Lords Sitting of 22 April 1996

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

Law of Murder Review
Lord Ackner Lord Ackner asked Her Majesty's Government:
What are the reasons for the Home Secretary's continuing delay in publishing the report of the review of the law of murder, announced on 24th January 1995, and his conclusions thereon.
The Minister of State, Home Office (Baroness Blatch): My Lords, this was always a sensitive and complex issue. However, my right honourable friend the Home Secretary announced the Government's conclusions on the review of the law of murder on 19th April when a copy of the report was placed in the Library. The Government are not persuaded that an adequate case has been made to change the law.
Lord Ackner: My Lords, I am grateful to the Minister for her Answer and also for her courtesy in sending me a copy of the report last Friday. It was the third time of asking and it demonstrated the validity of the proposition that perseverance doth keep honour bright.
I have two questions of the Minister, the first of which she will probably agree with but the second probably not. The first question is: does she agree that the essential question for the interdepartmental steering group was a short one; namely, where the accused overreacted and used excessive force to defend himself or prevent crime, but believed that such force was necessary and reasonable, he should be guilty of manslaughter and not murder, as recommended by the Criminal Law Revision Committee, the Law Commission and your Lordships' Select Committee and as supported by the Court of Appeal of Northern Ireland and your Lordships' Appellate Committee in the Clegg case?
The second question is: does the Minister agree that the Home Secretary rejected those recommendations for a wholly fallacious reason; namely, and I quote from the report,
"because the defendant could only",
and I emphasise the word "only",
"be convicted of manslaughter",
thereby missing the entire point that in manslaughter the judge has the fullest discretion to sentence from life imprisonment down to conditional discharge?
Baroness Blatch: My Lords, as regards the second question, I certainly do not agree that my right honourable friend has been fallacious at all. As regards the first question, there were four specific questions before the review. The first was whether a person who
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used excessive force resulting in death in self-defence or the maintenance of law and order should be liable to a charge of murder, manslaughter or some other charge. All previous reports were taken into account in coming to a view about that. The second was whether any specific, complete or partial defences should be provided. The third was whether a new defence or offence should apply only to soldiers and police officers or more generally. The fourth was whether official guidance to soldiers and police officers on the use of firearms should have any status in law. My right honourable friend commissioned that review. The review body has reported and its considerations are before your Lordships.
Lord Campbell of Alloway: My Lords, may I ask a short and simple question? As this is a matter of considerable urgency and great importance, when may we expect a Bill?
Baroness Blatch: My Lords, it is a matter of some importance but not of great urgency because the recommendation is that there should be no change.
Lord McIntosh of Haringey: My Lords, the Minister will accept that this is not and should not be a party political issue. Perhaps I may concentrate on one of the issues with which the review was concerned, which is the question of whether there should be a separate law for the Armed Forces and the police? Will the Minister take it that we on these Benches strongly support the view that terrorism should be countered within the existing criminal law and that it would be wrong to have a separate law for the Armed Services and the police? Will she confirm that the Armed Forces and the police representatives would oppose such a change, as stated in the review?
Baroness Blatch: My Lords, I am happy to put on record that the noble Lord has been entirely consistent over this matter. There has been a considerable body of evidence to support the conclusion that there should be no distinction between uniformed personnel and ordinary civilians.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that many of us believe that the Government are extremely sensible not to become entangled in further amendments to the law on this somewhat controversial issue and believe that they are wise to leave things as they are?
Baroness Blatch: My Lords, I am grateful for my noble friend's comments. It is worth noting that the conclusion, albeit that it discussed a third option, was anything but unequivocal on the point. It said that it gave rise to considerable debate.
Lord Donaldson of Kingsbridge: My Lords, is the noble Baroness aware that many of us on these Benches have views exactly the opposite to those of the noble Lord, Lord Boyd-Carpenter?
Baroness Blatch: My Lords, we live in a democracy and everybody has a right to a view. Having read the

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report, I believe that it is painstaking in its consideration of these matters and that, on balance, the conclusion that it is not an easy subject, but rather a difficult and delicate one, is correct.
Lord Ackner: My Lords, does the noble Baroness agree that the decision in the report strengthens even further the case for the abolition of the statutory mandatory life sentence?
Baroness Blatch: My Lords, it depends how one reads the conclusions. The report says that it is difficult to make changes in that particular aspect of the law without regarding more fundamental issues. However, the report does not conclude that we should necessarily resort to a fundamental review.

Mr. Jason Mitchell: Inquiry Findings
2.44 p.m.
Lord Harris of Greenwich Lord Harris of Greenwich asked Her Majesty's Government:
What action they propose to take following the inquiry into the case of Mr. Jason Mitchell, a paranoid schizophrenic, who murdered three people.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, this was a local inquiry set up by Suffolk Health Authority. I understand that the authority has agreed to invite the inquiry team back in six months' time to review progress in implementing the local recommendations.
Lord Harris of Greenwich: My Lords, I thank the noble Baroness for that reply. Is she aware of the very high level of public concern in relation to this question? There are a great many reports of cases of paranoid schizophrenics killing while released into the community. Is she aware that I know of nine such cases where people in that category have killed while in the community? Is she aware that many of us are concerned about the sheer repetition of such cases? I am sure that the noble Baroness will be the first to confirm the high level of public disquiet. One of the reasons for that concern is the acute shortage of community health nurses. Is she aware that only one out of every five schizophrenics in the community has a community health nurse? In that situation, is it sensible for the Government to propose closing 50 psychiatric hospitals in the next five years?
Baroness Cumberlege: My Lords, we are very much aware of the public disquiet. However, it is interesting to note that convictions for homicide under Section 2 of the Homicide Act 1957 and hospital orders imposed under the mental health Acts are no higher now than they were 20 years ago although of course in that time the total number of homicide convictions has increased substantially. However, we realise that there is
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enormous public disquiet. That is why we are undertaking a major programme to provide medium-secure beds and secure beds. Indeed, for those who do not require 24-hour nursing care, we appreciate what the noble Lord says about community psychiatric nurses. It is our intention to ensure that those numbers are increased.
Lord Strabolgi: My Lords, may I ask the noble Baroness when the report on the independent lay assessors is likely to be published? Those outside independent people seem able to overrule the professional opinions of psychiatrists and doctors in insisting on the release of dangerous mental patients, very often with disastrous consequences.
Baroness Cumberlege: My Lords, yes. The noble Lord is correct that we are at present assessing the role of lay members on the mental health review tribunals. At present, nearly all members have some involvement with mental health services in either a professional or a voluntary capacity. Sometimes that experience and knowledge are of extreme value. But we appreciate that there may need to be a review of the procedures of mental health review tribunals system and that is being undertaken at the moment.
Baroness Cox: My Lords, is my noble friend aware that I have served on a mental health tribunal and there was great anxiety about the availability of secure beds for potentially dangerous discharged patients? Will my noble friend assure the House that that shortage is being dealt with as a matter of real urgency?
Baroness Cumberlege: My Lords, yes. Indeed, since 1980 we have increased the number of secure and medium-secure places by 3,500 and there will be an additional 550. Not a single bed of that nature existed in 1980. The whole development has taken place in the past 15 years.
Baroness Jay of Paddington: My Lords, does the Minister agree that although this report, like so many others, was the function and responsibility of an individual health authority, there are very important national questions associated with it and the fact that the Mental Health Act Commission is the only national organisation which has some responsibility for mentally ill people? In the light of the report, will the Government take a different view about extending the remit of the Mental Health Act Commission so that it covers people like Jason Mitchell who may wander the countryside? There needs to be a central register and understanding of their needs and case histories to enable them to be fully monitored. That does not happen at present.
Baroness Cumberlege: My Lords, this is a very interesting report. In its introduction, Louis Blom-Cooper says that among the plethora of inquiries following homicides he believes that the report is unusual in that no one individual is singled out for blame other than

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Jason Mitchell himself. He says that the killings could not have been predicted and were not preventable, given the nature of the services supplied to Jason Mitchell. He goes on to say:
"Had different steps been taken at various stages from 1989 onwards, the ultimate outcome might have been avoided. But that is like saying, if I had not changed my airline booking, I would have been killed in a crash of the aircraft on which I had originally booked".
Therefore, we must be realistic about this matter. We cannot always prevent such cases from happening. Nevertheless, I appreciate the view of the noble Baroness that we should try to do so whenever it is possible. Perhaps part of that task might be the review of the Mental Health Act. However, we are anxious not to undertake that yet until we have seen some of the recent developments come to fruition, particularly supervision registers and the new power for supervised discharge.
Lord Harris of Greenwich: My Lords, is the Minister aware that one of the reasons for public concern is that the Mitchell case is by no means an isolated example, as I indicated earlier? Is the Minister also aware that this man strangled an elderly couple and, thereafter, murdered his own father and dismembered his body? Finally, is the Minister aware that only this morning a further report was published on yet another case in this category—namely, a man called Mr. Nilesh Gadher—who murdered a woman in a west London car park? Surely the reason for public disquiet is fairly obvious. People expect government action on the matter.
Baroness Cumberlege: My Lords, I believe that I acknowledged to the noble Lord that there is disquiet. That is why we have put such a huge investment into providing both secure and medium-secure beds. However, I want to reiterate the fact that one cannot always prevent such things from happening. Indeed, in the most recent case of Nilesh Gadher, although the report identifies some failings in management it goes on to say that the team did not consider that a tragedy of this magnitude was predictable. The inquiry also concluded that no one person or agency is to blame for what occurred. I believe that it is unrealistic of the people of this country to think that we can always avoid such cases. Clearly we cannot; and, indeed, they are not even on the increase.

Police Surveillance Cameras
2.52 p.m.
Baroness Sharpies Baroness Sharpies asked Her Majesty's Government:
How many police forces now use surveillance cameras in city centres.
Baroness Blatch: My Lords, this information is not collected centrally. Most town centre or high street CCTV systems, although not necessarily owned or operated by the police, have links with police control rooms and arrangements with the police to view or use images for evidential, investigative or operational purposes.
Baroness Sharpies: My Lords, I thank my noble friend the Minister for that Answer. However, can she tell me
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whether statistics are available on the success or otherwise of these cameras? Further, can my noble friend tell the House whether there have been any complaints from civil liberty organisations on their use?
Baroness Blatch: My Lords, the statistics that we have so far are most encouraging. I shall quote some of them from certain places at random. In the first year, Bedford, Workington, Llanelli, Brentwood, Strathclyde and Swansea recorded figures respectively of 31 per cent., 57 per cent., 34 per cent., 39 per cent., 21 per cent and 51 per cent. reductions in crime over the previous year when they did not have CCTV. The scheme was so successful in Birmingham that it was used by the police in 458 incidents, with 173 arrests directly attributable to CCTV. Finally, in Newcastle there were 800 arrests, 600 of which came to court, where 99 per cent. pleaded guilty because the evidence was so overwhelming. The remaining six defendants who did not plead guilty were in fact found guilty in court. Therefore, the statistics are seriously encouraging.
As regards civil liberties, almost every survey that has been carried out has revealed overwhelming support for closed circuit television. Indeed, in one survey only 6 per cent. of the people questioned believed that it was an intrusion into their liberty.
Lord Gisborough: My Lords, in view of the dramatic success of the system, can my noble friend the Minister say whether grants for such cameras are available for those communities which are running and financing their own security schemes?
Baroness Blatch: My Lords, I can confirm that they are. There was a substantial scheme last year and, indeed, there is one running at present where an additional £15 million is being made available to community schemes. I believe that over 700 bids have so far been received in that respect. They are being considered by my honourable friend in another place.
Lord Mason of Barnsley: My Lords, can the Minister say what governs the use and the release into the public domain of such films?
Baroness Blatch: My Lords, no government money is granted to any CCTV scheme unless a code of practice has been put in place. That code of practice covers the proper use of such material, whether it is used by the police or in the courts. There was one incident involving the release of a video about which, frankly, we take a dim view. The public outcry about the release of that film was such that we hope it will be an isolated incident. However, most of the closed circuit television schemes which are in place operate a code of practice and take the release of a film extremely seriously. Indeed, it just should not happen.
Lord McIntosh of Haringey: My Lords, does not the success that the Minister reported confirm the importance of collaboration between local authorities and the police? Does it not also confirm that we were right during the passage of the Police and Magistrates' Courts Act to secure that local authorities had an increased role on police authorities? Further, were we not right—although

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in this case the Government did not agree with us—to insist that crime prevention should be an active and important part of police objectives?
Baroness Blatch: My Lords, a central plank of government policy in the fight against crime is that there should be collaboration by the whole community with the police. That includes local authorities; indeed, many of the CCTV schemes are run by local authorities in conjunction with business and commerce in their areas and in collaboration with the police. We have never said that it was not a good thing to have collaboration. I believe that the outcome in both Houses of Parliament on that legislation was the right one.
Lord Harris of Greenwich: My Lords, is the Minister aware that one of the reasons why there was such a high proportion of guilty pleas as a result of the Newcastle scheme—a scheme at which I had the opportunity to look—was the fact that, when the police indicate they are prepared to make a video of the defendant's behaviour (when he is kicking someone lying on the ground) available to the court, that person is very keen indeed to plead guilty so as to avoid the video being shown to the judge and jury?
Baroness Blatch: My Lords, whatever the views of the offender, I believe that we should applaud the fact that he has been caught and that CCTV has helped to catch him. It may well be that the defendant does not wish the film to be seen. However, the fact that such a film is there to be seen does, I believe, act as a great deterrent.
Lord Beloff: My Lords, can my noble friend the Minister say whether the statistics to which she referred about the diminution in crime as a result of such measures have taken into account crime throughout the town or city concerned? I ask that question because there is some local belief that, although crime in the city centres has diminished, crime on the outskirts has increased.
Baroness Blatch: My Lords, that was indeed a commonly held perception. However, the research that has been carried out simply does not support that view. Indeed, none of the recent studies suggests that displacement of crime is a problem; for example, one of the main conclusions of the study in Airdrie is that there was no evidence that crimes were displaced from the town centre to areas without CCTV. One of the reasons for that is that it allows the police to target their men and equipment more effectively because they know that one part of the area is being watched by television.

New Cars: Delivery Charges
2.59 p.m.
Lord Strathcarron Lord Strathcarron asked Her Majesty's Government:
Whether they will encourage motor car manufacturers to include delivery and other charges in their quoted prices for new cars.
The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie): My Lords, the
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Government have no plans to do so. The Government consider that the legislation which regulates car pricing—namely, the Price Marking Order 1991 and the Consumer Protection Act 1987—adequately protects consumers.
Lord Strathcarron: My Lords, I thank my noble and learned friend the Minister for his reply. However, is he aware that the average delivery charge of a new car is in the region of £450, in addition to which there is the cost of number plates? Indeed, the delivery charge in particular is a great shock to many motorists who buy a new car. Is my noble and learned friend also aware that certain manufacturers already quote what are known as on the road prices? They include the delivery charge, the number plates, the road tax at £140, and also a full tank of petrol. Does he not consider this to be a much fairer way of presenting new car prices?
Lord Fraser of Carmyllie: My Lords, first of all I am aware that the average delivery price is about £450. As regards all-inclusive on the road prices, I can certainly envisage that for a number of would-be purchasers that would be an extremely attractive way to buy a car as they would know exactly what is involved. However, it seems to me a matter of commercial policy for those who are selling cars to note that those who have adopted this approach—there is a number of them now—have done so successfully and therefore to follow their example. I am not persuaded that it is a matter for government to determine how these commercial decisions should be taken. What is important, however, is that the law should ensure that people are not subject to fraud or are misled about what might be included.
Lord Peston: My Lords, I do not wish to disagree with that reply. However, I speak as a consumer when I say that I can think of few practices as irritating as that mentioned in the Question, even though one knows it is going to happen. I am perfectly well aware that once one walks into a shop to ask what something costs the price will be marked up. However, has the noble and learned Lord any explanation for what can happen to car buyers, given how annoying it is? Has he any explanation for the fact that many more sellers of cars do not adopt what one would regard as a much more rational and transparent approach? The only practice I know that is as had as the one we are discussing is the selling of computers ex-VAT. That is almost as annoying. However, the matter we are discussing has been getting up my nose for donkey's years. I wonder why the forces of competition do not somehow deal with it more effectively.
Lord Fraser of Carmyllie: My Lords, those manufacturers who sell at an all-inclusive on-the-road price will clearly be of interest to the noble Lord.- However, when people buy and sell cars they are often trading in them and it may be the one transaction where there is an element of haggling. Under the price marking order, if there is to be a price for other ancillary goods or services—for which the consumer must pay in order to obtain the principal item—those additional items and

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their prices have to be stated with equal prominence. I am bound to say there are occasions when I have some doubts whether equal prominence has been achieved. However, I am also aware that a number of major manufacturers have been prosecuted for failing to meet that requirement.
Lord Skelmersdale: My Lords, in these days of deregulation why do we need a price marking order at all?
Lord Fraser of Carmyllie: My Lords, it is appropriate that there should be such a provision when there are ancillary items. It is important that they should be stated clearly and prominently. It is not a matter of dictating at what levels they should be set, or indeed what should be included, but it seems to me appropriate that they should be clearly stated so that the consumer knows what additional items are involved before he is able to complete the purchase.
Lord McIntosh of Haringey: My Lords, I do not wish to detract from the agreement across the Front Benches about the undesirability of government intervention, but surely if the delivery charge is a genuine charge it ought not to he bundled with the cost of the car? The purchaser ought to be given the opportunity of not paying the delivery charge but of collecting the car instead.
Lord Fraser of Carmyllie: My Lords, the noble Lord puts forward his particular proposal for haggling on the purchase of his next car. It may be just that sort of arrangement which could be adjusted. That is why I suggest it is appropriate to leave it to the commercial judgment of those who are selling or buying to discuss whether or not they are prepared to have these items included. For some an all-inclusive price may be the most satisfactory way forward. That opportunity is now available from a significant number of major manufacturers.
Lord Geddes: My Lords, are motor car manufacturers in any way obliged to justify the level of their delivery charges?
Lord Fraser of Carmyllie: No, my Lords. As I said, it is a matter for their commercial judgment. However, I have no doubt that if they continue to raise the level of the charge they will find that people cease to purchase their motor vehicles.
Baroness O'Cathain: My Lords, will the Minister confirm that the delivery charges are not calculated by the manufacturers but by the delivery companies?
Lord Fraser of Carmyllie: My Lords, I am not entirely sure just exactly how they are arrived at, but they are certainly calculated by those who deliver the cars. What is of irritation to some people is the fact that if one lives in Wick or if one lives just to the north of London one will probably pay exactly the
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same delivery charge. I can understand why that is irritating to the consumer but, as I indicated, that again seems to me to be a matter upon which individuals can reach a view as to whether or not they are prepared to pay. If they are not prepared to pay for that separate item, they can look for a car which will be sold to them on an all-inclusive basis.
Lord Strathcarron: My Lords, is my noble and learned friend aware that the actual delivery charge is approximately £110 per car and nowhere near £450? Is he further aware that the original high charge for delivery was a way of getting round the purchase tax regulations at the time, so no one thought of reducing the charges?
Lord Fraser of Carmyllie: My Lords, I am grateful to my noble friend for that historical explanation of how we arrived at these charges. I may have referred to a delivery charge but I should have said that the £450 charge is the average extent of all the other charges that are sometimes added. All I can say to my noble friend—as he will doubtless recall—is that in 1992 the MMC reported on this matter and concluded that the charges were justified; indeed, it recommended no major changes to the United Kingdom car distribution system. I am bound to say to my noble friend that my department is not aware that there is any significant concern about a lack of transparency in car prices.
Lord Mowbray and Stourton: My Lords, I do not have a foreign car but I refer to a certain well known German manufacturer which charges something like £495 normal delivery charge in this country. However, if one collects the car I think I am right in saying that the company provides three days' entertainment showing one round its factories, which helps to reduce the burden and gives one a hit of a holiday.
Lord Fraser of Carmyllie: My Lords, I can only say to my noble friend that if he is thinking of buying a car in Bavaria he might consider going to Munich in October.

Audit (Miscellaneous Provisions) Bill
3.7 p.m.
Read a third time, and passed.

Rating (Caravans and Boats) Bill
Lord Strathclyde: My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Rating (Caravans and Boats) Bill, has consented to place her prerogatives and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

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Read a third time, and passed, and returned to the Commons with amendments.

Sexual Offences (Conspiracy and Incitement) Bill
Brought from the Commons; read a first time, and to be printed.

Housing Grants, Construction and Regeneration Bill [H.L.]
3.8 p.m.
Lord Lucas: My Lords, on behalf of my noble friend Lord Ferrers I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Lord Lucas.)
On Question, Motion agreed to.
Clause 102 [Construction contracts]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 111:
Page 58, line 14, at end insert ("the extent and nature of which shall be specified in the agreement.").
The noble Lord said: My Lords, this amendment stands in my name and that of my noble friend Lord Dubs. It may be for the convenience of the House if I also speak to Amendments Nos. 122, 123, 124 and 140. The words on the Marshalled List are designed to provide an escape clause—if I may say so—for the Government, who are in some disarray about the process engineering industry.
Ministers have placed much reliance on statements made by a group known as the Process Industries Latham Group (PILG). If I use the acronym PILG, noble Lords will understand what I am talking about. PILG has argued that process industries do not suffer the same problems as the construction industry. It states that statistics concerning the number of requests for appointment of arbitrators is evidence of that. PILG speaks for a small number of clients but appears to miss the point as to who carries out the construction and installation work. As with the construction industry, the majority of work is sublet and carried out by specialist contractors. The principal contractors carry out a management role but the installation work is carried out by the same specialists who work in the construction industry, often on the same commercial and contractual terms which, the Government and we accept after the Latham Report, are unsatisfactory.
The functions carried out by those specialist contractors are the same as those carried out within construction. They include electrical work, pipework, ventilation, structural steelwork and provision of basic building and civil engineering infrastructure.
PILG argues that its industry does not suffer from litigation and claims attitudes. However, members of PILG come from what I call the demand rather than the
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producing side of the industry. The procurement systems and contract documents used do not ensure that the same standards exist in contractual relationships downstream where subcontractors and specialist contractors are appointed.
The question of whether the provisions of the Bill apply to the process industries should be assessed against whether the requisite protection is provided to all parties operating in those industries. The criterion is not that one part of that sector, the demand side represented by PILG, should see itself excluded, but whether those within the sector have the basic protections described in the Bill. If so, the Bill need not apply; if not, clearly the Bill must apply.
An examination of the conditions of contract and subcontract normally used in process plant work will provide a demonstration of that point. The most commonly used conditions are the Institution of Chemical Engineers' Model Forms of Conditions of Contract for Process Plant, often known as the Red Book.
At main contract level, the Institution of Chemical Engineers' conditions provide a form of adjudication on a limited number of issues, although the parties may agree to refer other matters to the experts. At subcontract level, a totally different picture exists. There is no requirement at subcontract level to use the Institution of Chemical Engineers' subcontract conditions. That creates exactly the same free-for-all as bedevils the construction industry—the point that your Lordships address today. Without a mandatory subcontract, there is nothing to prevent any ad hoc conditions being used where pay-when-paid conditions abound, payment terms are frequently vague, and other rights such as adjudication or suspension are in most instances non-existent.
The conclusion is that the case for the whole of the process industries being excluded from the Bill has not been made by the Government. The PILG solution, which the Government have adopted, denies access to the safeguards of the Bill from the supply side of industry and restricts the ability of parties to contract freely within the safeguarded provisions of the Bill.
The Government can take their pick of the amendments moved by myself and by my noble friend Lord Dubs; they will be spoken to by my noble friend Lord Berkeley. We offer a possible solution to the problem. The parties to a contract may agree to contract out of the provisions of Part II of the Bill when the type of work falls under the definition of "process industries". If one contracting party does not wish to contract out of the provisions of Part II of the Bill, the parties will no doubt wish to agree contract terms which comply with the provisions of Part II of the Bill, notwithstanding that the whole process may be within the context of process industries. Furthermore, if the parties fail to agree on acceptable terms which comply, with the provisions of Part II of the Bill, then the relevant sections of this scheme of construction contracts, which we shall discuss later, will apply.
We believe that this is an honourable compromise between the construction industry and PILG: that those who wish to contract out can do so by contract; and

