, to know that it is the United Kingdom which is making a significant contribution to the technical discussions on verification.
Lord Mason of Barnsley: My Lords, is the Minister aware that one of the reasons why they will not condemn the French is that Her Majesty's Government are likely to receive information from the French after the tests are completed? Is the Minister further aware—I know that she does not want to be hypocritical about the issue—that Her Majesty's Government, and especially the Ministry of Defence, have made it absolutely clear that on safety and reliability of nuclear weaponry (as long as we have it) we reserve the right to test and that if we can find the facilities, the test sites, we shall do so if the need arises?
Baroness Chalker of Wallasey: My Lords, the kernel of the question posed by the noble Lord is in the last phrase; namely, "if the need arises" to do so. We hope that it will never be necessary in the future to do so. That is why we want and, indeed, are working for a comprehensive test ban treaty.
Lord Mason of Barnsley: My Lords, can the Minister answer my question about the exchange of information?
Lord Avebury: My Lords, the noble Lord did ask the Minister—she obviously overlooked it‹—whether the French had offered to share with us any information arising out of their tests, and, if so, whether we shall receive the data. Can she respond?
Baroness Chalker of Wallasey: My Lords, I have no knowledge of what the French have or have not offered. I do not believe that a matter of national security is for this House to debate.
Lord Archer of Sandwell: My Lords, is not saying that the French will accept the test ban treaty after they have conducted further tests a little like someone saying that he will sign the pledge after he has had one more evening on the bottle? Does that not have some effect on the confidence of the non-nuclear powers?
Baroness Chalker of Wallasey: My Lords, the noble and learned Lord may indeed have a point. However, it is important to note that the United States, the French and ourselves are quite determined to achieve a comprehensive test ban treaty by the end of next year. As regards whether or not France provides information about the tests to other authorities, I should point out that there is no legal requirement upon it to do so. Whatever the French are doing, I believe that it is right to work towards the comprehensive test ban treaty with all speed. It is to that that the British Government are fully committed.
Lord Callaghan of Cardiff: My Lords, have the Government given consideration as to how they will avoid a serious dilemma and division at the Commonwealth conference in November between our French ally on the one hand and the Australians and the New Zealanders who are so close to us on the other?
Baroness Chalker of Wallasey: My Lords, as the noble Lord, Lord Callaghan, will know, we have felt considerable concern about just what the future would hold for the south Pacific as a result of the tests that the French have been carrying out. However, as we are already actively pursuing nuclear arms control, are negotiating hard for the early conclusion of the CTBT and have made the announcement that the Rarotonga Treaty will be signed in the first half of next year, I believe that many of the anxieties expressed not only by those on the islands of the south Pacific but also by Australia, New Zealand and many other nations are being addressed.

Overseas Aid
3.10 p.m.
Lord Ashley of Stoke Lord Ashley of Stoke asked Her Majesty's Government:
Whether they have received any recent representations about the level of overseas aid.
Baroness Chalker of Wallasey: My Lords, we have received a large number of representations about the level of overseas aid, a great many of them paying tribute to the quality of our programmes.
Lord Ashley of Stoke: My Lords, is the noble Baroness aware that the House is familiar with the Government's claim that our overseas aid as a proportion of GNP is just over the average for all donor countries, which makes it sound respectable? However, the OECD report expresses a different viewpoint when it states that four countries now exceed the United Nations target of 0.7 per cent. and that five countries exceed 0.35 per cent.—which is half of the target—but that there are 12 countries which do not even manage 0.35 per cent. Britain is one of those countries and that is nothing to be proud of.
Baroness Chalker of Wallasey: My Lords, we are the fifth largest economy in the world and we have the fifth largest aid programme. I believe that our £2.2 billion programme, closely targeted and concentrating on the poorest in Africa and Asia, with the magnificent support of British NGOs, gives value for money far in excess of what some other nations may offer. I fully accept the figures that the noble Lord has given, but I believe that it makes much better sense to offer value for money within the budget we can afford than to throw money at problems as that never solves them.
Baroness Gardner of Parkes: My Lords, will the Minister assure us that she is well aware of the good value for money which is achieved through the money that the ODA gives through the NGOs which operate in other countries? I declare an interest as chairman of one of those fund-raising organisations. Those organisations employ the money effectively and directly in the field on their projects.
Baroness Chalker of Wallasey: My Lords, I am grateful to my noble friend. It is not just a matter of obtaining value for money through our bilateral programme but also improving the value for money
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given through multilateral programmes to which we devote much of our budget. That is most important. Whether the NGOs are working directly for us, when we have an absolutely straight influence over them, or whether they are taking resources from the European Union, British NGOs usually give the best value for money in the world.
Lord Judd: My Lords, as my noble friend has indicated, does not the Minister accept that it is a shameful record that the Government, despite the Minister's best endeavours, have virtually halved the proportion of our wealth devoted to overseas aid and development programmes? Will the Minister assure the House that enough is enough and that she will make absolutely clear to her colleagues that she will he in no way party to any further reduction in the proportion of our wealth that is being given to these urgent social issues overseas?
Baroness Chalker of Wallasey: My Lords, the answer to the first question is no; but the answer to the noble Lord's second question is a little more complex. It is not the amount that one gives but the value of that amount in the recipient countries that is important. There are many things which we used to do which, thank goodness, we no longer do. That comment is made by the recipient countries rather than myself. The noble Lord knows that, while I cannot comment on the public expenditure round, our aid is still said by the OECD and others—however much the noble Lord may decry it—to offer the best value for money in the world. I intend to keep it that way.
The Lord Bishop of Oxford: My Lords, as the Minister knows, a number of Bishops and Church leaders have written to Government Ministers expressing concern about rumoured cuts in the aid budget. Does the Minister know that in her battles on behalf of overseas aid she has the full support of Church leaders and, I believe, the Christian constituency in this country, and that that constituency would be appalled if there were any fall in the real value of aid? A £300 million cut, for example—only 01 per cent. of public expenditure—would have a devastating effect on the poorest countries in the world whom we are at present supporting.
Baroness Chalker of Wallasey: My Lords, I am most grateful to the right reverend Prelate for his comments and indeed to the Church and the non-governmental organisations for their support in our effort to make this still the most effective aid programme in the world. I just wish they would not all write to me!
Lord Ashley of Stoke: My Lords, is the Minister aware that I do not doubt she does—
Earl Ferrers: My Lords, I do not like to interrupt but we have spent 24 minutes on Questions so far and there is another Question to be discussed. It might be advisable if we were to move on.

Boxing
3 16 p.m.
Lord Taylor of Gryfe Lord Taylor of Gryfe asked Her Majesty's Government:
Whether, in the light of recent tragic events in the boxing ring, they will consider appointing a Royal Commission to examine and report on boxing.
The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood): My Lords, Her Majesty's Government wish to express their deepest sympathy and condolences to the family of James Murray, who recently died so tragically. However, we have no plans to appoint a Royal Commission to examine boxing.
Lord Taylor of Gryfe: My Lords, while I appreciate the sentiments of the Minister, I recall one or two tragic incidents which have prompted this Question. Michael Watson is paralysed and in a wheelchair; Gerald McClellan is permanently paralysed; Bradley Stone died 18 months ago in the ring and James Murray died three weeks ago in the ring. How many cases of death and how many cases of brain damage have we to witness before the Government consider an independent inquiry into this matter?
Lord Inglewood: My Lords, boxing is an established and lawful sport and the Government believe that the appropriate course is to ensure that safety is paramount and pre-eminently considered at all times. As the noble Lord may know, the British Boxing Board of Control announced a few minutes ago the provisional conclusions of its medical revision committee which the Boxing Board of Control proposes should be introduced as soon as possible to improve safety in the sport.
Lord Renton: My Lords, is my noble friend aware that violence has increasingly become part of the way of life of too many people in our country, and that boxing encourages that attitude? Would it not be better if we were to stop boxing just as duelling was stopped some years ago?
Lord Inglewood: My Lords, I am grateful to my noble friend for drawing that comparison to my attention but I do not think that it is exactly comparable. In any event, one of the tenets which I believe is accepted both by the proponents and the opponents of boxing is that it imposes a form of discipline. In a violent world that in its own way is an important safeguard.
Lord Avebury: My Lords, does the Minister know how many people have been killed and seriously injured in the Isle of Man TT races and the Grand National? Why does no one ever call for those sports to be stopped?
Lord Inglewood: My Lords, the noble Lord, Lord Avebury, is quite correct in that boxing is not the only sport which is considered dangerous and in which injuries occur. Indeed, in 1991 the Great Britain Sports Council conducted an analysis of sports accidents based on general household surveys and concluded that boxing was in the least risky of the categories that it identified.
Lord Carmichael of Kelvingrove: My Lords, this is not an appropriate place to discuss the nature of boxing or some of the other sports that have been mentioned, but will the Minister consider, if the Government will not set up a Royal Commission, setting up a Select Committee of your Lordships' House to look into this matter and report on it?
Lord Inglewood: My Lords, that is an idea that we have not considered. We have no plans to consider it now. Such issues are also matters for your Lordships.
Lord Taylor of Gryfe: My Lords, does the Minister agree that, in comparison with other sports, boxing is the only sport in which an individual enters into a ring to inflict damage on his opponent? Would not those two individuals in the ring be arrested if they did the same thing outside the ring?
Lord Inglewood: My Lords, it is the nature of the so-called sportsman's defence that, in a whole variety of circumstances, activities which might lead to criminal prosecutions outside a sporting occasion are defences in the event of some accident or injury occurring.
The noble Lord, Lord Taylor of Gryfe, is right to say that the position of boxing is anomalous. However, it is not unique in as much as the same applies to martial arts.
Lord Donoughue: My Lords, does the Minister accept that there will be widespread sympathy for the approach of my noble friend because of the fact that one of the prime objectives of boxing is to render damage to the opponent? However, in the light of what has been mentioned in relation to other sports and the fact that, for instance, motor sports and mountaineering result in 10 times as many deaths as boxing, and rugby and horse riding many more, does he agree that he would have support in taking the view that any attempt to ban a sport which is entered into voluntarily and willingly by the participant needs very careful thought?
Lord Inglewood: My Lords, the noble Lord, Lord Donoughue, is right to set the matter in context.

Relations between Central and Local Government: Select Committee
3.21 p.m.
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, on behalf of the Committee of Selection, That the Lord Sefton of Garston be appointed to the Select Committee in the place of the Lord Stoddart of Swindon, resigned.—(The Chairman of Committees.)
Baroness White: My Lords, before the House accedes to the request of the Chairman of Committees, will the noble Lord kindly explain why, when the Select Committee on Relations between Central and Local Government is officially recorded as being concerned with Great Britain as a whole, there is no member of the committee who has any adequate knowledge of the difficulties which continue to occur, admittedly less frequently than heretofore, between the Welsh Office

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and Welsh local authorities? I refer not only to the direct local government reorganisation and all that that entails, but also to the Welsh Office's proposals for other public agencies such as the fire services.
The Chairman of Committees: My Lords, I am grateful to the noble Baroness, Lady White, for giving me notice in advance that she proposed to raise this matter. For fear of transgressing the rules of order of your Lordships' House, I should perhaps indicate in a preliminary way that that more general point does not, strictly speaking, arise out of this particular Motion. However, I do not want to be unhelpful to the noble Baroness.
Before your Lordships remind me, I should perhaps remind the House that only last Thursday afternoon your Lordships passed a Motion, without any question being raised, approving the names of the members of this Select Committee. That was done after the customary consultations had taken place.
On the subject of the membership of the Select Committee, your Lordships will appreciate from their names that the members have wide experience and considerable qualifications. I have no doubt that they will be perfectly capable of hearing and assessing any evidence which is given to them by people, bodies and local authorities in the Principality. Perhaps I can give some comfort to the noble Baroness, Lady White, by pointing out that one of the members of the Select Committee, Lady Platt of Writtle, is an honorary Fellow of the Polytechnic of Wales. Therefore, I do not think that Wales will be overlooked.
However, perhaps I may say to the noble Baroness that I do not know whether there is scope for further consideration being given to the issue. I should like to look into that matter. I hope that the noble Baroness will forgive me if I do not make any promise this afternoon. After all, I cannot commit your Lordships in advance.
Lord Cledwyn of Penrhos: My Lords, we are grateful to the noble Lord for his reply to my noble friend. However, is he aware, and is the House aware, that there is a strong feeling in Wales that when Select Committees are appointed which affect the whole of England and Wales there should be a Welsh representative?
The Chairman of Committees: My Lords, with his extensive ministerial experience, the noble Lord, Lord Cledwyn, will know that one does not come to one of the Dispatch Boxes of your Lordships' House without some prior briefing. I do not know whether I should reveal to your Lordships—but perhaps I shall take the opportunity to do so—that I was briefed that that question might be raised. My immediate response was to say that if the matter was raised it was likely to be raised by the noble Lord, Lord Cledwyn, with his experience. I say to the noble Lord that the observations that I made in reply to his noble friend Lady White will, of course, be taken into account in that same context.
On Question, Motion agreed to.

Gas Bill
3.25 p.m.
Read a third time.
Clause 1 [General duties under 1986 Act]:
The Earl of Cranbrook The Earl of Cranbrook moved Amendment No. 1:
Page 1, line 21, at end insert—
("and a duty to take into account, in exercising those functions, the objectives of sustainable development.
(1A) In performing his duty under subsection (1) above to take into account the objectives of sustainable development, the Director shall have regard to such guidance as the Secretary of State may from time to time provide.").
The noble Earl said: My Lords, my amendment, in its third, revised form, stands as a general qualifier to the three new general duties that will appear in the proposed new Section 4(1)(a) to (c) of the amended Gas Act 1986.
I am grateful to my noble and learned friend for his courteous response to the amendments in the form in which I tabled them at Report stage. I listened carefully to what he said at that time. I have since read the Official Report to be sure that I took in all the arguments that were put forward by my noble and learned friend and by other noble Lords who contributed to the debate on that occasion.
In the light of the wide scope of the international, European Union and national commitments that I summarised, I was reassured by my noble and learned friend's confirmation that the goal of sustainable development is indeed followed across government and is recognised as important policy guidance. My noble and learned friend went further. He said that weight had been given to the principles of sustainable development in framing the proposals of the Bill. That assurance from my noble and learned friend strengthens my conviction that an unambiguous reference to those principles can be accommodated in the Bill without any problems.
Sustainable development is about the management of social and economic aspirations in ways that respect the environment and use resources wisely, with respect for others, now and into the future. It is probably futile to attempt to find a form of words which comprehensively defines sustainable development in all its aspects and all its contexts. However, it is wholly relevant to a Bill which deals with the management of a nationally important energy source.
At Report stage my noble and learned friend commented that he believed that the regulatory regime had been structured in a way that,
"will allow the forces of the market to be harnessed in the cause of energy efficiency".—[Official Report, 18/10/95; col. 756.]
Those noble Lords who followed my somewhat lonely trail will realise that, against that, my starting point, as I emphasised at Committee and reiterated at Report, was the totally contrary conclusion reached unanimously by the working group of the Round Table on Sustainable Development (based on the direct experience of energy suppliers, among others) that market forces and sustainability issues such as energy efficiency are not intentionally aligned, and therefore not mutually reinforcing. Therefore we have two opposing views of the situation. But whoever may be right I hope that what I have said has made clear why I conclude that it will

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not be damaging to the position of my noble and learned friend to invoke sustainable development in the Bill. He has told us that the principles are contained in its framing. On the other hand, in order to safeguard against the more pessimistic prediction of those who were involved in the Round Table it is essential to introduce a form of words into the Bill which ensures that the exercise of the general duties of the Secretary of State and the director—they are detailed in the proposed new Section 4(1) referred to in the amendment—are conducted with proper regard to the objectives of sustainable development.
A duty to contribute to the objectives of sustainable development would also modulate the new obligations towards the environment which are introduced in the Bill and would thereby forestall the problem of excessive zeal on the part of the regulator about which my noble and learned friend expressed anxiety, again at col. 756.
In response to my noble and learned friend's accompanying arguments—that the regulator must not have too much freedom but that his independence must not be unacceptably restricted—noble Lords will note that in the revised form of my amendment I propose that the Secretary of State may provide guidance. However, that proposal is now in a revised form. The duty to provide guidance will be much less onerous than that proposed in my previous amendment. The provision still follows the model of the Environment Act, but it is optional: guidance may be given. Moreover, it is given at the discretion of the Secretary of State and is not obligatory. In the terms of my amendment, such guidance may be given from time to time.
The Government's programme for sustainable development has a high profile. It has drawn attention to the forward looking programme of the Government in the international arena. It involves a mix of institutional responses including the panel chaired by Sir Crispin Tickell, the Round Table co-chaired by Mr. John Gummer, the Secretary of State for the Environment, and Professor Sir Richard Southwood, and also Professor Ashworth's programme, Going for Green.
I am convinced that a positive reference written into the Gas Bill to the role of sustainable development and its objectives will be interpreted nationally and internationally as confirmation of the weight that the Government attach to those processes. I believe that the proposal will be regarded very positively in many quarters, nationally and internationally. For that reason, I beg to move.
Lord Skelmersdale: My Lords, I begin my remarks with an apology to my noble friend for misnaming him last Wednesday. It was an unintentional slip; I am sure that he will accept it as such.
I have no problem with the beginning of the amendment. As my noble friend made clear last Wednesday and today, in our various lives we all have a duty to take account of sustainable development, whether or not it is specifically defined. We have the word of no less a person than my right honourable friend the Prime Minister that sustainable development is almost indefinable. It is an issue of which we should all
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take account. That applies just as well to the Secretary of State as to the regulator. However, I have difficulty with the proposed new subsection (1A) of my noble friend's amendment, which states:
"The Director shall have regard to such guidance as the Secretary of State may from time to time provide".
I gently suggest to my noble friend that the relationship between the regulators and their sponsoring departments—usually the DTI—is rather different from that between the Secretary of State for the Environment and the Environment Agency. Uncomfortable though it is for both politicians and the regulated industries—and, indeed, the Government from time to time if they can be separated from politicians—the independence of the regulatory bodies has been well established over a number of years since the Government privatised the telecommunications industry. It would be a great mistake at this stage, even regarding an issue as important as sustainable development, to cut across the independence of the regulator. If the Secretary of State were to be involved in giving guidance to the director on a wide range of issues, it would cut across one of the key principles of utility regulation and, I suggest, make the position of the regulator considerably weaker. With the problems that we have had from time to time with the various regulators, I do not believe that that is desirable.
Lord Clinton-Davis: My Lords, I support the amended form of the amendment. I start by commenting on the rather curious argument adumbrated by the noble Lord, Lord Skelmersdale. Does he suggest that the regulator is entitled to go on a frolic of his own so far as concerns major policy matters regardless of the views of the Government of the day? We allude immediately to the distinction between "operational" and "policy" which has featured singularly in debates over the course of the past few weeks and in the media. One could not have a better example, in a way, than the one posed in this instance.
If the regulator were to abandon any consideration in his judgment of sustainable development, or any other major element of policy, could he possibly be justified in that regard? I am perfectly happy to give way to the noble Lord if he wishes to intervene.
Lord Skelmersdale: My Lords, I am conscious that this is Third Reading. However, the duties of the regulator are well established in statute, both in the Gas Act 1986 and by the amendment of that Act by this Bill.
Lord Clinton-Davis: My Lords, therefore the answer is, as I thought that it would be, that the regulator cannot go on a frolic of his own.
I believe that the noble Earl is absolutely entitled to introduce this provision because it goes to the very heart of environmental policy. The Secretary of State is responsible for adumbrating that environmental policy on behalf of the Government of the day. Consequently, he is entitled, therefore, to give guidance on those issues.
One of my responsibilities in the Commission, as the noble Lord, Lord Skelmersdale, will remember because he was a Government Minister in that field at that time, was in relation to environmental issues. One of the most

1117
important underlying features of both the Single European Act and the new chapter that was introduced and later modified advantageously in the Maastricht Treaty in relation to the environment was the sustaining of the very arguments that were put before the House by the noble Earl on a number of occasions in the context of this Bill. Consequently, there can be nothing lacking in conformity so far as the European angle is concerned in what he said. Should we therefore be looking at the matter in relation to this Bill or saying that it is all part and parcel of the Government's general objectives? In my view, it is right when dealing with a specific Bill to ensure that that Bill signals very clearly not simply objectives but specifics in relation to the sustaining of those objectives.
If what the noble Earl argued here were inconsistent with the Government's objectives, I could understand the Government saying that they could not go along with it. But that cannot be the case. If the noble Earl's proposal were inimical to the purposes of the Bill, I could equally understand it if the Government were to say that that was unacceptable to them. But neither of those propositions can be sustained. The noble Earl is saying here simply that the director shall have regard in this particular context to the objectives of sustainable development, to the guidance that the Secretary of State may from time to time provide. There is nothing wrong or ignoble about that. There is nothing that debases the purposes of the Bill or the Government's objectives.
As the noble Earl rightly said, there is an important audience that the Government ought to take into account in relation to these matters; namely, the audience outside. That is not simply the British electorate but the wider world community. It is important. Not that the wider world community will take too much notice, I suspect, of the Third Reading of the Gas Bill—though perhaps I am wrong; it may be on the tips of the tongues of all world leaders. I know that they always listen to what my noble friend Lord Peston has to say—I have that on the highest authority. It is important for the Government to signal in a very decisive way that they are concerned about these matters. Here is the ideal opportunity to do so. Therefore I strongly support this amendment. I hope that if the Government's response is negative, the noble Earl will take the appropriate course and challenge that view.
Lord Cochrane of Cults: My Lords, I am sorry to see that the noble Earl has reintroduced his amendment, with which we dealt at some length last Wednesday. Before dealing with it in more detail, with the leave of the House I draw noble Lords' attention to the declaration of interest that I made many moons ago when we first set out to deal with this Bill.
Gas, as at present organised, is an extractive industry. Sustainable development in the long term, and possibly the very long term, cannot exist in an extractive industry. Were it to do so, we should be in the happy position of having discovered the secret of perpetual motion. Alas, no such luck attends us.
I looked at the blue book report from the committee under the very wise and learned guidance of the noble Lord, Lord Tombs, on the subject of sustainable
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development, as no doubt did other noble Lords who have spoken on this subject. As last week, it leaves me confused. I profoundly agree with my right honourable friend the Member for Huntingdon, whose opinion was referred to by my noble friend Lord Skelmersdale. The Prime Minister said that the notion of sustainable development eludes precise definition. I have never heard a better reason for omitting something from a Bill. If we write something in which we know on good authority "eludes precise definition", all we are doing is giving work to the lawyers, or perhaps just wasting time. This is an unwise amendment.
The point that my noble friend sought to emphasise in his amendment about sustainable development is that we should make the supply of gas, which is finite and is available to us, last as long as we decently can. That is our duty. It is profoundly unfortunate that "sustainable" and "development" have become linked, rather in the way that all the fumes these days are toxic. There are many other examples that are very often used as the parrot cries of single interest groups. Therefore, as the duty to preserve in the longer term the finite resources of gas that are available to us is already written into the Bill and sustainable development is inherently indefinable, I much regret to tell my noble friend yet again that I cannot agree with him.
3.45 p.m.
Lord Ezra: My Lords, I support the amendment so effectively moved by the noble Earl. As presently drafted, new Section (4)(1) in Clause 1 is too narrowly drawn. It does not pay sufficient regard to the fact that gas is a commodity of particularly widespread and fundamental importance. Therefore, merely to talk about securing the supply and making sure that licence holders have the necessary finance and securing competition does not pay regard to that feature. The Government, in spite of what was just said, are committed to the concept of sustainable development. It occurs in many government publications. No doubt the noble and learned Lord, when he responds, will confirm that. The fact that it might be difficult to define is not the issue. The fact is, this is a broad concept; namely, making sure that we support environmental improvement as everybody understands it in that light.
Had I not been subject to an unfortunate sequence of events, I should also have moved in relation to this section an amendment to bring in consumer interest. I shall deal with that point at a later, appropriate stage. I very much hope that in his response the Minister will take very serious account of the remarks made by his noble friend Lord Cranbrook and will accept this amendment.
Lord Desai: My Lords, I hesitate to add my voice to the debate at Third Reading as I have not spoken before on this Bill. I also apologise to the noble Earl since I arrived after he had begun his remarks. My only point is that the fact that sustainable development cannot be defined is not a good enough reason for not accepting the amendment. New Section 4(1)(c) refers to "effective competition". As a professional economist, I challenge anybody to define effective competition any more precisely than sustainable development.