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those who wish to contract in can do so by contract; but every point in any agreement should be limited by the definition that is either within or without Part II of the Bill.
Having explained the purpose of Amendment No. 111—Amendment No. 122 is consequential—I do not wish to talk about the amendment which will be spoken to by my noble friend Lord Berkeley. It has the same thrust as my amendment. I believe that my noble friend has drafted it rather more expertly. Nevertheless, the principle is there. Process industries, in particular subcontractors, have a large component of matters relating to Part II of the Bill. It seems to us only right that those who wish by contract to participate in or participate out (if I may use that rather inelegant expression) should be allowed the choice. The important point is that anyone engaged in this business, in particular subcontractors to process engineers, should be protected by Part II of the Bill.
It is an important matter. We discussed the issue in Committee but I do not believe that we focused on the proper terms of subcontractors to the process engineering industry. I hope that the Government have recognised the problem and are prepared to accept the amendment. I beg to move.
Lord Berkeley: My Lords, I wish to speak to Amendments Nos. 122 to 124 and 140. My noble friend Lord Williams has lucidly explained some of the background to my drafting of the amendments which initially came from the Constructors Liaison Group. The amendments reflect something which we discussed at previous stages: the serious concern from subcontractors, sub-subcontractors and the many suppliers involved in the industry. It confirms my long-held view that it does not matter whether you are building a block of flats, a process plant or a bridge, when it gets down to the subcontractor or supplier level, the problems and challenges are the same. Therefore, the protection required for the smaller peopleߞif we may lump them in that inelegant phrase℄is extremely important.
I started by looking at the problems of the process industry. Then I received further information from the people who make steelwork. I was convinced that the answer was to have a much more general amendment to subsection (2) of Clause 103 which at present allows everyone who wants to be part of the scheme to be part of it unless both parties to the contract have agreed to contract out.
I wish to give one or two examples because it is important to understand the problems and concerns of the small suppliers. I suspect that nowadays things are different from when the noble Lord, Lord Howie, and I were young engineers and most of the work seemed to be done by the main contractor employing thousands of people. Now most of it is done by subcontract. The Constructors Liaison Group said that the supply side of the industry, the little people, confirm that the Utopia described by PILG does not exist in the relationship between the principal
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contractor and the specialist subcontractors. All the specialist subcontractors are fighting hard in competition with others to obtain a small or large part of the order.
We are in danger of splitting the Bill's provisions into the haves and the have-nots. Whatever the type of contract, I believe that the activity remains the same. Therefore, it is important that the same contractual protection on a building project, process plant or whatever should exist. Sadly for the industry generally, at subcontract level it is normal—and there is no prohibition on it—to have the rather frightening "pay-when-paid" clause, no defined payment terms, discharge period or adequate mechanism and, of course, no adjudication. Suspension can happen just like that, for no apparent reason. There was the comment that the form G90 was frequently used in the water industry, which I believe is still part of the definition of the process industry. It contains no adjudication provisions, payment terms are defined and a suspension right exists for non-certification and payment. There is no compatible subcontract.
To round the point off, the subcontract documents are frequently one-off documents on the contractor's own terms. They were probably written five or 10 years ago with little typed or handwritten changes. It is that kind of problem that the building industry seeks to redress. We must consider carefully the comments from smaller suppliers and manufacturers in this instance.
I turn to a comment from the steelwork manufacturers, fabricators or whatever we like to call them. It is reasonable to point out that, unlike the suppliers of brick or cement who are obviously not covered in the provisions anyway, steel is specifically cut, burned, drilled, welded or whatever it is for a specific construction task. It is usually the first thing to be ordered. The shape of the building is known, one orders the steelwork and, as we have seen in many construction projects around the country, it comes first and is put up pretty quickly. Perhaps we should say that it is the first substantial expense on a project. It is usually subject to onerous terms and conditions—perhaps lateness in payment—but it is off-site until 90 per cent. of the value has been spent, which means that it is less easy to get paid. Therefore, that kind of steelwork needs the full protection of the construction Bill, in whatever form.
I have spoken about process plants. We discussed them at length in previous stages of the Bill and I do not intend to speak about blinds, signwriting, security systems or anything else because the amendments that I have drafted will enable, or, I hope, require, anyone who is a party to a construction contract anywhere in the industry either to agree with the other party that they do not need the provisions of this Bill because the terms are already included or, if they are not, that the Bill's provisions should apply.
As my noble friend Lord Williams mentioned, this is a satisfactory and fairly open way of sorting out some difficult definitions with which many noble Lords have been struggling in subsection (2). I hope that other noble Lords will find them acceptable.
3.30 p.m.
Lord Howie of Troon: My Lords, I support my noble friends Lord Williams and Lord Berkeley. Unusually for me, I start by complaining. We went through a lengthy, detailed and extremely constructive debate at Committee stage. It was enlivened by a number of contributions, from this side of the House as well as from the other side, from people who knew about the construction industry. Encouraged by the general tenor of the debate and the kindliness with which the Government listened, I wrote a lengthy letter to the noble Earl, Lord Ferrers, in which I drew attention to the comments which he and his colleagues had made on matters which were raised during the debate. I received a Spartan reply.
Looking at the Marshalled List, noble Lords will see that the Government's response has been to produce a trivial number of marginal amendments. In other words, they have paid virtually no attention to the serious points which were raised during the debate. That may have been because they did not understand them or that they ignored them. It is not a happy way to deal with a measure which is not partisan but technical. It is not as complex as the Government make out; it is quite simple. The Government's response was to say: "Here we are and here we stand". That is not the correct way to treat what is thought in the textbooks and in the minds of many of the more naïve among us to be a revising Chamber. A revising Chamber revises; it does not put up proposals which the Government ignore.
That is my ill-tempered beginning. I wish it to remain on the record because I believe it to be correct. But I am not an ill-tempered fellow—though I could and might yet be, who can tell? But I want to support my noble friends.
What is the purpose of the Bill? That question underlines the amendment that my noble friends have tabled. The Bill's objective, as I understand it, was to produce cheaper and more reliable construction. One of the ways in which that was to be done—the route adopted by the Government and included in the Bill—was to regularise the body of dispute that arises between contractors, clients, subcontractors and everybody else involved. The process is very time-consuming and expensive. It keeps the lawyers happy but does not produce the kind of inexpensive building that we want.
That was the whole aim of the Latham Report. Sir Michael Latham thought that the cost of construction might be reduced by as much as 30 per cent. He may be right or he may be wrong. I have my own views on that. A large part of the reduction in cost that Latham sought lay in minimising the conflict between client, contractor and subcontractor. Design may produce cheapness, but the major area where cheapness could be produced is that area of conflict. That is what Part II of the Bill is mainly about.
My remarks are based on very lengthy experience in the construction industry—even longer experience than that of my noble friend Lord Berkeley, who is a mere youngster in these matters. I have seen this whole business of conflict, claims and counter-claims going on
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and on to no great effect in the end. These are fairly general remarks, and I hope to be more brief in the course of today's proceedings.
I turn to PILG, as it was termed by my noble friend Lord Williams. PILG represents the process industries' desire to be excluded from the Bill. The Government have acceded to that demand. I can see why PILG wants to be excluded; the industries would not have to bother with these matters. My noble friend Lord Berkeley put his finger on the problem. He remarked that PILG represented the "big boys" in the process business. We know perfectly well that in the process industries, as in any other area of the construction industry, there is a long chain of contractual obligations. It extends from the main contractor to the subcontractor, to the sub-subcontractor, and ends up who knows where?
It is not true that the constrictions of Institution of Chemical Engineers' contracts apply to the subcontractors and the sub-subcontractors. That is not so. In so far as PILG says that these contracts apply to the main contractors, it is correct; but they do not go on down the line. And on down the line is where construction contracts come into play—and where the construction subcontractor comes into the Bill.
In Committee, I drew attention to such matters as the foundation for a chemical plant or a power station. That foundation might well be totally, completely and utterly a piece of civil engineering construction. I shall not irritate the House, as I did in Committee, by drawing on my own experience. However, I could mention power stations that have been floated upon civil engineering rafts—constructions like boats, on which the power station sits. The power station might be a process plant—although I am prepared to argue the matter—hut the foundation is wholly a civil engineering conception. The fact that it is on the site of a process plant is totally and utterly immaterial. I find it extremely odd that people as intelligent as Ministers and the whole of Whitehall cannot grasp such a simple concept. I imagine it is not that they are unable to grasp it, but merely that they do not want to.
In another context the noble Lord, Lord Ezra, referring to coal-mines, said that such contracts would be treated as civil contracts. If they are treated as civil contracts, with all the ramifications involved in the chain (contractor, subcontractor, sub-subcontractor and so on), why should they be excluded en bloc as though they were somehow extraordinary? They are not. They are extraordinary only in the sense that the Government say they are extraordinary because they appear on a particular site. They are not extraordinary because of their engineering complexity or because of contractual arrangements. In fact, some may well be done under civil contracts, which would nullify the exclusion. We could have an extraordinary situation in which a foundation might be done under a civil engineering contract and will in some magical way be excluded from, the Bill, which would throw doubt on elements in the contract itself. I have no doubt that a lawyer would sort that matter out, but that is not my business.
Obviously, the way round this is for the parties involved to agree that this work should be done under normal civil engineering contracts. That is the natural

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way for it to be done, and it would be the sensible way. Under the Bill, it need not be done. The contracts for those elements of work in the process industries—however they are described (and to my mind the description is quite extraordinary)—and in so far as these sites can be described as process sites, can be wholly excluded from the Bill.
I suppose this is a revolutionary concept. The Government are not urging people to exclude their work from the normal contracts that have applied for a very long time. However, they are saying: if you do exclude your work from the normal civil engineering contract, you come under the Bill and then, hunky-dory, you can do more or less what you like. It will not do.
Frankly, the Government misconstrued the construction industry. They did so by referring back to a tax Bill for a definition. They were then got at by some big, powerful, important interests in what are called the process industries. They yielded to those pressures and in so doing lost sight of the aim of the Bill. We must not forget that the aim of the Bill is to ensure that the subcontractors and the sub-subcontractors down that enormous chain are properly paid when they complete the work on time and that they have the protection to which they are entitled.
I entirely support my noble friends and I hope that the Minister—a very nice young man—can give me a better reply than he gave me in the charming letter which he wrote to me a few weeks ago.
Viscount Ullswater: My Lords, I am attracted to the proposition put forward by the noble Lord, Lord Williams, at this stage of the Bill. It is a new approach, as is that of the noble Lord, Lord Berkeley.
At Committee I said that I was persuaded by the Process Industries Latham Group—PILG—and I noticed that the noble Lord grimaced when I used that term at Committee stage. However, I am glad that he is now used to using it. The group has long experience of good relations within that sector of the industry. I do not believe that it is right just to sweep aside or impose upon it unthought-out recommendations. It is not basically concerned with speculative development; normally, it carries out a process which both sides want. At that stage, therefore, I said that I felt that the Government were taking the right tack.
The noble Lord, Lord Berkeley, mentioned the problem of the steel fabricators. I agree with much of what he said, and I should like to tackle that point in a later amendment which will cope with the problems that the steelmakers face. But the duty of the Government—the noble Lord, Lord Howie, may put it more strongly—is to try in some way to satisfy the industry. The noble Lord, Lord Williams, is trying to square a circle by not making it mandatory that every process engineering contract be excluded from the Bill but, instead, allowing it to be excluded by the words in his amendment.
Therefore, this is not a novel approach; it is a new approach, and my noble friend should consider what is being said. It may be that the industry is trying to speak to him in this way.
Lord Ezra: My Lords, the amendments we are now debating relate to a fundamental but simple issue:
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namely, that hard and fast distinction cannot be made between construction work and process work; that some trades inevitably cross the border.
We now have a number of propositions which introduce flexibility. I am attracted by the wording put forward by the noble Lord, Lord Berkeley, in Amendment No. 140. I would have thought that the Government would be pleased to see that degree of flexibility introduced into something which has proved extremely difficult and which could be made more difficult by the solution proposed in the Bill. I hope, therefore, the noble Viscount having suggested that his noble friend look at the matter sympathetically, that the Minister will do so.
3.45 p.m.
Lord Monkswell: My Lords, in rising to support my noble friend's amendment, I speak as a mere stripling in the industry compared with my noble friends Lord Berkeley and Lord Howie of Troon.
My noble friend Lord Williams is trying to resolve a problem that we see on the face of the Bill in the distinction between sections of the construction industry. Amendment No. 111 is one way of resolving the problem. It may be that if this one does not find favour with the Government, subsequent amendments may help to bail them out in different ways.
Perhaps I can say a few words about the perception of the process industries and their anxieties. We must recognise that within the construction industry contractual problems arise. To a large extent a number of unpredictable factors bear upon the construction industry which cause difficulties between contractors and subcontractors. Some may be totally outside the realms of human control—things like the weather which can affect contracts; but other factors are under human control. For example, a large contractor may seek to gain advantage over a small subcontractor.
Another factor that must be considered is the variations in demand and workload in the industry. Twenty years ago there was a large degree of unpredictability in the industry. For instance, in the building of a nuclear power station the initial contractor could not tell within half a decade when the job would be completed because he could not predict what would happen—the design parameters might change and so forth. Over the past decade it has become easier for the main contractors in an operation to say how long it will take and what the cost will be.
There have been major advances in the way that large contracts are organised and planned. But one factor that comes into the situation is the fact that there is a great dearth of work in that area of activity. It is relatively easy, therefore, for a large contractor to lay terms and conditions on the smaller subcontractors and be able to plan with a fair degree of precision the timescales and costs involved. But that situation could change. Within the next five or 10 years there could be a complete turnround.
If we look at the state of the water industry, for example, we see a desperate need for major investment. That will increase the demand on the contractors and

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subcontractors. It may be that the planning and timescales in terms of costs will go out of the window because of competition and changing circumstances. It may be that an industry which operates on a fairly secure basis and does not think it needs a fall-back position to deal with problems of contracts, payment terms and so forth may, in the foreseeable future, find itself in difficulty and needing that fall-back position. That is something else that we must recognise.
The civil engineering and construction industries operate on the basis of contracts. In the normal course of events, everyone would expect that the contracts would be honoured and everything would go ahead but, in practice, what happens is that, as we heard from the noble Lord, Lord Howie, the Latham report recognised that those contracts fell apart, there was litigation and there were all sorts of problems which added to the industry's costs. That is what we are trying to do with this Bill: to provide that when these contractual positions become difficult and everything falls into the muddy morass of disputes there should be a fall-back position enshrined in this Bill to enable prompt, satisfactory resolution of problems and to enable the business to carry on.
We have recognised on this side of the House—and I think that it has been recognised by a number of noble Lords on the other side of the House—that there is a problem there and the Government are tackling it with this Bill. However, there is a risk that quite large parts of the construction industry will effectively not be covered. While at this point in time they may feel that they do not have a problem, it is quite likely that they will have problems in the short, medium and long term, and they should have a fall-back position, which would be guaranteed by this Bill, to resolve those problems. I hope that the Government will recognise the force of the arguments that we have deployed and, if they do not accept this amendment—I believe it is probably one of the better ones—I hope they will recognise that later amendments propose what we might describe as fall-back positions to try to ensure that the aims of the Bill, which we agree with the Government, are met fully by the Bill itself.
Baroness Hamwee: My Lords, the noble Viscount, Lord Ullswater, put his finger on it. Unless these provisions satisfy the industry, or industries—I am learning that, perhaps, there is more than one industry—then they will have failed. It is something of an indictment of the Government that the matter is left to the Pandora's box of this House—and, if I may say so to the noble Lord, Lord Howie, there are not so very many of us who are experts. I am very much not an expert in matters of the construction industry, although I am learning as this Bill progresses. However, I see as a matter of common sense in relation to these industries, as well as to others, that if the Bill does not end up with a procedure and provisions which are generally acceptable then it will have failed, and failed very badly.
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It will have failed those from outside this House who have put a great deal of work into getting a better Bill than we started with.
Lord Lucas: My Lords, these are four very interesting amendments. Before I deal with them and the problems we have with them in detail, I should like to turn to the general matter which has been raised, which is really a question of whether the process engineering industry should be in or out of this Bill. The noble Lord, Lord Howie of Troon, said that he found rather too few amendments.
Lord Howie of Troon: My Lords, the Minister is not listening.
Lord Lucas: My Lords, we listen very carefully to what is said in this House. I shall consider carefully all that has been said today, but the noble Lord should be aware that it takes some while to produce amendments. As we go through today's proceedings he will discover that there are things happening beneath the surface for which he may be grateful, but which have not yet poked their heads above it in the form of amendments.
Lord Howie of Troon: My Lords, God bless you for those kind words.
Lord Lucas: My Lords, the noble Lord, Lord Howie, also quoted the Latham Report's finding that construction costs might be cut by 30 per cent. That is not a consequence of this Bill alone; there is a whole series of initiatives being pursued by the Construction Industry Board, and the Process Industries Latham Group believes that it can achieve cost reductions, principally by good practice rather than mainly by legislative means. As has been outlined by several speakers today, there is a difference between the construction industry and the process industry. The construction industry is broadly behind this Bill. There is a consensus. The process industry is not; there is a divergence of opinion, and the Process Industries Latham Group, which is a powerful element within the industry, does not want this Bill applied to it. As my noble friend Lord Ullswater and the noble Baroness, Lady Hamwee, said, it is important that this Bill operates with the agreement and consensus of the industries, because otherwise it will not work.
Lord Howie of Troon: My Lords, I am grateful to the noble Lord for his earlier kind remarks, to which I look forward with eager anticipation. But does he not realize—I am sure he does—that, in this matter, when the process industry (if there is such a thing, but let us use that shorthand) objects to certain elements in the Latham approach it is dealing with the relationship between the process industry as a technical client, which-knows very much what it wants, and the main contractor. It is less interested in the relations between the main contractor and the chain of subcontractors which follows thereafter. It is this chain of subcontractors which we, or some of us at any rate, are interested in protecting, rather more than the immediate

911
relationship between the technical client and the immediate main contractor. This is the big split that we have to consider very carefully.
Lord Lucas: My Lords, while not wishing to encourage the noble Lord, Lord Howie, to break with convention at Report stage, I will in this instance reply to the noble Lord and say that, yes, this is something which has been made very clear in the speeches today, of which we shall certainly take cognisance to the extent that we were not aware of it, although I suspect that we were very much aware of it. Nonetheless, there is discord within the process industry at the idea that this Bill should be applied to them. We want this Bill to work; we think that this Bill will work if it encompasses an industry which wants it to work and which goes at it with a will, and that industry is the construction industry.
The process industry is not happy with the Bill. To have them inside would introduce discord and, to our minds, would make it less likely that this whole process would work. However, the provisions are in the Bill to bring the process industry within it later if that consensus can be achieved. It requires only affirmative resolutions to do so, subject to the amendments which I hope will be made later today. That is our approach: to say that the process industry does not wish to be included now, we will leave it out for now, and it can come in later if it can be agreed that it wishes to come in. Indeed, when the construction industry has, as I hope it will, demonstrated how successful this process can be, I would think there will be a clamour from the process industry or, at least from its subcontractors, to come in. The process of including it will be a simple one.
Given our wish to exclude process engineering, there is a process of then drawing the line between construction and process engineering. As the noble Lord, Lord Ezra, said, that is an inexact one. We are still thinking hard as to how that should be done, and that will be reflected in much of what I say to later amendments, but there will always be boundaries; you cannot define any industry in a simple way. There are always boundaries, and I can think of boundaries between the construction and telecommunications industries which might be hard enough to draw, let alone between construction and process engineering. We will come back to the House on that issue, but I hope to give further enlightenment later. That will cover such matters as foundation and steelwork, where our view is very clearly that the process plant exclusion only covers plant, machinery and steelwork and would not cover all construction work on the site.
To turn to the amendments in particular, Amendment No. 111 from the noble Lord, Lord Williams, is very similar to one proposed in Committee. On that occasion my noble friend Lord Ferrers advised against it. He pointed out that activities either fell within the definition of construction operations, as specified in Clause 103, or they did not. Clause 103 is the test of what counts as construction, and we would not wish to muddy a situation by putting something in statute which requires parties to specify the construction elements of a particular contract.
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Of course parties would be quite free, for their own guidance, to distinguish between construction and non-construction activities in a contract. Perhaps one or more of the bodies that look after standard forms of contract might even decide that it was a good practice to do so. That would be all well and good. But if a contract omitted to mention some activity which the Bill regarded as a construction operation, there should be no question of it being "exempted" by the contract. At the end of the day it would be for an adjudicator, an arbitrator or the courts to decide which operations covered by the contract were caught by these provisions, and any contractor who wishes to make sure that everything that is happening is covered by the Bill may do so. Matters can be written into the Bill; they just cannot be excluded from it in the way it is written.
There is a risk with the amendment of the noble Lord, Lord Williams. Suppose we were to accept it, and a party bent on avoiding fair contract terms then failed to identify some task as a construction operation. He could then claim that, although the activity qualified as construction under Section 103 of the Act, because it had not been designated in the contract it was disqualified under Section 102 of the Act. We would then have created an alternative test for what constituted a construction activity and thereby a recipe for confusion, litigation and avoidance. I am sure that that is not what the noble Lord, Lord Williams, is trying to achieve.
The other amendments in the group cover some of the same ground; namely, the question of whether parties should be able to opt out of fair contract provisions by agreement. Their impact would be to make all the operations covered by Clause 103(2) construction operations for the purposes of the Bill. We have already heard that many noble Lords have difficulties with some of the operations on this list. I hope they will accept that, with Amendments Nos. 120, 121 and 137, when we reach them, I shall be going some way to address their difficulties. In Committee we also took a helpful step towards the inclusion of work on warehousing associated with the process industries. When we reach Amendment No. 136 in the name of the noble Lord, Lord Williams of Elvel, I hope noble Lords will see that we are again trying to be helpful and make the list of exclusions as lean and precise as possible.
Nevertheless, there are some operations which are clearly not construction operations and where there was a good measure of agreement on that in Committee. I am thinking of examples such as drilling for oil and gas, mining, the assembly of process plant and machinery, nuclear processing, the production of bricks and blocks and works of a purely artistic nature. The effect of the amendments would be to include such operations if any party had a mind to do so. I cannot believe that that would be the right outcome. Around other items covered by Clause 103(2) we are still seeking to draw a line, and trying our hardest, with the assistance of noble Lords opposite, to make it the right line.
We do not believe, therefore, that it would be right to fudge the issue of defining the industry simply by lumping all the difficult areas together and allowing

913
contracting parties to pick and choose whether or not they were covered by this legislation. That is something which the Bill itself must make clear. I hope therefore that noble Lords will not seek to press their amendments.
4 p.m.
Lord Williams of Elvel: My Lords, I am grateful to the Minister for his response. I am bound to say that I do not think that he has really understood the problem. The problem is that main contracts between main contractors and clients can be what they are. In the process industries these are what they are. They are governed by certain rules of the associations. The real problem is that where a main contract is concluded without any specification of how subcontractors or sub-subcontractors will operate, the subcontractors and the sub-subcontractors are left completely empty of reassurance.
We accept that the Government do not wish the process industries to be in the Bill. The noble Viscount, Lord Ullswater, expressed it quite clearly. We have come back with what I regard as being a sensible compromise. It is clear to me that the process industries have not achieved the required standards in all their contracting procedures, whatever PILG may say. At the level of employer main contractor, they may well be content. But between main contractor and subcontractor and between subcontractor and sub-subcontractor, if I may go down the chain, all is not well. It is our belief that the minimum standards in the Bill should apply down the line.
No one in your Lordships' House or in any other forum that I can imagine can define exactly where the interests of subcontractors and sub-subcontractors start and where they finish. Nevertheless, anyone taking on a subcontract from a main contract, which is what we are talking about, will be looking at the main contract and asking, "Do the provisions in the contract apply in the context of the Bill?". If they do, the subcontractors and the sub-subcontractors will be reassured. If they do not, that is a different competitive situation, with which people may or may not be happy.
This is not a party political issue. We really do believe that the Government have heard only one side of the debate and that we must find some kind of compromise to respond equally to the views of the supply side, if I may put it in that way, who are the subcontractors and the sub-subcontractors, and the demand side, who are mainly those who form the group called PILG who actually commission contracts. To do anything else would be to impose double standards on the industry.
It is perfectly honourable and honest to say that there is a grey area and that there is difficulty in defining where one thing starts and the other thing stops. I should have thought that the way to resolve that would be to put into the Bill a simple provision, in whatever terms the Government like, saying that this is an area where there is difficulty and that the way to resolve the difficulty is by allowing contracting parties to define in
914
any contract which parts of the contract—and hence, flowing on, to the subcontract and the sub-subcontract— are in the ambit of the Bill and which are without the protection of the Bill. The noble Viscount, Lord Ullswater, made a good point in that originally we were hoping that the process industries in their entirety would be subject to the Bill. This is the compromise which I believe would meet the desire of your Lordships that the Bill should satisfy all elements in the industry, both process and construction.
Having said that, I see from the noble Lord that it probably has written on his brief "Resist" or "Do not listen". However, as we are at a late stage of the Bill, I think it is appropriate that I take the opinion of the House.
4.7 p.m.
On Question, Whether the said amendment (No. 111) shall be agreed to?
Their Lordships divided: Contents, 70; Not-Contents, 117.

Division No. 1

CONTENTS

Addington, L

Howie of Troon, L

Annan, L

Ilchester, E

Beaumont of Whitley, L

Jay of Paddington, B

Berkeley, L

Jenkins of Putney, L

Blackburn, Bp

Kilbracken, L

Blease, L

Longford, E

Borrie, L

Lovell-Davis, L

Broadbridge, L

McIntosh of Haringey, L

Bruce of Donington, L

McNair, L

Carmichael of Kelvingrove, L

Mason of Barnsley, L

Carter, L

Monkswell, L

Chorley, L

Morns of Castle Moms, L

David, B

Nicol, B

Dean of Thornton-le-Fylde, B.

Peston, L

Donaldson of Kingsbridge, L

Redesdale, L

Dormand of Easington, L

Richard, L

Dubs, L

Russell. E

Ezra, L

Sainsbury, L

Falkender, B

Seear, B

Falkland, V

Sefton of Garston, L

Fisher of Rednal, B

Serota, B

Fitt, L

Shaughnessy, L

Gallacher, L

Simon, V

Smith of Gilmorehill, B

Gladwin of Clee, L

Stallard, L

Glenamara, L

Strabolgi, L

Gould of Pottermewton, B[Teller]

Taylor of Blackburn, L

Thomson of Monifieth, L

Graham of Edmonton, L [Teller]

Tordoff, L

Gregson, L

Turner of Camden, B

Grey, E

Wharton, B

Hacking, L

White, B

Halsbury, E

Williams of Crosby, B

Hamwee, B

Williams of Elvel, L

Hams of Greenwich, L

Winchilsea and Nottingham. E

Hilton of Eggardon, B

Winston, L

NOT-CONTENTS

Aberdare, L

Astor of Hever, L

Addison, V

Belhaven and Stenton, L

Ailsa, M

Blaker, L

Alexander of Tunis, E

Blatch, B

Ampthill, L

Boyd-Carpenter, L

Archer of Weston-Super-Mare, L

Brabazon of Tara, L

915

Bridge of Harwich, L.

McConnell, L.

Brougham and Vaux, L.

Mackay of Ardbrecknish, L.

Bruntisfield, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Butterworth, L.

Cadman, L.

Mackay of Drumadoon, L.

Campbell of Alloway, L.

Merrivale, L.

Campbell of Croy, L.

Mersey, V.

Carnock, L.

Miller of Hendon, B.

Chalker of Wallasey, B.

Milverton, L.

Charteris of Amisfield, L.

Monteagle of Brandon, L.

Chelmsford, V.

Mountgarret, V.

Chesham, L. [Teller.]

Mowbray and Stourton, L.

Clanwilliam, E.

Munster, E.

Courtown, E.

Murton of Lindisfarne, L.

Craig of Radley, L.

Noel-Buxton, L.

Cranborne, V. [Lord Privy Seal]

Norfolk, D.

Cranbrook, E

Northesk, E

Cuckney, L.

O'Cathain, B.

Cullen of Ashbourne, L.

Oliver of Aylmerton, L.

Cumberlege, B.

Oppenheim-Bames, B.

Davidson, V.

Orkney, E

De Freyne, L.

Orr-Ewing, L.

Dean of Harptree, L.

Pender, L.

Denton of Wakefield, B.

Pilkington of Oxenford, L.

Dixon-Smith, L.

Platt of Writtle, B.

Ellenborough, L.

Plummer of St. Marylebone, L.

Elliott of Monpeth, L.

Porter of Luddenham, L.

Elton, L.

Rankeillour, L.

Flather, B.

Rees, L.

Fraser of Kilmorack, L.

Renton, L.

Gainford, L.

Renwick, L.

Geddes, L.

Saint Oswald, L.

Gisborough, L.

Seccombe, B.

Goschen, V.

Sharpies, B.

Gray, L.

Shaw of Northstead, L.

Gray of Contin, L.

Skelmersdale, L.

Hailsham of Saint Marylebone, L.

Strange, B.

Harding of Petherton, L.

Srathcarron, L.

Hertford, M.

Strathclyde, L.

HolmPatrick, L.

Sudeley, L.

Hothfield, L.

Swansea, L.

Howe, E.

Swinfen, L.

Johnston of Rockport, L.

Terrington, L.

Kimball, L.

Teynham, L.

Lane of Horsell, L.

Thomas of Gwydir, L.

Lauderdale, E.

Trumpington, B.

Leigh, L.

Ullswater, V.

Liverpool, E.

Vivian, L.

Long, V. [Teller.]

Wilcox, B.

Lucas, L.

Willoughby de Broke, L

Lucas of Chilworth, L.

Wise, L.

Lyell, L

Wyatt of Weeford, L.

McColl of Dulwich, L.

Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.17 p.m.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 112:
Page 58, line 24, leave out from ("capacity") to end of line 25.
The noble Lord said: My Lords, this is a probing amendment and something which I did not pick up in Committee. It relates to certain activities of Her Majesty under Clause 102. I am sure that the noble Lord will explain to me why Her Majesty,
"in right of the Duchy of Lancaster or on behalf of the Duchy of Cornwall"
should be exempt from the particular provisions of this part of the Bill. Although in her private capacity, as a resident, Her Majesty would be exempt, the Duchy of Lancaster and the Duchy of Cornwall are substantial
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businesses in their own right. I wonder why those are included in the Bill. I should be grateful if the noble Lord can put on the record exactly why they are included in the Bill. I beg to move.
Lord Howie of Troon: My Lords, I support my noble friend by drawing attention to the fact that the Duke of Cornwall, I believe, in this particular context, is a substantial promoter of construction matters, especially in a housing development in south west England. That is a perfectly proper thing for a developer to proceed with and to profit from in the ordinary way of business, but it is not perhaps an area which should be excluded from the Bill. It seems to me that the Duke of Cornwall—if I have mentioned the right chap because he has several names—at Poundsbury is not acting in any way different from any other developer. And why, if he differs in no way from any other developer, should he be excluded from the Bill? I may be wrong about that. I am wrong from time to 'time. Your Lordships will have noticed that. If I am wrong, I am sure that the Minister will explain to me just where I am wrong. If I am right, I am sure that he will accede to me.
Lord Lucas: My Lords, the general rule of constitutional law is that an Act of Parliament does not bind the Crown unless, and to the extent, specified in the Act. This Government's current policy is to ensure that government departments and other public offices are not protected by this rule. We were aware that many in the industry were anxious that these provisions should apply to contracts with government departments, and we have made sure that that would be achieved.
We did not seek, however, to hind the Crown in a private capacity or by virtue of its interests in the Royal duchies. I am pleased to see that the amendment would not affect our proposals with respect to the Crown in a private capacity. We will reflect upon comments on work in the Duchy of Lancaster and the Duchy of Cornwall and I will write to the noble Lord when we have done so. I am afraid that I cannot be more helpful than that at the moment, but we welcome the amendment.
Lord Williams of Elvel: My Lords, I am grateful to the Minister for welcoming the amendment. It is, as I said, a probing amendment. I look forward to a considered response from the Government in the light of the comments that I and my noble friend Lord Howie of Troon have made. I understand the complexities of the consultation in which no doubt the Government are engaged. I should not wish to intrude on any of those complexities. In the light of what the Minister said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 103 [Meaning of "construction operations"]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 113:
Page 58, line 26, leave out (", subject as follows.").
The noble Lord said: My Lords, again this is a probing amendment, possibly a probing drafting amendment. Since I have been following Bills from this

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Front Bench I have believed in the principle of Occam's razor and "Entia non sunt multiplisanda praeter necessitatem" if I may quote the terms of the razor. The expression "subject as follows" seems to me to be otiose in the context of the clause, but parliamentary counsel may have good reasons for including the words. I beg to move.
Lord Lucas: My Lords, as the noble Lord, Lord Williams, correctly points out, we are in the dark and mysterious world of legislative syntax here. I can confirm that parliamentary counsel like their choice of wording.
"Subject as follows" in the first line of subsection (1) of Clause 103 simply means that subsection (1) must be interpreted in the light of subsections (2), (3) and (4). Without this, the modifications suggested by the later subsections would fail to connect with subsection (1) and might even be seen to conflict with it. The phrase "subject as follows" is necessary to qualify the general definition in subsection (1) by reference to the exclusions in subsection (2), the inclusions in subsection (3) and any modifications made by order under subsection (4). With that assurance, I hope that the noble Lord will feel able to withdraw the amendment.
Lord Williams of Elvel: My Lords, I am most grateful to the Minister. As he said, parliamentary counsel have their own ways of drafting Bills. I am grateful that the Minister produced the reasons that parliamentary counsel have for the drafting. I find it rather odd; nevertheless, if that is the way it is required, that is the way it is required. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.30 p.m.
Lord Howie of Troon Lord Howie of Troon moved Amendment No. 114:
Page 58, line 29, after ("structures") insert ("or parts of buildings or structures").
The noble Lord said: My Lords, I must offer a kind of apology to the House. It seems that I contravened the conventions by interrupting the Minister in an earlier debate. I did not, and still do not, think that I contravened the conventions, but it has been explained to me by noble Lords opposite that I did. I apologise. The problem is that I did not know what were the conventions. I rather think that noble Lords opposite made up the conventions on the hoof, which is not too bad a way of going about this kind of business. I shall try to intervene, within the conventions, on the hoof, as we go through our business. I apologise if I disturbed the Minister at what was an important part of his reply.
This group of amendments relates to the definition of "construction", about which we had lengthy and, I thought, inconclusive debates at an earlier stage. As noble Lords will remember, the definition of "construction industry" was drawn from, I think, the Income and Corporation Taxes Act 1988 to be used as a framework for the definition in what was then Clause 102.
Many of us on this side of the House, and when I say that I am merely speaking geographically and not politically, because I should be putting forward the same arguments if I sat on the other side of the House, which I once did a long time ago, and who knows, might well do again, although I do not want to anticipate such an event which has nothing to do with our discussion. It has nothing to do with "this side of the House" which is merely a conventional term when I use it, and I always like to be understood.
We tend to think that the clause as drafted left out many things which should have been in. This group of amendments hopes to cope with some at least of those matters. As it stands, the grouping falls into two parts. Amendments Nos. 114 and 115 are different from Amendment Nos. 116, 117, 118, and 119 only in the sense that Amendments Nos. 114 and 115 are general rather than particular. Amendment No. 114 is a drafting matter and may turn out to be unimportant, although it has some reference forward to later parts of the Bill and to some of the matters we discussed on an earlier amendment when I talked about parts of buildings or structures. That hints at parts of projects which are not process but construction matters. I refer to foundations, structures and things of that nature.
It may well be that to refer to parts of buildings or structures is important. It is also important, I think, when we talk about demolition, as the Bill does. Even the most ardent demolisher might not want to demolish an entire building. He might wish to demolish merely a part of it. He might wish to demolish the wrong part; he might wish to demolish the right part. So to refer to the building as a whole does not seem to me to meet that matter. If one wished to demolish a hit of a building, say, a wing of a stately home or a wing of the National Gallery, that would be part of a building and could he construed as being different from the building as a whole.
Amendment No. 115 refers to "civil or building". Here, I try to define the type of structure that is referred to in order to differentiate it from the process industry. Noble Lords with long memories and close attention spans may recall that when the Committee debated the process industries I drew a distinction between parts an oil refinery, for example, in which the process plant was closely integrated with the structure—say, a catalytic cracker or something of that nature where it was extremely difficult to distinguish between the plant and the structure (I go a long way with the Government in making that distinction)—and foundations, ordinary structures and so on. These ordinary construction elements, as opposed to those that are closely integrated into a process plant, like catalytic crackers and matters of that kind, should be distinguished. I believe that this is a serious distinction. I give the Government credit for this. It is a difficult distinction to make. Perhaps I have not chosen the right words with which to make it, but it is a distinction that ought to be made because it is real.
Amendments Nos. 116 to 119 are drawn from a rather elegant amendment that I put down at Committee stage. It was summarily rejected by the Government with contumely, instead of being accepted with grace and dignity. In the Government's list of inclusions in

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Clause 113 (then Clause 112) a number of matters have been omitted or at best included by inference. The inference is slight, and I do not see it myself. For example, when one talks about harbours one wishes to include structures such as jetties and breakwaters. Those are sometimes, but not always, parts of harbours. Jetties sometimes stand on their own, like the oil jetties referred to at Committee stage. Sometimes breakwaters stand on their own as distinct from harbours. A breakwater may be there for a variety of purposes but it is a construction element in its own right and ought to be included as such.
I have said that tunnels ought to be added after waterways. Some tunnels are included in the sense that there is an implication that if one builds a road or railway one includes tunnels which are inherent in that road or railway or matters of that nature. But that does not include all tunnels. The tunnel that I have in mind—I apologise to the House for reverting again to my lengthy experience in this matter and perhaps becoming the prize bore of the year—is that comprised in the hydro-electric scheme at Glen Shira. The purpose of that tunnel is to convey water from a high level dam to a low level, just outside Inveraray, where the power station is situated. It is a pressure tunnel but not a tunnel in any sense in which that term is included in the Bill. That particular tunnel was constructed under the orthodox civil engineering contracts of the day.
It may be that Amendment No. 118 is a tautology because I have suggested the insertion of "hydro-electricity supply", but I do not apologise for it. Obviously, the example that I have given would be included under hydro-electric supply, but there are a number of other matters which are totally construction in nature and are concerned with hydro-electricity supply but which are not, as far as I can see—the Minister will tell me if I am wrong—concerned with hydro-electricity. I know, or believe, that the Bill refers to dams concerned with water supply, but as far as I can see dams that are concerned with hydro-electricity supply are not included in the Bill. It may be that we will not do much in the way of big hydro-electric schemes in the future, but if we have any sense we may well be involved in a sizeable programme of small-scale hydro-electricity which will demand small-scale dams. I believe that dams in relation to hydro-electricity may well be included. The Minister will be aware that since Britain is not blessed with deep canyons and features of that nature such as can be found in the United States, where a big dam can be built behind which a large body of water is impounded, it has relatively shallow reservoirs into which water is brought from a variety of sources through a body of aqueducts and matters of that kind. These aqueducts are all construction matters. I am not quite sure that they are included in the Bill.
I turn lastly to Amendment No. 119. I do not believe that the Bill deals adequately with the civil engineering aspects of flood control. I expect that the Thames Barrier is included in the Bill. That is a big item of flood control. There are a great many other items of flood control round coasts and so on which are different from coastal protection measures. Coastal protection is not the same as flood control. Although it may be a kissing
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cousin, it is not the same. I believe that that should be recognised in its own right. I have also added lighthouses. A lighthouse is an important civil engineering artefact. At the top of the coat of arms of the Institution of Civil Engineers is a lighthouse. That is Eddystone Lighthouse, which was designed and built in its modern form by John Smeaton. He was the first man in Britain to describe himself as a civil engineer. Therefore, the lighthouse has an historic significance.
Not only that but, who can tell, we might still want to build lighthouses. We might decide that we need them in order to prevent ships foundering on reefs, rocks and so forth. I dare say that they will not be manned as they were, but they are important construction artefacts. They are all "construction", apart from the lamp, I suppose; the lamps are bought in and will be excluded from the Bill. However, the lighthouse itself is a civil engineering artefact, and that should be recognised in the Bill.
I am sure that the Minister will tell me where these and other artefacts that I have mentioned are covered in the Bill. But I do not believe that they are, and they ought to be. I beg to move.
Lord Williams of Elvel: My Lords, the amendment proposed by my noble friend and the subsequent amendments to which he has spoken illustrate the difficulties of trying to define what is a construction operation in the Bill. The more the Bill goes into detail the more traps are set. Indeed, my noble friend made a series of interesting points. Whether or not they are to be supported is another matter. No doubt the Minister will explain in what way, if at all, they are covered by the Bill. The argument illustrates that subsection (1)(b) is extremely detailed but leaves out some important details.
I have only one question to ask the Minister. In re-reading that subsection, I imagine that "coast protection or defence" does not refer to defence-related industries. No doubt the Minister will tell us. I imagine that "coast protection or defence" implies the defence of the coastline against, for instance, the intrusion of tidal water or whatever and not against the intrusion of a potential enemy, requiring civil engineering work. I should be interested to know whether that is part of the provision and in hearing the Minister's interpretation of that expression.
Lord Berkeley: My Lords, the noble Lord, Lord Howie, raised some interesting matters of detail. Perhaps I may begin with his comments about lighthouses. I thought that lighthouses had been abolished; manned lighthouses certainly have. To a large degree, they have been replaced by floating buoys. One or two, such as the Royal Sovereign, were concrete structures. That buoy was cast ashore somewhere near Eastbourne and floated out with some degree of problem. It did not land on the seabed the first time but it did eventually. I do not know whether that is included. It does not appear to be from the definition that we have had. As one goes down the River Thames one sees steel frames which, I believe, are anti-aircraft batteries from the Second World War. Had they ever been used for the

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extraction of oil they would be excluded but, if not, any demolition of them would be included—and we go on down the route.
The most interesting project to examine is a combined water supply and hydro-electric project involving a dam, some pipelines, a reservoir, some tunnels, an office block and so forth. If it is a water supply project it is excluded under subsection (2). If it is a hydro-electric project it appears to be included. The reservoir is included and the tunnel might be included if the Government accept the noble Lord's amendment. Presumably the office block is included if the whole thing is demolished but if only half is demolished it will not be included. The pipes are excluded. The same applies in respect of flood controls; if they are water supply they are excluded but if they are for flood control only they are included.
Is there a problem of precedence as well as definition between subsections (1) and (2)? We appear to be getting deeper and deeper into the mire and I certainly do not see any way out.
4.45 p.m.
Lord Lucas: My Lords, I hope that it will be possible to find a way out, although I cannot yet enlighten the noble Lord, Lord Berkeley, because, as I said, this is a matter upon which we are still cogitating. However, I hope to be in a position to show the House at least the direction of our thoughts, if not the actual wording of amendments, which would be preferable, by Third Reading.
We believe that none of these amendments is necessary. The "construction" in Clause 103(1)(b) is a generality, which is,
"works forming, or to form, part of the land",
and then there is a selection of illustrations. I expect that there are thousands of individual items and ideas which we could include in the list. However, we have tried to include a sufficient number to give a good general idea of what is meant by the first part of the clause. The first part of the clause is the governing part, which enables us to say without fear of doubt that all the ingenious additions proposed by the noble Lord, Lord Howie, are unnecessary.
Perhaps I may tackle the amendments in order. Clause 103 (1)(a) deals with buildings and structures, which clearly includes parts of buildings and parts of structures, making Amendment No. 114 unnecessary.
As regards Amendment No. 115, we understand the noble Lord's interest in ensuring that his profession is not overlooked. However, the formidable list of examples of civil engineering works in subsection (1)(b) means that that is hardly likely to happen. Furthermore, all the suggested additions in Amendments Nos. 116, 118 and 119 fall within the meaning of,
"works forming?£part of the land",
in subsection (1)(b). Tunnels are covered in subsection (1)(b), to which Amendment No. 117 relates.
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I hope that with those assurances the noble Lord will feel able to withdraw his amendment.
Lord Howie of Troon: My Lords, I have a vague feeling that I ought to be pleased, but I am not sure about that. I ought to be pleased up to a point. I am struck by the thought that if Clause 103(1)(a) covers everything, the other subsections are not necessary. That is what the Minister said. He said that subsection (1)(a) includes all those things, so why list all this lot; or, if we list all this lot, why not list all the others, including the inoffensive items which I have asked to be added? Either the Minister is correct in saying that subsection (1)(a) includes everything or he is not—
Lord Lucas: My Lords—
Lord Howie of Troon: My Lords, do the conventions of Report stage mean that the Minister can interrupt me but I cannot interrupt him?
Lord Lucas: My Lords, we are both allowed, with the leave of the House, to interrupt each other in order to make brief clarifications. The brief clarification that I wish to make is that I said that the first part of paragraph (b) covers all the noble Lord's amendments except for Amendment No. 114, which is covered by paragraph (a), and Amendment No. 117, which is covered by paragraph (e).
Lord Howie of Troon: My Lords, I am sure that the noble Lord is right, as he is in relation to so many things. However, he referred to the first part of subsection (1)(b). It does not have a first part; there is only one part.
I should have thought that if he can include harbours, he can include jetties and breakwaters. If he can include pipelines, he can include a hydro-electricity supply. It is not too difficult and it would not do a great deal of harm. It would make matters clearer for those who are concerned about it. Therefore, I find his argument unconvincing. But I am sure that the Minister will reflect upon these comments.
Lord Williams of Elvel: My Lords, before my noble friend decides what to do with the amendment, will he ask the Minister what is the response to my question about coastal defence?
Lord Howie of Troon: My Lords, I was about to come to that. My noble friend mentioned coastal defence. There are a number of forts in the lower reaches of the Thames and probably elsewhere, so far as I can recall, which are not unlike oil rigs. In fact, they are more like gas rigs because they were designed by Posford and Pavrey, the same people who designed the first gas rigs. They are undoubtedly part of coastal defence in the sense in which my noble friend used the term, although not in the sense that I used it. I was much more specific.
Those are undoubtedly construction civil engineering matters. They were designed by consultant engineers and built by important construction contractors. They were intended for defence. They have guns and other weapons on them and are not meant for fun. Perhaps

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we may never have such things again. Who can tell? I sincerely hope that we do not. But, if we do have them, they should certainly be included in the province of the Bill. Therefore, my noble friend is right to raise those matters.
We talk about tunnels as being an integral part of this, that and the other. I can see the noble Lord's point but, in my opinion, that is where the clause becomes redundant and even—if I may use such a word in this House—otiose. I believe that the Minister is right to say that subsection (1) deals with everything. I agree that it does. I should be happy if we had subsection (1)(a) and left out everything else. I may have second or third thoughts about that. The Minister is taking up this point only because the clause was plagiarised from income tax legislation and he does not want it changed because of the embarrassment that that may cause. That is the simple reason; it is not a bad reason. He is being pressed by people from all quarters not to change the legislation. But, in terms of intellectual purity or even ordinary common sense, if there must be a list, it should be reasonably complete, simple and uncomplicated.
The list that we have is not complete, as I have shown, because I have proposed simple additions which a child might wish to add because they are obvious. There are then the operations that form an integral part. I believe that at an earlier stage of the Bill, an unkindly chap described this as a bit of a shambles. I hope that I did not do that, although I might have done, because it is a shambles. Of course, I shall withdraw the amendments. I believe that the Minister wishes to intervene.
Lord Lucas: My Lords, with the leave of the House, I feel that I should reply to the question asked by the noble Lord, Lord Williams. I have a helpful note in front of me which reads: "Williams: coastal defence. Yes, this is just coastal defence". I am not totally enlightened by that but I believe that the note means that that example refers to coastal defence. But, on my reading of the Bill, building a fortress from which to fire guns at the enemy would also be a construction operation. My mind then runs on to consider whether in Clause 103(1)(a), demolition of buildings or structures (whether permanent or not) would include shooting at it with a howitzer. Therefore, if I may, I shall write to the noble Lord, Lord Williams, on exactly where are the beginnings and ends of the clause in relation to warfare.
Lord Howie of Troon: My Lords, I am grateful to the noble Lord for that intervention, which seems to have nothing to do with me. However, it gave me some guidance as to the kind of intervention which can usefully be made on Report since I was rebuked earlier. I shall take that as my guide rather than the advice which I received from the noble Lord and his companions earlier. Therefore, he should look forward to lengthy interventions unless I become more kindly disposed towards him.
I believe that the clause is preposterous. Nobody to whom I have spoken in the industry—and I know a fair number of people in it—believes that there is any sense in this clause. People may have had to put up with this
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when dealing with their income tax but this is a totally different matter. I believe that I could have saved the time of the House by proposing to delete everything after subsection (1)(a) and to leave it at that. But, bearing in mind that that is what the Minister believes although he dare not actually say so, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 115–119 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 120:
Page 58, line 37, after first ("of') insert ("fittings forming part of the land, including (without prejudice to the foregoing)").
The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 121 and 137, which stand in my name, and to Amendments Nos. 136, 138 and 139 in the name of the noble Lord, Lord Williams of Elvel.
I hope by now it is clear that we have taken the comments made in Committee very seriously. The exclusion of work on seating, blinds, shutters and security systems was challenged then by the noble Lord, Lord Williams of Elvel, and my noble friend Lord Ferrers undertook to consider the point.
This we have now done, and have concluded that there is a case for including the installation of the items mentioned within the definition of construction operations. This requires not only the simple deletion of subsections (2)(h) and (2)(i) of Clause 103, which we would achieve with Amendment No. 137 but also a widening of the list of systems covered by the Bill, as achieved by Amendment No. 120. We also felt it was helpful to add the examples of security and communications systems to those already present in Clause 103(c) to widen the types of system given as examples. This is the purpose of Amendment No. 121.
I hope that the noble Lord, Lord Williams, will recognise the efforts that we have made to meet his concerns and that he no longer feels the need to move Amendments Nos. 138 and 139. However, I understand that the noble Lord wishes me to address Amendment No. 136 now. Of course, I am happy to do so. We did not omit subsection (2)(g) from our scrutiny of the changes that have been suggested. I am pleased to he able to tell noble Lords that we believe that there is indeed a case for much of the work specified in paragraph (g) to be considered as construction operations. Our only hesitation is that we believe it may not be appropriate to include some signwriting activities—such as, for example, painting a pub sign—particularly where there is very high artistic content. However, we have been convinced that work on "signboards and advertisements" is a straightforward construction operation and we shall be bringing forward a suitable amendment as soon as possible. I beg to move.
5 p.m.
Lord Williams of Elvel: My Lords, I am grateful to the Minister for bringing forward Amendment No. 120. I am also grateful for Amendment No. 121. I shall speak to the same group of amendments. We did, indeed, raise

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such concerns in Committee. I have no difficulty in accepting the Minister's response to Amendment No. 136. No doubt we will have an amendment from the Government at a future stage which meets the concerns expressed. I am glad that the Government have accepted that paragraphs (h) and (i) are really not suitable to be excluded from the operation of the Bill.
I have one small question for the Minister. It is really a question of interpretation upon which we need, if I may put it this way, a ministerial explanation. Amendment No. 120 refers to,
"fittings forming part of the land".
I would be most grateful if the Minister would elaborate as to what that phrase means in very simple English. I hope that the noble Lord will be able to do so without further ado. However, if he wishes to take further advice, I shall be happy to wait.
Viscount Ullswater: My Lords, I am grateful to my noble friend the Minister for bringing forward the amendments. Unlike the noble Lord, Lord Howie, I believe that it demonstrates that the Government are listening. They are sensible amendments. My noble friend also indicated that he will look at Amendment No. 136 tabled in the name of the noble Lord, Lord Williams. I expect that something could be done in subsection (2)(f) to include the artistic nature of the pub signs about which my noble friend was worried. The amendments demonstrate the care with which your Lordships have studied the issues raised in Committee. I am pleased that my noble friend has been able to bring forward such sensible amendments.
Lord Howie of Troon: My Lords, Amendment No. 120 refers to,
"fittings forming part of the land, including (without prejudice to the foregoing)",
whatever the latter may be. I want to ask the same question posed by my noble friend Lord Williams. What does the phrase,
"fittings forming part of the land"
really mean? Does it, by any chance, include such things as jetties which I have mentioned from time to time? I am not sure that they are fittings in the strict sense of the word, and I am not sure that they form part of the land. However, they do connect to the land and therefore might be thought of as being an extension of the land. I am perhaps talking nonsense but I talk nonsense in the search for enlightenment in this case.
Lord Elton: My Lords, would not the instrument which prevents the ingress of unwelcome visitors to your Lordships' car park when it is raised and which forms part of the road when it is lowered be a fitting which is also part of the land?
Lord Ezra: My Lords, I share with other noble Lords who have spoken a slight incomprehension as to the meaning of the phrase. I believe that it is intended to generalise that part of the clause. If that is the case, I am very much in favour of it. It has already been made clear
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that what is stated in Clause 103(1) is not exclusive, and the more that that is referred to throughout the clause the better.
Lord Lucas: My Lords, I am delighted to confirm everything that the noble Lord, Lord Ezra, says. The amendment would indeed make the clause general whereas it was not so before. As to the meaning of the phrase,
"fittings forming part of the land",
the general rule of law is that whatever becomes attached to the land becomes part of it. An object which was attached to the land or which was attached to something which was itself attached to the land would be covered by the provisions. It does not matter whether it is easy to remove, such as something merely screwed to the wall, or whether the attachment is more substantial. Examples of such fittings,
"forming part of the land"
would include a fireplace, panelling, a conservatory on a brick foundation or radiators bracketed to a wall. The dividing line between things which are fixed and not fixed might be the telephone on one's desk which is not fixed to the land and the socket in the wall which is. That is the sort of dividing line I would think of, but of course it is something that would be determined in each individual case.
So far as concerns jetties, if a jetty is installed inside a building then it comes under the clause. If it is not installed inside a building but is outside, it comes under subsection (1)(b).
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 121:
Page 58, line 39, at end insert (", or security or communications systems").
On Question, amendment agreed to.
The Deputy Speaker (Lord Broadbridge): My Lords, I must inform your Lordships that if Amendment No. 122 is agreed to I cannot call Amendment No. 123 due to pre-emption.
[Amendments Nos. 122 to 124 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 125:
Page 59, line 13, leave out (", or construction of underground works,").
The noble Lord said: My Lords, in moving the amendment I shall, for the convenience of the House, speak also to Amendment No. 126 tabled in the name of my noble friend Lord Howie. In Committee we discussed the construction of underground works. I came away from that stage with the feeling that we really had not arrived at any agreement as to what construction operations are properly excluded, perhaps by tunnelling, and construction operations which should be included in the Bill such as the activities of propping up tunnels and various civil engineering works underground.
My noble friend has formulated an amendment—Amendment No. 126—which is perhaps rather better than mine. However, I believe it would he sensible for

927
the House to have another look at the construction of underground works. I feel that there are matters here which are still in the grey area between construction operations and those operations which are not of a construction type, which we have not yet resolved. I very much hope that we shall hear more from the Government what they can do to help the House. If I had been asked to choose between my amendment and that of my noble friend Lord Howie, I would probably have chosen my noble friend's amendment which seems to be slightly better drafted than mine. Nevertheless I believe it is time that your Lordships had a view from the Government after our discussion in Committee. I beg to move.
Lord Ezra: My Lords, I believe that this is an area which needs to be clarified. My experience of the construction of underground mines is that the civil engineering industry played a major role. I believe that the modifications proposed either in the name of the noble Lord, Lord Williams, or of the noble Lord, Lord Howie, need to be taken seriously into account.
5.15 p.m.
Lord Howie of Troon: My Lords, I am extremely grateful to my noble friend Lord Williams for preferring my amendment to his. I was a little taken aback that he should say such a thing although he and I retain relatively good relations most of the time. I think the Government should reconsider the discussion we had on this matter in Committee, in the course of which the noble Lord, Lord Ezra, spoke. He has just spoken briefly, I think rather too briefly in the light of his immense experience of underground working and indeed of placing contracts for underground working. If the Government reconsidered the Committee stage discussion they would recognise, or perhaps begin to understand, our several experiences in the construction of coal mines.
There is a problem here. The construction of a coal mine includes a certain body of surface works, some of which will be railways, roads, bridges and the supply of water for the washery, and some of which will be buildings for water supply, most of which would, I think, in the time when the noble Lord, Lord Ezra, ran the Coal Board, have been placed under civil engineering contracts and would have been happily so placed under the Bill.
However, there is a more difficult part of the problem as regards digging a shaft. The shaft for a coal mine is normally, I cannot say constructed—I suppose that excavated is the word. It is excavated and lined by a civil engineering contractor. As the noble Lord, Lord Ezra, said, when he ran the Coal Board that work would have been let under a civil engineering contract; that is, it would have been regarded as part of construction, and it certainly would have been in mining.
I do not think that the Government have really thought this matter out. They think that everything underground is the same. If one digs a tunnel before the extraction of minerals—in the case we are discussing the mineral is coal—that would be a mining operation.
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But before one can begin the mining operation—that is, digging the horizontal tunnels and the horizons and all of the structures out of which coal is won and extracted from the ground—one must get into a position where one can do this. One gets into that position by excavating a shaft and lining it with concrete. That is a straightforward and orthodox, although quite difficult, construction project. There is absolutely no reason why that part of the effort of winning coal, for example, should be excluded from the Bill. That is why I drafted my amendment in the way I did.
I drafted the amendment myself without advice from anyone. It may well be imprecise and inexact; it may not quite meet the high demands of parliamentary draftsmanship. We have frequently criticised the draftsmanship throughout the Bill. Nevertheless, I make a serious point in that insofar as the work on a site—being the site of the coal mine in this case—is on a site which is directed towards the gaining of minerals and is itself operated under a civil engineering contract, it should be included in the ambit of the Bill. This would not matter where the contract was precise but it does matter where the contract relates to the scheme—which no doubt we shall discuss later—because if the work were not done under a civil engineering contract and the scheme had to come into play, that particular piece of work, in its contractual sense, would be in a kind of limbo.
I shall not insist on the wording of my amendment but I want the Government to say that they have looked carefully at the comments of the noble Lord, Lord Ezra, which he made in Committee—I do not think the Government have looked at them closely enough as yet—and the rather less important remarks I made. I hope that the Government will think again about this matter and return to us with some kind of proposal which deals with what is a serious point concerning the delineation between what is actual construction work and what is not. At the minute the Government have used a blanket, blunderbuss approach which is totally inadequate and which no one in the construction industry believes in. The Government should give this matter much more careful thought than they have done to date.
Lord Berkeley: My Lords, we discussed this matter in Committee but I am a little worried about the amendment of the noble Lord, Lord Howie of Troon. I am not sure how one recognises a civil engineering or building contract unless it happens to come within the terms of the noble Lord's special scheme. I refer to the words in the Bill,
"tunnelling or boring, or construction of underground works, for this purpose".
It is a matter of trying to get to the site of the mineral extraction. I do not think there is much difference between tunnelling or boring. Usually it is the same thing. It might be a matter of drilling and blasting, boring with a machine drill, or building a shaft or underground caverns, or the kind of thing to which the noble Lord, Lord Howie of Troon, referred.
The real problem lies in defining whether one wishes to extract minerals, or whether one wishes to construct something else, and one uses what comes out—it I can