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Making such a requirement helps us to sharpen a vague notion slightly more because it is now policy relevant. If we include "sustainable development" in the Bill, it will concentrate our minds. It will draw from the Secretary of State and the regulator a little more effort to define it more precisely. If they cannot define it more precisely, just as in relation to competition they refer to the Monopolies and Mergers Commission, a Royal Commission on the environment could be referred to to find out how it would implement sustainable development. The point is, were we to stop putting vague words into law, there would not be much legislation left.
Viscount Caldecote: My Lords, I also support this amendment. In the debate on Report, one of the points made against it was that it was not logical or appropriate to include this reference in the Gas Bill. The point was also made today that there was no precise definition. On the second point, it seems to me absurd and completely illogical that the Government in fact published a command paper on the strategy for sustainable development at the beginning of this year, and therefore presumably know what sustainable development is. I think I have a fairly good idea. The argument that the idea should not he included here because it was not included in similar Acts of Parliament seems extraordinary. We have to start somewhere. It was an error not to put such emphasis on sustainable development elsewhere. For goodness sake, let us start now.
Secondly, the point about the independence of the regulator was well made by my noble kinsman Lord Cranbrook. The second part of his amendment makes it perfectly clear that,
"the Director shall have regard to such guidance",
as given by the Secretary of State.
Thirdly, surely this approach to emphasise the importance of the objectives of sustainable development is entirely in line with the Government's response to the report of the Select Committee on Science and Technology on sustainable development which we shall debate on Thursday. For all these reasons, I strongly support the amendment.
The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie): My Lords, I am grateful to the noble Earl for giving us a further opportunity to discuss this matter. In our previous debate at an earlier stage, I made it clear that the Government continue to offer their strong support for the concept of sustainable development. Without repeating myself, I should like to refer back to what the Prime Minister said in the White Paper. We have particular support to offer for the building of environmental and economic factors into the consideration and development of government policy.
The provisions of the Bill will help promote sustainable development by setting the forces of the market to work in favour of energy efficiency. We believe that, by breaking down the artificial constraints of monopoly, we shall be taking an important step towards the optimum and efficient use of resources in the sector. Apart from that general observation, the Bill
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has specific provisions which will help promote sustainable development. These include the duty to promote energy efficiency and new duties in respect of the environment—that word is specifically used. The licences under the Bill will take those provisions further and will, for example, extend a duty to provide energy efficiency advice to all suppliers.
Those are tangible results from the legislation which will support sustainable development and the work of the Round Table, about which my noble friend made a number of remarks. Without wishing to rebuff the Round Table in any way on the importance of taking forward questions of sustainable development and government policy, I must say that we are still in some difficulty in using that phrase in this legislation. That is an important point. I hope that noble Lords will hear with me if I rehearse some of the points that I made previously.
This amendment would have the effect of conferring wide powers on the director to set his own agenda because of the wide meaning of the term "sustainable development". As I said previously, it is an extremely widely used term. If we turn to the Agenda 21, following the Rio Summit, we see that, as I pointed out at an earlier stage, when sustainable development is discussed there it runs to no less than 470 pages. If a broad power were given, because of the broad nature of the director's powers in relation to the onshore gas industry, that could give the director a very real opportunity to take forward an agenda entirely of his or her own.
I understand the argument advanced by my noble friend. He too understands that it would give an extraordinarily wide power to the director to set a particular agenda. In a sense, because there is that clear appreciation of the difficulty, he seeks to restrict it by suggesting in his amendment that the director should have regard to guidance given by the Secretary of State on sustainable development, in some way bringing it in a little. However, in our view it remains the position that such a provision would have the effect of involving the Secretary of State in the policy of the director across a wide range of issues. In other words, the provision would breach the independence of the regulator, a policy which lies at the very heart of utility regulatory policy.
What is different about the utility regulators is that they do not report to the Secretary of State. They are accountable only in respect of their statutory duties. As my noble friend pointed out in relation to the gas industry, these are clearly set out in statute. Their accountability means that they may be subject to judicial review. They are also accountable to Parliament through their reports and to Select Committees. The model, therefore, requires clear statutory duties which are not subject to ministerial adjustment.
I understand very clearly what my noble friend said. The way in which he has drafted his amendment allows the director to "have regard to" the guidance and in that sense to accept or reject it. If that is the case and the director can accept or reject it without explanation or being subject to any particular duty in that regard, we are back to the first problem; namely, that the director would have very wide powers indeed. On the other

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hand, if it becomes more restrictive, then we introduce the interference of a Minister in a way that we have sought to avoid throughout the changes that we have introduced.
The ability of the Secretary of State to influence the regulator by guidance—or, for that matter, as I said, for the regulator to take his or her own view on sustainable development—could be used as a platform to promote a wide range of policies, such as seeking to promote certain uses of gas over others or to reduce the rate at which reserves are used. I accept that those are very important issues; but, with respect, it seems to me that they are matters which ought only to be embarked on formally by government and not be introduced in this way. I believe that it would run counter to the principle of regulating these industries at arm's length from government with the minimum of interference if we were to build in proposals of that kind.
In conclusion, I am afraid that my response to the amendment will be a disappointment to the noble Earl. I regret that, because I entirely share his very worthy preoccupation with the principles of sustainable development. However, I hope that he will recognise the strong endorsement that I have given to the principles of sustainable development and their inclusion in government policy.
I had anticipated that the noble Lord, Lord Peston, might respond on this matter. Certainly, as I understood his arguments when he contributed to our last discussion on this matter, he seemed to appreciate that that was a fundamental point. If sustainable development and a duty to look to it were to be introduced on one regulator, we ought to look at it across the whole board of regulatory policy.
Finally, while I regret that I cannot agree to a change in such a key principle of regulatory policy on the scale which would be imposed by this amendment, I hope that my noble friend will appreciate our approval of his commitment to sustainable development.
The Earl of Cranbrook: My Lords, I do greatly appreciate the struggle that my noble friend had in presenting those arguments. I believe that they were answered from all around the Chamber before he spoke. With regard to the definition, I am grateful to the noble Lord, Lord Desai, for his academic intervention. But it seems to me that we can equally say that, while a definition may take up so many pages, we still know perfectly well what would not be sustainable as, in the same way, we probably know what is not "effective competition". That kind of approach is actually a very useful and practical one to take towards definitions. The key thing I should like to emphasise is that I have proposed this amendment so that if the Secretary of State so decided, because he adhered firmly to the principles that my noble and learned friend has laid before us, he would not have to give any guidance. It is entirely optional.
Secondly, if the director and the Secretary of State, both of whom would be bound by this amendment, do take actions in terms of sustainability, since my noble and learned friend has already assured us that this is in
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fact the principle which lies behind the Bill, they would therefore be acting in accordance with the intentions of the Bill. Moreover, were they to use this basis to go any wider, they would be doing so in a totally benign sense, since sustainable development is entirely in accordance with stated Government policy at a major policy level.
I feel that this amendment clarifies and lays down a sound basis for this whole Bill at an early point in the Bill. It does not in any way act contrary to the aspirations of the Government as they were expressed by my noble and learned friend. Therefore, I wish to seek the opinion of the House.
4.1 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 76; Not-Contents, 133.

Division No. 1

CONTENTS

Airedale, L.

Hylton, L.

Archer of Sandwell, L.

Ilchester, E.

Bruce of Donington, L.

Jay of Paddington, B.

Caldecote, V. [Teller.]

Jeger, B.

Callaghan of Cardiff, L.

Jenkins of Hillhead, L.

Carmichael of Kelvingrove, L.

Judd, L.

Cledwyn of Penrhos, L.

Kinloss, Ly.

Clinton-Davis, L.

Kintore, E.

Cocks of Hartcliffe, L.

Kirkhill, L.

Cranbrook, E. [Teller.]

Listowel, E.

David, B.

Lockwood, B.

Dean of Beswick, L.

Longford, E.

Desai, L.

McIntosh of Haringey, L.

Donaldson of Kingsbridge, L.

Mackie of Benshie, L.

Donoughue, L.

McNair, L.

Dormand of Easington, L.

Mar and Kellie, E.

Dubs, L.

Masham of Ilton, B.

Ewing of Kirkford, L.

Mason of Bamsley, L.

Ezra, L.

Merlyn-Rees, L.

Farrington of Ribbleton, B.

Monkswell, L.

Fitt, L.

Monson, L.

Gallacher, L.

Morris of Castle Morris, L.

Geraint, L.

Nathan, L.

Gibson, L.

Nicol, B.

Glasgow, E.

Prys-Davies, L.

Glenamara, L.

Raglan, L.

Gould of Potternewton, B.

Robson of Kiddington, B.

Graham of Edmonton, L.

Rochester, L.

Grey, E.

Sainsbury, L.

Hanworth, V.

Sandwich, E.

Harris of Greenwich, L.

Sefton of Garston, L.

Haskel, L.

Stoddart of Swindon, L.

Headfott, M.

Strabolgi, L.

Hilton of Eggardon, B.

Thomson of Monifieth, L.

Hollis of Heigham, B.

Tope, L.

Hooson, L.

Wharton, B.

Howie of Troon, L.

White, B.

Hughes, L.

Winchilsea and Nottingham, E

NOT-CONTENTS

Aberdare, L.

Ashbourne, L.

Addison, V.

Astor of Hever, L

Ailsa, M.

Balfour, E.

Alexander of Tunis, E

Barber, L.

Allenby of Megiddo, V.

Belhaven and Stenton, L

Alport, L.

Bethell, L.

Ampthill, L.

Birdwood, L.

Archer of Weston-Super-Mare, L.

Blatch, B.

1123

Boardman, L.

Liverpool, E.

Boyd-Carpenter, L.

Lucas, L.

Brentford, V.

Lucas of Chilworth, L.

Bridgeman, V.

Lyell, L.

Burnham, L.

McConnell, L.

Butterworth, L.

Mackay of Ardbrecknish, L.

Cadman, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Campbell of Alloway, L.

Campbell of Croy, L.

Macleod of Borve, B.

Carnegy of Lour, B.

Malmesbury, E.

Carnock, L.

Marlesford, L.

Carr of Hadley, L.

Merrivale, L.

Chalker of Wallasey, B.

Mersey, V.

Charteris of Amisfield, L.

Miller of Hendon, B.

Chelmsford, V.

Milverton, L.

Chesham, L. [Teller.]

Monteagle of Brandon, L.

Clark of Kempston, L.

Montgomery of Alamein, V.

Cochrane of Cults, L.

Mottistone, L.

Coleraine, L.

Mountevans, L.

Courtown, E.

Mowbray and Stourton, L.

Cross, V.

Munster, E.

Cullen of Ashbourne, L.

Newall, L.

Davidson, V.

Noel-Buxton, L.

Dean of Harptree, L.

Norrie, L.

Denham, L.

Northesk, E.

Dilhorne, V.

O'Cathain, B.

Dixon-Smith, L.

Onslow, E.

Downshire, M.

Orkney, E.

Ellenborough, L.

Orr-Ewing, L.

Elles, B.

Parkinson, L.

Elliott of Morpeth, L.

Pearson of Rannoch, L.

Elton, L.

Pender, L.

Faithfull, B.

Pym, L.

Ferrers, E.

Rankeillour, L.

Finsberg, L.

Rawlings, B.

Flather, B.

Rippon of Hexham, L.

Fraser of Carmyllie, L.

Rodger of Earlsferry, L.

Fraser of Kilmorack, L.

Romney, E.

Gainford, L.

St Davids, V.

Geddes, L.

Seccombe, B.

Goschen, V.

Simon of Glaisdale, L.

Gray of Contin, L.

Skelmersdale, L.

Gridley, L.

Stanley of Alderley, L.

Grimston of Westbury, L.

Stodart of Leaston, L.

Harding of Petherton, L.

Stokes, L.

Harmar-Nicholls, L.

Strathclyde, L. [Teller.]

Harrowby, E.

Strathcona and Mount Royal, L

Hayhoe, L.

Swansea, L.

Hemphill, L.

Swinton, E

Henley, L.

Tebbit, L.

Holdemess, L.

Terrington, L.

Hood, V.

Teviot, L.

Howe, E.

Thomas of Gwydir, L.

Hylton-Foster, B.

Torphichen, L.

Inglewood, L.

Ullswater, V.

Killearn, L.

Vivian, L.

Kimball, L.

Westbury, L.

Lauderdale, E.

Wyatt of Weeford, L.

Lawson of Blaby, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
4.10 p.m.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 2:
Page 2, line 18, after ("environment") insert ("(whether by way of pollution or otherwise)").
The noble and learned Lord said: My Lords, after that disagreement with my noble friend, Amendment No. 2 and Amendment No. 5, to which I wish to speak at the same time, are put forward in response to the concerns expressed by my noble friend a week ago at Report
1124
stage. His concern was that the definition of the environment, which we were lifting from the Environmental Protection Act 1990, did not encompass the prevention of harm to living organisms and the ecological systems of which they form part.
As I made clear at Report, the Government do not consider that the downstream gas industry is likely to have significant effects on wildlife. However, to the extent that such effects exist, it is appropriate that they are taken into account. Having taken advice from the draftsman, we consider that these amendments are the most appropriate way to introduce the additional definitions from Section 1 of the Environmental Protection Act 1990, and I hope that my noble friend will accept that they meet his points though, I regret to say, not with the economy of words which he himself proposed.
The Earl of Cranbrook: My Lords, I am most grateful to my noble and learned friend for taking these steps. I am totally perplexed by the ingenuity and the mind set of those who frame such legislation. I would point out to him that the downstream effects are in fact potentially enormous. Methane itself is a greenhouse gas of great power. Carbon dioxide when burnt is also a greenhouse gas. There are many effects also of disturbance of the environment—for instance, in pipe laying and so on—where it is the living environment which is as much affected, and potentially significantly affected, as the physical environment. Therefore, I am glad to have this amendment in place. I sincerely hope that it performs the function that it is intended to fulfil.
One of the morals that we might learn is that it could be important for people in this House and the Government to put their heads together and get a definition of "the environment" which actually means what we all know "the environment" to mean (going back to the point made by the noble Lord, Lord Desai), which includes living organisms. I am sorry that we have lost that opportunity in this Bill. So I shall amuse and perplex your Lordships by waving one that might perhaps have potential after further thought in suggesting that the environment "consists of all or any of the following media, namely, the air, water or land, and the biological diversity which these media support". That definition is economical, truthful and pretty exact. I realise that that is not where we have got to, but I am grateful to my noble and learned friend all the same.
On Question, amendment agreed to.
The Earl of Cranbrook The Earl of Cranbrook moved Amendment No. 3:
Page 2, line 18, after ("or) insert ("—(i)")
The noble Earl said: My Lords, this amendment was presaged by what I said just now. There are large effects from the consumption of gas. I think I have been over this ground sufficiently in discussing previous stages of the Bill. The consumption of gas produces carbon dioxide. I hope that my noble and learned friend will agree that the importance of the Government's climate change programme makes it necessary to lift one's eyes above the narrow objective of efficiency, to which he referred in his previous answer. The reference to the

1125
environmental effects of gas cannot ignore the critical impact of the release of carbon dioxide at its combustion by the consumer.
As I have previously emphasised, the consumption of gas by the consumer differs from the consumption of electricity. As my noble and learned friend pointed out at col. 764 of the Official Report at Report stage, the Government's climate change programme has to look across the range of greenhouse emitters. The ground that other alternative sources are not simultaneously considered does not oblige us to avoid the present opportunity to provide guidance applicable to one source—piped gas. I pointed out on Report that the argument that we should not move forward with one regulator as against others is not tenable. It prevents all progressive legislation, it has not been observed in practice and in any case it would easily be resolved—I would willingly agree to do so—by the prompt introduction of further amending legislation to level the playing field. All those things could be done.
I predict that at some stage it may become necessary to introduce special measures to combat global warming. I believe that the industry could suffer great perturbations if the basis of this consideration was not in the Act. Those are the reasons why I have brought this matter forward once again for consideration. I beg to move.
4.15 p.m.
Lord Fraser of Carmyllie: My Lords, as my noble friend has indicated, we have debated this matter previously and that previous debate was certainly an important and useful one. I hope that noble Lords were reassured by the explanations I gave then about the existing duties of the director to promote the efficient use of gas conveyed through pipes and the important duties in the draft licences which will be designed to promote energy efficiency in the gas market. However, I still have the same concerns about the potential effect of these amendments in giving the director a wider duty to consider the effect on the environment of the use of gas in carrying out her functions. I remain of the view that it is difficult to conceive of an issue relating to the environmental impact of the use of gas which is properly within the director's remit that is not already covered by the efficiency duty already in the Bill.
As I indicated previously, the concern is that the duty of the director would become wider than appropriate if she was required to look at environmental questions arising from the burning of gas other than those relating to its efficient use. Matters such as the comparison of the efficiency of different fuels are for government to consider in the light of overall policies. In our view it would not be appropriate for a regulator who was rightly focusing on issues relating to the gas industry alone to have regard to or to be responsible for these wider measures.
As my noble friend rightly says, in the future special measures may be needed to combat global warming. Those may well involve the promotion of gas use as a low carbon fuel rather than its restriction. They could involve taxes, although I have mentioned before the
1126
difficulties with those. However, all these matters are clearly ones which it should be for government and Parliament to assess. In our view they are not matters for an independent regulator in a particular industry to pursue. We therefore feel that the balance of environmental and efficiency duties is right in the Bill as it stands.
I hope that my noble friend will in particular appreciate what I said in acknowledgement of his concern about special measures possibly being necessary in the future. I trust that I have said sufficient so that he will feel that he can withdraw his amendment. In harping back to the last amendment, I certainly acknowledge that methane clearly contributes to global warming. In that respect I have no doubt that where there is, for example, leakage from a gas pipe there could be in the longer term significant environmental implications. However, as I am sure he will appreciate, the existing duty provided for in the Bill would allow the director to take environmental issues in that respect into account.
The Earl of Cranbrook: My Lords, I take note of my noble and learned friend's opinion that the matters I raised are adequately covered and that the prediction I made will be able to be dealt with without this amendment. I therefore beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendment No. 4. not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 5:
Page 2, line 28, leave out ("has the meaning given by section 1(2)") and insert ("and 'pollution', in relation to the environment, shall be construed in accordance with section 1").
The noble and learned Lord said: My Lords, in speaking to Amendment No. 2 I spoke also to Amendment No.5. I beg to move.
On Question, amendment agreed to.
Clause 6 [Licensing of gas suppliers and gas shippers]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 6:
Page 10, line 7, leave out from ("conveyed") to end of line 12 and insert ("otherwise than by a public gas transporter").
The noble and learned Lord said: My Lords, at an earlier stage of this Bill I indicated that there are a large number of technical and drafting amendments. I propose to move them briefly unless any noble Lord wishes to ask further questions about them. In moving this amendment, I shall speak to Amendments Nos. 8 to 11. They are all technical and drafting amendments. I beg to move.
On Question, amendment agreed to.
Lord Peston Lord Peston moved Amendment No. 7:
Page 10, line 13, leave out subsection (6).
The noble Lord said: My Lords, I now revert to what we might call the mainstream part of the Gas Bill. The origin of the amendment I am putting before your Lordships is an excellent article in the Financial Times of last Monday by Robert Corzine. That was followed