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put it crudely—as a mineral. I believe that on Second Reading or in Committee I referred to the fact that all the spoil that came out of the seaward drives of the Channel Tunnel—I declare an interest in regard to the Channel Tunnel—was strictly mineral because Eurotunnel had to pay a royalty to the Crown Estates. That is another good reason for leaving the Duchy of Cornwall out of this.
I can foresee lawyers having a wonderful time in the future defining what was the main purpose of a particular construction activity. It may be to extract coal or gravel. Who knows what will happen in the future? However, the situation is confusing at present. The amendment proposed by the noble Lord, Lord Williams of Elvel, goes some way to improving the position. I hope that the Government will look at the issue again because it is extremely unclear.
Lord Lucas: My Lords, as noble Lords clearly realise, we are dealing with one of the boundaries here and one can look at the issue either way. One can say, as we have done, that the best way to draw the boundary is for mining to be out. One then gets into the problem outlined by the noble Lord, Lord Berkeley. Alternatively, I can think of another problem: gravel was extracted in large quantities in order to make a boating lake. Was that in or was that out?
The noble Lord, Lord Ezra, and the noble Lord, Lord Howie, have quite correctly pointed out that mining operations commonly involve large contracts which we would all recognise as being construction and that in principle it would be nice to have those within the scope of the Bill. However, we have been unable to devise or to find solutions in the proposed amendments as regards exactly where those lines should be drawn.
The problem continues to rest on the difficulty of distinguishing between mining operations and civil engineering operations. We heard in Committee from the noble Lord, Lord Ezra—and we heard from him again today—that he had no difficulty distinguishing the two but no one has, as yet, suggested how this may be done satisfactorily in legislative terms.
It is true, of course, that with Amendment No. 126 the noble Lord, Lord Howie of Troon, has attempted the task for us. But I am afraid he has run straight into difficulties. It is perhaps worth pointing out that when the Department of the Environment conducted its consultation exercise on fair construction contracts last year, there was broad support for ensuring that the resulting provisions were not restricted to standard form contracts. We have therefore not sought to tie the application of Part II to the use of any particular type of contract, and it would be inconsistent of us to do so now.
It would also throw up all sorts of problems. We would need to establish what was meant by a,
"recognised civil engineering or building contract",
as the noble Lord, Lord Berkeley, pointed out, and how that recognition could be updated from time to time. We would need to decide how to deal with contracts where provisions had been struck out, or where they had been
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inserted; and we would still be left with the prospect that, even with the amendment of the noble Lord, Lord Howie of Troon, in place, any party could simply avoid these provisions by insisting on using a bespoke contract. In other words, the noble Lord's amendment would have little effect.
The Government are not unsympathetic to these amendments, but we genuinely believe that in achieving their intent we would throw up too many additional complications. However, we shall look again carefully at what has been said today. If we can offer any prospect of a way forward we shall let noble Lords know by Third Reading.
Returning to the question asked by the noble Lord, Lord Berkeley, as regards the use of excavated material, I can do no better than to repeat the advice I gave to the noble Lord, Lord Williams, in our letter of 16th April. Where material such as gravel is taken from an area not otherwise involved in the construction process and used in that process, this would count as mineral extraction. In contracts for work involving borrow pits, parties may choose to extend the terms of the legislation by contract to the whole of the process, but the pit which is not otherwise involved would be outside the terms of the construction contract.
Lord Williams of Elvel: My Lords, I am grateful, as always, to the noble Lord for his response to my amendment and for the expression of sympathy from the Government on the thrust of the amendment.
I recognise that this is a difficult area. However, it is for the Government to solve difficult problems. I hope that by the time we come to Third Reading, the Government will have had further thoughts and will have been able to solve the problem with the sympathy which the noble Lord expressed this afternoon. In the light of what the Minister said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Howie of Troon Lord Howie of Troon had given notice of his intention to move Amendment No. 126:
Page 59, line 14, at end insert ("except insofar as this work is carried out under a recognised civil engineering or building contract").
The noble Lord said: My Lords, my blood ran cold when the Minister said that he sympathised with my amendment because in my experience that is usually the nail of doom.
The noble Lord is quite right. I admitted that the wording of the amendment was my own and therefore might not have met his high standard. I recognise the difficulty of using the word "recognised" as regards a form of contract. I accept that as a real objection to my amendment. However, I remind noble Lords that in other parts of the Bill the word "adequate" was considered adequate for the Government's purposes. Using the words of the Bill, perhaps the words "an adequate civil engineering or building contract" might be the way to phrase the provision. I put that thought to the noble Lord for further consideration.
I am glad that the Minister's mind is not closed on the matter. With those brief, and I hope not unwelcome, remarks, I shall not move the amendment.
[Amendment No. 126 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 127:
Page 59, line 15, after ("plant") insert ("or").
The noble Lord said: My Lords, the amendment stands in my name and in the names of my noble friends Lord Dubs and Lord Howie of Troon. It may be for the convenience of the House if I speak also to Amendment No. 128.
The purpose of the amendment is simple. It is to challenge the exclusion of steelwork from construction operations. I am advised that, unless otherwise specified, steelwork is an essential part of construction activity and construction operations. I see no reason why in the provision,
"construction, installation or demolition of plant, machinery",
and so on, steelwork should be included where there is a primary activity of whatever it may be.
We discussed this issue in Committee. My noble friends Lord Howie and Lord Berkeley introduced several examples of steelwork being part of the construction operation, even under paragraph (c) of the provision. I see no reason why the Government cannot respond to that. I beg to move.
Viscount Ullswater: My Lords, I believe that the inclusion of the word "steelwork" in this provision is confusing. Therefore I ask my noble friend to give consideration to Amendment No. 128. I should have thought that the word "plant" would be sufficient to include the kind of steelwork to which we refer. The subsection deals with the process industry.
Perhaps I may put it another way. The difficulty has already been recognised by the Government in the amendment that they put forward at Committee stage. They included—that is, excluded from the exclusion—warehousing when they sought to make clear the meaning of bulk storage, especially when considering its application to food and drink.
I shall wish to speak later to an amendment which deals with steelwork. However, I ask my noble friend to consider carefully whether there might not be some confusion as regards the word "steelwork" in this subsection of the Bill.
Lord Elton: My Lords, perhaps I may add a request to what my noble friend has said. Perhaps he will explain to me as a layman what will happen when a high-rise block is built: all the works after the foundations are set are steelworks and the building is put on to the steelwork afterwards. Am I using the term in a sense not intended in the Bill? If not, what will be the effect of the inclusion of the words which the amendment proposes to take out of the Bill on contracts for the construction of that kind of building?
5.30 p.m.
Lord Berkeley: My Lords, perhaps I may respond to the noble Lord, Lord Elton. The amendment refers to
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steelwork and plant and machinery in respect of the process plant. We discussed the point earlier when I spoke to another amendment. I was pleased to hear the comments of the noble Viscount, Lord Ullswater, about the problems of the steelwork industry. Its representatives have written to us and said that the industry is beset by bad payment practices. The whole purpose of the Bill is to try to avoid bad payment practices, and they are what the Bill seeks to overcome. That is the strong message from those who put up steelwork—that is steel frames around process plants, water treatment plants and anything else that is included in the provision—and I urge the Government to reconsider the point. It may be perfectly adequate for plant or machinery, but, for the reasons which I mentioned earlier, steelwork needs to be included in the Bill. Therefore, I support my noble friend's amendment.
Lord Howie of Troon: My Lords, I too support the amendment, not surprisingly, since my name is attached to it. For once I do not think I am confused, but in so far as there is any confusion when we use the word "steelwork" in the construction industry, we mean structural steelwork. We sometimes refer to reinforcing, but when we do so it is in a context where we know what we are talking about. This reference is to structural steelwork, components of buildings. The components will be roof trusses, columns or gantries, the skeleton of a building. The noble Lord, Lord Elton, referred to the skeleton of a tower block. I do not believe that that applies here, although I may be wrong, because it is on site and relates to certain parts. If I am right, it would be odd if the structural steelwork for a tower block were included under the Bill but the structural steelwork on the sites covered in the subsection were excluded. I say that off the top of my head and I hope I am right.
Structural steel elements are wholly different from plant, whether the plant is machinery or what one brings in for heating, ventilating and similar needs. The structural steel elements are an integral part of the construction process. The fact that they are built somewhere else and brought on to the site is immaterial; they are part of the process and are usually ordered under the normal conditions of contract which apply to the construction industry. I have received a couple of letters which have no doubt also been sent to my noble friends and it is probably in order for me to quote one of them. A structural engineer who is in the business of making the structural components I am talking about writes to us in the following terms. I hope that he wrote to the Minister, although the letter does not suggest that. He states:
"steel is specifically cut, burned, drilled, welded to fit a specific construction task",
not another task.
"It already suffers from being one of the first things that entails substantial expense on a project and being subject to onerous conditions making it late in payment, but being off site until 90% of the value has been spent"—
that is, spentby the steelwork provider—
"means that it is less easy to get paid for: and therefore it needs the full protection from the construction bill"

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The key comment in that quotation is,
"less easy to get paid for".
One of the main aims of the Bill is that it should be easier for subcontractors to get paid for the work which they do. To exclude the steel contractors from the Bill excludes them from one of the Bill's main aims. I cannot imagine that that is the Government's aim.
I have received another letter from the British Constructional Steelwork Association, which I shall not quote, which supports that view. A distinction ought to be made, and has not yet been made in the Government's mind—I hope that the Minister is having an interesting conversation with the Whip; I am sure he will turn his attention to us fairly soon. Of course he will. I am pulling his leg. The Government have not adequately distinguished between what is understood in the construction industry, by both clients and constructors, as construction. They have probably done so under the influence of the Department of Trade and Industry, but I do not wish to go into that.
The Government should think carefully about the amendments and come back to us with a resolution which indicates that if they have not understood the points properly they have at least turned their minds to them and considered them.
Lord Lucas: My Lords, what more can I say to the noble Lord, Lord Howie, but, yes, certainly we shall return? This is very much one of the areas around the edges of the process industry that still perplexes us but not, we hope, for too long.
I am confident that at Third Reading I shall be able to say more about the point, but for the moment we are still turning it over, discussing it and trying to get the right formulation. I have little more to say other than that we recognise that we must tackle and solve the problem. It has been well discussed and eloquently advocated in the House. We paid great attention to what was said in Committee and will pay attention to what has been said today. I look forward to bringing a resolution to the House in a week's time.
Lord Williams of Elvel: My Lords, again I am grateful to the noble Lord for his assurance that on Third Reading the Government will produce a resolution to the problem. As he has heard and, I am sure, understands, it is a difficult problem. The support of the noble Viscount for the amendments will weigh with the Minister in what he has to produce on Third Reading. We look forward to that. In the light of what he said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 128 not moved.]
The Deputy Speaker (Lord Skelmersdale): My Lords, in calling Amendment No. 129, I should say that if the amendment is agreed to then I cannot call Amendment No. 130.
Lord Howie of Troon Lord Howie of Troon moved Amendment No. 129:
Page 59, leave out lines 17 and 18.
The noble Lord said: My Lords, the arguments in favour of my amendment to delete:
"nuclear processing, power generation, or water or effluent treatment, or"
are identical to the arguments which I raised earlier in relation to civil engineering works in mining. All those activities involve a very large element of straightforward old-fashioned construction work. You cannot build a nuclear processing plant I presume that means a power generation plant of any kind—without digging a hole in the ground. The hole you dig in the ground is a straightforward, old-fashioned civil engineering process called "muck shifting". You dig a hole, and in that hole you put the foundation. At the top of the foundation you put a shed of some kind, which encloses the nuclear plant, power station or whatever it happens to be.
Earlier, the noble Viscount, Lord Ullswater, quite properly referred to the Government's decision to exclude warehouses. Thinking about the matter rationally, a power station is just a kind of big warehouse, is it not? It is a shed. You do not pack baked beans in it or anything of that sort, but you pack certain plant in it.
That plant is excluded from the Bill; nobody argues about that at all. But there is an immense body of civil engineering (construction) activity that is involved in producing the "envelope", the shed, in which the processes are conducted. There is no possible argument for excluding the civil engineering works concerned with a nuclear power station, or any other power station or water treatment plant, from the Bill. Those are classic civil engineering operations and are to be included in the Bill.
Why on earth cannot the Government just recognise that? Why can they not quite properly exclude from the Bill those functions that are mechanical or electrical engineering or something of that sort, but leave in those that are quite obviously construction works, such as muck shifting, producing the foundation, building the envelope on top of the foundation and putting the roof on the top? I do not see any problem here.
I sincerely hope that the Government will have second thoughts about this matter. If they will not accept the amendment as it stands, I hope that they will at least accept the thought that lies behind it.
Lord Ezra: My Lords, I support the noble Lord's remarks. I have visited many power stations in my time. I supplied most of them in those halcyon days in the coal industry. Anybody who has ever visited a power station will recognise that what is visited is a vast structure which entirely dwarfs the equipment within it: the boiler plant, the turbines and the generators that produce the electricity. It is the structure that you see and the structure that you enter. A vast part of the work is civil engineering.
We are here, I suppose, to try to help the Government as much as we can through this difficult Bill. However, this is another issue which I hope the noble Lord will examine carefully in order to come back with a suggestion at Third Reading.
Lord Berkeley: My Lords, given the amendment tabled by the noble Lord, Lord Howie of Troon, in relation to paragraph (c), if the Government accept the removal of the word "steelwork", which we have just discussed, paragraph (c)(i),
"nuclear processing, power generation, or water or effluent treatment",
could be interpreted as referring only to the pieces of plant or machinery that are brought to the site and put on those lovely foundations that we have built, having done the muck shifting. After that, you connect up a few pipes and wires—which is a very simplistic description of the enormous amount of work that has to take place—and away it goes. It is slightly different and a little more complicated for a nuclear installation. The bulk of expenditure for water and treatment plant is in civil engineering and structural steelwork.
Perhaps the Minister, in responding, can clarify the meaning. Does this subsection refer just to the plant and machinery, which basically come in a box and are plonked on a foundation; or does it include the whole contract, including all the matters to which the noble Lord, Lord Howie, referred?
5.45 p.m.
Viscount Ullswater: My Lords, the noble Lord, Lord Berkeley, has put his finger on it. This is the point that we were discussing in Committee. However, we keep being drawn back to structural steelwork and the construction of warehousing and sheds. As the noble Lord, Lord Berkeley, said, I believe that this part of the Bill is to be interpreted as referring purely to plant and machinery. That is why, in speaking to the previous amendment, I said I thought the word "steelwork" was confusing at that point. I also said that I had another remark to make later about steelwork.
I agree with the comments that have been made. I do not agree with the amendment, since I do not think it is necessary. However, if my noble friend can confirm that we are not talking about shells and structural steelwork but merely about plant and machinery, that will be very helpful.
Lord Lucas: My Lords, the noble Lord, Lord Berkeley, has got it pretty well right, as one would expect. The phrasing here is,
"construction, installation or demolition of plant, machinery or steelwork"—
as we have just discussed—
"on a site where the primary activity is".
The governing phrase is,
"construction, installation or demolition of plant, machinery".
That is what we are talking about. There are grey areas enough in relation to that, if we think of building a sewerage works, for instance, as to which part is construction and which part is machinery. It is quite clear that the dividing line is there, and that in the wording of the Bill as drafted we confine the process section to that which has to do with plant and machinery.
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Within that, it is quite clear to us that industries such as,
"nuclear processing, power generation, or water or effluent treatment",
are at their heart, when it comes down to machinery, process industries and ought to be within the exclusion. But the construction operations that go with them, subject to the inevitable grey area, should be without the exclusion.
Lord Berkeley: My Lords, perhaps I may offer to the Minister a point of clarification. What has confused me, and possibly some other noble Lords, is the use of the word "construction" in this instance. I do not think that you ever "construct" plant or machinery. You fabricate it, and then you install it. It may be that we are so used to "construction" being civil engineering construction that we are becoming confused. (Perhaps it is I who am becoming confused.)
Lord Lucas: My Lords, we shall certainly take that point on board.
Lord Howie of Troon: My Lords, as always, I am indebted to my noble friend Lord Berkeley for pointing out the hole in my argument, which he did with what might be called unerring aim. I agree with him.
My purpose in tabling this amendment was to have on record, which is important, an admission by the Government that those construction elements as we understand them in the various process plants are included within the Bill. Having received that assurance—it should have been clear to me; but then I struggle with these matters—I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 130:
Page 59, line 17, leave out ("or water or effluent treatment").
The noble Lord said: My Lords, this amendment reflects an amendment moved in Committee and is rather more narrowly focused than the amendment we recently discussed in the name of my noble friend Lord Howie of Troon.
It is our continuing contention—in spite of the arguments put forward by the Government—that water and effluent treatment are fundamentally construction activities; that is, they are activities which properly fall within the construction industry. We contend that such treatment involves not merely the installation or demolition of plant and machinery. Much of the work is carried out by firms which we recognise as being part of the construction industry.
The water industry frequently uses what is known as form G90, which offers a reasonable form of protection for main contractors. However, subcontracts are frequently one-off documents on the main contractor's own terms which produce problems for subcontractors in the building industry which the Bill seeks to address.
We come back to the difficulty of main contractors, subcontractors and sub-subcontractors. Main contractors may be reasonably protected, though form G90 does not contain any adjudication provisions. However,

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subcontractors, often smaller businesses, need the protection afforded by the Bill. Amendment No. 130 seeks to ensure that water and effluent treatment are accepted as a construction industry activity because all water and sewerage plants are produced and undertaken by construction companies. Any machinery outside their ambit is brought in in the context of a construction activity. Therefore, where the Bill reads,
"construction, installation or demolition of plant, machinery or steelwork on a site where the primary activity is … water or effluent treatment",
our contention is that water and effluent treatment are fundamentally construction industry activities and should not be included here. However, subcontractors should be given the protection of the Bill.
Again, I understand that this is a grey area. We discussed this matter at Committee stage but I hope the Government will look at it again. I am advised by people who know much better than I that this expression in the Bill is something that they would like reconsidered. I beg to move.
Lord Monkswell: My Lords, I rise to support my noble friend on Amendment No. 130. It may be useful to draw a distinction between water or effluent treatment and the other two elements that are contained in this section of the Bill; that is, nuclear processing and power generation. As an engineer I am concerned that nuclear processing, power generation and water or effluent treatment are lumped together. I can see a great distinction between them and perhaps I may explain my reasoning to the House.
When one looks at nuclear processing or power generation activities, one sees that a large part of the operation of the plant as a whole will be precision engineering. When one talks of nuclear processing or power generation one expects there to be complex and precise engineering and specialist scientific plant that will be part of the whole site. In that sense a large proportion of the value of the whole contract will be concerned with precision engineering, which is rather different from the normal construction site type of operation. Therefore, the pure construction side—concrete laying, steel erecting and so forth—will make up only a small proportion of the cost of the overall project.
When we consider water and effluent treatment, that element of precision engineering which will no doubt be carried out by an engineering company and be built and delivered to the site will make up a much smaller proportion of the cost of the whole project. I hesitate to argue percentages, but it will be generally understood that the construction activities in building a water or effluent treatment plant will make up a large proportion of the total project cost. In that sense it is sensible—that is why I support my noble friend's amendment—to separate the water or effluent treatment activity from nuclear processing and power generation. I hope that the Government respond sympathetically to the amendment.
Lord Lucas: My Lords, yet again we find ourselves discussing the division between process and
938
construction. The water industry is a particularly difficult area. On the one hand, there is a great deal of construction involved in its activities and, on the other, the industry spends around £500 million a year on processed plant and therefore has a large element of process in it.
We promised to look again at the introduction of subsection (2)(c) to make sure that the right line is drawn between process engineering and other types of construction activity. Until we have done that and reached our conclusions, we do not want to look at how it will work within specific industries. For the moment we want to keep the water industry in the section. To a large extent it is a process industry and we do not want to lose that element in the generality of construction for reasons we outlined when discussing the first amendment this afternoon.
Lord Williams of Elvel: My Lords, I am glad that the Minister reaffirmed that the Government are looking at the whole question again. As I said, I received advice from somebody who knows much more about these matters than myself. I am sure that the Government will consult with those who know more about the problem.
This was a specific point which was felt to be particularly sensitive. Nuclear processing and power generation were not brought to my attention but water and effluent treatment were. I am sure that in considering their position the Government will talk to those who advised me on this matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 131:
Page 59, line 20, leave out ("chemicals, pharmaceuticals,").
The noble Lord said: My Lords, in moving Amendment No. 131 I shall speak also to Amendments Nos. 132 and 133. All three amendments stand in my name and that of my noble friend Lord Dubs.
The discussion in Committee took us some way forward. The Government eliminated warehousing from this section. It may be a matter of drafting and of substance as to why chemicals, pharmaceuticals, food and drink are singled out for bulk storage or production purposes. It seems to me that if the subsection which we are now addressing simply said,
"the production, transmission, processing or bulk storage"
of any commodity, that would probably meet the case. I would like to know why chemicals and pharmaceuticals appear where other things which, after all, are stored in bulk do not appear, and why food and drink is singled out as being a specific matter which needs to be mentioned here.
Once we have admitted that warehousing may well be a construction activity and, therefore, within the ambit of the Bill, it does seem to me that almost all food and drink, other than the bulk storage of what goes into the final product, is relevant for the purposes of this section.
Again, these are purely probing amendments to find out why the drafting resulting from the discussions we had is the way it is and whether there is any justification for keeping in these elements here. I beg to move.
6 p.m.
Lord Swinfen: My Lords, I wish to raise a small point: should it not be "food or drink", rather than "food and drink"? Otherwise, I wonder whether it has to be a warehouse with both food and drink in it and, if the warehouse has either food in it or drink in it on its own, whether it falls outside the Bill.
Lord Howie of Troon: My Lords, I am not quite sure whether I should speak at this moment, because "food and drink" does not seem to be included in the amendment, but it seems to be near enough for me to have a go. I see that in line 21 not only food and drink and other things are mentioned, but steel is mentioned. In an earlier discussion we wondered whether we should delete "steelwork" from the same clause of the Bill. I am pretty sure that if we decide to delete "steelwork" it would be quite sensible to delete "steel" as the first word of line 21 as well. I throw that into the air in the hope that it will land somewhere fruitful.
Lord Lucas: My Lords, in this clause of the Bill we are trying to get as close as we feel able, at least in the days before we come to our new conclusions, whatever they may be, to the desire of the noble Lord, Lord Williams, to keep the definition of the processing industry quite close. Therefore, we have defined the major users of process engineering as being the industries which are excluded. They are, first, food and drink, which spent £1.7 billion on process plant last year; £1 billion of expenditure came from the chemicals industry, with petroleum, oil and gas production not far behind; and pharmaceuticals and steel production—not that there is a great deal of new steelwork building going on at the moment, but the building of steelworks involves heavy use of process engineering. That is, I hope your Lordships will agree, a narrow definition of the process engineering industry, but we hope that it includes the major users of process engineering. It is the best, most useful and finest—in the sense of smallest—definition of process engineering that we have been able to agree for the purposes of this Bill. I really do not believe that there is any justification in trying to take out what the noble Lord, Lord Williams, wishes to take out, which are key parts of the process engineering industry.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord. As I understand it, the Government say that there are certain selected industries which seem, according to government figures, to spend a lot of money on
"production, transmission, processing or bulk storage (other than warehousing)".
Therefore, these are the items which are included seriatim. I understand the position of the Government. Obviously, I shall have to look at the government figures and see whether there are other industries which,
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in effect, spend more as a proportion of their total capital expenditure because, after all, that is what we are talking about.
I still see no reason why major industries should be singled out in this way if one is going to eliminate or exclude from the Bill the
"construction, installation or demolition of plant, machinery … on a site where the primary activity is … the production, transmission, processing or bulk storage (other than warehousing)".
I see no reason why the Bill should not be left as such without all the rest of it, but I shall rely on the noble Lord to have another look at this, as I am sure he will. It will, no doubt, be a source of further debate as we go along or, indeed, as another place goes along. It seems to me to be incongruous as it stands. However, having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 132 and 133 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 134:
Page 59, line 24, at end insert ("unless undertaken by the contractor or if not specific to the agreement").
The noble Lord said: My Lords, Amendment No. 134 stands in my name and that of my noble friend Lord Dubs. It may be for the convenience of the House if I speak also to Amendment No. 135 in the name of my noble friend Lord Howie.
This is a rather more important amendment. It does not relate to a drafting matter. It was an amendment on which we had some discussion at Committee stage, but it seemed to us that the discussion at the end of the day was somewhat less than satisfactory. I am advised, again by those who know much more about this industry than I do, that there are frequent occasions when a contractor undertakes what is essentially manufacturing work, for instance off-site, and then is responsible for bringing it on-site and constructing it. All those are part of a construction activity. It is probably well summarised by advice that I have received that, after all, a building is essentially a construction activity and everything else that goes into a building, if it is off-site and if it is brought in, specific to an agreement, by a contractor, should be covered by the Bill.
We have to have a let-out here where an agreement may specify that what is manufactured is not to he covered by the Bill. My amendment does provide for that but, apart from that, this seems to us to be essential. Any give on the part of the Government on this issue would be welcome, because it is an important point in the understanding of the contracting industry. I hope very much, therefore, that the Government will look sympathetically at what I have said. I beg to move.
Lord Berkeley: My Lords, we have been through this matter before in previous stages of the Bill. For example, I recall discussing the manufacture of a precast concrete beam for a house or a bridge. In my opinion, whether it is done by the contractor or a subcontractor does not make much difference to the problem, because the problem is the same as the problem of the steelwork contractor. The order is placed early; he is producing something, possibly, which is specific to a contract. which he cannot use anywhere else and which he cannot

941
sell anywhere else if the person who has ordered it—the main contractor or the subcontractor, if he is a sub-subcontractor—goes bust or changes his mind or whatever. He will then have a large asset of a large piece of concrete or similar on his hands or in his yard.
I believe that the amendment proposed by the noble Lord, Lord Williams, goes a good way to improving the clause. However, as I have mentioned before, I hope that the Government might consider introducing words to the effect that the manufacture of the building or engineering components or equipment is specific to the contract being ordered rather than being off the shelf. There is nothing particularly easy about that. If it is just bricks, one can always sell bricks to someone else. But if it is something specific for a contract—a bridge beam or a floor beam—or something that is unique and which the manufacturer off site, be he the contractor himself or the subcontractor, produces and subsequently cannot use, he is in just a kind of situation which the Bill is designed to avoid.
Viscount Ullswater: My Lords, these amendments, particularly Amendment No. 135, are worthy of consideration. At Second Reading I mentioned the difficulties with off-site manufacture of components, which is very much the modern method and the modern technology of a good deal of construction. In this instance I would particularly mention structural steelwork. During the course of today's discussions we have talked a good deal about structural steelwork and I indicated that I would wish to return to this item.
The noble Lord, Lord Howie, quoted a letter from a structural engineer saying that some 90 per cent. of the value of the steelwork is created in the engineer's workshop. If that is delivered to the site and then for some reason it is not used and is returned, the scrap value is minimal compared with the amount that has been invested. There is the difference in the price between the raw steel and the amount that has been invested in cutting it, burning it, drilling it, creating trusses, columns, frames or whatever it may be. Therefore, those who have written not only to me but to other noble Lords want to be included in the Bill not only for the adjudication but probably more particularly for the payment conditions to be followed later on.
The noble Lord, Lord Berkeley, was right in saying that we do not want to go further down the chain and deal with what might be called standard components—the industry is trying to work a little more towards using standard components—because that would be going down too far into the Sale of Goods Act area. However, I am informed that most buildings are one-offs. If a 30-foot beam is required, the client usually wants a 31-foot beam. By adopting Amendment No. 135 one would not overcome the Sale of Goods Act. The components, whatever they are, still have to be fit for the purpose for which they are supplied. Bricks that were specially manufactured—in a particular shape or with a particular architectural detail of a building—might fall
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into this because if they were created especially for that contract they would probably be almost worthless for any other purpose. Therefore, there are other components, apart from steelwork, which is an important component, to be covered by the Act.
As I read it, the Bill would exclude most of the warehouse construction where the steelwork has been fabricated off site. If I am wrong in my interpretation, I hope that my noble friend will put me right. Yet it is intended by government amendment that warehousing should be included in the contract side. So somehow we seem in one way to be excluding it all—if it has been made off site I cannot see that it can be included—yet it is the Government's intention that warehousing, although they refer particularly to the storage of various goods, should be included. At the moment there remains confusion. I hope that my noble friend can help me out of my dilemma.
6.15 p.m.
Lord Monkswell: My Lords, perhaps my mind works differently from those of other noble Lords but it strikes me that there will be a difficulty with this exception unless it is sorted out by government action, by the amendment of my noble friend Lord Williams or by the amendment of my noble friend Lord Howie of Troon. A builder might be contracted to knock down a brick wall, clean up the bricks and rebuild the wall elsewhere on the site. If he knocked down the wall and then took away the bricks to his own yard for the purpose of cleaning them up and, in effect, re-manufacturing them and making them suitable for rebuilding the wall, the process of taking the bricks off site to his yard would mean that he was not covered by the Bill. Therefore, the fall-back positions and the requirements that the contractor could normally use to ensure that the contract was carried on in a timely manner would be lost.
One of the main purposes of the Bill is to provide a fall-back position where one party or the other to a contract does not want to carry on and may have to be required to carry on. It may be my devious mind in thinking that someone may not want to carry on in order that he can take a better job elsewhere. If he shifts the bricks off site, will he fall outside the provisions of the Bill? That is another way of looking at the problem which has been mentioned by other noble Lords.
Lord Elton: My Lords, both the noble Lord, Lord Berkeley, and my noble friend Lord Ullswater have advanced the cause of these amendments with a little more restraint than I would have done. I would ask my noble friend to have in mind that the purpose of the Bill is to secure prompt and adequate payment. It is not just to prevent unnecessary loss. Both the noble Lord, Lord Berkeley, and my noble friénd referred to non-standard items as if those were all one wanted to protect. However, the supplier of the components needs protection from late or non-payment regardless of whether they are standard items which he can sell at a lesser price elsewhere. The principle of the Bill is to secure a proper cascade of payment