1127
by an equally interesting piece by him on Tuesday. Perhaps I may say, en passant, that he has another fascinating piece in the Financial Times today on the vexed question of the long-term contracts of British Gas. I suppose that I would be trying your Lordships' patience too much if I were to go over that ground again, but it is an important matter.
The essence of what Mr. Corzine had to say in his first two articles, which concerns us at the moment, is that there would be a delay in the introduction of the network code and that this would in turn delay bringing into effect the main purpose of this Bill, which is to extend competition in the market for gas.
Although we have differed on detail, we have all welcomed this Bill because of the benefits it is intended to bring to consumers. Certainly, for that reason alone, we would not wish to see the effects of the measure being delayed. There has been some suggestion that the delay has been due to the slow passage of the Bill through your Lordships' House. I am surprised at that. We have not spent an undue amount of time on the Bill. It would have been good if we had completed it before the Recess, but were unable to do so because the Government's business managers could not find the necessary time either here or in the other place. Certainly nothing that I or my noble friends have done has held things up: quite the contrary, I believe that it will be agreed that while we have subjected the Bill to very detailed scrutiny we have been at pains not to use delaying tactics. I may add that the Minister too has proceeded as expeditiously as possible.
Having said that, I do not see how the precise date of Royal Assent could or should have affected the planning process. The pilot programme for testing competition in the domestic market does not depend on that date. The ability of TransCo to sort out its relationship with the potentially independent gas shippers does not depend on that date. The construction of the computer database does not depend on it. In sum, I can see no good reason for the delay.
My main purpose is not to express my own view but to use this amendment as a means of asking the Minister to tell us how things are going. I hope that he will be able to assure us that no important snags have been discovered either in his department or in TransCo, and that what the Bill calls "effective competition" will emerge in the very near future. I beg to move.
Lord Skelmersdale: My Lords, in the normal way of things I suggest that the Companion to the Standing Orders might say—I confess that I have not checked it—that probing amendments on Third Reading are undesirable. I absolve the noble Lord, Lord Peston, entirely from any blame whatever on this score because it is important to establish from the Government exactly what the timetable now is for this Bill and, more importantly, the operation from 1st April of the trial competitive areas.
As I understand it, the original plan was that there would be six months between the passing of the Bill and 1st April. That slipped to four months and rumour has it that it is about to slip to two months and that in fact the code will not be available for operation until 1st
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February. In those circumstances, one wonders why six months was chosen originally. More importantly, one wonders whether two months, which is all that is left between 1st February and 1st April, is long enough to get the system up and running so that we can have a smooth introduction to trial competition on 1st April.
Lord Fraser of Carmyllie: My Lords, in responding to this amendment perhaps I may begin by reiterating our overall timetable for the liberalisation of the gas supply. Some 500,000 domestic gas consumers in Cornwall, Devon and Somerset, will be the first to he able to choose their supplier from April 1996. From a date to be determined in 1997 a further 1.5 million domestic consumers in Dorset, Avon, Kent, East and West Sussex, will also be able to choose. Domestic competition will then be extended to the whole of Great Britain, and to 18 million consumers from a date in 1998.
This phased approach is intended primarily to test the technical and administrative systems necessary for competitive supply. But before the timetable can start it is necessary for the new legislative framework provided for in the Bill to come into effect. That happens on the appointed day, which I can confirm to my noble friend Lord Skelmersdale we intend to be 1st February next year. On that date the new network code, which will govern transportation, will also come into effect. We had earlier hoped and indicated to the industry that the appointed day might be 1st December. That was based on the Bill being passed in the summer. I hasten to say immediately to the noble Lord, Lord Peston, and his other colleagues on the Front Bench, that I do not for one moment in anyway attribute any blame to them for the way they have taken the various stages of the Bill through your Lordships' House.
The fact of the matter is that we are still discussing the Bill. It is clear to us that three to four weeks would be insufficient time from Royal Assent to complete the implementation work for a Bill of this technical complexity. Noble Lords will have noticed the necessary number of technical matters that have had to be dealt with.
In any event, real concerns have emerged as to whether all aspects of the network code would have been ready on time. Clearly, noble Lords have read press reports that we are in discussion with British Gas about the relationship between this change in the appointed date and the timetable for extending competition to the domestic market.
While I am happy to respond to the amendment, this is a matter of detail which does not affect the Bill. The question is rather an abstract one: whether consumers can choose their gas suppliers from 1st April with a billing change to follow at the end of the month, or whether they can choose their supplier and have the billing change from that date. As I hope would be expected, we are probing carefully possible computer difficulties on this matter to ensure that the best possible result is available to consumers on 1st April.

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As yet, we are still considering the detail and officials of the department and Ofgas are continuing to have constructive meetings with British Gas to finalise the position. I hope that that explanation is of some assistance to the noble Lord.
Lord Skelmersdale: My Lords, before my noble and learned friend sits down, I did venture to ask him whether he was satisfied that the two months now proposed would be long enough to do the work that he has just described.
4.30 p.m.
Lord Fraser of Carmyllie: My Lords, as I am sure my noble friend will appreciate, while there is a major task involved in the introduction of a large computer system and data base as well as supporting contractual and administrative arrangements, nevertheless I can emphasise that a great deal of hard work is going on. I have no indication at present that the two months will prove to be insufficient. There is clearly a volume of work that can be done in advance of 1st February. With the best endeavours that are currently under way, I hope that it will prove possible to achieve all that we wish to achieve on 1st April, notwithstanding 1st February being the appointed day.
Lord Peston: My Lords, I thank the Minister for that reassuring answer. I appreciate that he cannot go much further than he has gone. I apologise to the noble Lord, Lord Skelmersdale, for going slightly against the Companion, but it seemed to me that not only noble Lords but also interested parties outside would want to have a realistic view of what is now going to happen with this important piece of legislation. That was obviously the reason why I used this method. I could not think of any other way of getting a statement out of the Minister. I am more than pleased with what the Minister has had to say. What is more to the point, interested parties outside will note with great care what the Minister said and will regard it as helpful. I have achieved my purpose, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 8:
Page 10, line 20, leave out ("that") and insert ("the 1986").
The noble and learned Lord said: My Lords, in speaking to Amendment No. 6 I spoke also to Amendments Nos. 8, 9. 10 and 11. I beg to move.
On Question, amendment agreed to.
Clause 11 [Amendments of Part III of 1986 Act]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 9:
Page 16, line 17, leave out ("the 1986") and insert ("that").
On Question, amendment agreed to.
Clause 12 [Acquisition of rights to use gas processing facilities]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 10:
Page 16, line 45, leave out ("his") and insert ("the owner").
On Question, amendment agreed to.
Clause 18 [Short title, commencement and extent]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 11:
Page 20, line 4, after ("17(1)") insert ("and (2)").
On Question, amendment agreed to.
Schedule 2 [The gas code]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendments Nos. 12, 13, 14, 15, 16 and 17:
Page 22, line 26, at end insert (", unless the context otherwise requires").
Page 23, line 43, leave out ("subsection (14) of section 17") and insert ("section 17(14)").
Page 26, line 26, at end insert ("; but this sub-paragraph shall not apply in any case where it is reasonably expected that neither of those sub-paragraphs will apply.").
Page 31, line 17, at end insert ("(i)").
Page 31, line 18, after ("or") insert ("(ii)").
Page 31, line 21, at beginning insert ("and in this sub-paragraph").
The noble and learned Lord said: My Lords, these again are all drafting and technical amendments. I beg to move.
On Question, amendments agreed to.
Schedule 3 [Other amendments of Part 1 of 1986 Act]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 18:
Page 45, line 12, leave out ("the") and insert ("public gas").
The noble and learned Lord said: My Lords, this again is a technical amendment. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 19:
Page 52, line 31, leave out from ("that") to end of line 35 and insert (", in so far as the following, namely—

(a) the cost of carrying out the modifications; and

(b) a reasonable element of profit,

will not be recoverable by the public gas transporter from elsewhere, the transporter should be entitled to receive them by way of consideration for carrying out the modifications." ").
The noble and learned Lord said: My Lords, as some of your Lordships may recall, I did not move this amendment on Report as the version tabled was defective. It has now been remedied. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendments Nos. 20, 21, 22, 23, 24 and 25:
Page 56, line 22, leave out (", or could have been if he thought fit,").
Page 56, line 24, at end insert ("or could have been determined by the holder if he had thought fit or had been required to determine them by or under a condition of the licence").
Page 56, line 37, after ("above") insert ("which incorporates the standard conditions").
Page 59, line 16, leave out (", or could have been if he thought fit,").
Page 59, line 17, at end insert ("or could have been determined by the holder if he had thought fit or had been required to determine them by or under a condition of the licence").
Page 71, line 5, leave out from ("information") to ("by") in line 11 and insert ("if—

(a) the disclosure is required by a notice under subsection (1) or (1A) of section 38 above;

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(b) the information has been obtained in pursuance of a notice under subsection (1A) of that section; or

(c) the disclosure is made by one licence holder to another and is required either by a condition of the disclosing licence holder's licence, or").

The noble and learned Lord said: My Lords, these again are technical drafting amendments to Schedule 3, affecting principally the provisions for amending licences pursuant to references to the MMC. I beg to move.
On Question, amendments agreed to.
Baroness Nicol Baroness Nicol moved Amendment No. 27:
Page 74, leave out lines 41 to 44 and insert—
(""( ) Regulations made by the Secretary of State shall provide for a public gas transporter to pay compensation for any loss sustained by any person as a consequence of the exercise of those powers.").
The noble Baroness said: My Lords, I understand that the marshalling of the amendments was incorrect and that Amendment No. 27 should have come before Amendment No. 26. First, I should very much like to thank the Minister for the meeting he had yesterday with one or two of the people concerned about the Bill. It was very useful and helped to move things forward.
I should like to thank the Minister also for Amendment No. 26 which removes the uncertainty in regard to "if' the regulations were produced, about which so many noble Lords were concerned at previous stages of the Bill. It makes it clear also that the Government accept the principle of payment of compensation. But one or two uncertainties remain about what the regulations will contain; for example, will there be a ceiling on the size of business which may claim compensation? The Minister will recall that we had the much discussed British Gas amendment of a £500,000 ceiling. What consultation will the Minister have before drafting the regulations?
Those questions are important, and I should like to have answers to them before I decide what to do with my amendment, because my position remains that compensation should be paid to all businesses which can prove that they have suffered loss, regardless of their size. I repeat, why should they have to suffer at the hands of another private business? There is no greater inducement to efficient working than having to pay for inefficiencies. The gas transporters are no exception.
The other amendment in the group (my Amendment No. 28) has been pre-empted by the Minister's new amendment (Amendment No. 29). The part of the clause which gave the gas transporters right of veto over future legislation was unacceptable to many of us in parliamentary terms as well as in other ways, and would have opened the way for similar demands from other organisations in other legislation. The new amendment leaves the power where it belongs. I am pleased that the offending words have been deleted and so I shall not be moving my Amendment No. 28. I await the Minister's answers on how the regulations are to be arrived at. I beg to move.
Lord Stanley of Alderley: My Lords, I supported the noble Baroness on Report, and I do so again today. Put on the face of the Bill, her amendments would deal with the problem rather more effectively than the
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Government's method. I do not wish to sound churlish for I appreciate the care and great thought that my noble and learned friend has put into listening to the problem of compensation, and the amendments that he has brought forward. In my opinion they have two main snags which the noble Baroness partly pointed out. The first and most important is that the Government intend to act by regulation, and we do not know what will go in and what will not go in those regulations, particularly if there is any limit.
The Government promised consultation before the regulations come before Parliament, and I welcome that. However, consultation means very little if the officials happen to behave like Sir Humphrey, as I am painfully aware today over the Charity Commissioners apparent inflexibility over SORP. Moreover, when the consultation has taken place and the regulations are laid before Parliament it can do nothing to alter them. I know that that point worries all noble Lords.
The second matter that worried me greatly was sub-paragraph (5), which is now dealt with by my noble and learned friend's new amendment. In the train today I composed a thoroughly sarcastic and vitriolic attack on my noble and learned friend. However, on arriving here I discovered that he had removed the offending sentence, for which I thank him greatly. My temper will now have to find another target.
I thank my noble and learned friend and the noble Baroness for reaching such a good compromise which will be welcomed, I know, by many small businesses. I hope that they will be gracious enough to thank both of them, as I do now.
Lord Skelmersdale: My Lords, having supported the noble Baroness every inch of the way from the first day of Committee, it would be unfortunate if, shall we say, the hint of iron in her speech caused me to break company and to break ranks at the last minute. Since taking over the Bill, which is never easy—and I speak from experience—my noble and learned friend has bent over backwards to ensure that he and his officials are as accommodating as possible to your Lordships' views and wishes. I congratulate my noble friend Lord Stanley on having persuaded them to remove what I described last Wednesday as the rogue "if' at the beginning of this part of the Bill and for removing the provision which led to a certain amount of angst around the Chamber. It was, as my noble friend pointed out, the need to have the consent of all public gas transporters before the regulations were changed.
Bearing in mind that my understanding throughout was that the Government were thinking closely along the lines of the letter sent by the chief executive of British Gas in January, referred to in Committee in another place, and taking account too of the fact that the current non-statutory arrangement catches 90 per cent. of VAT registered businesses, which by definition means 100 per cent. of non-VAT registered businesses, perhaps I may gently suggest to the noble Baroness that seven-eighths of a loaf is considerably better than none.
Lord Peston: My Lords, we have made considerable progress and everyone involved is to be congratulated. Perhaps I may say to the noble Lord, Lord Stanley, that

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no material that one prepares is ever wasted; it can always be recycled on other occasions. I look forward to hearing the vitriolic attack which perhaps he will direct at me some day.
I believe that my noble friend got the main point right to start with; that as regards private enterprises imposing costs on other private enterprises and damaging their business, there ought to be grounds for compensation. That is a fundamental point and broadly we have established that and agreed it. It is now a matter of how we achieve it.
The noble Lord, Lord Skelmersdale, is right to say that we have moved seven-eighths of the way towards our destination. I am not sure whether it is a constitutional point or a point of honour but since the regulations are in response to your Lordships' demands it seems clear that the Government will introduce them corresponding to what we have discussed. It would be appalling if the Government, having introduced the regulations in response to what we have said, formulated them in a way which did not bite on the issues we have put forward. Perhaps holding government in higher esteem than one or two other noble Lords, I am willing to believe for the moment that the regulations we get will be the regulations we want. However, we must wait for that.
We have moved forward and a concession has been made. Indeed, it is more than a concession; a considerable change has been made to the Bill which will affect small businesses in particular but other businesses too. I am most supportive of how far we are going now.
4.45 p.m.
Lord Fraser of Carmyllie: My Lords, I am delighted that the vitriol which my noble friend conjured up on the train today will not be displayed before your Lordships tonight. I am grateful for the observations that have been offered from both sides of the House for the changes that we have made. Perhaps I may reiterate that we have agreed not to make a general point that in each and every case there is a right to compensation when one user of the street acting lawfully causes delay or disruption to another. However, we recognise that a special exception is to he made for prolonged gas repairs affecting small businesses. I am grateful to the noble Baroness for drawing together at such short notice a number of people with whom the matter could be discussed.
Our present view is that an appropriate threshold for defining a small business would be a turnover of £500,000 a year, linked—and I stress this—to the retail prices index. We understand that such a figure covers the vast majority of small businesses. However, I confirm to the noble Baroness that we will be consulting appropriate national associations before making the regulations. Obviously, we will be prepared to look at any evidence as to whether a slightly different threshold ought to be used so as to cover the vast majority. The noble Baroness will appreciate that time is such that we do not have the opportunity for a widespread formal consultation but we shall certainly discuss the
1134
regulations informally. We have in mind a period of about three weeks starting in November and we will consider any evidence submitted as to whether the turnover limit is set at the right level to define a small business.
I turn to my Amendment No. 26. In the course of introducing our proposals on Report I gave a commitment that the Government would make the regulations envisaged by the appointed day when the principal provisions of the Bill will come into force. However, in response to my noble friend Lord Skelmersdale I also said that I would look to see whether we could reinforce that commitment by making it a statutory duty, rather than a discretion, for the Secretary of State to make the regulations. The amendment achieves that result.
The other amendment standing in my name on the Marshalled List was drafted in response to the continuing concern about sub-paragraph (5), expressed again by the noble Baroness and by my noble friend Lord Stanley. Their concern focused on what was seen as a veto being given to public gas transporters. The noble Baroness will appreciate that that provision will be removed by my proposed amendment.
I hope that we have achieved a satisfactory result and that we can leave this issue behind us at the last stage of the Bill.
The Earl of Harrowby: My Lords, before my noble and learned friend sits down, perhaps I may ask him to look more carefully and personally at the turnover figure of £500,000 because it would not be my definition of a small business.
Lord Fraser of Carmyllie: My Lords, I attempted to put the matter as carefully as I could. The advice that we have received is that that turnover figure would be sufficient to capture the vast majority. However, yesterday evening I was advised that that might not truly be the case. It is in that context that I am suggesting that during the period of consultation which we have announced we will indeed look at any evidence which suggests that the figure is inappropriate.
Baroness Nicol: My Lords, I am greatly reassured by what the Minister said. Perhaps I could just say that a turnover of whatever figure does not necessarily relate to the profitability of the business. A business with a turnover of £0.5 million may be making a substantial profit or may be making a mere pittance, depending upon the nature of the business. Therefore, I believe that a degree of flexibility is needed in that approach.
I am very pleased that the Minister is to consult. I regret that the time has to be so short but I am sure that the organisations interested in this amendment will prepare their case to put to the Minister. I am very grateful indeed for the concessions that have been made and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 26:
Page 74, line 41, leave out from beginning to ("a") in line 42 and insert ("The Secretary of State shall by regulations provide that, in such cases and to such extent as may be provided by the regulations").
The noble and learned Lord said: My Lords, there are some difficulties because there was something of an error in the way in which the amendments were numbered. Amendment No. 27 comes before Amendment No. 26. Therefore, I now wish to move Amendment No. 26. I beg to move.
On Question, amendment agreed to.
[Amendment No. 28 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 29:
Page 74, line 45, leave out from beginning to ("no").
The noble and learned Lord said: My Lords, in responding to Amendment No. 27, I explained Amendment No. 29. I beg to move.
On Question, amendment agreed to.
Schedule 5 [Transitional provisions and savings]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 30:
Page 84, leave out lines 35 to 37.
The noble and learned Lord said: My Lords, we have been looking again at the Bill and have concluded that paragraph 2(2) of Schedule 5 serves no useful purpose. The Secretary of State already has a power to secure that the scheme makes such provision, and only such provision, as he considers requisite or expedient for the purposes of Part I of Schedule 5. This power is conferred on the Secretary of State in paragraph 3 of the schedule and it appears that the mention in paragraph 2(2) adds nothing. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendments Nos. 31 to 35:
Page 86, line 39, leave out ("4") and insert ("paragraph 4(1) to (4)").
Page 86, line 41, leave out ("4") and insert ("paragraph 4(1) to (4)").
Page 91, line 36, leave out ("Such a scheme") and insert ("A scheme under this paragraph").
Page 92, line 11, leave out ("this paragraph") and insert ("sub-paragraphs (1) to (6) above").
Page 92, line 14, leave out ("this paragraph") and insert ("sub-paragraphs (1) to (6) above").
The noble and learned Lord said: My Lords, these are technical amendments. I beg to move.
On Question, amendments agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendments Nos. 36 to 39:
Page 93, line 4, leave out from second ("gas") to ("shall") in line 9 and insert—
("(2) The supplier's supply successor").
Page 93, line 45, at end insert—
("( ) In this Part of this Schedule "supply successor", in relation to a public gas supplier, means the person who becomes a gas supplier by virtue of a scheme made by or in relation to that public gas supplier under Part I of this Schedule.").
Page 94, line 26, leave out sub-paragraph (6).
Page 97, line 31, at end insert—
("( ) the Valuation for Rating (Plant and Machinery) Regulations 1989, so far as those Regulations continue to have effect for the purpose of determining the rateable values of hereditaments for days falling before 1st April 1995;").
The noble and learned Lord said: My Lords, these are drafting and technical amendments. I beg to move.
On Question, amendments agreed to.
Schedule 6 [Repeals]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 40:
Page 98, line 39, column 3, leave out ("of').
On Question, amendment agreed to.
Lord Fraser of Carmyllie: My Lords, I beg to move that this Bill do now pass. Before the Gas Bill leaves this House, I should like to say a few words in recognition of the work that has been done on the Bill. In particular, I should like to thank my government colleagues who steered the Bill through Second Reading and Committee—my noble friends Lord Ferrers and Lord Inglewood. As your Lordships will appreciate, since the summer the pack has been shuffled and they are elsewhere, but it has been a pleasure for me to build upon the foundations which they laid. I should like to thank all the noble Lords who have taken part in the proceedings on the Gas Bill as it has passed through its various stages in this House.
I should apologise for the number of government amendments that have been brought forward. My noble friend Lord Ferrers said at the outset that it was to be expected that the Government would need to bring forward a number of amendments because of the technical and complex nature of the Bill. It may he that the amendments surpassed all our expectations as regards their number, technicality and complexity, but I can say that these arose from a determination on the part of the department to do our utmost to ensure that the provisions of the Bill had the desired effect. I should like to thank noble Lords for their patience and for speeding progress by allowing the majority of these technical amendments to be moved formally.
I should like to thank the noble Lords, Lord Peston and Lord Ezra, who have led the Opposition's probing and questioning of the Bill, ably supported by the noble Lords, Lord Haskel and Lord Clinton-Davis. I believe that they have demonstrated the value of a revising chamber by effectively analysing the Bill for weaknesses and identifying points where we have been able to make improvements.
The improvements secured by the noble Lords are many indeed. They include a requirement on the director general to include in her annual report to Parliament an account of the development of competition; requirement on licensees to take steps to secure that officers authorised to exercise powers of entry are fit and proper persons; a new offence to control bogus meter readers; and greater clarity in the provisions relating to licences artificially framed to avoid social obligations.
I shall at this stage pay tribute to my noble friends Lord Skelmersdale and Lord Cochrane, who have brought to our debates a detailed knowledge of the workings of different parts of the gas industry.
Your Lordships have taken a keen interest in safeguarding the interests of the more vulnerable groups in society. My noble friend Lord Boyd-Carpenter, ably supported by the noble Baroness, Lady David, make the