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from the principal contractor down to the smallest subcontractor. That is valid whether or not the items supplied are standard.
Lord Berkeley: My Lords, on a point of clarification, when I was talking about the supplies of non-standard materials, I referred to either the main contractor or subcontractor. Possibly I should have said "subcontractor or supplier". It is the same thing. I certainly take on hoard the noble Lord's point because he is absolutely right.
Lord Howie of Troon: My Lords, the more often that he intervenes in these debates, the more I warm to the noble Viscount, Lord Ullswater, especially as he has just commended my Amendment No. 135. He has commended it more warmly than I would have done. I bow to the inadequacies of its wording. The amendment is meant in good heart and its intention is clear. The problem with Clause 103(2)(d) is that it lumps together,
"components or equipment, materials, plant or machinery",
as though they were all the same thing, but they are not. I can go a good way with the Government in relation to,
"equipment, materials, plant or machinery",
but when we come to components I part company with them. The noble Viscount referred to steelwork and I need not dwell on that. It is an obvious example of a component which is wholly constructional and should be in the Bill.
I seem to recall that during the Committee stage of the Bill, the noble Lord, Lord Swinfen—he may have something to say—drew attention to components which were produced off-site by the contractor who is on-site. I have in mind a specific example. The well-known contractors Richard Costain used to produce pre-stressed concrete sleepers for railway work in a factory somewhere near Motherwell. Those components were transported to sites where Costain's was involved. The supply of these components was part of the general contract under which the company worked. It seems wholly appropriate that components made off-site by the on-site contractor should be included in the Bill. I go a little further than that. I have in mind a specific example of components made off-site by a subcontractor.
The noble Lord, Lord Elton, was right in reminding us that in this Bill we are concerned with payment on time on delivery and that sort of thing. Let us consider, for example, a dry dock, which is a great civil engineering hole in the ground lined with concrete in a very elaborate and expensive way. At the front end of the dry dock there are the gates which lean on bearings. They are called the quoins, which merely means the corners. These quoins might very well be made of highly specialised, cast, stainless steel made in a factory in a place such as Crawley, remote from the site, but delivered to it and integral to the construction process. The manufacturer of these components delivers them and he might also erect them. He is entirely dependent on the main contractor for his payment. So he is part of the contractual chain which we have emphasised over and over again.
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Under this part of the Bill, because he is producing a component which is essentially a structural matter rather than carrying out a structural act, he is excluded from the Bill. Therefore, he can whistle for his money unless he can exercise muscle of some sort. That is wholly wrong. I do not believe that it is the Government's intention that such a supplier should whistle for his money, but the effect of the Bill is that he does. I sincerely hope that the Government will consider the amendment of my noble friend, and even my own humble amendment, to see whether they can come up with a solution at Third Reading.
Lord Lucas: My Lords, I answer first the point raised by my noble friend Lord Elton. The material and component manufacturers indicated in consultation that they did not wish to be covered by the Bill, although they are covered by the supply and sale of goods Act. One presumes that someone who is just delivering a load of bricks to a construction site, and that is an end of it, feels that they are quite reasonably protected by the fact that, if they have delivered the bricks, they have completed what they were asked to do. That is something that cannot reasonably be argued about. Such a supplier presumably does not have the problems which gave rise to this Bill in the first place. We should respect that exclusion.
Amendment No. 134 addresses in particular a matter of common concern to us. There are those in the construction industry who do a great deal of work off-site and then deliver. They may not even do more than deliver, but they have completed a great deal of the construction contract off-site and, as this Bill is drafted at the moment, they are not included.
We are not happy with the exact wording of Amendment No. 134. I have a little difficulty in understanding it myself. I suspect that the words "if not" should either have commas around them or they should be excluded. If that is right, then I understand what the amendment is aiming at.
We have problems with the amendment of the noble Lord, Lord Howie, as he will know from a previous amendment, as regards the concept of a recognised civil engineering building contract. But we find ourselves in sympathy with the intention behind both these amendments. It is something which we discussed at length in Committee. My noble friend Lord Ferrers undertook to consider the matter. We are still doing so. We hope to be able to clarify the position at Third Reading. On that basis, I ask the noble Lord, Lord Williams of Elvel, to withdraw his amendment.
Lord Williams of Elvel: My Lords, I am again most grateful to the noble Lord, Lord Lucas, for considering these matters carefully. He is quite right in that the amendment, which I drafted myself, is slightly defective in its English and the words "if not" should be left out. The noble Lord is quite right in pointing that out. I hope that he recognises the strength of feeling not only in this House but in the construction industry about this matter and that at Third Reading he will be able to return with something that satisfies all concerned. As we keep on saying—and it cannot he said often enough—we are

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here to satisfy all in the industry. This is not a party political matter. We are doing our best to get the construction industry back on its feet. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment Nos. 135 and 136 not moved.]
The Deputy Speaker: My Lords, in calling Amendment No. 137, I advise the House that if this amendment is agreed to I cannot call either Amendment No. 138 or Amendment No. 139.
Lord Lucas Lord Lucas moved Amendment No. 137:
Page 59, leave out lines 32 to 34.
The noble Lord said: My Lords, I spoke to this with Amendment No. 120. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 138 and 139 not moved.]
Lord Berkeley Lord Berkeley had given notice of his intention to move Amendment No. 140:
Page 59, line 34, at end insert—
("(2A) When agreeing the terms of individual contracts which relate to construction operations described in subsection (2) above the contracting parties may agree to contract out of the provisions of this Part, but—

(a) if one contracting party does not wish to contract out of the provisions of this Part, then the parties must agree contract terms which comply with the provisions of this Part, and

(b) if the parties fail to agree on acceptable terms which comply with the provisions of this Part, then the relevant sections of the Scheme shall apply.").

The noble Lord said: My Lords, before withdrawing or not moving this amendment, perhaps I may make two points—
Lord Elton: My Lords, on a very important but small point of order, one cannot speak except to a Motion. The noble Lord can move the amendment, and having done so he can withdraw it, but he cannot speak to it until it is there to speak to.
[Amendment No. 140 not moved.]
6.30 p.m.
Lord Howie of Troon Lord Howie of Troon moved Amendment No. 141:
Page 59, line 35, after ("shall") insert (" , subject to such consultation as the Secretary of State shall consider necessary,").
The noble Lord said: My Lords, the amendment states:
"subject to such consultation as the Secretary of State shall consider necessary".
I leave it at that. I beg to move.
Lord Lucas: My Lords, I am sympathetic in principle to the amendment. Consultation has been the mainspring of the exercise to produce fair contracts legislation and the Government have a considerable consultation exercise ahead of them in bringing forward the schemes for construction contracts. Clause 103(4) allows the Secretary of State by order to amend the provisions of subsections (1), (2) and (3). That would allow the definition of "construction operations" to be fine tuned
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if it were not quite right. It would also allow definitions to be updated in line with developments in the industry. There is no question of any such amendment taking place without consulting the appropriate representatives of any groups affected. I hope that with that assurance the noble Lord will feel able to withdraw the amendment.
Lord Howie of Troon: My Lords, I am greatly pleased by the Minister's response to my eloquent moving of the amendment. I am happy to withdraw it, as he suggests.
Amendment, by leave, withdrawn.
The Deputy Speaker: My Lords, in calling Amendment No. 142 I should advise the House that if it is agreed to I cannot call Amendments Nos. 143 or 144.
Lord Howie of Troon Lord Howie of Troon moved Amendment No. 142:
Page 59, leave out lines 40 to 43 and insert ("architects, surveyors or consultants in building, engineering, interior or exterior decoration or in the laying-out of landscape in relation to such operations").
The noble Lord said: My Lords, as noble Lords will see, this is a piece of pedantry on my part. I am proposing to leave out certain words in the Bill as it stands and put the same words back in but in a somewhat different configuration. My reason for doing that is pedantic but simple. First, I am asking what is the difference between subsection (3)(a) which talks about the work of individuals participating and subsection (3)(b) which talks about the professional work of people.
As I see it, the professional people mentioned are likely to be the individuals participating in the carrying out of the work. So we have what might conceivably turn out to be tautology, although I am not sure. My second point is different. As we all know, in this part of the Bill the definition of "construction" was cribbed or plagiarised, virtually verbatim, from the Income and Corporation Taxes Act 1988. However, for some reason, in subsection (3)(b):
"the professional work ofx2014;

(i) architects or surveyors, or

(ii) consultants in building, engineering, interior or exterior decoration or in the laying-out of landscape,

in relation to such operations",
is changed. In the original legislation, from which this part of the Bill is cribbed, the wording was, I think, as I have put it in my amendment. The draftsman of the Income and Corporation Taxes Act 1988 was, I believe, unable to make a distinction between the professional work of architects, surveyors, or consultants in building, engineering and so forth. I am asking merely what is the distinction which the Government are making which made them change this part of the Bill into, first, architects or surveyors, and, secondly, consultants in building, and the others? There must be some explanation. It is not a great matter, but if we are to use the Income and Corporation Taxes 1988 as a model, we should not leave out the one bit of it that makes sense. I beg to move.
Lord Williams of Elvel: My Lords, it may be for the convenience of the House if I speak also to

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Amendments Nos. 143 and 144. In introducing Amendment No. 142, my noble friend said that it is a matter of pedantry. My purpose in tabling Amendments Nos. 143 and 144 is somewhat different. I am a little concerned, not that proper interior decoration should be included as a professional job in construction operations, but that interior decorators per se should be included.
It seems odd not that someone who advises on lighting, structure or whether screens should go here or there, or whatever it might be—that is, a professional in that sense—but that someone who, as I read the Bill—I am advised that my reading is correct—comes in and says, "I think you should have a flash of green there and a splash of blue there, and a rather interesting 17th century lampshade on your desk", should be included within the Bill's ambit. I am advised that my reading of the provision is correct, but perhaps the Minister will be able to assure me that that is wrong and that interior decorators—in the way that we are used to them—are not part of the Bill and that it is only those who are professionally qualified to advise on the construction part who come within the ambit of the Bill.
Lord Berkeley: My Lords, as a civil engineer and a member of the "Civils", like my noble friend Lord Howie of Troon I feel that we have a situation of sheep and goats here. I suppose that I could call the architects and surveyors sheep as they appear in paragraph (i) as worthy of special mention while everyone else is relegated to the role of consultant. The clause could be rewritten to read, "consultants in architecture, surveying, building, engineering, interior or exterior decoration", or whatever else one might want; or one could have architects, surveyors, chartered engineers, and so forth. I feel like a second class citizen as a chartered engineer reading this provision. I hope that the Minister will look at it again.
Lord Lucas: My Lords, to deal, first, with Amendment No. 142, the noble Lord, Lord Howie of Troon, said that he thought that it might be a piece of unnecessary pedantry. I cannot but agree with him. He has rearranged the words on the page and to our mind has made them considerably more confusing. I understand some of the sentiments behind what he is saying. I understand too the sentiments behind what the noble Lord, Lord Williams, is saying, namely, that there appear to be a number of classes of consultants who might be in but who are not. We intend to have interior decorators included, and the splash of green and yellow people are intended to be in. I take the noble Lord's point that if they are in, why not others? I can perhaps say that all the others one could conceive of are included in the wording. However, as I cannot provide answers I undertake to come back to the noble Lord before Third Reading or on Third Reading. With that comfort for the noble Lord, Lord Williams, I hope that the noble Lord, Lord Howie, will feel able to withdraw the amendment.
Lord Howie of Troon: My Lords, I am always gratified when my noble friend Lord Williams is
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comforted, and I am now. I have only one question to ask. If the words which I have extracted carefully from the Income and Corporation Taxes Act 1988 would be confusing in this Bill, how is it that they are not confusing in that Act? There is something which might properly be called a dichotomy here, or even a straightforward old-fashioned mistake. The Minister has been reassuring. I am sure that he will go back and think about the matter. In view of his remarks, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 143 and 144 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 145:
Page 59, line 46, at end insert—
("(5) No such order shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.").
The noble Lord said: My Lords, in moving Amendment No. 145, I should like to speak also to Amendments Nos. 148 and 176. My noble friend Lord Ferrers indicated in Committee that the Government would introduce these amendments. They reflect the concern of noble Lords that amendment of primary legislation should be a matter for affirmative resolution. The noble Lords, Lord Williams of Elvel and Lord Howie of Troon, laid amendments with the effect of Amendment No. 145 in Committee, and the noble Baroness, Lady Hamwee, put forward an amendment with the effect of Amendment No. 148. Amendment No. 176 is consequential. I beg to move.
Lord Williams of Elvel: My Lords, I am grateful to the Minister for bringing forward these amendments. They put into drafting language (if I may so put it) amendments moved in Committee. They also respond to concerns raised by the Delegated Powers Scrutiny Committee of your Lordships' House. That committee was worried about the Henry VIII provision in the original draft of the Bill to amend primary legislation by simple order. This shows that the committee set up by your Lordships to scrutinise delegated powers has again had an effect. We are grateful not only to the committee but to the Government for assenting to the important point that it raised.
Baroness Hamwee: My Lords, I, too, should like to thank the noble Lord for responding to those concerns. It occurs to me that, now there are so many provisions for affirmative resolution in the Bill, we shall have to show that we are assiduous in dealing with such resolutions when they come before the House. Of course, they may not do so.
6.45 p.m.
Lord Monkswell: My Lords, I rise to welcome what the Government have done. I believe that, when discussing earlier amendments to Clause 2, the Government gave assurances about the way in which they would use the power to amend Clause 103. Effectively, the provision says that they can amend any part of that clause: parts 1, 2 and 3. In discussions on the earlier amendments the Government spoke of

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amending part 2 of Clause 103 in a way that would create an inclusion within the scope of the Bill where it was deemed necessary and operations in the construction industry fell outside the Bill because of the way that the clause was written. Bearing in mind the decision in Pepper v. Hart, would the Minister be prepared to repeat those assurances so that they applied to parts 1, 2 and 3 of Clause 103 to deal with a fear that some noble Lords have that a grey area will emerge as to whether something is a construction activity not covered by the Bill? Is it the intention of the Government to seek to amend Clause 103 with this power to ensure that only construction activity is covered by the Bill rather than to cover exclusions?
Lord Elton: My Lords, I do not know whether I unnecessarily prolong matters. It seems that the anxieties of the noble Lord, Lord Monkswell, are unfounded since the amendment is to ensure that no changes can be made except if they are brought before this House, not merely by negative order, which somebody has to spot, but by affirmative order, where the matter has to be tabled and assented to by your Lordships.
Lord Lucas: My Lords, my noble friend is quite right. I believe that I have today given two assurances. First, we will consult before making any such changes. That is inevitable because it is a consensual process in which we are involved. To bounce people in and out of the Bill at the whim of the Government is not in accord with the way this part of the Bill has to work. I also drew attention to the width of the provision and the scope that it gave us to deal with large or small problems that might arise. They will all be dealt with by consultation and by the will of both Houses of Parliament and not otherwise.
On Question, amendment agreed to.
Clause 104 [Provisions not applicable to contract with residential occupier]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 146:
Page 60, line 2, leave out ("his") and insert ("a").
The noble Baroness said: My Lords, Clause 104 deals with contracts concerning residential properties. At the last stage of the Bill an issue arose as to whether the property in question, in order to fall within the provision, was required to be a person's main residence. The noble Earl, Lord Ferrers, said on the 28th March, at col. 1872, that when the Bill referred to a residence it meant any residence. During that debate I had wondered aloud whether the wording now proposed—which refers to "a residence" rather than "his residence"—might make it clearer that reference was being made to any residence and not a main residence. Since it was a matter that I aired at the last stage, I hope that on this occasion I have not, to use his word, bounced the noble Lord, Lord Lucas. I am glad that he shakes his head. I beg to move.
Lord Lucas: My Lords, we heard in Committee that the noble Baroness, Lady Hamwee, was concerned that the reference to a residence in Clause 104(1) might be
950
construed as a reference to a main residence. My noble friend Lord Ferrers reassured her on that occasion that when the Bill referred to a residence it meant any residence. I do not believe that there is any more that I can say or that can be added to the Bill to make that clearer. We also talked about an element of possession being included in the definition. This was a matter brought up by the noble Lord, Lord Williams of Elvel, he having considered the views of the Law Society of Scotland. The use of the possessive adjective "his" conveys that element. That would be lost if the indefinite article were substituted instead. We have considered what the noble Baroness had to say last time and looked at it again in the context of this amendment. We wish to retain the wording as it is. I hope that, with that explanation, the noble Baroness will be content to seek leave to withdraw her amendment.
Baroness Hamwee: My Lords, I moved the amendment on this occasion because I was not sure that the point had been made with any force last time. I am not entirely sure that I follow the explanation, but I certainly shall not pursue it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees: My Lords, in calling Amendment No. 147, I advise the House that, if it is agreed to, I cannot call Amendment No. 148.
[Amendment No. 147 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 148:
Page 60, line 11, at end insert—
("(4) No such order shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.").
The noble Lord said: My Lords, I spoke to Amendment No. 148 with Amendment No. 145. I beg to move.
On Question, amendment agreed to.
Clause 105 [Provisions applicable only to agreements in writing]:
Lord Howie of Troon Lord Howie of Troon moved Amendment No. 149:
Page 60, line 28, after first ("in") insert ("adjudication or").
The noble Lord said: My Lords, Amendment No. 149 is a very simple matter and I need not detain the House over it for any length of time. It is intended to clarify the constant confusion which the construction industry believes the Government are in throughout a large part of the Bill. I refer to the confusion between adjudication and arbitration. The effect of inserting the word "adjudication" is to suggest that certain written submissions will be appropriate in adjudication, arbitral or legal proceedings. It is hoped that the word "adjudication" will indicate that adjudication is a different matter from arbitration and should be distinguished on the face of the Bill. We will probably return to this matter later. I beg to move.
Lord Lucas: My Lords, when the noble Lord. Lord Howie of Troon, moved a similar amendment in Committee, my noble friend Lord Ferrers undertook to

951
consider the matter. Our first thought was that the amendment was unnecessary. However, we have since been considering whether, if it is necessary, a more comprehensive formula might be better. We have not yet reached a decision and I hope that the noble Lord, Lord Howie, will allow us another week in which to complete our deliberations on this admittedly minor phraseology. I hope that with that explanation he will withdraw his amendment today.
Lord Howie of Troon: My Lords, I am pleased. I had thought that my small amendment, which adds only one word to the Bill, would have done the job. However, if the Government are to produce a more complicated formula which will take a week to devise I welcome that. With the Minister's warm words, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 150:
Page 60, line 34, at end insert ("but will not include anything which relates to agreements totalling a sum below £25,000").
The noble Lord said: My Lords, this is an important amendment. It picks up a point made by the noble Viscount, Lord Ullswater, in Committee and is a matter which should concern the House. Clearly, it is not appropriate for the Bill to apply to small contracts. On the other hand, I recognise that it is difficult to prevent a larger contract being split up into smaller contracts so that the de minimis provision, which I put at £25,000, does not apply to a larger contract because it appears in several subcontracts.
Nevertheless, I believe that there is a case, if it can be properly worded, for having a de minimus provision in the Bill. I know that the Government have studied the matter and I hope that they will respond constructively. I beg to move.
Viscount Ullswater: My Lords, it would be churlish of me not to rise to say that I made the suggestion which the noble Lord, Lord Williams of Elvel, has now produced as an amendment. I made the suggestion in Committee and it prompted a considered written reply from my noble friend Lord Lucas. I hope that the noble Lord, Lord Williams, has received a copy of my noble friend's letter.
My noble friend indicated some of the anxiety expressed by the noble Lord, Lord Williams, over the splitting of contracts and the problem of non-payment which bedevils the industry even in relation to small contracts. I understand the problems that we might be putting into the Bill if we insist on the de minimis provision. However, I must stick to my last: I believe that some de minimis provision is required even in the general terms of not trying to wrap the industry in so much red tape that even the smallest contract which happened to be in writing would not be tied up in the scheme. I see the scheme as being a draconian way of dealing with a small problem. Whereas I have some concern about what my noble friend has said, I support some form of de minimis provision, whether or not the figure of £25,000 is the right one.
Lord Lucas: My Lords, this is a somewhat confusing amendment in that it attempts to graft a de minimis
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exemption for smaller contracts onto an inappropriate clause—that concerning agreements in writing. Nevertheless, I am happy to address the principle of an exclusion for smaller contracts without worrying too much about the precise details of how it could be achieved. This revisits the subject of a similar discussion in Committee.
There are several arguments against a de minimis exemption. First, many of those who suffer most in the construction industry are small contractors. Indeed, when one considers that about half the firms in the industry are one-man businesses and two-thirds of the rest employ no more than three staff, it is clear that we would be likely to deny fair contracts provisions to a vast amount of work if this kind of provision were in place.
However, we have done much to ensure that the provisions of Part II would be applied only to contracts where it was appropriate to do so. Clause 104, for example, would exclude a great many smaller contracts where they applied to work for householders. In addition, the right to instalments or periodic payments would apply only to contracts lasting 60 days or more, and this would also reduce the impact on smaller contracts.
Certainly we have not been convinced that fair contracts provisions would leave parties to low-value contracts any worse off. I doubt whether anyone would take a dispute about a broken window to an adjudicator, but if they did we would expect an adjudicator to be able to apportion his costs intelligently. However, I accept that when we came to detailed consideration of the scheme for construction contracts we might need to make sure that the right to adjudication did not obstruct access to the small claims court or other more efficient ways of settling tiny claims.
The main argument against a de minimis exemption is that it would bring with it the danger of unscrupulous contractors simply splitting contracts into smaller packets so that they fell below the threshold. This would be an added complication for all and do nothing to aid on-site relations. We would also need to deal with the problem of contracts whose value fluctuated above and below the threshold as the contract progressed. That is a related complication.
Even if this kind of exclusion were desirable, and we are convinced that it is not, it would by no means he easy to get right. In view of all I have said, I hope that the noble Lord, Lord Williams of Elvel, will feel able to withdraw his amendment.
Lord Williams of Elvel: My Lords, I am grateful to the Minister for his explanation of why the Government believe that de minimis provisions are not appropriate. I am bound to say that I first took the line which the noble Viscount, Lord Ullswater, took in Committee; that a de minimis provision was right. I have subsequently been advised by people who know better than I do that there should be at least a proper discussion of the de minimis provision.
I must read most carefully what the Minister has said and take advice on it because I am still unconvinced that there should not be some provision. How one formulates

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it I know not at the moment. It is a matter to which I may return on Third Reading or it may be taken up in another place. In the light of the Minister's explanation, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 150A not moved.]
Clause 106 [Right to refer disputes to adjudication]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 151:
Page 60, line 37, leave out ("for resolution by an adjudication procedure") and insert ("to adjudication pursuant to a procedure").
The noble Baroness said: My Lords, Clause 106 explains why construction contracts are defined and dealt with at such length by providing for an adjudication procedure. In Committee your Lordships spent some time on the language used in connection with adjudication, in particular whether it was appropriate to refer to a resolution to be achieved through adjudication since that suggested a permanent outcome.
I was teased by that and believed that there must be a way around it, laterally or perhaps diagonally. Therefore, I suggest that instead of providing for,
"the right to refer a dispute ‖for resolution by an adjudication procedure",
the clause might provide a right to refer the dispute,
"to adjudication pursuant to a procedure".
I beg to move.
7 p.m.
Lord Lucas: My Lords, this is the second time that we have seen the noble Baroness, Lady Hamwee, worried about the word "resolution". She moved another amendment to remove it in Committee. The noble Baroness continues to believe that "resolution" means something which is final; she has not accepted my assurance that this is not necessarily so.
It may be worth repeating that adjudication must have force to resolve disputes. The process is not intended to generate advice or recommendations which parties may or may not choose to accept: it is intended to produce a decision with which parties must comply. The word "resolution" is here quite appropriate.
I also pointed out in Committee that parties would be free to agree whether the decision should be final and binding, or effective for a more limited period. However, I know that noble Lords were suspicious of these assurances when they saw the description of the scheme for construction contracts. This suggested that an adjudicator's decision should have permanent effect unless parties agreed otherwise.
We have considered the views of noble Lords who sought to remonstrate with us on this point, in particular the noble Lords, Lord Howie, Lord Williams and Lord Berkeley. We have also taken into account representations which have begun to emerge from the industry on our description of the scheme. We have concluded that it would be right if disputes which are subject to scheme adjudication could normally be re-opened at practical completion of the contract, and
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we propose to amend scheme proposals when we consult following Royal Assent. I trust that noble Lords will now go to supper with a light heart. In particular I believe that my words should soothe the noble Baroness's fears that something dark and sinister lurks behind the word "resolution". I hope therefore that she will not press her Amendment No. 151.
Baroness Hamwee: My Lords, my concern was a good deal less than that of other noble Lords who spoke. I addressed the matter as something of an intellectual exercise and I have not lost a great deal of sleep in relation to it. I was merely hoping to be helpful to the process of what is agreed to be a non-party political matter.
I am sorry that my intellect has not shone. I am very grateful for the assurances given about the different approach to the workings of the scheme which, after all, is the substantive matter. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Courtown: My Lords, I beg to move that further consideration on Report be adjourned. In moving that Motion, I suggest that further consideration on Report begin again not before 8.5 p.m.
Moved accordingly, and, on Question, Motion agreed to.

Trusts of Land and Appointment of Trustees Bill [H.L.]
7.3 p.m.
Report received.
Clause 1 [Meaning of "trust of land"]:
The Lord Chancellor (Lord Mackay of Clashfern)The Lord Chancellor (Lord Mackay of Clashfern) moved Amendment No. 1:
Page 1, line 17, leave out subsection (3) and insert—
("(3) The reference to land in subsection (1)(a) does not include land which (despite section 2) is settled land or which is land to which the Universities and College Estates Act 1925 applies.").
The noble and learned Lord said: My Lords, Amendment No. 1 is the first of a group of nine amendments, the others being Amendments Nos. 2, 4, 13, 14, 33, 34, 36 and 37. The amendments are very closely interlinked and, with your Lordships' leave, I think it would be appropriate to speak to the whole of this group together in moving Amendment No. 1. This group of amendments will make changes in respect of charitable, ecclesiastical and public trusts involving land, argued for at Second Reading by the noble Lord, Lord Meston, on behalf of my noble friend Lord Kinnoull. The amendments are supported by the Charities' Property Association and the Charity Commission.
The Bill presently draws no distinction between charitable trusts and what may be termed "private" settlements, where land is limited in succession for individuals. As the Bill is presently drafted, all settlements in existence at the time of commencement

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would remain untouched by the new regime and subject to the Settled Land Act for as long as they remain in existence as settlements. It has been cogently argued, however, that charities would benefit from the more flexible trustee powers conferred on trustees of land, and that while it would not be right to convert existing "private" settlements into trusts of land and change the position of the tenant for life, there is no such problem in the case of charitable trusts. This group of amendments therefore provides for existing charitable, public and ecclesiastical trusts to become trusts of land on commencement, with two exceptions which I shall explain in a moment.
Amendment No. 2 inserts in Clause 2 of the Bill a new subsection which provides that land held on charitable, ecclesiastical or public trusts shall not be settled land after commencement of the Act (and therefore is no longer subject to the Settled Land Act 1925), even if it was settled land before commencement. Because of the all-embracing definition of a trust of land in Clause 1, this will have the effect that charitable, public and ecclesiastical trusts will be trusts of land, whether created before or after commencement of the Act. Amendment No. 1 provides an exception for land to which the Universities and Colleges Estates Act 1925 applies, so that the trusts of land regime will not apply to such land. This is because land to which that Act applies is in an unusual position, having never been subject to the Settled Land Act scheme but rather having its own detailed, self-contained scheme, and representatives of those who deal with such land have indicated that they would prefer to continue to operate in accordance with that separate scheme.
Amendment No. 4 provides that subsection (1) of Clause 8, which allows the powers of trustees of land to be restricted or excluded by the disposition creating the trust, shall not apply in the case of charitable, ecclesiastical or public trusts. This restores the present effect of Section 106 of the Settled Land Act 1925 for charitable trusts which become trusts of land, in response to concerns expressed by those responsible for the administration of charities, including the Charity Commission.
Amendments Nos. 13 and 14 ensure that the definition of a,
"trust of proceeds of sale of land",
in Clause 17 meets the new approach under which some trusts now subject to the Settled Land Act will become trusts of land on commencement: the wording will ensure that proceeds of dispositions made before commencement in such settlements will be covered.
Amendment No. 33 ensures that the changes effected by this group of amendments do not apply in relation to the deeds of settlement for the Chequers Estate and the trust instrument for the Chevening Estate, which are set out by statute. The settlements of those two estates are in a very unusual position in that they are not charitable, ecclesiastical or public trusts within Section 29 of the Settled Land Act so as to be part of the class of trusts which this group of amendments sets out to effect; but they are not "private" settlements in the ordinary sense either. Those responsible for administering these
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settlements believe it would he better for them to be treated for the purposes of the Bill like private settlements, so that they will remain subject to the Settled Land Act in the same way as at present, since it would be a very complex and delicate task to amend the statutory deeds.
Amendment No. 34 replaces the present provisions of paragraph 4 of Schedule 1 to the Bill with new provision to ensure that certain requirements relating to dealings with charity land in Section 29 or the Settled Land Act 1925 will continue to apply under the trusts of land regime as they do at present.
Since there is now to be no difference between existing and new charitable trusts for the purposes of the Bill, Amendment No. 34 simply reproduces the necessary parts of Section 29 for those trusts which fall outside the Charities Act 1993, together with the provisions of Section 29 concerning dealings by managing trustees. This means that both Section 29 and the words in Sections 37 and 39 of the Charities Act 1993 which exclude it from applying to charities within that Act can be repealed altogether. Those repeals are effected by the provision inserted by Amendments Nos. 36 and 37. With that lengthy preamble, I beg to move Amendment No. 1.
Lord Mishcon: My Lords, my remarks on the amendments to which the noble and learned Lord has just referred will be very much shorter. I gather from what he said that all those bodies which are vitally interested in the amendments have been consulted. For the purpose of the record, no doubt the noble and learned Lord will confirm that that has been done.
The Earl of Kinnoull: My Lords, as my noble and learned friend was kind enough to mention me at the beginning of his remarks, perhaps before he replies to the noble Lord I may thank him for bringing forward the amendments to clear up certain technical issues affecting a number of old and historic charitable trusts. My noble and learned friend has already said that delicate matters were discussed and formed the subject of meetings between his department and the representatives of the Charities' Property Association as well as the Charity Commission, and indeed the Home Office. I wish to place on record on behalf of the association its thanks to the officials of my noble and learned friend for the courteous and thorough way in which the matter has been handled, and especially for the satisfactory conclusion reached within this most useful Bill.
The Lord Chancellor: My Lords, I am extremely grateful to both noble Lords who have spoken. I can confirm that those affected as the professional body, together with the Charity Commission and the Home Office, have been consulted and that the amendments are the product of that consultation. I am also grateful on behalf of my officials for what my noble friend said about the nature of the consultations. It is exactly what I would have expected of officials in the Lord Chancellor's Department. However, it is very nice to hear it confirmed by others in such a felicitous way. I am most grateful.