1137
point that vulnerable groups of customers other than those who are disabled or of pensionable age, may need special consideration. The Bill now places an additional duty on the director to have regard to the needs of chronically sick people. I am also grateful to my noble friend Lady Gardner of Parkes for a number of suggestions on consumer matters, which have been helpful in revising the standard conditions of gas suppliers' licences.
Our considerations have also been helped by my noble friend Lord Cranbrook who has meticulously looked over the environmental duties of the director in the Bill. While I have not been able to agree with every point my noble friend made it has been possible in response to his suggestions to improve the reference to the environment, first by deleting the word "physical" and later by expanding it to take account of the impact of pollution on living organisms.
The noble Baroness, Lady Nicol, and my noble friend Lord Stanley took up the interests of traders suffering economic loss due to street works being undertaken outside their premises. While we could not accept the premise in logic on which their argument was based, we were able to bring forward amendments aimed at replacing the present British Gas scheme with regulations applying similar principles on a formal basis. I thank also my noble friend Lord Caithness, who contributed helpfully to our deliberations on many occasions.
I believe that it is right that competition should be extended to the domestic market so that households can benefit from a choice of gas supplier, as customers in the industrial and commercial markets have been able to do for the past few years. We are beginning to see evidence of the kind of benefits that customers might expect. Several gas companies have declared their intention to enter that domestic market, initially in the South West, and they have said that they expect to be able to offer savings of 10 per cent. or more to customers compared to the prices of British Gas. The existence of real choice will empower consumers to demand good service.
I believe that the Bill will provide a sound framework for the new fully competitive gas industry and that it will promote the development of competition in the domestic gas market. It should provide lasting benefits to consumers in general and the very careful consideration given by your Lordships to this complex Bill will have done a great deal to achieve that aim.
Moved, That the Bill do now pass.—(Lord Fraser of Carmyllie.)
5 p.m.
Lord Peston: My Lords, on behalf of my noble friends and, indeed, on behalf of all noble Lords I should like to thank the Minister for the many kind remarks that he has just made. It would weary the House if I were to go over every single name that the noble and learned Lord mentioned, but I can say that I am at least as appreciative as he is of the contributions made by all
1138
the noble Lords whom he mentioned. However, I should like to add to the list the name of my noble friend Lady Turner who also helped us.
I certainly wish to be associated specifically with remembering that the noble Earl, Lord Ferrers, and the noble Lord, Lord Inglewood, started the process. But, having said that, I should particularly like to congratulate the Minister. We have dealt with an immensely complicated Bill. The noble and learned Lord came into the process in the middle of the proceedings and I must say that he handled matters in a quite outstanding manner; that is, compared with me. I have actually had three people working with me and every time it got difficult I said, "Well, you do it", whereas I believe that the Minister has literally done everything since he began. That is a remarkable achievement.
I agree with the Minister that the Bill was a sensible measure in the first place. Indeed, promoting competition in the domestic market is a worthwhile objective and we wish to see it happen. Equally, the way that we have approached the matter has impressed me. I say that because the Government have been responsive to arguments and the Minister mentioned several places where the Bill has been changed in response to arguments put forward from different parts of your Lordships' House. I agree with the Minister that that shows the value of a revising Chamber.
However, I have to tell the Minister that during most of my years in this House I have had a fairly gloomy view of the latter, almost coming to the point where I did not see the point of a revising Chamber because, in my experience, almost anything that I put forward the Government turned down. Indeed, I believe that the list of amendments that I have had successfully accepted by the Government was still in single figures until we dealt with this Bill. Therefore, speaking just for myself, the Minister has changed my view from the rather gloomy one that I held to something a little more optimistic as regards what can be achieved by a Chamber such as ours.
After thanking the Minister and other noble Lords there is little more for me to say other than to reiterate the point that this is a very important measure. It is a measure which has been brought forward to give the consumer a better deal in the field. Many of us will be looking at it in the future with a view to seeing whether that happens. I strongly believe that it will. It is certainly my view that I wish to see a successful Bill.
Lord Ezra: My Lords, I should like to associate myself with the remark just made by the noble Lord, Lord Peston, in expressing appreciation to the noble and learned Lord for the very effective way in which he has conducted our affairs, bearing in mind that he was not present at the beginning of the proceedings. I should also like to thank the noble and learned Lord for his sympathetic manner in handling matters. The noble Lord, Lord Peston, and I met the Minister after the Committee stage and went through a number of points of concern. I must say that the Minister dealt with most of them, although not quite all, in a very satisfactory manner from our point of view.

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However, there is one issue upon which I must say that I am less than happy at this stage. I refer to the duty to safeguard the interests of consumers. I moved an amendment unsuccessfully in Committee and I proposed a modified amendment on Report, which I withdrew on the understanding that, without commitment, the noble and learned Lord would have another look at the matter. That was on the 18th October. On the morning of the 19th I wrote to the Minister with a suggested amendment asking him whether he would like to put it forward or whether I should; or, indeed, whether he had any other ideas. I did not hear from the Minister until this very day when I was handed a letter dated 25th October as I entered the Chamber. As a result, the amendment I proposed to the noble and learned Lord was rejected by the Public Bill Office because those responsible claimed that it had already been dealt with in Committee. However, had I received the Minister's letter in time and had it not been dated the 25th and handed to me on my arrival today, I believe that I could have proposed an amendment which the noble and learned Lord might have accepted. I say that because he says in the third paragraph of his letter:
"as I explained at Report, the duties in Section 4(1) are themselves designed with the interests of the final consumer in mind".
Therefore, I could have asked the Minister whether he would accept those words being included in one of the subsections. Unfortunately, however, caught between the Public Bill Office and the tardiness with which I received a reply from the noble and learned Lord—no doubt for a good reason—I was unable to do so. I wonder whether it would be in order for the Minister to comment on that matter now, or perhaps he will write to me. Having said that, I wish to emphasise my gratitude to the Minister for the way in which he has conducted our affairs, with that one small omission.
Lord Skelmersdale: My Lords, only a few moments ago we had an example—a real demonstration—of how cross-party co-operation can improve legislation. I have found that that cross-party co-operation has extended all the way through the Bill's proceedings from Second Reading until this moment. As a result, considerable progress has been made towards devising a sensible framework for domestic competition. It is a framework which I believe combines the principles of consumer protection and fair and equal competition. However, it is only a framework. Therefore, much now rests on the licences and on how they are interpreted and applied.
What we all seek to do by way of the Bill is unprecedented anywhere in the world, so we must edge forward with caution. But caution does not mean sloth, slowness or whatever one may want to call it; it means that we need to exercise a degree of care. In particular, as we hand over our framework to the regulator we must ask her to be vigilant. She must ensure that companies that wish to supply gas to domestic customers are fit to do so and that they will have sufficient gas not to leave customers high and dry. Bearing in mind that since 1986 gas prices have come down by 23 per cent., to achieve only 10 per cent. in the next 10 years—that is the figure currently going around—seems to me to be a pretty poor deal for the consumer. However, I shall leave the matter there.
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The regulator must ensure that all suppliers are able to meet their social obligations and that they do so without, hesitation or deviation, or something like that, which I believe comes from a radio programme. There will no doubt be teething problems along the way, but I hope that all parties can work together to ensure that they are sorted out as quickly as we have done our work on the Bill. We shall watch closely the progress of this project. I, for one, wish it well.
Lord Cochrane of Cults: My Lords, as we have now reached the end of this long drawn-out Bill, I wonder whether my noble and learned friend can give us any indication as to when some of the pruning which has been referred to in health and safety documentation—that is, some pruning of the undergrowth left from earlier gas Acts—and some of the regulations which it is proposed to make for specific and smaller segments of that wide field, the gas industry, are likely to come before Parliament.
Lord Fraser of Carmyllie: My Lords, I should like briefly to respond by saying that I am most grateful to noble Lords for the remarks which have been made. I can only extend an apology to the noble Lord, Lord Ezra, for the tardiness in responding to him. I had hoped that a message had previously reached him stating that I would have to reply along those lines, but it would appear that that, too, had somehow gone astray. I can only repeat my apologies. So far as concerns the point raised by my noble friend Lord Cochrane of Cults, I think that the most suitable way for me to respond would be to write to him on the matter.
On Question, Bill passed, and returned to the Commons with amendments.

PHARE Programme: ECC Report
5.9 p.m.
Lord Lewis of Newnham Lord Lewis of Newnham rose to move, That this House take note of the Report of the European Communities Committee on Environmental Issues in Central and Eastern Europe: the PHARE Programme (16th Report, HL Paper 86).
The noble Lord said: My Lords, in discussing the Motion standing in my name on the Order Paper I should first like to review the history of the potential entry of the eastern and central European countries to the European Union. The six countries considered in the report are Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia. The PHARE programme which was initiated in 1989 was primarily concerned in the first instance with Poland and Hungary, hence the "PH" in the acronym. The project was designed to help in the transformation of their economic programme to a democratic and market force based system.
The programme is perhaps best viewed as a technical assistance programme supervised and administered within recipient countries. That is an important point. The impact of Brussels was supposed to be minimised in these arrangements. It is also considered more than

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an aid programme as it was supposed to give close experience of the workings and the nature of the EU. I am afraid that one of the problems with the programme is that it has been found to be far more complex than had been appreciated, a factor that a number of others found in dealing with the programme. I hesitate to suggest that the diary of the EU Commissioner for the environment might help us in this respect.
It is important to recognise that the PHARE programme was never designed to solve environmental problems in these countries. That is far too great a subject to be accounted for in terms of the finance available in the programme. We are told that in East Germany it has been estimated that a factor of between 50 to 100 is necessary in the financial outlay to account for the problems there. One of the important features is that the moneys are considered as grants rather than loans.
From the point of view of the history of events, the June 1993 Copenhagen European Council offered the prospect of membership of the Union to former communist bloc countries. In December 1994 the Essen European Council established guidelines for,
"preparing for future accession of the six associated countries of Central and Eastern Europe".
I believe that at this very moment in Sofia—although I appreciate that it is a different type of conference—this must be one of the problems under discussion.
During the course of the study we made a visit to four of the six countries in the report; namely, Poland, Hungary, Romania and the Czech Republic. This gave us a good insight into the variety of the problems of these countries and emphasised the gross pollution issues involved. However, it is also important to recognise that there are areas of countryside which are quite pristine and which will sustain biological diversity. That is of international importance. We need to concentrate on protecting that countryside just as much as we need to remove the pollution from other areas. We are not dealing with a homogeneous group of countries. There is wide variation both of structure and management approach and certainly of economic potential. In terms of their GDP per capita they are poorer than any of the existing 15 members of the European Union.
The PHARE programme needs to be adapted to each particular recipient country. There is no overall solution that is applicable across the board. Any solution must be affordable both economically and socially. During our visit we were constantly aware of the fact that people had considerable anxieties about the implications of environment legislation as regards employment. The prospect of closing firms down was certainly a terror for them. I remind your Lordships that we are talking of communities where unemployment was virtually unknown until the fall of the wall.
The position has become further compounded by the fact that the PHARE programme has been extended to include six more countries: Albania, Estonia, Latvia, Lithuania and Slovenia, and in June of this year, Croatia. It is important to recognise that the PHARE programme covers many sectors other than purely the environment.
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In the period 1990 to 1993 approximately 10 per cent. of the total budget, which amounted to about 250 million ecu, was allocated to the environment. The programme has been seen to operate on a partnership basis but that was criticised in the early stages because the control and approval procedures were found to he complex and time consuming. I am sure that anyone who has had dealings with the European Union may feel a certain sympathy with that. As a result, of the 250 million ecu, no more than approximately half has been utilised in that period of time. Difficulties were encountered, but not just on one side. It is important to recognise that they arose from problems on both sides.
The staffing of PHARE in Brussels is inadequate. We held discussions there and saw the situation. I know that the noble Baroness, Lady Hilton of Eggardon, will discuss that problem and I shall therefore not pursue it. We also encountered problems as regards the delegations of the European Union in the various countries. The delegations in principle provide the direct contact with the European Union. They are the window through which the countries can observe how the European Union works. The staffing is different in each country. And certainly the attitude of the countries to the PHARE programme staffing is varied. The delegations are there primarily to suggest the approach to a "market free" economy. That is not fully understood. Perhaps not surprisingly the delegations have had some difficulty trying to explain. The Polish Government hired external consultants to advise them on how to deal with the PHARE programmes.
In the initial stages PHARE was viewed as a solution to environmental problems in the six countries. It rapidly came to be recognised, however, that the programmes would allow only for assessment of the problems. As I stated, in the case of East Germany the real solution involves investing large amounts of money. The NGOs, which are embryonic in that part of the world but a feature we would like to see encouraged—I know that some noble Lords will talk about that aspect—have pointed out that some inconsistencies occur. For example, some of the agricultural parts of the PHARE programme have produced environmental pollution problems. And one set of environmental pollution problems—as is often the case—produces another type of environmental pollution. The "cradle to grave" analysis which is now the conventional approach applied to environmental problems in this country has yet to reach the part of the world we are discussing. There must be careful monitoring.
An important step in the programme was the Dobris conference held in June 1991. This was the first pan-European conference of environment ministers to emphasise the difference in approach of the central and eastern European countries and the donor western group. The conference called for the production of an environmental action plan to provide a strategic framework for the management of the environment with the formation of a task force to develop the plan. That was endorsed two years later at the Lucerne conference and must be one of the primary features of the Sofia

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conference. I hope that the Minister will be able to report the outcome. The conference, I believe ends today.
The problems of pollution are vast. They are an inheritance of the manufacturing industrial policy of the Eastern bloc at a time when little attention was paid to environmental issues and the main emphasis was on production figures.
We saw many examples of major pollution of land, air and water. In Poland, for instance, 80 per cent. of the country's energy is obtained from a complex covering no more than 2 per cent. of the country. Yet that complex produces 60 per cent. of the solid waste within that country. Most of the rivers in the area are so polluted as to be unclassified under either EU or Polish standards.
In the black triangle, an area including eastern Germany, Poland and the Czech Republic, lies one of the major manufacturing areas of that part of Europe. There are large quantities of brown coal. This is mined on the surface and can be extracted down to a depth of 300 metres. We saw vast tracts of land which had been mined in that way. The problem is that brown coal contains large amounts of sulphur. In that area 30 per cent. of European emissions of SO, occur. At certain times the sulphur dioxide concentration in the air is 10 times the EU maximum.
In Romania we saw pollution of thousands of hectares of land as a result of fractured pipelines from nearby petrochemical refineries. We were shown holes which had been dug in the ground. They immediately filled with oil which was seeping from the soil. The oil was put in barrels and sold. That is a tragic feature of what we see in that part of the world.
One of the basic concerns in dealing with these pollution problems is the financing of the remedial projects. I remind the House that we are dealing with an area which has a very low GNP per capita. Interest rates are several times higher than in western Europe. Pay-back periods are frequently so long that they affect the potential for development in the private sector and local government. Local government is a tender plant in that part of the world. I remind the House that government was very much centralised. Local government must be, and is being, encouraged. PHARE is working with international financial institutions to find some way of reducing the problem. I believe that discussions are taking place in Sofia. I hope that we shall be able to hear what progress is being made.
The general view of the strength of the programme is that, first, it is the largest aid programme in central and eastern Europe. Secondly, it is viewed as mainly a grant programme. Thirdly, there is an attraction in that part of the world for open tendering. I must admit that in discussion with some ministers it emerged that "tendering" was a strange word in their vocabulary and that they were not aware of its full implications. The open tendering required by the PHARE programme avoids the tied aid relationship. Much of the aid to countries in that part of the world involves the use of agencies within the individual countries concerned.
The weaknesses were perceived as the administrative restrictions involved and the long delay in obtaining approvals. It was also felt that there was too short a period between the allocation and disbursement of funds which under the present arrangements can take years rather than months. I believe that that may have been due initially to lack of understanding of how the European Union works. There is no doubt that some of these countries have adapted to dealing with the programme. I am optimistic that in some cases that may be a solution.
I should like to conclude by thanking the Government for their prompt reply to the report and to note the general agreement with much of what has been discussed. However, I should like to press for the Government's views on three points. The first relates to recruitment and staffing for the PHARE programme in the Commission. Associated with that point is the rather difficult position which British civil servants face when they go to Brussels in not having that time acknowledged, compared with the situation in many other member states.
The second point is the possibility of delegation of more responsibility for the running of the PHARE programme to the six countries. In saying that, I recognise that there is diversity in their management potential. Nevertheless, it is important that we direct far more responsibility to the individual countries. The third point is help with the raising of capital for projects. That may well be an outcome of the Sofia conference.
Finally, I should like to thank the embassies, which were very kind to us and organised our visits most efficiently. At times I felt that the enthusiasm exceeded the physical abilities of the committee. I should also like to thank the members of Sub-Committee C. This is the last opportunity I shall have to do so as chairman. I have enjoyed my time with the committee. The members are an enthusiastic group of people, and I am sure that they will go on to consider greater things.
I should like to acknowledge the great help of our clerk, Mr. John Goddard. He was incredibly effective, and his enthusiasm and the efficiency with which he dealt with many of the problems which faced us was remarkable. He is an extremely able man. I acknowledge too the considerable help provided by our specialist adviser, Dr. David G. Smith. He knows how PHARE works; he knows that part of the world. He was able to lead us through a labyrinth of difficulties and to point the way. I take this opportunity to thank him. I beg to move.
Moved, That this House take note of the Report of the European Communities Committee on Environmental Issues in Central and Eastern Europe: the PHARE programme (16th Report, HL Paper 86).— (Lord Lewis of Newnham.)
5.26 p.m.
Viscount Bridgeman: My Lords, I should like to begin by thanking the noble Lord, Lord Lewis, for the wisdom, leadership and light touch with which he chaired the sub-committee over the past three years, and to welcome the noble Baroness, Lady Hilton, who will take over in the next Session.

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I took part in the tour with the noble Lord, Lord Lewis. On more than one occasion we were faced with a meeting of Ministers and officials. The proceedings would be started by a fairly elderly Minister who wore a Communist suit, talked with a Communist monotone and, not least, at Communist length. He was then followed by one of the young Turks, who was impressive, had a very good knowledge of the West and of Brussels, spoke very good English and was articulate. It was difficult to believe that only six years ago these people were living in a Communist environment. It is important that institutions like PHARE help these people.
PHARE terms that institution building. It is really the establishment of democratic infrastructures, which are so familiar to us here but are very new to most of the countries of the CEE.
We very much approve of the PHARE initiative in training project managers, law makers and civil servants and encouraging travel and study in the West. I should like to make a plea for the abolition of travel restrictions and visas as soon as possible.
The role of the non-governmental organisations to which the noble Lord, Lord Lewis, referred is crucial. These are by their nature less cumbersome and probably less doctrinaire. They have a crucial place in the establishment of the institutions. Here PHARE can play a key role, first, in reassuring the governments of the countries that they have nothing to fear from these NGOs. They are regarded with a great deal of suspicion, not unnaturally. The NGO was a virtually unknown phenomenon during the Communist era. It is important that the NGOs are assisted by PHARE officials to find their way around governments. In Budapest we found a particularly unfortunate situation. A congress of non-governmental organisations had no contact with and no understanding of government. At that meeting we realised just how far we have to go.
Most of the non-governmental organisations are national organisations. However, there was an important exception. The Regional Environment Centre in Budapest is internationally staffed. When we were there it had a Polish director. We found that organisation imaginative and flexible and, importantly, it helped small projects which are not of interest to the larger organisations. We found a slightly lukewarm approach by PHARE to those multinational non-governmental organisations; and we should like to see such organisations form a greater part of the NGOs' structure.
It is the committee's strong recommendation that non-governmental organisation senior officials and managers are included in the training programme provided for the officials of those countries. We are also pleased that they have equal opportunity for tendering.
Finally, perhaps I may mention the UK know-how fund, which applies to all six countries of the CEE. It is staffed by British personnel and British firms. Everywhere we went we found admiration and compliments for the work that it is doing. In profile, the fund lies somewhere between the non-governmental organisations and the more structured bodies such as PHARE. It is characterised by a responsive, hands on,
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at the coal face approach to its work. In Romania two non-governmental organisations had been entirely set up, helped and guided in their relatios with that government by a know-how team. In her evidence to us the Minister said that the organisation was unique within the European Union. It is something of which this country can be very proud.
The PHARE programme brings together the non-governmental organisations and the know-how fund. I am hopeful that the programme is moving in the right direction to help those countries to acquire the knowledge and infrastructure which they not only need but which, by their example over the past six years, for the major part they wholly deserve.
5.33 p.m.
Baroness Gould of Potternewton: My Lords, much as the noble Viscount, Lord Bridgeman, has done, I wish to concentrate my remarks on the NGOs and the problems that they face in central and eastern Europe. Before doing so, I wish to add my appreciation to the chairman, the noble Lord, Lord Lewis, for his patience and learned appraisal of our deliberations. Sometimes in committee that has not always been easy. He has acted with great tolerance and patience. I should like, too, to add my thanks to our clerk, John Goddard, and to Dr. David Smith, for their assistance in this project.
The revolutions of 1989 in eastern and central Europe provided the citizens of those countries with the democratic right to vote. But for real democracy to he seen to be achieved requires that those citizens understand the importance of playing a greater part in the decision-making processes affecting their lives and their futures—and none more so than those relating to the environment—by the development of a civic society and responsible non-governmental organisations.
However, in the context of the report, not only did the previous regime have no regard for the historical traditions of civic participation, but it also had a complete disregard for the environment. As the noble Lord, Lord Lewis, indicated, it left in its wake some of the largest concentrations of sulphur dioxide and nitrogen oxides in Europe; heavy industrial areas with the resultant health problems; extensive damage to vast forest areas; and ground water and arable lands polluted by the over-use of chemicals.
Unfortunately, I was unable to accompany the members of the committee who were able to visit four out of the six countries on which the report is based. However, two years ago I was involved in a project to develop civic participation in the Czech and Slovak Republics. We focused our work at that time on NGOs which were concerned with environmental issues. With no government support, a few enthusiastic individuals had determined to establish such NGOs. For instance, the mayor of Trencin, an area of heavy industry, founded the Regional Association for the Middle Vah Valley, bringing together people of like mind to seek to lobby government. But those enthusiasts were very much the exception. The majority of the electorate continued to rely on government to regulate most social, economic and environmental problems.