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On Question, amendment agreed to.
Clause 2 [Trusts in place of settlements]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 2:
Page 2, line 16, at end insert—
("(4A) No land held on charitable, ecclesiastical or public trusts shall be or be deemed to be settled land after the commencement of this Act, even if it was or was deemed to be settled land before that commencement.").
On Question, amendment agreed to.
Clause 6 [General powers of trustees]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 3:
Page 3, line 5, leave out from ("Where") to second ("the") in line 6 and insert ("in the case of any land subject to a trust of land each of the beneficiaries interested in the land is a person of full age and capacity who is absolutely entitled to the land,").
The noble and learned Lord said: My Lords, before I speak to this technical amendment, I should like to make some comments which concern all of the amendments in my name to which I have not yet spoken. They arise in the main from points made in Committee by the noble Lord, Lord Mishcon, with assistance, it would be fair to say, from the Law Society's representatives. The amendments as they are now before the House follow extended discussions involving the Law Society's representatives, myself, the Law Commission, departmental officials and parliamentary counsel; and I believe there to be general agreement as to the principles which underlie them. In the event that there are still queries as to the wording or precise effect of any of the amendments, I am ready to consider suggestions for revision with a view to arranging, if necessary, for final changes on Third Reading to ensure that the Bill gets everything right as far as that may he possible.
I ought to express here my gratitude to those who took part in the discussions and especially to those who represented the Law Society in such matters, both of whom were extremely technically qualified to discuss the issues. I am most grateful to them for taking the time to do so in the public interest. I am of course also grateful to the Law Commission and to officials in the Lord Chancellor's Department, as well as to parliamentary counsel. Indeed, parliamentary counsel took a great deal of trouble with the technical issues involved in a reasonably short time-scale for such matters. I am most grateful.
As to Amendment No. 3 itself, the noble Lord, Lord Mishcon, stated in Committee his belief that the trustees' power to convey trust land to beneficiaries under Clause 6(2) is to be exercisable where each of the beneficiaries in question is absolutely entitled; that is, on the basis of concurrent interests, as joint tenants or tenants in common. The amendment to Clause 6(2) is intended simply to make it clearer that the noble Lord's belief is entirely correct. The amendment also makes it clear that the power exists where one particular parcel of land is held for beneficiaries absolutely, regardless of whether absolute interests exist in other land or other assets of the trust. I beg to move.
Lord Mishcon: My Lords, in regard to the introductory remarks made by the noble and learned Lord, perhaps I may tell him how grateful the Law Society is not only to his officials but also to all those others whom he mentioned as having been consulted since the Committee stage. However, I should like to express a very definite sense of the gratitude of the Law Society and its representatives for the way in which the noble and learned Lord himself agreed to participate in discussions in order to resolve certain matters which were of great importance. That courtesy was very much appreciated.
The Lord Chancellor: My Lords, I am most grateful.
On Question, amendment agreed to.
Clause 8 [Exclusion and restriction of powers]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 4:
Page 4, line 10, at end insert—
("() Subsection (I) does not apply in the case of charitable, ecclesiastical or public trusts.").
On Question, amendment agreed to.
7.15 p.m.
Clause 9 [Delegation by trustees]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 5:
Page 4, line 17, at end insert—
("() Where trustees purport to delegate to a person by a power of attorney under subsection (1) functions relating to any land and another person in good faith deals with him in relation to the land, he shall (in the absence of evidence to the contrary) be presumed in favour of that other person to have been a person to whom the functions could be delegated.").
The noble and learned Lord said: My Lords, Amendments Nos. 5 to 8 are all concerned with aspects of the trustees' power of delegation in Clause 9 and, with your Lordships' leave, I believe that it would be appropriate for me to speak to them all together.
Clause 9 enables trustees of land to delegate their functions as trustees to a beneficiary or beneficiaries beneficially entitled to an interest in possession in that land. Delegation is by way of power of attorney, which must be given by all of the trustees jointly and accordingly may be revoked by any one of them. Amendment No. 5 carries through an additional element of protection for third parties from Section 29 of the Law of Property Act 1925, which Clause 9 supersedes. A person dealing with a beneficiary-delegate is entitled to assume that the delegate is a person who qualifies to have the function or functions in question delegated to him, unless there is evidence to the contrary, so that he is protected in the event of a mistaken delegation. In the event of revocation of the power, of course, the protection of Section 5 of the Powers of Attorney Act 1971 will be available.
Amendment No. 6 seeks to clarify the position where there is a change in the line-up of trustees. It is intended that the power of attorney effecting a delegation should not be revoked automatically where one of those who jointly gave it ceases to be a trustee because, as the noble Lord, Lord Mishcon, said in Committee, there is no reason in such circumstances to suppose that the

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continuing trustees will necessarily wish the power to terminate at that time. However, the position is different where a new trustee is appointed. In that case, the power is revoked by the new appointment and the new and continuing trustees must grant a renewed power at or after the time when the appointment takes effect.
Amendment No. 7 seeks to clarify the position where functions have been delegated to a beneficiary or beneficiaries and the beneficiary in question or one of them ceases to be entitled to the interest in the land which qualifies him to have such functions delegated to him. In the case of a single delegate, the power delegating the functions to him is automatically revoked. Matters are more difficult where functions were delegated to a number of beneficiaries either jointly, or jointly and severally. In the former case, the power delegating the functions is not automatically to be revoked if one of the joint delegates ceases to have the qualifying interest, so that the remaining joint delegates can continue, together, to exercise the delegated functions, unless of course the trustees take the view that this is inappropriate and revoke the power themselves. In the latter case, the power in effect terminates pro tanto, so that it is revoked in so far as it relates to the beneficiary who ceases to have the requisite interest but remains effective in respect of the remaining delegates.
Finally, Amendment No. 8 is intended to clarify the standard of care to be observed by trustees in deciding whether to delegate any of their functions in this way.I accept the force of the argument that the noble Lord, Lord Mishcon, put forward in Committee that the question of whether it is reasonable for the trustees to delegate could offer the possibility of confusion because something may be argued to be a reasonable thing to do, even though done without regard to the possible consequences.
The amendment is intended to require the trustees to observe the precautions of a reasonably prudent person in deciding whether to delegate those particular functions to that beneficiary or beneficiaries in the particular circumstances of the trust. That is in line with the well-settled test in Speight v. Gaunt. I beg to move Amendment No. 5. With your Lordships' leave, I hope later to move Amendments Nos. 6 to 8 together en bloc.
Lord Mishcon: My Lords, I hope that the noble and learned Lord will take it for granted that, after the talks and discussions that have taken place, there is no opposition to the amendments. However, there are some points which arise out of them. The noble and learned Lord may feel it convenient to deal with them as I raise them, or he may think that it would he very much more beneficial for them to be dealt with in further discussions between the officials of his department and the Law Society. If I may do so in courtesy, I leave to the noble and learned Lord to decide which course he wants to adopt.
I raise a point first of all on Amendment No. 5. The presumption provided for in this new subsection is in favour of a personߞcall him A—dealing in good faith with the attorney or the attorneys. Does the noble and
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learned Lord consider that any similar presumption is needed in favour of successors in title to A, perhaps even a stronger one to the extent that the successor should be allowed to assume that A did not know of evidence to displace this presumption? As the noble and learned Lord will know, the presumption of non-revocation in the Powers of Attorney Act 1971 proceeds on that basis.
There is another question that arises upon this amendment. Can the noble and learned Lord the Lord Chancellor confirm the intention to be that A's position is not prejudiced if evidence to the contrary becomes known to him after his dealing has been completed; in other words, that what matters is whether he deals without notice of such evidence? The present amendment, I suggest, is not entirely clear on that point.
The noble and learned Lord understandably grouped in his remarks Amendments Nos. 5 to 8. I have just spoken to Amendment No. 5. I have no comment to make on Amendment No. 6. I say at once that the wording of Amendment No. 7 is so much clearer than the original Clause 9(3) which appeared in the original Bill. In regard to Amendment No. 8, I was troubled about the reasonableness test and to what it applied, and that amendment suitably deals with that point.
The Lord Chancellor: My Lords, I am grateful to the noble Lord, Lord Mishcon, for those comments. I shall look further into the first point that he mentioned. I would assume that this amendment is sufficient to have the result to which he referred in that connection in relation to a successor of A. As regards the second point the noble Lord mentioned, I think it is reasonably plain on this amendment that the relevance, or the time that is relevant, is the time of the dealing, and therefore information that comes to his notice after the dealing has been completed would he quite plain. I think that the clause as drafted meets that point. It is obvious that the intention in relation to the first point is that a successor of A should be protected also. If we have not succeeded in doing that so far, obviously we would wish to consider amplifying that aspect of the matter. I do not believe there is any policy difference between us on that point.
On Question, amendment agreed to.
The Lord Chancellor The Lord Chancellor moved Amendments Nos. 6, 7 and 8:
Page 4, line 19, at end insert (": and such a power is revoked by the appointment as a trustee of a person other than those by whom it is given (though not by any of those persons dying or otherwise ceasing to be a trustee).").
Page 4, line 20, leave out from ("Where") to end of line 25 and insert ("a beneficiary to whom functions are delegated by a power of attorney under subsection (I) ceases to be a person beneficially entitled to an interest in possession in land subject to the trust—

(a) if the functions are delegated to him alone, the power is revoked,

(b) if the functions are delegated to him and to other beneficiaries to be exercised by them jointly (but not separately), the power is revoked if each of the other beneficiaries ceases to be so entitled (but otherwise functions exercisable in accordance with the power are so exercisable by the remaining beneficiary or beneficiaries), and

961

(c) if the functions are delegated to him and to other beneficiaries to be exercised by them separately (or either separately or jointly), the power is revoked in so far as it relates to him.").

Page 4, line 38, leave out ("it was not reasonable for the trustees") and insert ("the trustees did not exercise reasonable care in deciding").
The noble and learned Lord said: I beg to move Amendments Nos. 6 to 8 en bloc.
On Question, amendments agreed to.
Clause 11 [Consultation with beneficiaries]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 9:
Page 5, line 24, leave out from ("in") to ("or") in line 25 and insert ("relation to a trust created by a disposition in so far as provision that it does not apply is made by the disposition,
() in relation to a trust created or arising under a will made before the commencement of this Act,").
The noble and learned Lord said: My Lords, in moving Amendment No. 9 I wish to speak also to Amendments Nos. 10 to 12. These together change the transitional provisions in Clause 11, and it therefore seems appropriate for me, with your Lordships' leave, to speak to them all together.
At present, the trustees' duty to consult under Clause 11 will not apply to an existing express trust of land unless the settlor provides by deed within a year of commencement of the Act that it is to apply, but nothing is said about cases where the trust is created by a pre-commencement will but the testator dies after commencement. Since a will speaks from death, this would mean that such will trusts would not be treated as existing express trusts and so the burden would be on the testator as from commencement of the Act to consider whether to take steps to exclude this duty to consult. This could lead to cases where the testator assumed when making his will that the trustees would not have to consult but the trustees are nevertheless put under that duty because the testator for one reason or another did not revisit his will after he made it.
Amendment No. 9 accordingly provides for any trust created or arising under a will made before commencement of the Act to be treated as an existing express trust. The words "created or arising under", which are based on the precedent of paragraph 6 of Schedule 3 to the Family Law Reform Act 1969, are intended to cover not only will trusts proper but also trusts which may be created by assents by the personal representatives to beneficiaries under the will.
Amendment No. 11 removes the time limit within which a settlor of an existing express trust may opt to bring it within the provisions of this clause, the Law Society believing the limit to serve no useful purpose. That was one of the matters that we discussed at the meeting to which the noble Lord, Lord Mishcon, kindly referred. Consequential on that change, Amendment No. 12 deletes subsection (4) which defines the terms
"transitional period" and
"existing express trust of land",
and Amendment No. 10 replaces the term,
"existing express trust of land",
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where it occurs earlier in the clause with the precise wording describing such a trust, doing away with the need for a definition. I beg to move.
Lord Mishcon: My Lords, in the same spirit that I spoke on the previous amendment I put to the noble and learned Lord on the Woolsack two points arising out of Amendment No. 9. This amendment, as he rightly says, protects trusts arising under the will of a testator who dies after the Act comes into force, if the will was made before commencement. Can the noble and learned Lord confirm that if a trust of land is created by an assent—when, as he well knows, the executors vest the land in themselves or others as trustees—that would not make the new provisions apply if the will predates the commencement of the Act; in other words, that it is the time of creation of the beneficial trust which determines whether it counts as an old trust or a new one? That is my first point.
The same point would seem to arise where additional land becomes comprised in an existing old trust after the Act comes into force, whether through a further gift by the settlor or through a purchase by the trustees. Which regime does the noble and learned Lord consider should apply to that situation, and is it clear that this result flows from the wording of the Bill? I said when posing these points, which do not go to principle but to clarification, that it may well be that the noble and learned Lord would prefer to take note of them and not deal with them now. However, I repeat that I leave that entirely to him.
The Lord Chancellor: My Lords, I shall say how I see the matter, subject to correction. I think that Amendment No. 9 will have the effect that the trust will be regarded as coming into existence for the purposes of these provisions at the time that the noble Lord, Lord Mishcon, stated. The words "created or arising under" refer back to the time at which the original expression of the trust was made, and the fact that there are later assents will not derogate from that.
So far as concerns new land, one might consider new land not to make a new trust. In other words, the fact that you have added land to an existing trust might not make a new trust. I can see an argument also for the view that the trust is defined by reference to the disposition—that is to say, the directions as to what is to happen—and to the subject matter, namely a specific piece of land, and, therefore, that the other option is possible under the provisions as drafted. It may he that we should consider this point. It is one of interest that I would wish to look at further to see whether we should expressly deal with the situation where the subject matter of the trust is enlarged. I can see an argument that until that other piece of land is affected by the trust, even though the trust provisions are the same affecting a different and earlier piece of land, there is no trust in existence in respect of that second piece of land.
With that rather hesitant response at this stage, I hope that the noble Lord will allow me to consider the matter

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further. It may well be that we should consider an amendment at Third Reading to deal with the second point.
On Question, amendment agreed to.
7.30 p.m.
The Lord Chancellor The Lord Chancellor moved Amendments Nos. 10 to 12:
Page 5, line 27, leave out ("an existing express trust of land") and insert ("a trust of land created before the commencement of this Act by a disposition").
Page 5, leave out line 29.
Page 5, line 35, leave out subsection (4).
The noble and learned Lord said: My Lords, I spoke to Amendments Nos. 10 to 12 with Amendment No. 9. I spoke to Amendments Nos. 13 and 14 with Amendment No. 1. I beg to move.
On Question, amendments agreed to.
Clause 17 [Application of provisions to trusts of proceeds of sale]:
The Lord Chancellor The Lord Chancellor moved Amendments Nos. 13 and 14:
Page 8, line 35, leave out from ("property") to end of line 40 and insert ("(other than a trust of land) which consists of or includes—

(a) any proceeds of a disposition of land held in trust (including settled land), or

(b) any property representing any such proceeds.").

Page 9, line 6, leave out from ("to") to ("includes") in line 7 and insert ("settled land").
On Question, amendments agreed to.
Clause 19 [Notice to beneficiaries of proposed appointment of trustee]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 15:
Leave out Clause 19.
The noble and learned Lord said: My Lords, Amendments Nos. 15 through to 32, 35 and 38 together radically change the approach of Part II of the Bill, broadly in line with the approach urged on the Government in Committee by the noble Lord, Lord Mishcon. These amendments are really interconnected in such a way that I believe it would be appropriate to speak to them all together in moving Amendment No. 15, so that the House may have the whole picture.
The approach of this group of amendments is to give a wider power to the beneficiaries, in essence reversing the 1948 decision in the case of Re Brockbank. That decision is to the effect that beneficiaries who are entitled to have the trust property conveyed to them because they are together absolutely entitled to it may nevertheless not control appointment of the trustees other than by ending and reconstituting the trust—which is unattractive because of the tax implications. Part of the new scheme is that Clause 19 should be deleted, since the power now to be given to beneficiaries will be exercisable at any time, not only when the existing trustees are in the position of having to appoint a new trustee, and so the notice requirements in Clause 19, to which the noble Lord drew our particular attention on the last occasion, would be superfluous.
Amendment No. 15 accordingly deletes Clause 19, and this makes it possible to remove a number of subsequent provisions which are only necessary because of the notice requirement, and to avoid attendant complications and possible problems in practice. Accordingly, Amendments Nos. 23 and 26 together delete subsections (3), (4) and (6) of Clause 22. The deletion of Clause 19 and insertion of the new clause effected by Amendment No. 16 necessitate a number of purely consequential changes in Clause 22, to change references to "this Part" or to "Clause 20" into references to the new clause and Clause 21 or to the new clause alone as appropriate, and Amendments Nos. 20, 25, 27 and 28 are concerned with this.
Amendment No. 16 is the pivotal amendment, and the comments which I made earlier about being ready to consider suggestions concerning the precise wording apply most particularly here. It inserts in place of Clause 20 a new clause which confers on beneficiaries, subject to qualifying conditions, a power to direct any trustee or trustees to retire from the trust, or to direct the appointment of a new trustee or trustees of the beneficiaries' own choosing, or to do both. The new clause operates independently rather than by reference back to the Trustee Act 1925, and so certain aspects of Section 36 of that Act must be spelt out since they are no longer incorporated by reference.
The qualifying conditions for the clause to apply, set out in subsection (1), are that no person has been nominated for the purpose of appointing trustees, and that the beneficiaries are all of full age and capacity and, taken together are absolutely entitled to the trust property.
Subsection (2) sets out the directions which the beneficiaries are able to give, and since they include a direction to retire, Amendment No. 22 is necessary, to insert a reference in Clause 22(2) to the person specified for retirement as well as for appointment. Likewise, Amendment No. 35 provides for a consequential amendment to Section 40 of the Trustee Act 1925, so that it encompasses directed as well as voluntary retirement, and Amendment No. 38 amends the Long Title of the Bill by inserting a reference to retirement as well as to appointment of trustees.
Subsection (3) of the new clause is a very important provision. A trustee who is directed to retire may have rights in respect of the trust property, for example rights to reimbursement or indemnity for expenses incurred in relation to the trust, and may need to take action to ensure that he can enforce those rights.
Subsection (3) is intended to apply to a trustee directed to retire, whether or not he is being replaced, and to ensure that he does not have to comply with the direction unless reasonable arrangements have been tendered which will be effective when the retirement becomes effective. It also reproduces the protection afforded by the retiring trustee's involvement in the paperwork which is necessary to make the retirement effective.
Subsection (4) is intended to make clear the persons on whom a direction to appoint a trustee of the beneficiaries' choosing must be served; and subsection
(5) makes it clear that the power is subject to the general restrictions on numbers of trustees, which needs to be spelt out because it is no longer incorporated by reference.
Amendment No. 17 aims to ensure consistency by importing into Clause 21 the same beneficiary qualification as in the new Clause 20. Amendment No. 18 simplifies the drafting of the clause by removing subsection (3) and incorporating the essentials of it in subsection (2). Amendment No. 19 works together with Amendment No. 24 in Clause 22, which makes it clear that subsection (7) of Section 36 of the Trustee Act 1925 applies to a trustee appointed under the new Clause 20 or Clause 21 as if the trustee had been appointed under Section 36. The need to spell this out for the new Clause 20 as well as for Clause 21 arises because the new clause no longer operates by reference to Section 36; and, once this is done by Amendment No. 24, subsection (4) of Clause 21 becomes superfluous and falls to be deleted, which is done by Amendment No. 19.
Amendment No. 21 deals with a point made by the noble Lord,Lord Mishcon, in Committee, and makes it clear that any direction made by the beneficiaries can be revoked if one or more of them withdraws it in writing before it becomes effective.
Amendment No. 29 does, mutatis mutandis, the same thing in respect of the transitional provisions for Part II of the Bill as Amendment No. 9 does in respect of those for Clause 11, providing for the position of pre-commencement wills which become effective on a post-commencement death. Additional changes to the transitional provisions are made by Amendments Nos. 30 to 32, in the light of representations by the Law Society. The new approach provides for Part II of the Bill to apply to a trust created before commencement of the Act unless the settlor by deed excludes it, and for the settlor to be able to make such a deed at any time, so that he may thus stop a direction from becoming effective, but may not thus affect an appointment or retirement already effective. I beg to move.
Lord Mishcon: My Lords, it does not fall often to Members of your Lordships' House to be able at one stage of the Bill to move that a clause does not form part of that Bill, to withdraw that amendment, and to find the Government agreeing with it in the next stage of the Bill. I happen to be in that happy position, having moved that Clause 19 should not form part of the Bill:
However, I ask for your Lordships' indulgence because, as noble Lords will have seen, many clauses and amendments have been dealt with by the noble and learned Lord in a very succinct manner. They cover a great number of clauses in the one speech that he made on these various amendments. Perhaps I may, therefore, be forgiven if I take some little time in making the points that I wish to make in particular on behalf of the Law Society. Perhaps I may deal with the various points under the appropriate amendment numbers which were covered in the all-embracing speech of the noble and learned Lord.
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Starting with Amendment No. 16, subsection (1) provides that the first condition for the application of Clause 20 and therefore the whole machinery of Part II is that there is no person nominated for the purpose of appointing new trustees. I refer your Lordships to the wording of Amendment No. 16:
"This section applies in the case of a trust where...there is no person nominated for the purpose of appointing new trustees".
My first query arises out of that wording. What is the position where the person was nominated but is now dead? Will the noble and learned Lord confirm that Clause 20 is intended to apply where there is no person now alive with the power to nominate trustees as well as to cases where no such person was ever nominated in the first place? In making that point, I excuse myself by saying that in the amendment that I tried to put forward in Committee I was careful to ensure that the wording covered the fact that the person concerned was still in existence. There may be many cases where the person originally nominated has been dead for many years.
Subsection (3) deals with the protection of the position of a trustee directed to retire. For example, he is protected against contractual liabilities to third parties and against taxation liabilities which might be enforced against him after retirement. I tried to emphasise in Committee that this was an extremely important topic, given the element of compulsion involved. The wording of the subsection will require him to retire as soon as he has been—I emphasise this word—"offered" reasonable arrangements. That is quite all right in principle, so long as it is clear that the arrangements on offer are to he implemented no later than the time when the actual retirement takes place. Can the noble and learned Lord please consider whether, on Third Reading, there should be wording which makes that clear and gives emphasis to it?
Can it also be confirmed that no trustee who is directed to retire can in practice be removed from office under these provisions, whether or not in combination with existing provisions of the Trustee Act 1925, without himself executing a deed of retirement and therefore having the ability to defer doing so until reasonable arrangements for his protection have been made? That has been agreed as the correct principle, but it is thought that further drafting amendments may be necessary to ensure that the mechanics work properly.
Lastly, under Amendment No. 16 it is not entirely clear what situation subsection (4) is intended to deal with. It appears to specify to whom a notice is to be given in certain circumstances. Some clarification of how the subsection is intended to work would undoubtedly be helpful. In particular, if a direction has been given under subsection (2)(a) requiring the retirement of all the existing trustees, should the direction under subsection (2)(b) not he given to those outgoing trustees since they are the persons who have power to appoint their successors? Here again, I submit respectfully that further drafting may be necessary.
I now turn to Amendment No. 21 which affects Clause 22. The provision makes clear that a beneficiary can withdraw from a direction given under the new provisions at any time before the direction has been

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complied with. I tried to voice the provision about the risk of undue influence in Committee. I am most grateful, as is the Law Society, for the consideration given to the point. Withdrawal should be possible, whether the beneficiary in question signed a single joint direction or one of several identical ones. It is unclear from the way the amendment is expressed—I am talking in particular about introducing the additional words at the end of line 6—whether that is achieved; in other words, whether the additional wording qualifies just paragraph (b) of Clause 22(1) or both paragraphs (a) and (b).
I turn to Amendments Nos. 29 and 30 to Clause 22. The amendments reverse the present presumption of the Bill, with the consequence that Part II will apply to existing trusts unless the settlor or settlors by deed provide to the contrary. The reversal of the presumption as regards existing trusts is appropriate, given acceptance of the revised scheme for Part II to which the noble and learned Lord referred. The essence of the scheme is that it only applies in circumstances where the beneficiaries could remove the trustees by putting an end to the trust altogether, under the rule in Saunders v Vautier. Were the Bill put forward in its present form it is my submission that it would certainly not be correct to reverse the presumption in this way.
In cases where the settlor or testator has died, the effect of Amendments Nos. 29 and 30 appears to be that the new provisions will not apply if the trust is created or arises under a will made before the Act comes into force, whether the settlor died before or after commencement. They will, however, apply if the trust was created otherwise than by will, even if that was before commencement. The distinction between inter vivos and testamentary dispositions appears to be an anomalous result and is presumably unintended. In view of the reversal of the basic presumption for existing trusts, will the noble and learned Lord consider whether there is still reason, in this context, to retain a special provision relating to pre-commencement wills as set out in Amendment No. 29?
It is with relief, I am sure so far as your Lordships are concerned, that I deal with the last amendment, Amendment No. 30 to Clause 22. The right for a settlor to opt out for his trust at any time raises the question of how this is to interact with anything done under the provisions before he does so. It is clear that it must not be allowed to upset any appointment or retirement of trustees which has actually taken place in the meantime, even if carried out pursuant to a direction given by the beneficiaries. However, can the noble and learned Lord confirm that the fact that the provisions have already operated once does not stop the settlor from opting out so that they cannot operate again in the future; and if a direction has been given to the beneficiaries but has not yet been acted upon by the trustees and the settlor disapproves of the action taken by the beneficiaries, he can deprive their direction of any effect by opting out before the trustees act on the direction? That may be of particular significance in the period immediately after commencement when beneficiaries may be seeking to pre-empt action by settlors in respect of existing trusts.
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I have said quite a lot in dealing with these grouped amendments. I do so only because I believe that these matters are of some importance and use in making the Bill as efficient as we all want it to be. I realise that I have put a pretty heavy burden upon the noble and learned Lord were he to deal with all these matters now and upon noble Lords had they to listen to a very long and detailed reply. The purpose is to put these matters on record.
Lord Meston: My Lords, after that tour de force I wish only to reinforce the first point made by the noble Lord, Lord Mishcon; namely, that it should be clear in the new clause whether the reference to the person nominated by the instrument is intended to be a reference to someone who is both still alive and still competent.
The Lord Chancellor: My Lords, that point, reinforced by the noble Lord, Lord Meston, made by the noble Lord, Lord Mishcon, was certainly addressed by parliamentary counsel. I know that for a fact as I was involved to some extent.
The point is that the verb is in the present tense: there "is" no person nominated. Accordingly, that falls to be tested at the time when this section is under construction. Therefore, the policy, as both noble Lords said, based on the advice that I have so far, is that when a person who was nominated is dead before the application of this section is in question, there "is" no person nominated if that person has already died. If the words had been "has been nominated", the situation would be different.
I am in a position to deal in some way with most of the other matters raised. However, I am not sure that it would be particularly useful to do so in detail now for the reason stated by the noble Lord, Lord Mishcon.
Perhaps I should just state the intentions and leave aside the arguments. So far as subsection (3) of the new clause dealt with in Amendment No. 16 is concerned, the intention is certainly that the arrangement should be such as to be effective when the retirement is effective. Secondly, the intention is also that the retiring trustee shall not have to comply in all ways with the direction to retire until he is protected; that is to say, he requires to make a deed.
The opening words of subsection (4) are intended simply to cover circumstances in which the beneficiaries exercise their powers. Counsel has specifically indicated a willingness to revisit the wording if there is doubt about it.
To refer again to Amendment No. 16, the intention in regard to retraction of a direction is that once unanimity is broken and a beneficiary makes that clear in writing, the direction falls. We shall see whether more needs to be done to ensure that both (a) and (b) are covered, but that is certainly the intention.
Turning to Amendments Nos. 29 and 30, I certainly have no objection to examining whether will trusts and inter vivos trusts shall be covered differently or in the same way. I will take that matter up with the draftsman to seek his further advice.
In relation to Amendment No. 32, it was not the intention that the settlor should be able to opt in and out. It was intended, because it is simple, that a settlor should

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be able to stop a direction in its tracks. If there is real objection to that, we shall be happy to look again at the clause. I rather took it from the remarks of the noble Lord, Lord Mishcon, that he wished the matter to be reasonably clear. I believe the intention we have is probably an intention in common. The only question is whether the wording effectively arrives at that or effectively declares that intention.
I shall certainly consider all these matters in the light of what has been said. If further amendments are required, I hope to put them forward in good time for Third Reading.
On Question, amendment agreed to.
Clause 20 [Appointment of trustee at instance of beneficiaries]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 16:
Leave out Clause 20 and insert the following new Clause—
APPOINTMENT AND RETIREMENT OF TRUSTEE AT INSTANCE OF BENEFICIARIES
(".—(1) This section applies in the case of a trust where—

(a) there is no person nominated for the purpose of appointing new trustees by the instrument, if any, creating the trust, and

(b) the beneficiaries under the trust are of full age and capacity and (taken together) are absolutely entitled to the property subject to the trust.