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There have been some improvements since that time, varying in degree from country to country. Some international NGOs have established themselves in those countries, but they have done so without the support and encouragement of the governments concerned. It seems rather that politicians and officials see their presence as an interference in the political process. That opinion is reinforced in paragraphs 64 to 70 of the report which outline the views of each of the six countries regarding their environmental awareness and NGOs. It is clear from all their responses that the need for public awareness has to be, in the words of the Polish Government,
"strengthened and deepened to make the full impact required".
PHARE funds and the know-how fund are being used to assist in that development either through the establishment of specific projects such as the Regional Environment Centre in Budapest, mentioned by the noble Viscount, Lord Bridgeman—an umbrella NGO—or through the provision of information on the environment as in Bulgaria.
What was clear, however, was continuing frustration over the obstructive attitude of the bureaucracy towards funding from abroad and the imposition of tax burdens, such as the taxing of membership subscriptions, on the NGOs. The Globe Europe Network report on environmental reform in east and central Europe, published in May of this year, came to the same conclusions and called for NGOs to be viewed as important cost-effective partners but requiring funds from both domestic and foreign sources. Partners who can advise, monitor and draw the attention of funding bodies and governments to the effect of their actions are absolutely crucial, especially in a newly developing society.
It was, therefore, encouraging for the committee, when the Minister attended the meeting, to hear that she was clearly committed to the strengthening of NGOs as a way of stimulating environmental concern and,
"fostering 'good government' generally".
As she said, there is no doubt that PHARE should do more to promote NGOs and to encourage them to take up their concerns with government. But that action will he truly effective only when the governments of the six cease to see NGOs as a threat to their own authority.
The Summary of Conclusions and Recommendations makes clear in paragraph 147 that there is a need for cultural shifts and the shedding of habits bred in the communist era. Only then will PHARE be able to put in place the policies, institutions and capital investments required to improve the environment and public health. That shedding of old habits, as the report says, needs to he nurtured by PHARE's "institution building" programmes and by the training of law makers, managers and the leaders of NGOs—training designed to break down the mentality of central control; to develop initiative, and to show how dialogue and discussion are the basis for sound policy formulation and better management.
In their response, while supporting the need for "institution building", the Government specifically draw attention to the close involvement of the NGOs in the PHARE/TACIS democracy programmes, set up to give
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special support to non-governmental bodies, and the LIEN programme, designed to promote cross-country boundary activity. Hopefully, this process of learning will be assisted by the reported development of the LIEN programme, the increased funding for the PHARE democracy programme and the extension to the six countries of the EU schemes, such as Leonardo and Socrates; and now there will be greater opportunities for broadening European awareness across country boundaries.
In conclusion, I should like to say a brief word on staffing. I know that my noble friend Lady Hilton will refer to this in more detail. The Select Committee points out the danger of creeping paralysis arising, not through any fault of the staff—it is important that that is stressed—but because of their small numbers and the nature of their work. The PHARE programme has been criticised for being over-bureaucratic and slow to the point of being stationary. For its job to be carried out effectively, the staffing needs to be strengthened as a matter of urgency, the temporary nature of the employment re-examined and staff work patterns reviewed.
The PHARE environmental programme, limited as it is, is crucial to the beneficiaries and must be well handled and well managed. Its importance to those countries that benefit is summed up in the response from Hungary on the perceptions and advantages of PHARE which states:
"In Hungary Phare was seen by the government as very useful not only because it was the only multi-lateral funding mechanism for the environment but also because Phare contributed to strengthening democratic institutions. This made it difficult to quantify Phare's benefits or to put a cash value on them".
While we have to accept that progress towards high levels of environmental protection will be gradual, equally we have to accept that in the long term environmental standards are not negotiable. This is an important report as part of that process. I look forward to the Minister's response, particularly on questions relating to the lack of material resources and the fragility of the democratic institutions, which create constraints to solving the environmental problems within these newly democratic countries.
5.42 p.m.
Lord Butterfield: My Lords, I am just coming to the end of my period of service on Sub-Committee C under the chairmanship of the noble Lord, Lord Lewis. Perhaps I may take a few seconds to talk about my overall impressions as a new Peer of the work of the sub-committee, and indeed of the Select Committees generally.
I was most impressed by the contribution of your Lordships' committees in which I was involved and the contribution that they can make to the country as a whole. Indeed, I confess that I admit to my children and my closer friends at table (it may be impudent of me to say this) that the contribution of our committees, based on well-informed inquiry and subjected to the scrutiny of people who have knowledge of the various situations, is a feature that must be recognised and protected in the future of this House. During the course of the afternoon

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we heard one reference to possible changes in the House in the future. It is my hope and prayer that the work of these committees will not be swept aside. I am sure that it will not be.
Obviously, the sub-committee scrutinising European Community affairs deals with important matters. When I look back on my period of service with the committee I am astonished at the range of matters upon which I have been educated. I did not know that I was to have a profound late-life educational course. It has covered matters from poverty to drinking water. Regarding poverty, let me say as an aside that it has become clear to me—and perhaps I may direct this to the Bishops' Benches—that perhaps the most dreadful sin that I, and indeed all of us, can commit socially towards other people is to involve them in social exclusion. We were told by the poor groups, as the chairman will remember, when in Portugal and other places that the one thing that bruised them about being poor was being excluded. I have tried to make my children agree that they will remember that and will not be snobby. I hope that I succeed.
I am anxious to pay tribute not only to the chairman himself, but, as he did, to the Clerk and to our specialist adviser on this topic, and of course to my colleagues. I can tell the House that Sub-Committee C has become a little club. We are not excluding anyone. To anyone who wants to come along and listen to our affairs, I am sure the door will always be open, and that that applies under the new chairman.
It is also very important to convey that many of the matters with which the committee has been involved over the past three years are relevant to this important PHARE—or "far"—programme. I joke about its being concerned with far-away places; noble Lords must forgive me. We watched over, and indeed interviewed, people who were concerned with this incredibly important European Environmental Agency. If we are to get what we want in Europe it is essential that the methods and standards applied to pollution and other aspects are standardised. I believe that when the Lord Chairman looks back not only will he be pleased with the PHARE programme efforts but he will feel that the investment made in interviewing people who will take a leading role in the European Environmental Agency might have the most important long-term effects.
Noble Lords have heard that PHARE aims to help eastern european countries prepare for entrance into the European Union. It is very important that the House realises that its financial authority is very small compared to what would be asked for in order to bring about a transformation. I have no doubt that the seeds being sown through this organisation are taking root and growing and that harvests will follow.
Noble Lords should also remember, as the chairman pointed out—and it needs to be remembered, especially by people who say, "Well, you are not getting on very well in eastern Europe"—that PHARE covers banking, transport and the production of energy. It is important that we do not see it as having only to do with pollution of the soil.
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We visited Europe in regard to pollution. I echo the remarks of previous speakers. We were very impressed and proud to find UK citizens working all through these countries. I hear it said, as no doubt do other noble Lords, "Oh, well, the trouble is, can we get into the core of Europe?". Indeed, we are already there. So far as I am concerned—I am sure the Minister will agree—I hope that we can stay there. Of course, the know-how fund has been terribly important in achieving what we have got out of it all and in producing the people with the money to get things going.
Perhaps I may mention one point from the report. It is unkind of the examiner— that is me—to look at the students of the document of which we speak and steal out a sentence or two. In the report at paragraph 19 the committee said:
"High priority should be given to broadening the experience within the Six of life outside",
especially after the years of intellectual deprivation in the past. The Minister's response was:
"The Government agrees with the Committee that opportunities for foreign study, training and travel are important elements".
To that extent, the seeds have been planted and they will produce fruit in due course.
In the last country that we visited, the Czech Republic, I saw things which gladdened my heart. We all know that the Czech Republic has been a big mark in recent media reports about what they are doing to the Lada motor car, which many people regard as a rather pedestrian vehicle. It is to be modernised and it will be extremely interesting to see whether it captures part of our market. I believe that the Czechs are such good engineers that it will do so; it will make an inroad.
I want to say—I am sure the noble Viscount, Lord Bridgeman, will agree with me—that we were very impressed by the work taking place in developing their health service. Sadly—or perhaps not so sadly—we had an opportunity to test the system when one of the visiting team became unwell one morning. I, as general practitioner to the team, had the privilege of going to the university hospital in Prague to see how our colleague was being taken care of. I want your Lordships to know that he was taken care of by Professor Kolbel, who has a doctorate of science as well as a medical degree and had been trained in America. He rendered to us, I think I can say, exemplary emergency service. The noble Viscount and I both noticed, as the food was brought in for us to see, that it held certain resemblances to the food served on Sunday evening in the NHS. Lunch tended to be sandwiches. But never mind; it is the medicine that matters.
I also want to say how much I agree with those members of the Committee who made the point that young people are becoming involved in the NGOs. They are the people on whom we must fix our hopes and prospects for the future. They are dynamic and energetic young people. They are unbiased about their resolve to pursue a clear, clean environmental programme. They will not be bullied by the past.
Lastly, let me refer to the excellent work of a retired professor of the Czech technicological university whom I met in Prague and to whom I wrote later. Many of us wrote letters to the people whom we met as we felt that

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we should do our best to encourage them. Professor Vegh is a retired emeritus professor in the technicological university. He is a man of immense energy and drive. He has put his back into organising environmental information conferences. As well as conferences, he has also been organising exhibitions, to which more and more British firms are able to go. Those are the firms producing environmental apparatus to clean up soil or water, or whatever it may be. I was told that a firm in this country called TBV (but at that time called Rendell Science), W. S. Atkins (Civil Engineers) and Biotechnica Graessa of London—all firms which make environmental apparatus—will be invited to the conference and exhibition next year that Dr. Vegh is organising in association with Dr. Singer at the Hertfordshire University. That is where they can show their wares and win orders. It will encourage some competition in the technology of environmental affairs.
As I said, I have no doubt, as I step down from this Committee, that the new chairman will have great opportunities. She has all our good wishes. I support the Motion of the noble Lord, Lord Lewis.
5.55 p.m.
Baroness Rawlings: My Lords, I speak in this debate with certain reservations, not having sat on the committee that produced this excellent report. I commend the committee for choosing today to debate this very important subject. It is the week of the third European Environmental Conference, which is taking place in Sofia. Ministers and activists from 49 countries are attending. One of their tasks is to consider how to pay for the expensive clean-up of the environment of central and eastern Europe.
On Monday, the European Union offered 60 million dollars for investment in environmental projects. The Swiss agreed to write off some of Bulgaria's debt if money was spent on the environment. I should like to concentrate on Bulgaria, even though the report covers a much larger area. I do so not because of the conference taking place there and not because Bulgaria's situation may be more serious than that in any of the other new democracies of Europe. I do so because I wrote the report for the European Parliament on the Europe Agreement with Bulgaria. I was also vice-president on the Bulgarian delegation and took a great interest in the country.
Bulgaria is one of the most beautiful and unspoiled countries in Europe. It still has a predominantly rural economy. It has great tourism potential with its Black Sea resorts, the Rodopi mountains, many forests, its mass of wildlife and its famous wine and attar roses. But it has an economy which for many years has had to rely mainly on shoddy Soviet factories for its development. That has had shattering effects. Factories not only marred and scarred the picturesque countryside; they also seriously polluted many of the rural areas, making them awful places in which to live.
On a recent visit, I heard a story from an inhabitant of one of the villages. She had done her washing and hung up a pair of lady's tights on the line to dry. Some of your Lordships' may not appreciate those daily needs. Only a few hours later to her horror she discovered that
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those tights had totally disintegrated. They had been destroyed by the pollution. That is just one of many stories.
Bulgaria is a country which has suffered under 400 years of Turkish domination and spent years under a Soviet regime that terrorised the people and drove them into poverty. Since the Berlin wall came down, those people look towards the West for their future.
The PHARE programme has played an important role during that transition period. It is still vitally important, as is our Overseas Development Administration and the British Council. Perhaps I may put in a small plea to the Minister: these budgets should not be cut.
There is also support from the G7, the EIB, the EBRD, the IMF and the know-how fund. But think of the enormous amount of money that West Germany paid into East Germany to improve its environment. I am afraid that all that support is but a drop in the ocean when we talk about eastern and central Europe and especially Bulgaria.
One of the long-standing worries—this is my main point—is the safety of the nuclear plant at Kozlodui on the Danube River. The PHARE programme has provided about 60 million ecus to improve it. The Bulgarian Government have committed themselves to closing down the first reactor of the nuclear power plant in three years' time. However, Russian and Bulgarian experts believe that currently the first reactor is safe enough and can function. Consequently, a week ago the Bulgarian Government decided to put the reactor on stream. Two weeks ago the G7 had asked Bulgaria not to put the reactor into operation because Western experts believed that additional expertise on the reactor's safety was needed. The European Parliament has voted a Motion insisting on the closure of the reactor. Neighbouring countries such as Greece and Romania have also insisted on the closure of the reactor.
The main objection of the Bulgarian Government against the closure is that it provides something like 10 per cent. of the electricity produced in Bulgaria and the closure of the reactor would cause shortages of power supplies during the winter, and the winters are very cold. The critical point is whether the European Union, through the EBRD, can fulfill its promises to compensate Bulgaria for the closure of the reactor, not only for the duration of the additional expertise required by the western experts—six to nine months—but also in case the latter concludes that the reactor has to be closed down definitely. We are all aware of the potential disaster should there be an accident. I wonder whether the Welsh farmers have yet recovered from the Chernobyl effects. I would be most interested to hear from my noble friend Lord Kimball as to whether they have recovered.
Bulgaria has suffered badly through the war in the former Yugoslavia by the blocking of major routes to western Europe. Environmental problems do transcend national barriers. Finally, I would support the noble Lord, Lord Lewis of Newnham, when he says that these new democracies need aid, especially for the environment. However, we must not forget that trade is vitally important for their future development. I support the Motion.
6.1 p.m.
Lord Mackie of Benshie: My Lords, I was in Bucharest at the IPU conference along with the noble Baroness, Lady Hilton, who is to speak after me. Every day we went up to the venue, which was a monstrous marble creation which the monstrous Ceausescu spent so much money on, and we looked down the great avenue which he had created and which may be a monument to him. There was only one day on which I could actually see the end of the avenue, and then it was hazy. However, I should think that that was one of the lesser trouble spots.
Like everyone else, I would like to praise the report and the chairman. It must have been a terrible job to pursue, with the bureaucracy of Brussels and of the Six, and it was a great achievement eventually to track down the fact that in the environmental sector of PHARE there were four jobs, three of them manned by people who were not very enthusiastic about their work, as I understand it, and the other job was not manned at all. I should think that the work done must be of great value to the Minister in trying to improve the administration. There is no question but that PHARE is of great importance overall but particularly in its work for the regeneration of industry. Of course it ties in all the time with the environment. The noble Baroness, Lady Rawlings, has already mentioned that the output from this doubtful reactor is highly important. Poland got 80 per cent. from brown coal or lignite, which gives off enormous fumes.
The report was meticulous in laying out that all these aspects go together and will be successful only so far as the local people understand what is needed and as far as the economy's needs are taken into account for the well-being of the people. It was interesting to learn about the staffing of the department and the fact that the commission was actually frightened to start the work properly because of the propaganda of various Eurosceptics and everything else. I hope that this aspect will give fuel to those who want to see good people doing good jobs in the Commission in connection with this very important work.
The section on grants rather than loans is obviously very important. It is difficult for people to have loans at a very high interest rate. It is also important to show people where they can get good loans at lower interest rates. In short, this is an extremely practical report and one of the more valuable of the many reports which have been produced by the committees of your Lordships' House.
I now move on to my favourite subject, which is of course the countryside and rural development. Here the environment, as was said during the last debate, is extremely important, and of course the environment includes people. The economies of the countries I have been to have been largely dependent, at least at the moment, on a large number of people being settled in agriculture on the land in small units, many of them not really economic. However, socially they give the stability which these countries badly need at a time of change.
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This is a part of the environment which needs to be handled with great care because it involves, as has been said already, communist thinking. All of us who have had experience of it will know what can happen. I was in Albania at one point and there we were told to drink only bottled water. I went to the lady in the hotel who dispensed the bottled water and asked for two bottles of water. She said, "Finish". I asked, "Can't you get more?", and she repeated, "Finish", and turned away. She was simply indicating that there was no point in questioning any edicts: if a thing was finished it was finished.
That of course is entirely the opposite to the sort of thing that many of our people are showing to industry in general on many other aspects. For example, a couple of young friends of mine have set up a farming company in Poland. They could not get fertiliser and the machinery was not there to produce the fertiliser at the right time. So they hired a lorry, drove 200 miles to Germany and bought the fertiliser, to the amazement of their neighbours who would never have thought of such a thing. It is that sort of thinking which has to permeate the whole of the economy and the thinking about the environment.
We in the Council of Europe on the Agriculture and Rural Development Committee are looking at a rural charter for the development of rural areas. When I say "development" I mean of course sustainable development—call it what you will—in the rural areas. As we all know, they suffer from too many people wanting to live in them, thus putting up the price of houses, and too many people are not able to find a job and go into the towns. There are also the masses of tourists who come in, destroying, for example, the heights of Lochnagar. There is a whole environmental area in the countryside that needs planning, direction and a great deal of thought. I hope that the glorious areas of the Carpathians—for example, in Romania—will not be destroyed by a badly designed free enterprise tourist system which has involved no planning whatsoever. There is no question about the enormous harm done by the central planning of the communists. That has already been spoken about. We have now to see that free enterprise does not destroy many of the beautiful places on the Continent which are so necessary.
I have said enough. This is a very good report and we have a very good Minister who is to reply to the debate. I trust and hope that we shall hear of the advances that she is going to make.
6.7 p.m.
Baroness Hilton of Eggardon: My Lords, as previous speakers have said, this was a particularly fascinating study and it provided an opportunity to gain some understanding of the problems of eastern Europe as well as of the administrative strengths and weaknesses of the European Commission. I am personally indebted to our chairman the noble Lord, Lord Lewis, for his leadership and imagination in guiding us safely through many complex and, at first, ill-understood issues. I hope that I shall prove a worthy successor to him.

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I intend particularly to concentrate on two aspects of our study: firstly, the staffing problem of the European Commission and then because, like the noble Lord, Lord Mackie, I visited Romania again recently, the particular environmental problems of Romania as an example of those difficulties faced more generally throughout eastern Europe.
To deal first with the staffing of the European Commission, which was picked up by the noble Lord, Lord Mackie, as being one of the salient points that we wished to make in our report, the tabloid press in this country and Europhobes or Eurosceptics have spread many myths about Brussels' bloated bureaucracy, but in fact many of the difficulties of Brussels are occasioned by lack of staff rather than by excessive numbers. Matters are therefore dealt with at too low a level by junior staff with no overall or strategic view of Europe.
Delays result not from an excess of bureaucratic layers but because young and inexperienced staff are overloaded with paperwork and lack the power to delegate. The total permanent staff of the European Commission is under 18,000. That compares favourably, noble Lords may think, with the 15,000 civil staff who help to run the Metropolitan Police or the 12,000 staff in the Department of Transport, both of which organisations have much narrower ranges of responsibilities.
To our surprise, therefore, the number of staff employed in Brussels to administer the environmental section of the PHARE programme is only four. The noble Lord, Lord Mackie, said that they were unenthusiastic, but I do not think that that is true. Their problems arise from their conditions of employment. Only one of the four staff is permanent. The other three are there on temporary three-year contracts which cannot be renewed. The inevitable consequence is a regular loss of expertise and commitment as staff changes occur. These four Brussels staff have between them been responsible for the disbursement of more than 250 million ecu to the East European countries since 1990 for environmental projects and therefore have had no mean demands upon their ability as administrators. It is not surprising if sometimes there are blockages at the Brussels end.
In our report we make a number of recommendations about staffing which we believe would improve the stability and commitment of the Brussels staff. We have, indeed, been heartened by the Government's positive response to our recommendations on these points, but I should like particularly to emphasise the following recommendations about the administration of the PHARE programme. The procedures need to be more transparent and streamlined. In their response the UK Government have undertaken to get the Commission to establish a clear timetable for each step of the programming process, with responsibilities between Brussels, the European missions and the recipient governments clearly delineated. I hope that that will occur. We intend to monitor whether it does occur.
As the noble Lord, Lord Lewis, said, the PHARE staff in Brussels need to be strengthened. The United Kingdom Government have offered a detached national expert. I regret to say this but we have met one or two
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of our national experts who have not greatly impressed us. I believe that more could be done to make a posting to Brussels an important part of the career development of our civil servants in this country. At the moment it is seen as, "Time out of sight, out of mind", an interruption to the career of the brightest and best, whereas in fact it should be seen as a feather in the cap of those who wish to get to the top of our Civil Service. The best of our civil servants ought to see a posting to Brussels as being an important part of their career development and not something which will interrupt their progress up the ladder.
The second part of what I wish to say concerns our visit to Romania. Romania is a country with great environmental problems, some of which have already been described by the noble Lord, Lord, Lewis. Most of its energy is derived from worn-out coal-fired power stations which blacken the countryside around to the extent that some villages have had to be evacuated with the workers being bussed in to work in the power stations. Romania has one new nuclear power station. As the noble Lord, Lord Lewis, said, the oil industry has so saturated the ground around the refineries that people can effectively dig oil out of the ground and sell it. He did not describe the other thing which we saw very vividly—the totally inadequate sewage works for Ploiesti, a large town of some 500,000 people. The town has water for only two hours a day. That is an example of the kind of conditions under which many Romanians are living. Life expectancy in Romania has declined in the past five years and infant mortality is extremely high, to say nothing of some of the direct consequences of Ceausescu's policies, such as the number of children in orphanages who are afflicted with AIDS.
However, there were brighter aspects to Romania. Other members of the group have described the young and enthusiastic members of the NGO, whose conference was funded under the know-how fund. They spoke excellent English, they had good knowledge of the West and they understood the environmental problems of their country. But they were desperately strapped for cash. There is no basis for mass membership of NGOs in countries like Romania. People cannot afford subscriptions. People cannot afford to produce the necessary literature to inform people who might wish to be members. They cannot circulate students or universities with information about environmental problems. Although some dedicated people belong to NGOs—we were impressed by their intelligence, brightness and enthusiasm —they suffer enormous handicaps. At the other end of the scale were the traditional communist bloc bureaucrats, to whom the noble Viscount, Lord Bridgeman, referred. The worst one we met was in Romania where we were subjected to a half-hour lecture. He had to be reminded that we were entitled to ask questions at the end of it, so in no way was it a discussion.
On my return to Romania a fortnight ago to the IPU conference, to which the noble Lord, Lord Mackie, referred, I took the opportunity to try to pick up on some of the threads of the things we had seen in April. I saw the head of the European delegation there and was given a good briefing on how things were going. There was

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one disappointment. An environment Bill has been passing rather slowly through the Romanian Parliament. The Bill originally included a clause providing for an environment fund, which in all the other East European countries, particularly in Poland, has begun to provide some means for cleaning up rivers and so on. Unfortunately, the Upper House of the Romanian Parliament has dropped the clause setting up an environment fund because it could not agree whether it should be administered by the central government or by the Environment Ministry. The British Ambassador arranged for me to see the Speaker of the Upper House to discuss the matter with him. His only idea about improving the environment in Romania was to say that he would like Western funds to build more nuclear power stations so that they could get rid of the coal-fired power stations, but he was not interested in doing anything about an environment fund or anything that would help at the margins. We realise that very small things can be done with an environment fund but it is a way of attracting capital from the World Bank, the European Union and so on. It is a way of capitalising some attempts to clean up the environment. So that was very disappointing.
My only bright encounter in Romania this time was with a joint venture setting up a water purification plant which was run by a man who is actually American but operates from this country. He said that the quality of the Romanian engineers is excellent and that by employing young Romanians again he was getting good quality work from them. So perhaps there is some hope at the bottom levels of Romania, as we saw with the NGOs, rather than with the bureaucracy or what is happening in the government there.
My impression is that, unlike Poland, Hungary and the Czech Republic, which on the whole we thought showed some realism about their situations and some indication of steady progress, the Romanian Government still do not understand their own problems or what might be done to address them. Overall, as was said by earlier speakers, the PHARE programme has only contributed one-fiftieth of the amount that Western Germany has poured into East Germany. Germany is also investing heavily in the Czech Republic. But if the other East European economies are going to recover and become part of a stable Europe, and if they are to provide a wider market for our goods and deal with their environmental problems, they will need even more help not only with money but also with management expertise. They will need a model of streamlined and efficient administration that could be provided by Brussels if it were better staffed and managed.
I should like finally to emphasise the points that were made by the noble Lord, Lord Lewis. The critical issues are the staffing of the Commission, the funding of PHARE and also, as was mentioned by the noble Baroness, Lady Rawlings, the outcome of the Sofia conference, which should provide a strategy for the whole of Europe's environment and a very important framework for the future of Europe.
6.20 p.m.
Baroness Chalker of Wallasey: My Lords, perhaps I may begin my response to this short debate by thanking your Lordships and especially the noble Lord, Lord Lewis of Newnham, for an excellent report and for all the practical matters that noble Lords are stimulating, not only by their questions when taking evidence but by their questions when they were away looking at the four countries. They really have put some impetus behind what we have been trying to do as one of 15 member states contributing to the PHARE programme.
This has been an informative debate and I have listened carefully. I would love to be able to reply to your Lordships on what has been going on in Sofia over the past few days, but with the conclusion of the conference only today I am a little light on final information. I believe that it would be useful if I were to write to all those who have participated in this debate, and those who were Members of the Committee, when I have Mr. Gummer's report.
Since its creation in 1989 the PHARE programme has evolved pretty rapidly over what is a relatively short period. It has grown in coverage from two countries—Hungary and Poland which, as your Lordships have often said, are doing fairly well, and the Czech Republic which is doing extremely well—to 11 countries in total. The PHARE programme really has developed from what I would term a standing start into the largest technical assistance programme in the region. While I would be the first to agree—and did so in evidence on 5th July to your Lordships' Committee —that it has a long way to go, it is a body which is now giving a pretty material contribution. The PHARE programme has committed over £3.3 billion of funds to support the process of social and economic reform in the countries of central and eastern Europe.
I thought that one of the remarks made by my noble friend Lady Rawlings was absolutely right; namely, that some of these problems will never be solved by outside investment, but from changes within the countries themselves with the realisation that their own economies and manufacturing processes must be such that they do not contribute further to pollution and that they themselves start to clear up the pollution of the past. There is no question that members of the European Union will help and other countries too, because it is also a job for the international financial institutions. There is certainly a job for the industries of these new countries to participate in as well.
We all know that the environmental challenge is huge. Perhaps it is the most visible of the dismal legacies of the communist era. But it still is only one of the many challenges facing the central and eastern European countries. A number of your Lordships have remarked on the very out-of-date ideas of some of those whom noble Lords met in those countries. Of course, for each one of those whom we have met in those countries there are probably many thousands who cannot see why they need to change. They are not reformers and have very little conception of the sorts of reforms that younger members of their societies are demanding for the future.

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So the PHARE programme has an important role to play in helping central and eastern European countries to put in place the policies and institutions necessary for environmental improvement. They must also create the incentives for the capital investment required. The PHARE programme remit goes well beyond the environmental sector. As I mentioned, of the £3.3 billion from the PHARE programme in general, over £300 million has been committed for environmental activities. The Commission in Brussels has said that the environment will continue to be a priority sector of PHARE. So far the environment has received about 11 per cent. of the total spent. It is expected to receive between 10 per cent. and 11 per cent. of PHARE resources over the next five years.
It is quite clear from those figures and from the information that your Lordships gave, that the PHARE programme is not going to meet the environmental needs of all these countries. It can begin to help but it cannot do everything for them. Therefore, there is something more that we all have to do and that is to stimulate the interest and enthusiasm of those countries to start making changes themselves. At least we do a very thorough job by providing a major source of technical assistance and training in the transfer of know-how. We shall continue, as the European Union, to have an important role in helping to mobilise the essential investment from the international financial institutions and from the private sector. So I see PHARE as an enabler, but it must be a more effective enabler, as the noble Baroness, Lady Hilton, and others have said in this debate.
I should like to say how much the Government welcome the report from the Committee. It is a critically important subject. The Committee has done a very thorough piece of work. It has given us a balanced assessment of the environmental problems facing the countries of central and eastern Europe and the important role of the PHARE programme. I may differ a little in emphasis here and there, but the conclusions of the report overall are very much in line with government thinking. Therefore, the work we are doing through the know-how funds, which has kindly been praised by my noble friend Lord Bridgeman, the noble Lord, Lord Butterfield, and others, has also helped to stimulate the PHARE programme.
The know-how funds have always been recognised as quick to disburse and in bringing a great deal of know-how to a problem early on. In my inquiries before this debate it was interesting to be told by some of my officials that occasionally when a job needed doing people came to the know-how fund in order to get it started and then let the PHARE programme take over afterwards. The reason for that is that the know-how fund made decisions about what to do in two weeks and the PHARE programme took six months. I am very happy for the know-how funds, which are run jointly by my department, the ODA and the diplomatic wing of the Foreign Office, to be in the lead. All I wish to do is to cut down the six months which the PHARE programme takes to get its much larger projects under way.
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Perhaps I may just say one or two things about the PHARE programme itself on which your Lordships' debate has concentrated. It is right that it should provide grant-funded technical assistance. I hope that will continue to be so. It is perfectly reasonable that if a country can repay its loan without adding unreasonably to its debt burden it may also be engaged in some loan arrangements. But PHARE should be a grant programme which can focus on training and building the capacity of the local environmental institutions to draw up effective policies, workable regulatory frameworks, to help educate the public as well as the politicians and to improve the monitoring systems for that.
I noted particularly what my noble friend Lady Rawlings said about Bulgaria. It is interesting that that country particularly asked PHARE for help with the upgrading and renovating of national monitoring systems for air, water and radioactivity. About £32 million has been spent on that. What we hope that is leading to is better control of the situation for the future; but as my noble friend rightly said, there is a very long way to go.
It is interesting to see how the money has been used in different countries. The key job to be done is to encourage PHARE to make use of local experts and local capacity by giving technical assistance. They can do that, of course, by using local consultants. Local consultancy markets are developing as a result of that. I hope that that will continue. The second way in which that can be done is by giving more help with day-to-day project management. The implementation of the larger PHARE programmes in the Six has now by and large been decentralised to 130 programme management units in government ministries staffed by local civil servants. Some 75 per cent. of the contracts have been let under that new programme management unit, which is a great improvement on the earlier years of the operation of PHARE. Thirdly, recipient governments have now been given proper oversight of the programme management unit system, which is educating them in setting up their own systems for the future.
It is interesting to note that PHARE is required to let contracts of more than 50,000 ecu through competitive tendering. While I noted the remarks of the noble Lord, Lord Lewis, on that point, it is right that competitive tendering should be encouraged and indeed that those countries should be helped to understand how they can have a proper system of their own. What it has meant for the UK is some pretty good success with UK companies winning those contracts and so playing an important role in implementing the programmes. I understand that 21 per cent. of all contracts awarded to EU-based organisations have been won by British companies. That is the largest percentage obtained by any EU member state. I suspect that in the environmental field the percentage is much higher because the environmental management capacity of British companies is second to none.
We encourage the PHARE programme to co-ordinate not merely with our know-how environment funds but with other funds so that there is far better co-ordination overall with the governments of the countries concerned in developing the whole educative process.

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A number of noble Lords, referring to the programmes, asked why they are so slow, and also asked about the problems of staffing. We all know the reasons which were clearly spelled out by the noble Baroness, Lady Hilton, and with which I do not disagree. Indeed, it was in part of my evidence to the committee. I am convinced that the Commission is trying to do better with that. It is something which needs to be taken up again with the Commission and I shall do so as a result of this debate, the committee's report, and the Government's response to it.
PHARE documentation has become easier to use. There is a better understanding now among recipient governments of PHARE procedures, but we must introduce some more improvements, such as multi-annual programming, the increased decentralization —something to which I referred some moments ago when I spoke about the programme management units—the increased use of drawdown contracts and financial intermediaries for product implementation, standardised reporting requirements which will give a better flow of information and streamlining the administrative procedures.
I believe there to be a large role for EU delegations to provide better co-ordination in-country. One of the things I would like to encourage is more co-ordination between the EU delegation in-country and the national missions of the EU countries because, just as in other parts of the world, we encourage donor co-ordination meetings. That is highly necessary in this specialised field of environmental management and is a further point that I shall take up after the debate.
I hope that we shall persuade DG I in Brussels to have an internal reorganisation of PHARE which should be on a geographic rather than sectoral basis because there is no doubt that although there needs to be cross-fertilisation between the sectors if it is not on a geographic basis the work will not get done as efficiently. Finally, there need to be improved monitoring systems, and the PHARE programme must have an evaluation unit.
The PHARE staffing problems were dealt with in a number of speeches: not enough experienced staff; staff recruited on the wrong terms; too many people on non-renewable short-term contracts. That is something with which the Commission must deal. It needs to appoint more career staff or renewable fixed-term appointees into key programming positions in PHARE. We are already encouraging it to do that.
As the noble Baroness said, we are not talking about more Brussels bureaucrats. We are talking about having the right people in the right places. The PHARE headquarters' staff in total was only about 127 a year ago in relation to a programme which will amount to £720 million this year. Although day-to-day management may be handled now by the programme management units in the recipient countries, we are talking about controlling finances and ensuring that the very best value is obtained from this programme.
As the noble Baroness said, Britain has offered the use of a detached national expert. Although she hinted that she had not been terribly impressed by some
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"experts" whom she had met, the terms upon which one can attract people to do the work and the future security of working in this field make a difference. We are ready to consider assisting the PHARE programme with further British experts if so requested by the Commission. We want to improve the quality of what is being done.
The noble Lord, Lord Lewis of Newnham, the noble Baroness, Lady Gould of Potternewton, the noble Lord, Lord Butterfield, and the noble Viscount, Lord Bridgeman, all spoke about the NGOs. Your Lordships will remember that in giving evidence I made clear (paragraph 163) how important I thought the participation of the NGOs and the stimulation of the NGOs in those countries would be.
PHARE is providing support to some local environmental NGOs in the associates via its national programmes and the regional environmental centre in Budapest, but we think that PHARE must do much more in that area because the NGOs have a vital role to play in educating government, public and business about environmental issues.
If the NGOs can be stimulated to raise environmental awareness, then some of the people who were less willing to think anew in those countries will start to take up the advice of younger and more far-sighted people who want to change the atmosphere for the future. So we will urge the Commission to make much greater use of the NGOs in the PHARE programme. We have two British environmental NGOs which already have PHARE contracts. One is the Living Earth and the second is the Field Studies Council. They are both working with a Hungarian NGO, the Goncol Foundation, on a programme funded under the partnership and institution-building programme, but that is just one of the many necessary pieces of work which needs to be stimulated. There are others of which I have heard, and other NGOs wishing to take up such action, particularly in the Czech Republic and Poland.
My noble friend Lady Rawlings referred to the Kozlodui nuclear plant in Bulgaria. She said that it had now been put back into operation. The Government share all the international concern about putting Unit 1 of Kozlodui back into service before completing the tests aimed at verifying the safety status of the reactor pressure vessel. The EU has offered some joint technical assistance which has now been accepted by the Bulgarian government, and I hope that that is something my colleagues discussed in Sofia this very week.
Perhaps I may turn finally to the conference which followed the Environment for Europe (the Dobris process). The third conference has just taken place and we now know that the fourth conference will be hosted by the Danish Government in 1998. It was good that the Canadians, the Australians, the Japanese and the United States were also at the conference because the burden of improving the environment of central and eastern Europe needs to be spread beyond the European Union, otherwise the progress will be exceptionally slow.
I believe that the conference was important. Fifty-five countries were present to continue the process. Business, industry and the environment were discussed as well as the financing of environmental improvements. At long

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last, a good attempt has been made to define the long-term environmental priorities at a pan-European level, which is vitally necessary. The efforts which our Secretary of State for the Environment, Mr. John Gummer, has been making in this regard are second to none. I hope that following on from the conference we will see real, practical efforts to deliver the improvements which are so badly needed. Certainly, the ministerial declaration of the whole Dobris process and the Sofia conference recognises the polluter-pays principle. It also means that domestic financing has a decisive role to play in bringing about the environmental improvement. We will continue to commit external resources as a catalyst, but so much of the change will come from the change of will of the countries involved and which we are seeking to help.
It would be right for me to conclude by saying that there has been some real progress, however slow it may seem to us in the West. What is sometimes not realised is just how much there is to be done. The noble Lord, Lord Mackie of Benshie, described the effects of burning the brown coal and not being able to see. He was describing something which everyone in eastern Europe lives with all the time. Therefore, the task before us is enormous.
As a result of the PHARE programme we have at least changed the focus of these countries by providing advice and assistance in a way that no one has done previously. As I mentioned earlier, we are doing so through the know-how funds, which were referred to by the noble Lord, Lord Butterfield, my noble friend Lord Bridgeman and other noble Lords. However, one of the things that we must do is to motivate the governments, the universities and the embryo NGOs in those countries. If there is such a will in the country there will be demands for the kind of sensible advice that Britain can give through the know-how funds and that the European Union can give through the PHARE programme. We will then begin to see a real change.
Again, I thank the noble Lord, Lord Lewis of Newnham, and his committee for all the work that has been done. I wish the noble Baroness, Lady Hilton, well when she takes over the chairmanship of this important sub-committee. We welcome so much what has been done. We are committed to continuing the work. We will heed the advice and I am sure that I am right in saying that we shall continue to get good and sound advice from this sub-committee, which the Government much welcome.
6.43 p.m.
Lord Lewis of Newnham: My Lords, I thank all noble Lords who have taken part in the debate, which has been an extremely useful experience. I wish to underline some of the points that have been made. First, the NGO situation is most important, as was said by the Minister. However, perhaps the most important feature is the fact that the real future lies with the young. Undoubtedly, one of our biggest problems is that when we talk with many of the Ministers over there they say exactly the same things as they could have been saying
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20 years ago. We must recognise that and our hope must be to educate and to try to convince in the appropriate way.
It is also important to recognise the problem that was raised by the noble Baroness, Lady Rawlings. It is a very important section of the Community. The whole of this part of the world is the bone that has been pulled between various communities for so long. History has not been kind, and one's reflections on this part of the world is a tenderness of approach that must be delicately placed. However, I believe that one of the major factors, which is by no means unique to Bulgaria, will be the problem relating to nuclear power. The approach there has certainly left a lot to be desired. I spoke to some people in Armenia who are once again in exactly the same situation of projecting into building our nuclear reactors. That is a terrifying prospect, having a potential outcome for vast parts of our community.
I also agree with the noble Lord, Lord Mackie of Benshie. I am most sensitive to the fact that one of the features of this part of the world is that it has some magnificent countryside and beauties which we must maintain. In many ways, they are just as important as rectifying some of the pollution. In many cases, biodiversity is unique to those aspects of that part of the world.
I thank the Minister for what she said. She was most helpful. Indeed, she was more than that; she was most consoling in a number of respects. I thank her for giving us the opportunity to discover what happened in Sofia and we look forward to receiving her communication. There is little doubt in my mind about much of what the Minister said about loans and local experts. In addressing ourselves to this part of the world, one of the dangers is that we look upon it as consisting of developing countries. They are not; in certain techniques they are far in advance of ours and to call upon local help can often be of greater service than bringing in so-called western expertise to deal with the problems.
Finally, I thank all noble Lords who have taken part in this useful debate. I wish my successor, the noble Baroness, Lady Hilton, every success. I have no doubt whatever about the future.
On Question, Motion agreed to.