(2) The beneficiaries may give a direction or directions of either or both of the following descriptions—

(a) a written direction to a trustee or trustees to retire from the trust, and

(b) a written direction to the trustees or trustee for the time being to appoint by writing to be a trustee or trustees the person or persons specified in the direction.

(3) Where a trustee has been given a direction under subsection (2)(a), as soon as there has been made to him an offer of reasonable arrangements for the protection of any rights of his in connection with the trust, he shall by deed declare that he has been given such a direction; and if his co-trustees by deed consent to his being discharged from the trust and to the vesting in them alone of the trust property—

(a) he shall be deemed to have retired from the trust and shall be discharged from the trust, and

(b) he and the continuing trustees shall do anything necessary to vest the trust property in them alone.

(4) In circumstances in which either section 36(1) of the Trustee Act 1925 applies or a direction is or has been given under subsection (2)(a), a direction under subsection (2)(b) shall be given to the surviving or continuing trustees or trustee or the personal representative of the last surviving or continuing trustee.
(5) This section has effect subject to the restrictions imposed by the Trustee Act 1925 on the number of trustees.").
The noble and learned Lord said: My Lords, I spoke to Amendments Nos. 16 to 32 with Amendment No. 15; to Amendments Nos. 33 and 34 with Amendment No. 1; to Amendment No. 35 with Amendment No. 15; to Amendments Nos. 36 and 37 with Amendment No. 1; and Amendment No. 38 with Amendment No. 15. With the leave of the House, I therefore propose to move Amendments Nos. 16 to 38 inclusive en bloc.
On Question, amendment agreed to.
Clause 21 [Appointment of substitute for incapable trustee]:
The Lord Chancellor The Lord Chancellor moved Amendments Nos. 17 to 19:
Page 10, line 27, leave out ("are of full age and capacity and") and insert ("under the trust are of full age and capacity and (taken together)").
Page 10, line 36, leave out from ("appoint") to first ("the") in line 39 and insert ("by writing").
Page 10, line 41, leave out subsection (4)
On Question, amendments agreed to.
Clause 22 [Appointments: supplementary]:
The Lord Chancellor The Lord Chancellor moved Amendments Nos. 20 to 32:
Page 11, line 1, leave out (" 20") and insert ("(Appointment and retirement of trustee at instance of beneficiaries)").
Page 11, line 6, at end insert—
("and is not by writing withdrawn by any of them before being complied with.").
Page 11, line 8, after ("appointment") insert ("or retirement")
Page 11, line 9, leave out subsections (3) and (4).
Page 11, line 17, at end insert—
("() Subsection (7) of section 36 of the Trustee Act 1925 (powers of trustees appointed under that section) applies to a trustee appointed under section (Appointment and retirement of trustee at instance of beneficiaries) or 21 as if he were appointed under that section.").
Page 11, line 18, leave out (" 20") and insert ("(Appointment and retirement of trustee at instance of beneficiaries)").
Page 11, line 23, leave out subsection (6).
Page 11, line 26, leave out ("This Part does") and insert ("Sections (Appointment and retirement of trustee at instance of beneficiaries) and 21 do").
Page 11, line 27, leave out ("it does") and insert ("they do"). Page 11, line 27, at end insert (", or
() in relation to a trust created or arising under a will made before the commencement of this Act.").
Page 11, leave out lines 28 to 30 and insert—
("(8) Sections (Appointment and retirement of trustee at instance of beneficiaries) and 21 do not apply in relation to a trust created before the commencement of this Act in so far as provision to the effect that they do not apply is made by a deed executed-").
Page 11, line 36, leave out subsection (9).
Page 11 , line 41, at end insert—
("() Where a deed is executed for the purposes of subsection (8)—

(a) it does not affect anything done before its execution to comply with a direction under section (Appointment and retirement of trustee at instance of beneficiaries) or 21, but

(b) nothing shall be done after its execution to comply with such a direction.").

On Question, amendments agreed to.
Clause 26 [Minor and consequential amendments and repeals]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 33:
Page 12, line 27, at end insert—
("() Neither section 2(4A) nor the repeal by this Act of section 29 of the Settled Land Act 1925 applies in relation to the deed of settlement set out in the Schedule to the Chequers Estate Act 1917 or the trust instrument set out in the Schedule to the Chevening Estate Act 1959.").
On Question, amendment agreed to.
Schedule 1 [Provisions consequential on section 2]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 34:
Page 14, leave out lines 37 to 46 and insert—
("4.—(1) This paragraph applies in the case of land held on charitable, ecclesiastical or public trusts (other than land to which the Universities and College Estates Act 1925 applies).
(2) Where there is a conveyance of such land—

(a) if neither section 37(1) nor section 39(1) of the Charities Act 1993 applies to the conveyance, it shall state that the land is held on such trusts, and

(b) if neither section 37(2) nor section 39(2) of that Act has been complied with in relation to the conveyance and a purchaser has notice that the land is held on such trusts, he must see that any consents or orders necessary to authorise the transaction have been obtained.

(3) Where any trustees or the majority of any set of trustees have power to transfer or create any legal estate in the land, the estate shall be transferred or created by them in the names and on behalf of the persons in whom it is vested.").
On Question, amendment agreed to.
Schedule 3 [Minor and consequential amendments]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 35:
Page 20, line 7, at end insert—
("() In section 40(2), after the word "appointed" insert "or under section (Appointment and retirement of trustee at instance of beneficiaries)(2)(a) of the Trusts of Land and Appointment of Trustees Act 1996".").
On Question, amendment agreed to.
Schedule 4 [Repeals]:
The Lord Chancellor The Lord Chancellor moved Amendments Nos. 36 to 37:
Page 27, line 30, column 3, at end insert—

("Section 29.")

Page 33, line 20, at end insert—

("1993 c. 10.

The Charities Act 1993.

Section 37(6).

Section 39(5).")

On Question, amendments agreed to.
In the Title:
The Lord Chancellor The Lord Chancellor moved Amendment No. 38:
Line 4, after("appointment") insert ("and retirement").
On Question, amendment agreed to.
Baroness Trumpington: My Lords, I beg to move that the House do now adjourn during pleasure until 8.5 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.56 to 8.5 p.m.]

Housing Grants, Construction and Regeneration Bill [H.L.]
Consideration of amendments on Report resumed on Clause 106.
Lord Howie of Troon Lord Howie of Troon moved Amendment No. 152:
Page 60, line 39, at end insert—
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("Adjudication is not arbitration, the main difference between them being that the decision on an adjudication is not binding except with the consent of the parties. It is an interim decision which must be accepted for the duration of the contract but which can be challenged later either by arbitration or through the courts.").
The noble Lord said: My Lords, I come to this amendment fresh from a dinner in Terrace Room A with the Construction Industry Group, although I was able to stay only for the first course. I hope to get back for the pudding with any luck, but who can tell. The group sent me here with an enthusiastic urge to persuade the Government to do their best, though we are not doing too badly so far.
Amendment No. 152 is by way of definition. I seem to recall that in the Second Reading debate my noble friend Lord Williams drew attention to the fact that, while there was a large battery of definitions in Part I of the Bill, there was none in Part II, which is the part that concerns us here tonight.
The amendment contains a kind of definition. I say "kind of definition because it does not actually say what adjudication is; it says what it is not. However, that is the important part in regard to the findings of adjudication in the whole ethos of the Bill. Everybody in the construction industry and those concerned with this Bill, with the possible exception of the Government, believe that the Government have confused arbitration and adjudication. There is no doubt that the majority of opinion is correct and that the Government are wrong. It would help us a great deal if the Government were to accept Amendment No. 152. I am not sure whether it is in the right place, but it should be included somewhere.
The definition is not complete. I notice that my noble friend Lord Berkeley has tabled a more judicial definition than I managed to; but I have drawn attention to the key factor which runs through a large part of the Bill and which caused so much annoyance within the construction industry. The confusion is on the government side; the annoyance is on the construction industry side.
The key to the amendment lies in the first four words—"Adjudication is not arbitration". On that simple proposition I rest my case, apart from reminding the Minister that the scheme also confuses the two. I believe it does that quite deliberately. It applies elements of arbitration law to adjudication. I beg to move.
Lord Berkeley: My Lords, in supporting the amendment of the noble Lord, Lord Howie of Troon, if it be convenient for the House, I would like to speak also to my amendment No. 152A. My purpose in putting down the amendment is to have the definition of "adjudication" included—exactly the same purpose as that of the noble Lord, Lord Howie. It follows on from the amendment which we discussed earlier this evening, Amendment No. 151, proposed by the noble Baroness, Lady Hamwee. The amendments have the same objective—to define adjudication. Again, I am not saying that my drafting is the right solution. We have a definition of "dispute"; we have had "construction contracts" defined previously in Part II, and also "construction operations", which we discussed at some length earlier this evening.

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There should be a short and clear description of what adjudication is. I hope that the words "summary", which, I believe, means quick and easy, and "non-judicial" can also appear to emphasise the importance that the procedure, which we shall be discussing in later amendments, does not involve expensive lawyer time. The wording I have put towards the end of the amendment is my latest understanding of what the purpose of the scheme and Part II is about.
With those few words, I hope that the noble Lord the Minister will be able to look at both amendments with a view to putting in some definition which will help to clarify what we are all doing and what the Bill is all about.
Lord Williams of Elvel: My Lords, as the House will recognise, I am not against purpose amendments. I believe there is a case for saying, in the rubric to the clause:
"Right to refer disputes to adjudication."
There should be some wording about what adjudication, as opposed to arbitration, really means. That would lead us into further discussion about the scheme and all the rest of it but, in supporting either of my noble friends, whichever amendment the Government wishes to accept—I am sure they will accept one of them—it would be sensible, in my view, to put something in as a purpose of adjudication, because the industry, as my noble friends have said, is unclear. We do not know whether the Government mean adjudication or arbitration. They would be wise to put something in Clause 106 to reflect what is meant by "adjudication".
Lord Lucas: My Lords, the difficulty we have with the two amendments is that we do not wish to restrict the contracting parties opting for something close to arbitration. We have discussed at length the difference between arbitration and adjudication; I believe that we are basically agreed on that. However, we do not wish to stop parties opting for arbitration if that is what they want. We believe that, within the context of making things work better, that would be acceptable. We do not therefore want to draw the definition in Clause 106 so tightly that people cannot go down that route if that is what they want to do.
As I said just before supper, we have accepted the arguments made in Committee and subsequently by noble Lords, and we have concluded that it would be right if disputes which are subject to the scheme adjudication could normally be re-opened at practical completion of a contract. That is making the whole scheme very much closer to pure adjudication than it was, and I am sure that that is welcome to the noble Lord, Lord Howie.
Lord Williams of Elvel: My Lords, I am sorry to intervene at this stage but, as I understand it, Clause 106 specifies:
"A party to a construction contract has the right to refer a dispute arising under the contract for a resolution by an adjudication procedure".
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It seems to me, subject to clarification, that if there were something saying: "This is what adjudication is about", that would be the right place in which to put it.
8.15 p.m.
Lord Lucas: My Lords, yes, I entirely agree. We have said as much as we wish to say. The argument behind our not wishing to say more is that we do not want to fetter parties to the contract more than we believe is necessary in order for them to achieve the effect we are looking for; namely, a satisfactory procedure for resolving disputes. If they happen to want something which is close to arbitration, we do not want to force adjudication on them. We want their freedom to contract to be as wide as possible concomitant with their having an agreement which does what we believe it should do in providing a disputes procedure. Clause 106(2)(a) to (d) sets out the limits on adjudication as we see it, with the qualities that the procedure must have. I agree that this need not be adjudication. It need not be adjudication, as the noble Lord, Lord Howie, knows it, as we shall now have it in the scheme; it could be something which is almost pure arbitration if that is what the contracting parties want.
We do not see the need to restrict the contracting parties just to go for adjudication. We do not see why we should draw things that narrowly if they happen to want to go wider. The question of whether there should be a definition of adjudication in the scheme is a matter for a later clause. This clause deals with what is acceptable in contracts and not what should appear in the scheme. That is at the heart of our objection to the two amendments; it is not that we disagree with either of the attempts to define adjudication. But at this stage of the Bill we do not wish to restrict contracting parties in that way.
Lord Howie of Troon: My Lords, I listened with care to what the noble Lord the Minister said, and with a great deal of sympathy. It seems to me that he has performed something not unlike the Indian rope trick; he has produced some form of magic. Also, he said that he did not really wish to say anything at this point. I have had periods in my lifetime when I did not wish to say things. I shall not alarm the House by drawing attention to what they were, but I have not always meant my intentions to be absolutely clear, although they were frequently successful or, put another way—to avoid boasting—not infrequently successful. It is not good enough to say that the Government do not wish to say something. The fact is this: we have a substantial clause on adjudication which, let me remind the Minister, is one of the three key factors from the Latham report which the Government have seen fit to legislate upon. Here is one of the key elements of that report—adjudication—and yet the Government are unwilling to say what it actually means.
There is a theme running throughout the Bill. It is most evident in the scheme, but it is also prevalent in the Bill itself. That theme is a confusion between arbitration and adjudication. It was even evident in the reply of the noble Lord the Minister. Let me agree. If the parties wish to go to arbitration instead of adjudication, that is all right. They can do so. There is

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nothing to hinder their agreeing to do that. But if they want to go to adjudication it should be made absolutely clear that adjudication is not arbitration.
That is what I have tried to do in Amendment No. 152 and it is what my noble friend Lord Berkeley has tried to do in Amendment No. 152A. The Minister has shown a certain amount of flexibility in his replies to us today. We shall hope that that flexibility in his replies is reflected in words on the Marshalled List when we come to Third Reading and eventually on the face of the Bill. I do not want to press the amendment. However, the amendment, or something like it—I shall not go to the gallows for my wording—should be in the Bill. It should be either where I have stated it should he or somewhere in the adjudication clause so that people know what is expected of them.
The Government are setting up parameters. The parameters ought to be clear so that people know the hurdles—if a hurdle can be a parameter or a parameter can be a hurdle—they have to leap over. It should be made clear. The Government have so far failed to do that. They ought to, either in my words or some other words. However, the Minister has been conciliatory. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 152A not moved.]
Lord Lucas Lord Lucas moved Amendment No. 153:
Page 61, line 6, at end insert—
("(2A) The contract shall also provide that the adjudicator is not liable for anything done or omitted in the discharge or purported discharge of his functions as adjudicator unless the act or omission is in bad faith, and that any employee or agent of the adjudicator is similarly protected from liability.").
The noble Lord said: My Lords, in moving this amendment I wish to speak at the same time to Amendment No. 154. In Committee both the noble Lord, Lord Williams of Elvel, and the noble Lord, Lord Howie of Troon, introduced amendments which included some sort of legal immunity for the adjudicator. Initially it was the Government's view that this was something to be left for parties to cover in their contract but, on reconsideration, we believe that freedom from legal liability for an adjudicator acting in good faith is such an essential feature of the process that it should be specified in primary legislation. I hope that the noble Lords I have just mentioned continue to agree to that.
Amendment No. 154 is partially consequential on Amendment No. 153. However, noble Lords will note that the phrasing of subsection (3) of Clause 106 has also been clarified, since we felt it was vital that there should be no confusion about its meaning. What we are saying—and have always been meaning to say—is that, unless all the conditions in subsection (2) and the new subsection (2A) are met, the provisions for adjudication in the scheme for construction contracts will apply in their entirety. There is to be no "mixing and matching" between the contract and the scheme. One has either the contract operating; or, if the contract falls down on these provisions, one has the scheme in its entirety. Mixing and matching would be risky. We do not wish parties to be in any unnecessary doubt about what adjudication
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procedures are open to them. I believe this is a helpful clarification. I shall seek to move the amendment when its time comes.
Lord Williams of Elvel: My Lords, I am grateful to the Government for introducing this amendment. It certainly meets the concerns that we expressed in Committee about the legal liability of those persons who are appointed as adjudicators. It would be absurd if someone were to be appointed as an adjudicator and, in discharging his duties in good faith, were to be subject to legal action.
I prefer to reserve my comments on Amendment No. 154 until we reach it in the Marshalled List because there are points arising on it which I wish to address. I am grateful to the Minister for introducing this amendment which meets our concerns on the legal liability of an adjudicator.
Lord Howie of Troon: My Lords, I wish to add my thanks to the Minister for bringing forward the amendment. Several of us brought up this matter in Committee. Lest the noble Lord thinks that my thanks are not double barbed, perhaps I may say that the amendment, which I welcome, would have been very much strengthened if my Amendment No. 152 had been accepted so that an adjudicator knew what adjudication was and knew that it was not arbitration.
Lord Lucas: My Lords, with thanks to the noble Lord, Lord Howie of Troon, I commend the amendment to the House.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 154:
Page 61, line 7, leave out ("such a procedure, the relevant") and insert ("a procedure which complies with the requirements of subsections (1) to (2A), the adjudication").
The noble Lord said: My Lords, I have already said what we believe this clause to be for. I look forward to listening to the noble Lord, Lord Williams, and to discussing the concerns he may have on the amendment. I beg to move.
Lord Williams of Elvel: My Lords, the Bill as drafted states:
"If the contract does not provide for such a procedure, the relevant provisions of the Scheme for Construction Contracts apply".
In place of,
"such a procedure, the relevant",
the Government wish to insert,
"a procedure which complies with the requirements of subsections (1) to (2A), the adjudication".
That seems to be slightly circular. I fully understood the Bill as drafted but I cannot quite understand what is meant by referring back to subsections (1) and (2A) the adjudication. If the Government had accepted my noble friend's amendment on the subject of adjudication, I would be quite clear on the matter. But since we are left slightly in the dark about the status of the scheme of construction of contracts, I should be grateful if the noble Lord could enlighten me on exactly what this amendment produces.

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My next point may not be relevant to this amendment but it is certainly relevant to the discussions we had in Committee. There is a question of whether the adjudicator, under whatever procedure, is allowed to go beyond what is relevant to the case he is adjudicating on. In Committee we discussed the problem of adjudicators ranging far and wide. I should be grateful if, in the context of responding to Amendment No. 154, the noble Lord could reassure us that adjudicators will not be ranging far and wide in searching out information which may not be relevant either to their charges under Clause 106 or indeed under the amendment moved by the noble Lord. This is quite an important factor in determining what adjudication means and what adjudicators under the clause are allowed to do.
8.30 p.m.
Baroness Hamwee: My Lords, I do not see it as my brief to support the Government on this part of the Bill or, indeed, necessarily to oppose them. I am attracted by the approach which the noble Lord, Lord Lucas, used when he spoke to this amendment a moment ago. It is probably right to be clear about what scope there may be, if any, for mixing and matching, as the noble Lord put it. However, we might find it easier to discuss such amendments if we were dealing first with the scheme'. It is perhaps an oddity of the way in which these matters are approached that we come to the substance of it after we have dealt with the way in which the scheme is to be applied or not. I believe that this approach by the Government is probably helpful in practice.
Lord Howie of Troon: My Lords, I intervene briefly on Clause 106(3). If I am out of order, I am sure that a noble Lord will tell me, so I give due warning. Subsection (3) states,
"such a procedure, the relevant provisions of the Scheme for Construction Contracts apply".
But in reading the Bill I notice that the clause understates the case. It refers to "the Scheme", when there are in fact two of them. We shall come to this matter later in the Bill in more detail. But, as I understand it, there is a scheme put forward by the Minister, whoever that person is, for England and Wales and another for Scotland. Each will produce a scheme of their own, but they will not necessarily be the same scheme because of the changes in the law which apply between our two united countries pro tem.
I am merely laying down a marker for a debate which we shall have later. I believe that the Government will have to take a little more care about this part of the clause. I had not thought about it early enough to table an amendment, which would have been kinder. I do not expect the Minister to reply at this stage because I am being a nuisance by inventing an amendment which I have not tabled. But there are two schemes, not one.
Lord Lucas: My Lords, perhaps I may begin by explaining how this new subsection would work. Under the clause as it stands, there is a description of an adjudication under subsection (2)(c) which satisfies the scheme. It states,
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"impose a duty on the adjudicator to act impartially".
As the Bill is written, if a contract were deficient in that aspect alone, that aspect alone of the scheme would be imported into the contract. As regards the amendment, if a contract is deficient in just that one aspect, the whole scheme is imported into the contract. We are saying that we do not believe that it would be satisfactory to try to mix and match bits of the contract with bits of the scheme and to pick out something which is deficient in the contract and substitute just that part of the scheme. As it emerges, the whole scheme will be an entity which ties in and works together. If one tries to bring parts of it into the contract for which there is no legal control, which is not necessarily related to the way in which the scheme is laid out, that is a recipe for confusion. We have always intended that the scheme as a whole should be imported if something was wrong with the contract rather than to include bits and pieces.
The noble Lord, Lord Williams of Elvel, asked about the ability of the adjudicator to range far and wide. That is something to which Amendment No. 189 addresses itself to a certain extent. Perhaps I may pre-judge that and turn to it. Amendment No. 189 would have the effect of restricting an adjudicator to consider material presented to him rather than letting him decide procedures. In reply to that, I say that we would not wish to restrict an adjudicator's ability to investigate cases without first considering the views of the whole industry. This is certainly a point that we shall look at, but in consultation with the industry rather than on our own initiative.
Lord Swinfen: My Lords, before my noble friend sits down, I point out that I was under the impression that the whole scheme would be imported into the contract if the contract had one part missing. What is the position if the original contract is drafted in such a way that it is in conflict with the balance of the rest of the scheme and not the part which is in there just to replace the missing part in the contract? One can have the original contract which is drafted in such a way that it conflicts with the scheme, which has to be imported as a whole. I realise that my noble friend would like the whole scheme imported rather than small pieces of it. I wonder whether there could be a conflict between the two. Perhaps my noble friend will give the matter consideration before Third Reading.
Lord Lucas: My Lords, yes, I shall do so.
On Question, amendment agreed to.
Baroness Hamwee Baroness Hamwee moved Amendment No. 155:
Page 61, line 9, leave out subsection (4) and insert—
("(4) The Scheme may include—

(a) for England and Wales, such provisions of the Arbitration Act 1996 as appear to the Secretary of State to be appropriate, and

(b) for Scotland, so much of the law, practice and procedure relating to arbitration as appears to the Lord Advocate to be appropriate.").