Tourism
6.47 p.m
The Earl of Bradford The Earl of Bradford rose to ask Her Majesty's Government what are their future plans for the funding of the promotion of tourism to Great Britain and in particular how they intend to allocate the funds between the British Tourist Authority and the statutory tourist boards for England, Scotland, Wales and Northern Ireland.
The noble Earl said: My Lords, first, I should express a close interest and involvement in tourism as a restaurateur, President of the Master Chefs of Great Britain and Chairman of Weston Park Enterprises. We recently acquired a new Minister of State at the Department of National Heritage who has much experience of budgetary restraints in her previous

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position as Secretary of State for Health. As a result of her appointment, there now seems to be a far greater understanding of the necessity to improve our efforts at tourism promotion. Shortly she will be outlining the grant for next year.
Sadly, our performance has slipped very badly in recent years, as is borne out in the figures in Her Majesty's Government's own document, Tourism: competing with the best. For instance, our share of world tourism has declined from 6 per cent. in 1987 to only 4.3 per cent. now, six years later, and we were third from the bottom in the league table of tourism growth in Europe between 1980 and 1992.
Our balance of payments performance has been even more dramatic and extremely disappointing, reversing a decent surplus of £500 million in 1985 into a massive deficit of £4.5 billion in 1994. Not only is that money helping to provide employment abroad, but just consider what financial freedom the Chancellor would have if he had that missing £5 billion each year to help solve the balance of payments problem. I anticipate that my noble friend Lord Inglewood will state that the position has improved for the current year. However, I fear that, instead of this being a change in the long-term trend, it is merely a temporary reaction to a combination of unusually fine weather and the weak pound helping to keep more Britons at home.
The fact is that spending money on tourism promotion is not like other forms of government expenditure. It is an investment that actually pays off. It puts people into work. The numbers presently employed in tourism and tourism-related industries are estimated at 1.475 million. Professor Stephen Wonhill, Professor of Tourism Studies at Cardiff University, has demonstrated that one new job is created by an increased tourism spend of just £28,500. That missing £5 billion could have created 175,000 jobs in Britain.
It generates revenue. The World Travel and Tourism Council's assessment is that the UK travel and tourism industry will contribute £26.2 billion in taxes in 1995. Most of all, it yields a direct financial return to the Exchequer. An influential study by a respected firm of international consultants has estimated that every extra pound spent on tourism promotion by the Government produces over £4 in additional tax revenue—a staggering pay-off which is quickly generated. Your Lordships will envisage the imaginary situation. If the Chancellor, in his November Budget, were to increase spending on tourism promotion to £5 billion, there would be truly amazing tax cuts which could then be afforded. Unfortunately, the consequent side-effects would he that the country's infrastructure would collapse totally under the burden of increased tourist numbers; the Tower of London would be worn away in sand; and Yorkshire Water would probably have to cease supplies completely.
However, in recent years the grant has been restrained. It is exactly the same in real terms in 1995 as it was in 1979, which disguises the situation that, as many of the BTA's costs are in foreign currencies, there has been a reduction in its actual resources created by a fall in the value of the pound.
In addition, further cost burdens have also been imposed by the Government on the tourism industry. VAT has been increased from 8 per cent. in 1979 to 17.5 per cent. now. The new airport tax has been created. That is expected to raise a massive £300 million in its first full year of operation and it has been rumoured that there may even be an increase in the next Budget. If that is to happen, why is that money not put to good use by investing it in tourism promotion instead of merely increasing our competitive disadvantage?
It has been suggested by some in Her Majesty's Government that the industry should pay for its own promotion. Of the 224,000 businesses in the tourist industry, 180,000 are owner-operated. Therefore, the cost of promotion would be funded by the largest companies alone. That would tend to drive the smaller ones out of business to the detriment of employment. The stark facts are that we should also be the only major tourist destination in the world not to fund centrally tourism promotion.
Other countries are recognising the need to invest in promotion. Australia, where incidentally the Minister for Tourism has cabinet rank, is currently spending £100 million Australian dollars on world-wide television advertising, including 30 million dollars in Asia, the fastest growing market. Our total grant to the BTA and all the statutory bodies is only £90 million this year.
Tourism will be the world's largest industry by the start of the next millennium. Let us attempt to ensure that we are not left out of the boon to our economy by penny-pinching lack of investment in international promotion—to be paid for by the Exchequer certainly but recouped quickly and many times over.
The facts are incontrovertible. I hope that we shall hear a positive response from the Minister. Finally, I congratulate the noble Lord, Lord Rathcavan, who is to make his maiden speech this evening. I congratulate him as a fellow restaurateur and also as somebody who is eminently qualified to speak on the subject of tourism and tourism promotion.
6.55 p.m.
Lord Rathcavan: My Lords, as this is the first occasion on which I have the privilege to address your Lordships, inevitably I approach the task with some trepidation. I must declare an interest. I am serving my third and final term as chairman of the Northern Ireland Tourist Board, in which capacity I have attended, by invitation, over the past seven years, board meetings of the British Tourist Authority.
With that close involvement in our tourist industry, I share many of the anxieties expressed by the noble Earl, Lord Bradford. I have watched with concern, if not dismay, the diminishing role and reduction in funding of the English Tourist Board. It is statistically overwhelming that England receives nearly 90 per cent. of all overseas visitors as the most popular region of the tourist industry. And yet some of the regions of England such as the south west, from a point of view of product development, have become the most neglected.
In some quarters of government tourism is perceived as a wealthy and successful industry which does not deserve government support. I hope that I can prove

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easily to your Lordships that the small amount of government assistance given to the tourism industry is exceptional value for money.
Much quoted as the fastest growing industry in the world, tourism has the potential to deliver many benefits to our national economy and in particular in the remoter regions like my own—Northern Ireland—where jobs are most needed. Tourism is extremely important to job creation because it offers opportunities to the semi-skilled; it picks up the unemployed at the lowest level of skills; it trains people in a job and it gives them satisfying jobs. Tourism created 70,000 jobs in the past financial year—one-third of them full time. It is estimated that tourism saved more than £200 million in social security and unemployment costs by the creation of those new jobs; and that trend will continue.
It seems therefore small change to restore, at the least, to the English Tourist Board a greater role, as it has now become little more than a transmission mechanism for funding its own regional tourist organisations in partnerships with local councils.
In my seven years with the British Tourist Authority hoard, I have observed its great professionalism in overseas markets and the value for money that it gives. It wins prizes in many markets year after year around the world as the best national tourist office in the business, not because of the strength of its spend but because of its professionalism. It needs more funding so that it can give even better value for money.
The weakest part of the BTA is the lack of co-ordinated product development and quality assurance in England. That is because the English Tourist Board has been unable to fulfill its role in that area as its funding has been reduced. Admittedly, the funding has been given over to the BTA but the English Tourist Board has suffered very badly in my opinion.
The tourism industry is wildly fragmented. It is a difficult industry to manage. It is the tourist board organisations which must give the leadership to that difficult industry and help it to work together. The English Tourist Board is just not well enough funded to give that leadership at present.
I speak with experience of my own region of Northern Ireland where our tourist board has been given the opportunity to co-ordinate development and give the industry leadership and a strategy. During the past five years or so selling Northern Ireland has not been an enviable task. But I was asked recently to talk to the Barbados Tourist Board about marketing, or so it thought, a difficult destination. That was a more pleasant aspect of the job. Nevertheless, we did double the number of holiday visitors during the past five years, and I believe that that was because of the professional support that we were able to give to our industry.
With the aid of the peace process this year tourism has fulfilled the promise in Northern Ireland with which it has been vested. Holiday visitors have increased by over 60 per cent. so far this year—an increase for which the industry was well prepared. Surveys show that visitor satisfaction has been at a high level. We have created jobs at a faster rate than manufacturing industry. We aim to more than double employment over the next four to five years and we are well on our way to that
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target. Tourism is playing a major role in the regeneration of the Northern Ireland economy. As in Great Britain, it creates jobs in those areas where they are most needed. Jobs in our case are the cement of the peace process.
Tourism has become vital to the national economy, as the noble Earl, Lord Bradford, mentioned in some detail, and, as I have mentioned, in the great contribution that it makes to reducing the costs of social security and unemployment. Tourism is the conduit to more business for those other important parts of the Department of National Heritage—for example, sports the arts and heritage itself. Therefore, I hope that the noble Lord the Minister will be able to make a forceful argument to the Treasury during this season. I hope that the debate will assist him to make the argument that tourism needs more funding, not less, especially the English Tourist Board, and that it will repay such small assistance many times over and in the very short term.
7.2 p.m.
Lord Cochrane of Cults: My Lords, it gives me very great pleasure to congratulate my noble kinsman on his excellent and well-informed maiden speech on tourism to which we have just listened. My noble kinsman comes from a family which is greatly distinguished—if not the most distinguished—in the political and public service of Northern Ireland. It gives me pleasure to recall that the grandfather of my noble kinsman was my father's best friend throughout his long life and my father's best man; and, indeed, my godfather—and a very handsome silver tankard he gave me too.
My noble kinsman has many enviable appointments, but I shall not detain the House by mentioning them. I shall just congratulate him on the breadth of experience that they must bring him and on the wisdom which he has clearly displayed on the subject of tourism. I have to admit that I envy my noble kinsman his appointment as a director of the Bushmills Distillery.
In saying that my noble kinsman's family was greatly involved in public service, it is perhaps worth recalling that his grandfather sat for an Antrim constituency from 1952 and for the next 37 years and eight months. He then became Father of the House. Upon his retirement from the House, he was succeeded by his son. In total, they acquired between the two of them a period almost equivalent to that of the present reign of 44 years. Surely no greater devotion to duty could be imagined.
I thank the noble Earl for introducing tonight's most valuable debate. I agree with everything that he said. However, I must now declare an interest. I am chairman of a small family company which operates a caravan park in Scotland. The tourist industry is a curious one. It is very large and is probably one of the largest, if not the largest, single employer in the United Kingdom. As the noble Earl said, it is fragmented; indeed, there are some very large operators and a great number of small ones. Therefore, it is not an industry which is readily represented by voluntary associations. For that reason, if for no other, we need a tourist board to give the necessary leadership and sense of direction to the industry.

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I am sorry to say that one of the greatest follies of the present Government in relation to tourism is to declare that it is a mature industry. I have no knowledge of what evidence led them to that conclusion. I can only say that I regard it as a profoundly mistaken and extremely damaging conclusion to have reached. Tourism is not a mature industry: it is evolving and growing rapidly throughout the world. Unhappily, following on from that disastrous policy decision, it is shrinking in the United Kingdom.
In Scotland, so the Scottish Tourist Board tells me, it has been shrinking for the past 10 years at a rate of about 2 per cent. a year. In discussion with the tourist board this morning—I hope that I heard right, and I fear that I may have—I was told that, had it grown at the international rate of 4 per cent., as opposed to shrinking by 2 per cent. annually for the past 10 years, tourism receipts in Scotland in 1994 would have been worth another £1 billion. One billion pounds is powerful money in anyone's language. So let us think of that situation as needing to be redressed.
In tourism in Britain we have many strengths and, as others said earlier, we also have weaknesses, some of which are more easily remedied than others. One of the great strengths that we have is that we still live in a country which is politically stable and, compared with many places, extremely law abiding—although I must say that some of us wish that it was sometimes a little more so. However, we have a number of snags, one of which is the fact that the United Kingdom is seen to be a high-cost destination. As the noble Earl said, one of the reasons for that is VAT. The trouble with VAT is that one pays 17.5 per cent. on a holiday here but if one goes on a comparable holiday in, say, France or any adjacent country (which are now not at all far away), one only pays 5 per cent., 6 per cent. or perhaps 7 per cent.
Despite what was said to me after I raised the subject on the debate on the last humble Address, the fact is that the price which is looked at by the purchaser of the holiday—usually the woman of the family—is the one set out in the catalogue. People tend to disregard whether the drink, the cigarettes or the restaurant meals, and so on, are more or less expensive. The headline or list price of catalogue holidays in this country appears large when compared to that of our neighbours. That applies to families going on holiday by land. Those who fly are even better treated.
As I understand it, if one takes a holiday by air, the component of the hotel in the receiving country will be in the order of 5 per cent., the flight will be free of VAT and there seems to be some curious arrangement with Customs and Excise that in the third component of the cost of the holiday—advertising, publicity, overheads, agency commission and so on- -only the profit element attracts the 17.5 per cent. rate. So as I mentioned in your Lordships' House almost a year ago when I was not contradicted, which means that it is just possible that I am right, the net effect on air holidays abroad of VAT is very small compared to other holidays.
However, I have to say there is a slight caveat in that respect in that the rules have recently changed slightly. If the holiday is promoted by a company which is big
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enough to own its own airline it gives even better terms than those who have to hire aircraft seats and who then pay VAT on the travel element. In short, that is encouraging people to go out of the country, and it is discouraging them from coming in. Surely that is not a policy that can sensibly be followed.
As regards the roles of the tourist boards, the important thing, as I said earlier, is that there should be leadership. A fragmented industry is difficult to lead. There are conflicting interests and there are as many opinions as there are economists advising what should be done. However, one thing that must be tackled is the setting of standards. Certainly a great deal has been done but it has resulted in a substantial degree of confusion in the public's eye because of the proliferation of schemes indicating accommodation standards. In the section of the industry in which I operate—that is—caravans, we have the British holiday parks grading scheme. That has been in existence for a long time.
I am sorry to say—I have made my views patent in the industry and to the tourist board—that the scheme as devised, although with the very best of intentions, first, is not understood by the public (and I do not think it ever will be) and, secondly, it is so constructed that under certain conditions it penalises improvements in the service which one gives to one's customers. That is an important point. I hope that that point will be taken great notice of by those who subsequently, should they choose, read what has been said in this debate tonight.
I am grateful, as I said, to the noble Earl for introducing this debate and I can imagine no more pleasurable occasion than it has given me to thank and congratulate my noble kinsman on his speech, and, curiously, I shall also listen with the greatest of intent to what two more of my noble kinsmen are to say shortly.
7.12 p.m.
The Earl of Glasgow: My Lords, following my noble kinsman I, too, would like to speak on the state of tourism in Scotland and explain why it is so important that the Government, through the Scottish Office, do more to help the Scottish tourist industry. Tourism is arguably Scotland's largest industry. It sustains 185,000 people in employment and generates about £2 billion annually. In many of the rural areas—the north and west of Scotland in particular—it is the only industry and thus essential if we do not want to see the Highlands further depopulated.
Unlike many other industries, world tourism continues to grow. As the noble Earl, Lord Bradford, has already said, the current annual rate of growth is about 4 per cent. and it is expected to become the world's largest industry by the turn of the century. Thus tourism has become a truly global marketplace, moving billions of passengers around the world and distributing billions of dollars in foreign currency. Tourism in 1994 brought £2.05 billion to the Scottish economy. That is the good news. The bad news is that for the past eight years—up until 1994 anyway—tourism in Scotland has been in decline. The number of visitors coming to Scotland has decreased when in most other European countries—for instance, Austria, France, Portugal and Ireland—visitor numbers have increased. As a matter of

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fact the number of overseas visitors to Scotland has risen by 2 per cent. over this period but the domestic market—that means principally the English, who are by far our biggest market—has fallen by 10 per cent.
Many reasons have been given for our poor performance. Scotland is perceived as being too expensive, as has already been mentioned. Compared with package holidays in Spain and Greece with guaranteed sunshine, it is more expensive. Some visitors feel the standard of service and food in some hotels are not up to those on the Continent. Some regard Scotland as too cold, dark and wet in all but the summer months. That has meant that tourism in Scotland is particularly seasonal; more so than in England. This makes it difficult for many hoteliers and operators, like myself, of visitor attractions to make a profit without keeping their summer prices high. However, against those setbacks, Scotland has so much to offer: spectacular scenery; islands and lochs; mountains to climb; real wild areas with an abundance of wildlife; the best golf courses in the world; a rich heritage, and great cities like Glasgow and Edinburgh. Noble Lords will note that I put Glasgow first.
Scotland is a comparable tourist destination to the Republic of Ireland and both try to attract the same sort of market. Both have similar climates and both rely to some extent on visitors whose ancestors emigrated from there and settled in North America or other ex-British colonies. Both countries offer wonderful, unspoilt scenery, but I always think that Scotland has the edge in that respect. Both countries are rich in history and heritage. Here again, I always think that Scotland's castles and historic houses are just that bit more impressive. Both countries have a friendly and welcoming native population; at least, they are friendly and welcoming in the west of Scotland. Yet where tourism in Scotland has declined, tourism in Ireland has grown and has now overtaken Scotland. In 1994 10.25 million trips were made to Scotland but 11.73 million trips were made to the Republic of Ireland.
In the past I would have put the blame for Scotland's decline on the ineffectiveness of the Scottish Tourist Board. It always seemed an unnecessarily bureaucratic body, with little flair or imagination, that was primarily concerned with justifying its existence when it should have been devoting its energies to selling Scotland, particularly to its biggest market, England. For 10 years, from 1985 to 1994, there was no promotional television campaign in England at all. Now, however, the Scottish Tourist Board, under its new chief executive and with its new remit, is committed to a national tourism strategy and is focusing its energies on marketing Scotland, in Britain and abroad, more aggressively. I am confident that Scottish tourism at last has the policies and leadership it so badly needed. For example, it is now working to solve the problem of "seasonality" with its "Autumn Gold" campaign. It is actively promoting activity holidays in Scotland; tourism relating to the arts and tourism relating to wildlife and the environment. It is introducing the world to the delights of Scottish cuisine. At the same time it is launching a marketing
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campaign which includes television advertising directed specifically at the English market with the slogan, "When will you come?"
That is very encouraging. However, we shall not catch up with other countries, all competing for their share of the tourist cake, unless our tourist board is adequately financed. The Republic of Ireland with a population of 3.5 million, but a government who take tourism seriously, grants its national tourist board (with some help from the EC) a marketing budget of £17 million. Scotland, with a population of 5.5 million, expects its tourist board to do the same job with a budget of only £7 million. When one considers again that tourism brings over £2 billion into the Scottish economy, £7 million seems a small advertising budget. No wonder the Irish have overtaken Scotland in their bid for English as well as overseas visitors.
Scotland has much to offer the visitor. It must have a flourishing tourist industry to create employment and to ensure its economic survival, particularly in the rural areas. It now has a vigorous and enterprising tourist hoard. All it lacks to compete on equal terms with other European countries is enough money to market itself more effectively. We cannot rely on "Rob Roy" or "Braveheart" to bring visitors to Scotland. I hope that the Minister appreciates the value and importance of tourism to Scotland, and indeed to the whole of Britain, because if more people visit England, that also means that more people will visit Scotland. I hope that the Minister will help to persuade the Government to give the Scottish tourist industry the extra financial support it so badly needs and deserves.
7.18 p.m.
Lord Mountevans: My Lords, I join my noble friend Lord Cochrane in congratulating the noble Lord, Lord Rathcavan, on his excellent maiden speech. His distinguished term of office as chairman of the Northern Ireland Tourist Board has already been commented upon, but my friends in the British Tourist Authority—I declare that interest—particularly valued his anticipation in the rather darker days of the 1980s that there would one day be a peace dividend and that it was apt for colleagues north and south of the Border to prepare for it in many ways, not least by opening a joint presence in 1989 in London's British Travel Centre. The noble Lord mentioned the tourism consequences of the peace process. That they are there for all to see is a tribute to his vision over many years.
I am also grateful to my noble friend Lord Bradford for giving us this opportunity—the second this year—to debate tourism and its importance to Great Britain Limited, its contribution to the balance of payments, its benefits to our economy and to employment creation. Tourism accounts for one-third of all service sector exports. In invisible terms it is more important than the financial services sector or, in more visible terms, our oil and petroleum exports. The industry generates spend in Britain of over £100 million per day. It employs over 1; million people and in the year to 31st March generated thousands of additional jobs, as the noble Lord, Lord Rathcavan, reminded us.

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Those figures should be seen against a wider background. Although they are impressive, they cannot hide legitimate anxieties. It seems to me that we shall all be agreed on that tonight. In a global industry which, as we have been reminded, is expected to become the world's largest some time early in the next century, Britain currently ranks fifth. Although since 1980 international tourism to Britain has grown annually by something over 5 per cent., the corresponding figure for Europe is over 7 per cent. Worldwide, annual growth was around 8 per cent., and on the Pacific Rim it was running at 15 per cent. per annum. Although we rank fifth in the world tourism league we are losing market share, as we have been reminded. That must worry us all.
Our statutory tourist boards must go all out to persuade and to sell. We are all agreed that they must be given the resources to do that job of enhancing the £100 million daily spend that I have already mentioned.
In the current financial year the English Tourist Board has grant-in-aid of £10 million, the Scottish Tourist Board almost £17 million, the Welsh Tourist Board just over £14 million, Northern Ireland receives almost £13 million and the BTA £35 million. In round terms, that amounts to £90 million, a not ungenerous figure in a time of restraint. However, if that figure is compared with the £10 million per day which British and foreign visitors spend in VAT and excise duty alone, one can calculate that the Treasury gets its £90 million back almost every nine days. That is a rate of return with which any private industry would be delighted. Put another way, the grant-in-aid is equivalent to only 2.4 per cent. of the tourism tax revenue. Looking at the BTA alone, the Treasury gets a net return within a year of £4 for every grant-in-aid pound given. In wider terms, Britain achieves a return of £23 for every such pound.
Although foreign currency fluctuations have seen the BTA's grant-in-aid eroded by some £2.3 million since late 1992, it still managed to use its central funds last year to attract over £15 million of additional funding from the tourism industry as a whole—a figure which suggests to me that the industry knows a winner when it sees one and hopes that the Government will recognise that winner too.
To ask for more grant-in-aid is one thing. To justify one's request is another. However, I feel that the figures that I and other noble Lords have cited justify that request. I have no difficulty in supporting the BTA's bid for a further £3 million next year for specific initiatives in Asia, Europe and North America. My noble friend who is to reply to our debate this evening has recently visited our North American operations, and I have no doubt that they impressed him not only with their competence but also with the need for more resources.
Aside from more resources, I see a need for greater consistency in allocation of funding. The grants given to the Scottish and Welsh Tourist Boards have each risen by over a third since 1991–92, while that given to the English Tourist Board has fallen by a larger fraction to £10 million this year, with around half of that figure flowing straight through to the English Tourist Board regions. Put another way, ETB works with a grant-in-aid of 25p. per head of population. The Scots have £4 per
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head of population, the Welsh over £6 and the Northern Irish almost £11 per capita, for reasons that we can all understand.
As we were reminded this evening, that imbalance has always been justified on the basis that the industry in England was said to be more mature. However, the tourism industry, with some 200,000 small businesses, is a fragmented one, needing central help and advice. That is one of the major roles which the statutory tourist boards must play. Among those businesses it is hard to understand that the problems in West Cornwall differ greatly from those in West Wales or that problems in Northumbria are more easily solved than those across the Border. It seems to me that the maturity argument really bit the bullet in the last Budget when my noble friend Lord Astor was able to secure an additional sum of £2 million over two years specifically for London, which is surely the most mature of all our regions.
I believe that the industry and the Government can be proud of their performance to date, the industry perhaps more so than the Government. However, we cannot afford to be complacent in the face of loss of market share. I believe that we can afford increased grant-in-aid but we cannot afford complacency. Nor can we afford inconsistency. Rather, I hope that the Government, having noted how the statutory boards are making substantial progress towards greater co-operation in terms of promotion, standards and training, will also seek to adopt a more Britain-wide stance. That would surely be preferable to sheltering behind the old arguments about departmental structure and departmental responsibility. In tourism we have an opportunity waiting to be seized. The industry and the country are waiting to benefit, but most of all they are waiting for the Government.
7.26 p.m.
The Earl of Mar and Kellie: My Lords, I join in congratulating the noble Lord, Lord Rathcavan, on his excellent maiden speech. I hope that we shall hear him often in the future. I also congratulate the noble Earl, Lord Bradford, on raising this Question about the future of the British Isles tourist industry.
I must declare two interests. First, I am the hereditary Keeper of Stirling Castle, a Historic Scotland visitor attraction enjoying a 30 per cent. increase in visitor numbers this year. Secondly, I am a trustee of Alloa Tower, a new visitor attraction opening in the summer of 1996.
Tourism is an important part of the Scottish economy. The 800 visitor attractions are set in the finest possible natural resource, the Scottish landscape, with its history and its culture. Welcoming visitors generates many jobs, some full-time but a depressing number seasonal or part-time. As my noble friend Lord Glasgow said, tourism contributes £2 billion to the Scottish economy.
The Scottish tourist product is good and unique. I hope that its image will be developed. At present it can, on occasion, be caricatured as a haggis wearing the kilt and playing the bagpipes. That somewhat tacky image must recede and a more characteristic image evolve—the image of a people striving to find their place in the world, set in a rugged environment of mountains, islands

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and broad straths. Even in the wee county, Clackmannanshire, we have a mountain range, a canoeing and fishing river, a country park, a mill trail, an equestrian centre, several historic buildings and 55 miles of lowland footpaths—all set in only 60,000 acres. At the same time, the countryside is not a theme park but the workshop of the busy rural economy.
The noble Earl's Question asks about the Government's plans for the promotion of tourism in Great Britain and the role of the BTA. I do not believe that that is the correct approach for tourism in the British Isles. First, I see some confusion in the marketing of tourism in Scotland, England, Wales and Northern Ireland. Each country's tourism product is unique. Trying to market the whole as Great Britain through the BTA seems to provoke confusion and a possible lack of focus.
Secondly, I believe that each country should be in charge of its own tourism promotion, not just because of the unique products but also in response to the changing constitutional situation in the UK. As the ties within the UK begin to slacken by popular demand, and as Scotland seeks a velvet separation, rather than divorce, it is sensible to meet that challenge positively and to make tourism one of the industries in the forefront of the new constitutional arrangements. Our future lies in co-operation wherever possible.
That brings me to my third point. Now that the Republic of Ireland is being rehabilitated in the eyes of the Westminster Parliament and Government and the bitterness of bungled devolution in Ireland recedes, the time has come to move ahead in tourism promotion. Within the context of travel and access only, the British Isles should be marketed as a whole. The network of cross border road, rail and air services and of sailings to the islands and between Ireland, Wales and Scotland, and, of course, the rest of the world, need to be promoted as a whole.
For example, the new ferry service to be introduced in 1997 between Campbeltown and Ballycastle illustrates the potential. It will enable the visitor, typically from North America, to land at Shannon Airport, to visit the west and north of Ireland and then cross over to Kintyre and gain access to the Highlands and Islands without touching the industrial areas of the Lagan Valley and the Central Lowlands. Already tourism in Ireland is seen as ripe for cross-border co-operation. That model should be extended to the whole of the British Isles.
To conclude, I hope that the Minister will see the merit of minimising the role of the BTA to that of a travel co-ordinator and promoter after its conversion to the British Isles Tourist Authority in co-operation with Ireland; and I hope that he will see the merit of placing full responsibility for tourism promotion with the four national tourist boards.
7.32 p.m.
Lord Graham of Edmonton: My Lords, perhaps I may begin, as others have done, by thanking most sincerely the noble Earl, Lord Bradford, not only for having initiated the debate but—as one finds on research—for his avid questions to the Government, and
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requests for information on policy and other initiatives of the Government. Not only does he serve this House well by giving us the opportunity for this debate but he also serves industry well by being persistent.
The Minister should understand that the mood tonight is more benign than malignant. We are not shouting; we are not screaming. We ask him to take seriously the points made and to return to his colleagues with a better understanding of the injustice which has been done to the tourist board and to the tourist industry generally as a result of policies pursued by the Government.
I wish also to say what a joy and pleasure it was to hear the noble Lord, Lord Rathcavan. He brought to the House what we always appreciate—authority, experience and commitment. I am absolutely certain that the House will benefit from his presence today and many times in the future.
I do not ask the Government for details. I have listened with interest to many who are employed in, and whose livelihood depends upon, the tourist industry and who therefore know what they are talking about, as I hope that I do too. However, those people have experience at the sharp end of the industry. The Minister's job involves administration and policy; my job involves advocacy from this Bench. But I always appreciate that the practitioners know far more about a subject than the politicians.
Regarding the size of the tourist industry, different statistics have been given. I was interested to read a Question asked by the noble Earl, Lord Bradford. In the Official Report of 16th May, at column WA 27, he asked Her Majesty's Government:
"Pursuant to their Written Answer of 3rd April … whether they agree with the World Travel and Tourism Council's estimates that the UK travel and tourism industry contributed £22.5 billion in taxes in 1992 and is expected to contribute £26.2 billion in 1995, compared with Government funding of tourism of £89.8 million; and, if not, whether they will give their own estimate of revenues".
The reply from the Minister underlines what the debate is about. The Parliamentary Under-Secretary of State, Department of National Heritage, stated:
"Tourism will have an impact on the tax revenues raised from a wide range of different industries. No precise estimates are available".—[Official Report, 16/5/95; col. WA 27.]
Other people produce precise estimates. They may be challenged, but those people are able to say, "Here is an industry that earns billions of pounds for the country; and here is a situation where, by grant-in-aid, the industry receives peanuts". The Minister must say why the Government or Treasury have a vendetta against the tourism industry. The small amounts doled out are ludicrous when one considers the size of the Treasury cake. The Minister should tell us a little more about a philosophy which is successful from the Treasury's point of view.
The song says, "I will survive". The industry will survive. Some people may go out of business but, in general, the industry will survive. But why do not the Government nurture and cherish the industry and give it a little more of the money that it deserves? In his brief the Minister will speak copiously about the Touche Ross report of 1993. The Government should seriously consider the report's recommendation and elevate the status of the portfolio; with a Ministry of Tourism and

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its own Minister. I was interested to hear from the noble Earl, Lord Bradford, of the situation in Australia. I was not aware of it. The Minister responsible for tourism in Australia is a member of the Cabinet. A Member of the Cabinet in this country has within his department Ministers whose job, among a dozen others, is to look after tourism. For many years this country has lacked the sharp focus required.
What did the Touche Ross report recommend? First, it pointed out that Ireland, Portugal and France—they have excellent structures with excellent government backing—are able to produce many of the factors that we wish to see in this country. Those successful countries have a clear, coherent central government strategy for developing tourism. We do not. They have a coherent central co-ordination of all policies affecting tourism, such as transport, cultural developments and regional policy. In all three countries, the Government led private sector activity, and acted as a catalyst for it, rather than seeking merely to co-ordinate private sector initiatives. We do not do that in this country. All three governments offered fiscal incentives to private sector in the form of reduced VAT rates for small hotels and accelerated capital allowances. The revival of Ireland's tourism—overseas visitor expenditure grew at 10.8 per cent. per annum between 1980 and 1992 compared with UK growth of 5.9 per cent.—coincided with the Irish Government's decision to cut VAT on hotels from 20 per cent. to 10 per cent. in 1983–84. Any number of times I have heard hoteliers and the industry in general wonder why the Government believe that they are helping tourism by adding burdens to it. The Deputy Prime Minister makes a fetish of the way that this Government want to encourage small businesses by lifting burdens from their backs. The Government are proud of the number of small businesses that they have created. I have news for the Minister. A few years ago those small businesses were big businesses. They have been reduced to being small businesses as a result of this kind of government activity.
The Government's task tonight is to help the House understand why the UK has enjoyed none of the success factors that have characterised our competitors. UK tourism policy has been dominated by short-term rather than strategic considerations. With the sudden reversal of policy, grant-in-aid cuts to the English Tourist Board and such severe restraints on local authority spending, tourism services and investments in, for example, seaside resorts have suffered.
I was glad that the noble Lord, Lord Mountevans, gently introduced the ludicrous disparity between the per capita support for the English Tourist Board in comparison to the others. It was not just a question of doubling or trebling. In some instances they received 10 times as much. The Minister will tell us again that there were special grounds in relation to Scotland. My difficulty is that I do not want to plead the case for reducing the amounts received by others. There is a clear case to be made as to why the English Tourist Board ought to be better treated than it is.
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A Labour Government produced the definitive Act, in 1969. It has been improved upon and reworked. I do not deny that the present Minister, and others, genuinely want to see an expansion of tourism in this country. He is going about it in a queer way if he wants support from those who are involved. His colleagues in another place, and the Treasury, may very well enjoy the fact that expenditure has been contained, but it is a sad and strange situation.
For instance, one debate in which the noble Lord, Lord Mountevans, and I engaged was on the incomprehensible decision of the London Tourist Board, driven by a cut in its grant, to abolish the London Convention Bureau. The bureau had within it a special unit whose job was to stimulate interest worldwide regarding conventions in Britain. The amount of money it received was cut, and as a result the convention was cut. Figures that I have show that the cuts made a few years ago include 42 staff from the English Tourist Board and 28 from the British Tourist Authority. Posts in London were lost, and a major revision of activities concentrated on assisting the industry to make its full contribution to the economy but with less money and fewer people. Amazingly, it works and continues to survive and expand.
The Minister might say, "What is Lord Graham complaining about?". I am saying that there needs to be a little equity, fairness, and understanding. I believe the noble Earl, Lord Bradford, mentioned the figure of one-and-a-half million people with personal capital wrapped up in 200,000 businesses, most of them small. Those people fondly believe that the Government have their interests at heart. That is true—but only after the Treasury has been satisfied. That is the wrong way to go about it.
I confidently believe that the Government should revise, for instance, some of the ludicrous policies that are mentioned in the annual report of the BTA. The report mentions the example of London buses being kept red. How could it be credited that part of the Government's policy in deregulating transport was to give rise to the fear and the real danger that London buses, coloured red, would no longer be capable of being seen as a national symbol? The Government stood by and almost allowed that to happen.
There was an allusion to the threatened new duty that is to be imposed and increased. I believe that the possibility is well founded. We shall know the answer in four weeks' time when the Budget is announced. This is a case, if not of killing, then of damaging the goose that lays the golden eggs. The industry has produced billions of pounds which we all enjoy as a subvention to the general taxation system. The Minister clearly has a good opportunity tonight, not to give definitive answers that will be taken away and accepted, but to show tolerance and understanding.
In Sun City in South Africa some three weeks ago the annual conference of ABTA took place. I hope that everyone in the tourism industry respects, as I do, ABTA's worth as a trade association, helping as it does to project and articulate ideas on behalf of a very disparate industry, one that involves hoteliers, bankers, credit merchants, taxis, hotels and restaurants. It is

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comprised of a whole range of people. ABTA is interested in incomers, but also in people travelling abroad. It is very worried about the impact of the competition that is faced from our main competitors.
Mr. Colin Trigger, the president of ABTA, laid it on the line when he talked in terms of the craziness of the industry living like Alice in Wonderland. I quote:
"What really concerns me is what I will call the conditioning of the consumer…Whether for market share, or just blind marketing, or for reasons best described as charitable, we are not only confusing the consumer we are spoiling him for years to come".
There is a great job to be done by this Government—for as long as they have the remit. They can act as the driving force in combining the best interests of those involved in the industry. I believe that they yearn for leadership. But they do not get it from this Government.
I hope that at the end of our debate the Minister will have some kind remarks to make to the noble Earl, Lord Bradford. Equity, fair play, common sense and nous are what I believe we ought to see from this Government. The industry is troubled. It has difficulty in understanding the strategy that the Government are attempting to put forward. Tonight the Minister can reverse the experience of this House in listening to his predecessors in comparable debates. He can send us away happy with his reply.
7.48 p.m.
Lord Inglewood: My Lords, I am very grateful to my noble friend Lord Bradford for enabling me to speak about the Government's commitment to supporting the tourist industry.
It is a characteristic of the British parliamentary approach that the parties stand opposite each other and there is a kind of dialectic to the way the debate goes. This is a noteworthy debate. It is probably divided between those who are the kinsmen of my noble friend Lord Cochrane of Cults and those who are not. Among those kinsmen is the noble Lord, Lord Rathcavan, whose heartfelt maiden speech we heard with great interest and with great expectation of more to come. Like his predecessors, the noble Lord has played a significant role in Northern Ireland. I am sure that I speak for everybody in this House in wishing him well in his endeavours for that country. I am most grateful to him for drawing my attention to the fact that the Irish Tourist Board is appearing on the same stand as the British Travel Authority at the ASTA world congress next week in Philadelphia, effectively promoting the British Isles for the first time.
I listened with considerable interest to the views expressed and not least to the suggestion that the Minister for tourism should have a seat in the Cabinet. It is a suggestion with which I unequivocally concur. I shall endeavour to answer the points raised by noble Lords but I am sure that your Lordships will appreciate that I cannot say anything at this stage about forthcoming announcements on public expenditure. As a result, I must duck some of the points to which I am sure some of your Lordships would like me to reply. However, I can assure the House that when the Department of National Heritage argues within
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government, it argues most vigorously. I hope, however, that I can reassure your Lordships of the Government's determination to continue to support this vital industry.
The tourism industry in this country is a very successful and important one. We must not forget that it has the capacity to finance a considerable amount of its own future. It is an industry which will play a vital role in the future growth of our economy in general as well as specifically in the regeneration of poorer areas. It brings enormous amounts of custom and income to the arts and heritage in this country. We must never forget that support for tourism comes from sources such as the single regeneration budget, the European Regional Development Fund and arts and heritage funding. However, good as its performance may be, the industry, we believe, could do even better. It operates in a rapidly growing world market. World spending on international travel will grow by over 4 per cent. per year over the next decade. Tourism will be easily the world's largest industry by the year 2000.
As has been said, our share of that growing market has been falling. We had 6·1 per cent. of international tourism earnings in 1985. That had fallen to around 4.3 per cent. in 1993. We have had a couple of good years since then. But so has everyone else. We must recapture our share of the market. I believe that the figures for 1994 and the first half of this year show an encouraging change. I do not believe that it can simply be a matter of sunshine and exchange rates.
The growth of the world tourism market is welcome but it is also a challenge. As it grows, that market place becomes very much more competitive. New destinations come on stream almost daily. At the same time, people going to more conventional destinations want more for their money. Their expectations of quality are rising all the time. That is true of our domestic tourists as well as our overseas visitors.
If we are to compete at home and abroad, we must not only—as has been suggested—ensure that tourism to Britain is promoted effectively. We must also ensure that visitors are not disappointed. The quality must be right.
Government support for the tourism industry is primarily channelled through the statutory tourist boards, to which I shall turn in a moment. But effective government support for the industry is not simply a matter of funding. Our support for tourism includes a substantial investment of public money, but it goes well beyond that.
The Department of National Heritage is strengthening its sponsorship of the industry. Our broader policies which benefit small businesses are always good for tourism. For example, the opt-out from the social chapter means that small firms in tourism and other sectors do not have to bear unwarranted and damaging costs and obligations.
Earlier this year, we published our document Tourism—Competing with the Best. That set out a work programme for the current year which has been widely welcomed and on which good progress is being made. The programme has never claimed to be comprehensive but it does identify some important issues upon which immediate action is necessary. On the supply side, those

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concentrate on the quality and value for money provided by hotels and guest houses. Accommodation represents 30 per cent. of the spending of overseas visitors. Despite the fact that many of our guest houses and hotels are very good indeed, too many visitors go away from Britain disappointed with their accommodation. For example, a survey by the London Tourist Board found that about one in four overseas visitors staying in tourist accommodation was dissatisfied.
The five areas for action set out by Competing with the Best include a benchmarking initiative. Seventy small hotels across the country have been studied to identify the features which make for a successful business. The results are now being evaluated and we hope to publish them soon. The report will help small hotels everywhere in Britain to measure their performance against the best and identify areas where they can improve.
Competing with the Best indicated that it is difficult for consumers to know in advance the quality of accommodation that they are buying when they book a hotel room. As a result, many excellent hotels in this country do not reap the full reward of their excellence. Those which are substandard disappoint customers and damage the whole industry. It is therefore essential to have a comprehensive classification and grading scheme for the accommodation sector. A widely recognised, easily understood and used rating system makes it easier for customers to choose what they want and to distinguish the good from the bad. It will encourage operators to improve, enabling them to reap the rewards of providing a quality product.
The ETB is currently reviewing its accommodation classification and grading scheme. It will make proposals by the end of the year for changes to ensure that the scheme focuses clearly on consumer priorities and is user friendly.
Competing with the Best also notes that it is often more difficult to book a holiday in the United Kingdom than it is to book an overseas trip. The English Tourist Board is examining ways of making it easier to arrange domestic holidays. In addition, I am now in the process of convening a group of experts from the industry to suggest what might be done to broaden the scope of booking schemes and marketing consortia to make holidays in this country more accessible to the domestic consumer.
The Government continue to support the British Tourist Authority as the leader of our overseas marketing effort. I do not suppose that your Lordships will be surprised to hear that I cannot agree with the thrust of the argument advanced by the noble Earl, Lord Mar and Kellie. It is clear that the small businesses that predominate in the tourist industry would find it extremely difficult and perhaps impossible to gain access to overseas markets were it not for the services offered by the BTA.
I believe that the funds that the Government invest in the BTA are very well spent, often matching commercial funds, which all add significantly to the country's earnings from overseas visitors. We have asked the authority to improve value for money even
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further, first by devoting more effort to assessing the opportunities in different overseas markets and, secondly, by enhancing its research to improve our understanding of what customers look for. That will ensure that promotion is targeted on those markets with the greatest return.
Let me turn briefly to the promotion of London, which was a point referred to by my noble friend Lord Mountevans. All the evidence suggests that London is Britain's greatest asset in attracting overseas tourists. For many visitors London is the gateway to Britain. Overseas visitors, brought here by the attractions that our capital offers, when they have once arrived, may well travel on elsewhere in the country or perhaps, which is at least as important, come back on another occasion for more. Hence, securing London's place at the centre of tourism will bring enormous benefits not only to London itself but to the whole of the tourist industry across our country.
Lord Graham of Edmonton: My Lords, perhaps the noble Lord will allow me to intervene. I wonder whether it is recognised that, although the attractions of London are very real and patent, there are apparently limits to the ability of London to accommodate the number of people who are attracted to it. Would the Minister care to comment on an initiative called the Northern Gateway whereby, instead of people automatically coming into Britain through London, they are encouraged to come in, for instance, through Manchester? Visitors will always come to London to see the sights but if the strategy was for them to come through the Northern Gateway at Manchester that would provide an incentive for them to go more easily to Scotland, Yorkshire and other parts of the country.
Lord Inglewood: My Lords, I am most grateful to the noble Lord for referring to the Northern Gateway. It is important to be clear that we are talking about two complementary matters. As I said, there is an enormous amount of evidence to suggest that London is the greatest attraction that our country has to offer. That has been empirically established. Once the visitors are here, we hope we can encourage them to travel further.
The Northern Gateway initiative is very valuable because it encourages people to travel direct to other parts of the country. But the reality of the market place is that those are not alternatives. London is an enormous attraction. The Northern Gateway initiative will enable those who know London well to bypass London when they come to this country, thereby relieving to some extent the congestion to which the noble Lord refers. The London Tourist Board and the Department of National Heritage are concerned about that. They are endeavouring to take steps to ease the problem so that it will not get in the way of an effective and successful tourist industry.
As I was saying, we must make more of this tremendous asset that we have. For that reason the Government have provided £2 million of new money over two years to the British Tourist Authority to improve the promotion of London in overseas markets. The British Tourist Authority will match this from its

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own resources, and it is using funds in conjunction with the London Tourist Board, which is raising matching private sector contributions.
The debate then turned to the other parts of our country and it was asked how funds were allocated between the statutory tourist boards within the United Kingdom. So far as the countries of the United Kingdom are concerned, it is clear that the tourism industry differs considerably from one to another. For that reason it is important that support for tourism in each of the countries of the United Kingdom is determined accordingly. So the Secretaries of State for Scotland, Wales and Northern Ireland determine allocations from their national budgets to support tourism in their own countries, while it is the Secretary of State for National Heritage who determines the grant to the English Tourist Board and the British Tourist Authority.
Going back to certain remarks made by the noble Earl, Lord Glasgow, I myself, as an Englishman coming from just south of the Border and having no specific governmental responsibility in this regard, would say that I very much do not wish to get involved in the problems of the other home countries in this manner. However, I can assure your Lordships that all your points will be noted by those who have responsibilities in these affairs.
It is, I know, tempting to make simple comparisons between the amounts of grant given in each part of the United Kingdom or a grant per head of the population hut, as I am sure we already know, it is not quite as simple as that. Public money must be allocated on the basis of an assessment of the need for and the return to public investment in tourism in each of the countries. It therefore follows that the amount of funding and the policies for distributing it will differ accordingly. It is
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worth pausing for just a moment to reflect that many industries which receive no grant at all contribute substantial tax revenue to the Exchequer.
As I mentioned earlier, my noble friend Lord Mountevans referred to the English Tourist Board. Of course it is true that the grant-in-aid to the ETB has been reduced; but this is a result of hard spending decisions and the need to preserve the BTA's capacity to promote overseas. It also reflects our view that the ETB should operate as a strategic organisation, offering leadership and advice, and should reduce its emphasis on running programmes and particular marketing campaigns.
Government support for the tourism industry has never been stronger. Direct financial support for the tourist boards for the United Kingdom in the current year totals almost £90 million, as has been mentioned earlier in the debate. In addition, substantial amounts of money from regeneration programmes such as the European Regional Development Fund are going to tourism projects. Furthermore, much of the £1 billion or so that is spent by the Department of National Heritage this year funds the arts, culture and heritage, which are among our most significant tourist attractions and which can in addition benefit from the huge success of the National Lottery. Equally important is the support from the Government and the statutory tourist boards underpinning the industry's efforts through the quality and promotion of its own products. Never has this support been more carefully considered or so wholeheartedly given.
The Government recognise the tourism industry as a vital component of the future success of the United Kingdom economy in creating wealth and securing jobs. In partnership with the industry we will continue to play our part fully in strengthening its performance and in ensuring that Britain remains one of the world's premier tourist destinations, underpinning one of the world's foremost tourist industries.
House adjourned at four minutes past eight o'clock.