The noble Baroness said: My Lords, the Minister referred to mixing and matching. My amendment is intended to seek to understand how much may he mixed and matched of the Arbitration Act for England and

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Wales and the law, practice and procedure of arbitration in Scotland. As Clause 106(4) is drafted, the scheme may apply the provisions of the Arbitration Act for England and Wales—similar provisions will apply to Scotland—with adaptations and modifications at the discretion of the Minister. Can the noble Lord, Lord Lucas, explain to your Lordships if it is intended that the existing provisions of the Arbitration Act can themselves be altered and then put into the mix of the scheme or if what is intended here is that the scheme may apply to some provisions but not others—that would clearly be sensible—of the Arbitration Act? The reason I am pursuing this matter is that it does not seem appropriate to give power to the Minister to start changing the provisions of the legislation, albeit for the purposes only of the scheme, but without bringing those changes before this House and another place. I beg to move.
Lord Howie of Troon: My Lords, is it convenient to the House if we discuss my Amendment No. 160 at this time? It stands alone in the groupings on the Marshalled List. I shall not pursue it unless the Minister agrees with me. I am asking that we consider two schemes, and not one. If the Minister agrees, then I shall continue, but if he does not, I shall wait my turn with the normal politeness that I always show. I shall babble on while the Minister makes up his mind. Does he find it acceptable? I am suggesting that we discuss Amendment No. 160 with Amendment No. 154, because they seem to have a kissing cousinship at least.
I admit to a certain dereliction of duty here, in the sense that I did not realise that there were to be separate schemes: one for England and Wales, and another for Scotland. Our debate in Committee did not make that clear. I absolve the Government from any blame in this matter, because if one looks closely at the Bill it implies that there are separate schemes produced by separate Ministers. We did not realise that at the time, and the Government did not feel inclined to remind us of it.
I received a letter from the Lord Advocate (the noble and learned Lord, Lord Mackay of Drumadoon), a man whom I do not know, although he seems to be a Member of this House. He may be a recent Member. He wrote me a kind and informative letter relating to matters I had raised at an earlier stage in relation to my native land and the Bill.
I was reading the noble and learned Lord's letter happily until I reached page 2, when I was drawn up short. He explained of course that his department (the Lord Advocate's Department) worked closely with the Secretary of State for Scotland, which did not surprise me because I think that the Secretary of State for Scotland is a man who would insist upon being worked closely with—if that is grammatical. The Lord Advocate went on to tell me that his officials have been in contact with representatives of the construction industry in Scotland,
"in order to discuss the terms of the Bill and the proposals for a Scottish scheme".
That is direct. I am sure it is within the Bill's ambit, although no one reminded us of that. It was not thought to be appropriate, and we did not spot it. He continued:
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"These discussions will assist in determining the nature of the Scottish scheme, and will in due course form part of the formal consultation exercise which I require to undertake before I make the scheme itself'.
I could go on. There is an interesting paragraph which tells me about Scottish law, and matters of that nature, and things which will apply in Scotland and things which will not. The most important one is the fact that the Arbitration Bill will not apply in Scotland. Yet this "scheme" as we have called it so far, which is in fact a scheme for England and Wales, leans heavily on the Arbitration Bill and quotes from it extensively, without admitting it. The Arbitration Bill does not apply to Scotland, so what is the Scottish scheme to consist of? Will it spatchcock in bits of an Arbitration Bill which does not apply to Scotland? The Minister shakes his head, and I am glad to see that.
That brings me to a question which I must put to the Minister. We asked, I think in Committee, that this famous scheme be presented to the House in draft so that we could consider it, and even think about it, if the worst came to the worst. We may want to consider and think about the Scottish scheme. So is there any possibility that we may see a draft of the Scottish scheme before Third Reading so that we can consider it and possibly think of putting it down as a schedule to the Bill on Third Reading? I chuckle in a demonic way, but this is a serious matter.
If it is right that we should have a sight of the scheme for England and Wales, is it not right that the Scottish Office should lift its kilt just enough to let us have a look at the scheme for Scotland? Because it will he a different scheme. The Arbitration Bill does not apply, and there are all sorts of elements of Scottish law which do not apply. We should see the scheme in draft form before we go to the next stage of the Bill. I should have thought that round about Monday would be a good time.
8.45 p.m.
Lord Lucas: My Lords, I am pleased that the noble Baroness has recognised that it is legitimate for the Government to draw from arbitration law in the making of the two schemes for construction contracts. The Arbitration Act is, after all, the most up-to-date legislation on dispute resolution available.
Lord Williams of Elvel: My Lords, it is not an Act.
Lord Lucas: My Lords, it is a Bill. I do apologise. We believe that at least some of its provisions may be useful in one form or another when it comes to taking powers for the scheme. I believe this has been superseded by what was said by the noble Lord, Lord Howie, but, following full consultation on the scheme after Royal Assent, we should like to give the industry the fallback adjudication provisions which suit it best. It might prove difficult to do that if the relevant Minister were not empowered to make minor adaptations or modifications to arbitration law. That is as far as our English ambitions go.
The Scots may, as their view of their scheme develops—I am afraid that it will not have developed fully by Third Reading—feel that they need slightly

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greater powers. I am not in a position to say that yet. In short, we want to ensure that we have the powers to make schemes that work for the construction industry on both sides of the Border. That could be difficult if we were to accept the amendment. I hope that the noble Baroness will withdraw it, therefore.
Before I leave the Floor clear for the noble Baroness to do that, I should perhaps say that she produced an accurate sting in the tail when she asked why we do not have this back to look at it. Looking at it in that way, why do we not have the whole scheme back, subject to affirmative resolution? That is something that we are prepared to consider.
Lord Howie of Troon: My Lords, before the Minister sits down, will he satisfy me—I am not difficult to persuade, as he knows—why it is that the English and Welsh—estimable as those people are—should have a look at the scheme before it passes through this House while the Scots—of course we know that they are less estimable in some respects—have to wait until Royal Assent? That is an argument which cannot stand. Surely the Scots can have a peek at it.
Lord Lucas: My Lords, the intention is that the scheme should have the same effects north and south of the Border, but because the law is different the way in which the provisions work will have to be different. We have not yet reached our conclusions as to what they should be north of the Border so as to make the proposal one that is suitable for publication.
Lord Monkswell: My Lords, before the Minister sits down, perhaps he can clarify something. From what he said, I inferred that the amendment was right and required. The Minister said that we had a new Arbitration Bill—it is a Bill rather than an Act, as my noble friend pointed out—and when it became an Act the Government would modify it and put it into the scheme.
The reasoning behind the amendment of the noble Baroness, Lady Hamwee, was that it would be wrong for a Minister to be able to amend primary legislation without recourse to Parliament. That is exactly what the Government have suggested that they will do. I hope that I have not got hold of the wrong end of the stick. If that is what the Minister is talking about it seems to be a travesty of the whole parliamentary procedure.
Lord Lucas: My Lords, I believe that I said in my closing remarks in reply to the noble Baroness, Lady Hamwee, that we were very happy to consider the possibility of making the whole scheme subject to affirmative resolution so that that particular point should be covered.
Baroness Hamwee: My Lords, I am grateful for what the Minister has just said. Before I seek leave to withdraw the amendment, I raise one point which I ask the Minister to note, not to respond to at this stage. I ask that he lets me and other noble Lords know before Third Reading whether that is to be proposed by the
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Government. Otherwise, there will be a number of amendments that I and no doubt other noble Lords will wish to table at Third Reading.
It has crossed my mind more than once during this afternoon and evening that, given that the Government clearly have a number of major amendments in mind, it is a pity that this part of the Report stage could not have been deferred somewhat so that noble Lords could have seen those amendments. I believe that we might have moved faster and more constructively had the Government allowed that flexibility in their timetabling. Having noted that the Minister has heard my request, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 108 [Dates for payment]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 156:
Page 61, line 30, leave out ("adequate") and insert ("effective").
The noble Baroness said: My Lords, Amendment No. 156 is another short probing amendment. Clause 108 (1)(a) provides that every construction contract shall provide an adequate mechanism for determining payments. I seek to understand a little better what is implied by the term "adequate". The clause could simply have said that every construction contract should provide a mechanism for determining payments. The term "adequate" must mean something. To me, it suggests a degree of quality, but I am not sure about what other than to ensure that the payments can be determined. I suggest the use of the word "effective", not as a synonym, but as a more accurate term for what is intended. I do not seek necessarily to redraft but rather to understand. I beg to move.
Lord Lucas: My Lords, I am afraid that once again the Government have considered the matter and like things the way they are. To us, an adequate mechanism is one that is proportionate and appropriate to enable the payments mentioned in Clause 108 (1)(a) to be determined; in other words, it is a mechanism that works. In contrast, the effectiveness of a mechanism brings in the concept of quality. Does it work well? Is it the best that there can be? It is a matter that is subjective rather than objective, which may vary according to the preferences and perceptions of the individuals involved. In this context, the word "adequate" is already used in building regulations and therefore has some kind of history. We feel that it is the right word for these circumstances. However, I thank the noble Baroness for raising the question. The Government are glad to have had a chance to look at the matter again.
Baroness Hamwee: My Lords, perhaps its use elsewhere is the most telling point. The argument used by the noble Lord against the adoption of the word "effective" is the one that I would use against the word "adequate". My further concern is that to provide for an adequate mechanism implies a retrospective assessment of that mechanism. However, having sounded off about it, it is perhaps appropriate to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 109 [Notice of intention to withhold payment]:
Lord Lucas Lord Lucas moved Amendment No. 157:
Page 62, line 10, leave out ("award") and insert ("decision").
The noble Lord said: My Lords, in moving Amendment No. 157 I shall speak also to Amendment No. 158. These amendments follow similar ones moved by the noble Lord, Lord Howie of Troon, in Committee, which we undertook to consider. Having done so, we remain unconvinced that the word "award" is wholly specific to the process of arbitration. However, we know that the noble Lord feels strongly on this matter. We are also aware that there are those in the construction industry who share his views. Rather than let the Bill arouse hostility in this way, we propose to remove references to an adjudicator's award and use instead the word "decision". Of course, the terminology in the scheme for construction contracts will be made consistent with this. I beg to move.
Lord Howie of Troon: My Lords, I thank the noble Lord for acceding so graciously to my request—I will not say demand because that is too severe—at Committee stage. The noble Lord said that I felt strongly about the matter. I am too mild a man to feel strongly about anything. The reason for using the word "decision" rather than "award" was that it was right to do so. It was not a matter of strong feeling but a matter of lowland Scots pedantry: we like to get it right rather than wrong. I am grateful to the noble Lord for accepting this small but proper amendment to the Bill. We are here to improve the Bill, and we have done it in a small way.
Lord Lucas: My Lords, I thank the noble Lord for his remarks.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 158:
Page 62, line 12, leave out ("award") and insert ("decision").
On Question, amendment agreed to.
Clause 112 [The Scheme for Construction Contracts]:
Lord Howie of Troon Lord Howie of Troon moved Amendment No. 159:
Page 63, line 25, leave out ("The Minister shall by regulations make a") and insert ("Schedule (Scheme for Construction Contracts) sets out the").
The noble Lord said: My Lords, I rise with a certain amount of alarm. My Amendment No. 159 is a trifling matter. It is a paving amendment. It is coupled with a substantial number of other amendments, some of which are in themselves quite big. At least two of them involve completely new schedules to the Bill. I am a little hesitant because in this House we like speeches to be relatively brief, provided they cover the points at issue in the amendments to which they speak. I cannot see how I can be brief in the normal sense of that word in the face of this grouping of amendments. I see that the noble Viscount, Lord Ullswater, has his head in his hands. I apologise to him. I hope he will understand that this is not my fault. I was not asked to agree, and did not agree, to this enormous grouping. It has the unfortunate effect that I will not he able to give each
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amendment its due weight. That worries me a bit. I should like each to be considered fully. I will try to do my best to consider them as fully as is appropriate within decent brevity. If my notion of brevity does not coincide with that of other noble Lords, I hope that no one will be so churlish as to propose the Motion that I be no longer heard.
9 p.m.
Lord Elton: My Lords, in an interpolation, perhaps I may ask the noble Lord whether it is right that a substantial number of his amendments are amendments to an amendment tabled by the noble Lord, Lord Williams of Elvel. Would it not be easier for the noble Lord to explain his amendments if we heard first what the noble Lord, Lord Williams, proposes to move which the noble Lord wished to amend? Therefore, might it not be easier if, now that the noble Lord, Lord Howie, has introduced the subject, the noble Lord, Lord Williams, explained his amendments and then the noble Lord can come back? It is a humble suggestion and if it is confusing I withdraw it.
Lord Howie of Troon: My Lords, it is an interesting suggestion but it comes up against a procedural problem. It is that we are at the Report stage and I am permitted to speak only once, which might take some time. The noble Lord's suggestion is extremely sensible and if there were some way in which the leave of the House could be gained I should not be opposed to such a procedure. Indeed, it would be of great help.
Lord Williams of Elvel: My Lords, I admit guilt in all this. When my noble friend and I tabled amendments I agreed from this Front Bench to the groupings. I thought that it was appropriate that we should have the debate on one—admittedly long—section because the amendments relate to the same business. I apologise to my noble friend if he was not consulted about the groupings and I hope that on some future occasion I can make it up to him. However, from this Front Bench I am happy with the groupings and moving on to Report stage requirements.
Lord Howie of Troon: My Lords, in view of that I must babble on for quite some time. I do not blame my noble friend in any way for his grouping. It has an intellectual consistency but it causes me a difficulty in that I may have to speak for longer than I normally speak. If any noble Lords wish to go away they are perfectly entitled to do so.
As regards Amendment No. 159, I need say no more about it than that it is a paving amendment. Amendment No. 161 leaves out subsections (2) and (3), which I do not believe are necessary. They deal with the scheme as regards the Minister's actions and relate to my Amendment No. 160, which we discussed earlier out of order. We have more or less dealt with that, therefore.
Amendment No. 162 has nothing to do with me and I wish to say nothing about it, apart from the tact that it is excellent in its construction. Amendment No. 178 goes to the heart of the matter. As the noble Lord. Lord Elton, said, many of my amendments are amendments to Amendment No. 178. Perhaps I may say

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in introduction that I do not think too much of the scheme, which has been tabled as an amendment in its totality. Your Lordships will remember that we considered doing that in Committee but did not do so. That was a pity but we are doing so now. Had we tabled the scheme in Committee, we could have spoken about it at greater length and in greater detail and given it closer consideration than we are able to give it at this stage.
Perhaps I may say in general terms what is wrong with the scheme. The Government have a strategy which in its aim is wholly correct and admirable. It is that construction contracts should be proper and should ensure that people are paid and so forth. We discussed that matter on Second Reading. The peculiar aspect of the scheme is that that is not its intention. The intention of the scheme is to frighten people into taking up contracts which they do not feel inclined to take up. The Minister and his colleagues admitted that in Committee when they described the scheme as being more draconian than the provisions of Clause 105, which is now Clause 106. That was not my word, it was theirs.
The scheme is more draconian. It has about it all the hallmarks of something that Michael Howard might have conceived. It is a boot camp solution. The Government are trying to frighten people into taking up contracts because if they do not the Government will be obliged to adopt a scheme which is more draconian and will put the frighteners on them. I find that odd. If the Government want people to adopt contracts under the provisions of Clause 106, that is fine and I do not dissent from that in any way. Indeed, I support it, except in detail here and there. If the Government want people to take up the provisions of Clause 106 why do they not make them compulsory or make the scheme the same as the provisions in Clause 106?
I am a great man for an easy life and so is the Minister, I am sure. At this stage of the Government's life they should be in favour of an easy life too and put forward propositions which people will find agreeable and acceptable. The provisions of Clause 106 are generally acceptable to those in the industry, with some minor dissensions, but the scheme is not. It is absurdly controversial and for no good reason whatever.
Those are general comments and I do not wish to detain the House too long. No, that is not true; I do wish to detain the House for quite a long time but I cannot do so because it would be unfair at this time of night.
I turn to Amendment No. 182, which provides that Clauses 20 to 28 of the scheme are needed only if adjudication is actually arbitration. Most noble Lords are agreed that adjudication is not arbitration. Therefore, those clauses should go because they are not needed.
I could go on. I do not wish to detain the House. I shall not go through these matters in any detail because it would he quite wrong for me to do so. The essence of an adjudication is that it should be quick. It should remove a source of disharmony from the contractual arrangements, a disharmony which could affect adversely the conduct of the contract and the successful conclusion of the project. As the Minister knows and
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as Clause 106 allows, that adjudication produces rough justice but it is a rough justice which can be put right at a later stage. There is absolutely no reason why the scheme should not adopt the same attitude and strategy. I am sure that the Minister will tell me that that is what he has in mind. If he does that, I shall be delighted.
Perhaps I may say a few words now about Amendment No. 191. My reason for tabling it is that it removes all references to the Arbitration Bill. I do that quite clearly in order to ensure that nobody confuses adjudication with arbitration. We had a short exchange about that earlier when we discussed the scheme which would apply to Scotland. We had not realised that there was such a thing, but there is.
Since the Arbitration Bill does not apply to Scotland, it is inconceivable that its provisions could apply to the Scottish scheme. If it did, that would be an act of imperialism far beyond Edward I, let alone the current Government. If it cannot apply there, why should it be imposed in England? Why should the Arbitration Bill be imposed upon a process of adjudication since we are all agreed that adjudication and arbitration are not the same? I have probably said enough at this stage although I have a substantial body of notes and I could go on for some time. However, that would be quite unfair.
I turn now to my Amendment No. 197. That introduces into the Bill as a new schedule a satinised version of the conciliation procedures of the Institution of Civil Engineers. I say that because those procedures are part of the sixth edition of the ICE Standard Conditions of Contract which are acceptable to and used throughout the construction industry. It includes that process of conciliation.
Conciliation is not exactly the same as adjudication but it is near to it. The idea of conciliation is to produce agreement so that the parties involved in a dispute agree to a resolution, as the noble Baroness, Lady Hamwee, wanted. Of course, that is an extremely sensible way to proceed. I have adjusted the conciliation process to make it an adjudication process with which the parties do not need to agree but where the adjudicator gives a decision which may be subject later to arbitration or resolution through the courts. The conciliation procedure was first introduced in 1988, which is quite some time ago. It has been in use since that time and has proved its worth in that period. On the basis of experience, the procedure was revised in 1994 and could no doubt readily be revised again, perhaps on the basis of the satinised version that I have tabled.
I have dealt with this rather large group of amendments quite inadequately. I say that because each one of them deserves much more attention and much more detailed consideration than I have been able to give. However, I am well aware of the fact that the House does not want to listen to me all night. Indeed, noble Lords have been most patient. I am most grateful: I beg to move.
9.15 p.m.
Lord Williams of Elvel: My Lords, I am grateful to my noble friend Lord Howie for being so reticent in

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moving his Amendment No. 159 and, indeed, for his restraint in dealing with the amendments which I confess I agreed to when grouping Amendment No. 159 with a whole series of amendments on the Marshalled List. The substantive amendment with which we are dealing is Amendment No. 159 on which is consequential my noble friend's schedule set out in Amendment No. 197. Therefore, if the Government were to agree, as I hope they might, to Amendment No. 159, it would follow that Amendment No. 197 would also be accepted.
Independently of my noble friend, I exercised the threat which I made in Committee to table the Government's scheme so as to allow amendments to be made to it. However, it is late in the evening and we have had a long day. I do not intend to go through all the pages of notes that I have with me as regards what is defective in the Government's scheme. But if noble Lords opposite wish me to, I will go through them.
Suffice it to say that we believe that the scheme produced by the Government is, first, unpopular; and, secondly, it is full of problems, starting from the procedure in appointing adjudicators, going on to the commencement of proceedings, and then to a stay of legal proceedings, failure of appointment procedure, and so on; indeed, every single provision in the Government's scheme—as set out in the schedule that I have proposed as an amendment—is wrong and has some particularly offensive matters in it. My noble friend is right to say that the Government's scheme as presently produced is more in the nature of arbitration than of adjudication. That is the fundamental problem that we have in the matter.
Noble Lords have tabled amendments to the schedule that I propose. Again, I do not intend to go through them in detail. However, suffice it to say that I substantively agree with the amendments that my noble friend Lord Howie has tabled to that schedule. If by any curious event the House accepted my amendment/schedule I would be most disappointed. I say that because the point of tabling it was to demonstrate to the Government that we do not think that that is the right way to proceed and that the industry does not think it is the right way to proceed. Therefore, I would accept all amendments to the schedule and I would also accept the Government saying, "We do not like this being put into a schedule to the Bill and, therefore, we are not going to agree to it". Indeed, I would vote in the Government Lobby if that were to be the case.
I turn now to my noble friend's schedule, with which I have a great deal of sympathy. There are two principles involved. First, the scheme should be in the form of a schedule to the Bill. It is not enough to put it in the form of regulations, even though the noble Lord may say that it will be the subject of the affirmative resolution procedure. As we all know, the affirmative resolution procedure does not allow us to amend. If we cannot amend, then there is no point in affirmative resolution: it is either yes or no. In this House we have what is sometimes called a "convention" but which at other times is called a "self-denying ordinance" not to vote for or against statutory instruments under the affirmative
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resolution procedure. The fact that this becomes something which requires affirmative procedure does not impress me.
Secondly, what I believe should happen is that the Government should take my noble friend's schedule away—perhaps together with the amendments of my noble friend Lord Berkeley—and make sure that it is produced as a proper schedule to the Bill before it is enacted, as nothing else will do. The consequence of doing that would be to reassure the industry—we are all trying to reassure the industry—that the Government will not change the scheme for England and Wales and that they are not going to produce provisions which are more dependent on the Arbitration Bill, as it now is, rather than on adjudication. We should all he quite clear what will happen if the parties do not accept adjudication in the first place. When the Scottish scheme finally appears, I would expect that to be another schedule to the Bill.
It is late and there is still much business to get through. That is our position. We believe that there should be a schedule to the Bill and we believe that the schedule spoken to by my noble friend is probably better than anything else, subject to the amendments of my noble friend Lord Berkeley who no doubt will speak to them. Simple affirmative resolution on regulation is not enough. The Government must do much better. They may not do much better in this House but they must do much better in another place.
Lord Elton: My Lords, both the noble Lord, Lord Howie of Troon, and the noble Lord, Lord Williams of Elvel, have helpfully reduced this to a debate about a major principle, and that is the way in which Parliament will be satisfied—and the industry will know—in relation to what the scheme will contain. Both of them have come to the conclusion, by different routes, that the scheme should be on the face of the Bill. I hope your Lordships will pause over that suggestion and not immediately say that it has the great attraction that it gives parliamentary control over what is happening and gives security to the industry because it will know what will happen for a long time.
As I understand it, the Bill breaks new ground in two respects: first, because it applies to an area which has not hitherto been subject to such legislation and, secondly, because it seeks to be as broadly as possible consensual in its nature. It is dealing with an area of great complexity in which there is insufficient experience in the official world of the relationships which will develop under this legislation. It follows, does it not, that however wise we may be in preparing the scheme we are likely to be surprised in some respects by its effect. As a result of that surprise we are likely to wish to change it. If it is inscribed in the statute, we may have to wait five, 10 or 15 years for an opportunity to do it. If it can be achieved in some other way, we are more likely to remedy defects before they have caused too much damage. The question then is what that alternative should be.
One way is to proceed by a statutory instrument which should be either subject to the affirmative or the negative procedure. That is a change. As I understand

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it, the Government originally had a proposal that the scheme should be written by Ministers and could be altered by Ministers at will. That has the great advantage that defects can be remedied almost overnight. It has the disadvantage that your Lordships and another place would be surrendering all control as to what happened in the field for the foreseeable future because it would be up to Ministers, and they would not be controlled by Parliament.
believe that we should choose between those two methods. It would be a mistake to inscribe the provision on the face of the Bill with the necessary rigidity and delay that that would cause.
Lord Williams of Elvel: My Lords, I am sorry to interrupt the noble Lord. Schedule 1 of the Financial Services Act has exactly that provision. It can be amended by affirmative resolution. That is what I am proposing.
Lord Elton: My Lords, that is a combination of the two approaches. I thought that a moment ago the noble Lord argued against affirmative action.
If your Lordships are in favour of affirmative resolution, you accept some delay in the effect of your Lordships' wishes in changing legislation. But once it is in print, as the noble Lord said, there is no further power to amend.
The answer to that is surely for the Government to consult extensively before they draw up their statutory instrument. Subject to what my noble friend on the Front Bench will say, my view is that that would be a happy issue. If the Government were to consult both industry and informally among those interested politicians before they drafted such an instrument, I believe that the affirmative resolution would be a sufficient safeguard. However, I would not recommend that it be put on the face of the Bill.
Lord Ackner: My Lords, I have not intervened at any stage of the Bill until now. It was certainly not my intention to do so until quite recently. I had anticipated a quiet, peaceful evening recovering from the frustrations of an unsatisfactory Answer to a Starred Question.
However, I was telephoned by the head of my old chambers who specialises in construction disputes. He had with him a senior representative of the Official Referees' Solicitors Association. They were both deeply worried about the scheme that the Government proposed. They were joined subsequently by the chairman of the specialist group of the Bar dealing with building and construction disputes—a very experienced QC.
Their concern was a fairly simple one. They reckoned that the Government were misunderstanding what was required by an adjudication. Their concern seemed to me to be wholly understandable. What I have always understood to be required by the adjudication process was a quick, enforceable interim decision which lasted until practical completion when, if not acceptable, it would he the subject matter of arbitration or litigation.
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That was a highly satisfactory process. It came under the rubric of "pay now argue later", which was a sensible way of dealing expeditiously and relatively inexpensively with disputes which might hold up the completion of important contracts.
What is being proposed here is a speedy, fast-track arbitration which produces a binding conclusion, not open to any challenge after practical completion, but fixed and firm for all time in a wholly unrealistic timescale. I have been shown articles in the press that indicate that the industry is anxious about it and that Sir Michael Latham says that it is quite contrary to what he proposed. Hence the new scheme which has been suggested by the amendments to the schedule.
I invite the Minister to deal with the crucial point of principle. What on earth is the point of rushing through an arbitration which is to be final and binding in a situation probably of great complexity and, what is worse, one where the speed can be frustrated by applications to the court of the kind envisaged by the new Arbitration Bill which will become an Act in 1996? Because of the finality which it is suggested is to he ingrained in the adjudication, the courts will obviously be listened to. So there will be delay and frustration in the sense that payment will be put off and the adjudication process which is designed will be self-defeating for a reason which I find difficult to follow.
The Arbitration Bill is admirable. It has been praised in this House through all the stages which have so far been completed. But it is designed for arbitrations. It is designed to improve the arbitration procedure and to give the arbitrator more power. It is designed to stop the courts interfering in the way that they have been able to so far. That is a non-interference of which the courts thoroughly approve. My respectful submission to your Lordships is that the question of the adjudication ought to be dealt with clearly and firmly by the Government in answering the amendments.
9.30 p.m.
Viscount Ullswater: My Lords, Clause 106 does not allow adjudication to be struck out of a contract. That is where we started. Under the provisions of Clause 106 certain criteria will have to he fulfilled, and we are all clear about that. So the scheme that we are discussing, the subject of the amendment of the noble Lord, Lord Williams, is very much a fall-back provision. The scheme is still in draft, as everyone will accept, and therefore what we say about it in Parliament is important. However, the consultation that I believe is probably more important, very important indeed, is with the industry.
Before we went to dinner, my noble friend indicated that he was of a mind to bring in a proposal that would make a non-binding form of adjudication in the scheme.. That is welcome, and perhaps the noble and learned Lord, Lord Ackner, was not in his place to hear my noble friend's words. What is contained in Amendment No. 192 should command respect. The noble and learned Lord, Lord Ackner, is quite correct in that in preparing his report Constructing the Team. Sir Michael

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Latham recommended a simple form of adjudication to keep the contracts running and the payments flowing. In his summary, he states—and I paraphrase—that the award of the adjudicator should be implemented immediately; any appeals to arbitration or the courts should be after practical completion and should not be permitted to delay the implementation of the award.
I am, therefore, not in favour of putting a scheme and a method such as is proposed by the noble Lord, Lord Williams, into the Bill as a schedule. I understand and agree that it is a very useful way of discussing the contents of the scheme. Not only does the scheme need consultation during the course of parliamentary scrutiny both in this House and in another place, but, as I have indicated, the industry should be given constant access to consultation as the Bill is going through Parliament. Therefore it needs consultation up to and after Royal Assent. As my noble friend indicated, it may be possible to bring the scheme forward under a form of affirmative resolution. I suppose that the regulations to make the scheme in Clause 141 would be under affirmative resolution. That would be the right way of dealing with the matter.
In Committee, I started by saying that the scheme as proposed was draconian. I still believe that to be the case. Therefore I am extremely pleased to hear the way in which my noble friend on the Front Bench feels he can move. That is extremely practical. However, having said that, he must listen very carefully to what the industry says all the way through this process.
Lord Berkeley: My Lords, I shall speak briefly to my Amendments Nos. 197A to 197N, which support the amendment tabled by the noble Lord, Lord Howie of Troon. I do not need to say much about them. I was heartened by the wise advice from the noble and learned Lord, Lord Ackner, who has obviously examined the recommendations. I am pleased to hear his remarks about flexibility and speed and the problems of adjudication. All I tried to do in tabling my amendments was tighten up the procedures of the Institution of Civil Engineers, which I believe the noble Lord, Lord Howie, used in his drafting, to try to get decisions out of recommendations and a few consequential amendments.
All through the debate this evening and at previous stages of the Bill we have talked about consultation. This is not a political matter. All parts of the House want to see the industry flourish and receive support. As the Minister said earlier, he does not want to raise hostility.
Nevertheless, I have to mention a sheaf of press cuttings I have received in the past week which, frankly, express unanimous hostility, not to the Bill itself but to the scheme. I shall quote one or two:
"Furious construction professionals say they are no longer prepared to support the Bill".
That is from Construction News.
"Latham gives warning on Construction Bill … The ACE [Association of Consultant Engineers] supports the aims of the bill, hut we reject the scheme entirely".
So it goes on. I could continue for a very long time, but I shall not detain the House at this late hour.
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The Association of Consultant Architects (you can have a consultant architect, returning to Amendment No. 142) says that the Government have,
"ignored the comments made by a large section of the construction industry".
I shall end my quotations with that example. Consultation has to go on. But I have never seen such unanimity of criticism for the scheme that the Government put forward. I have no view as to where it should end up and whether or not it should be part of the legislation. However, I hope that as the Bill moves forward consultation will be wide and that the Government will listen to what the industry has to say. Like other noble Lords, I was very heartened to hear the Minister's remarks just before we broke for supper.
Lord Lucas: My Lords, we have now had several opportunities to debate Clause 112, which provides for the appropriate Minister to make a scheme for construction contracts. I hope I need not explain again why we are proposing the power to make such a scheme. However, it might be worth reminding noble Lords that we made it available to the House primarily to illustrate the relationship between the Bill and the scheme and to show what sort of things the scheme needs to cover.
Proposals for the scheme were, as my noble friend Lord Ferrers made abundantly clear when he introduced it, a first shot, a starting point, something to build on. We were not particularly surprised to find that they attracted criticism in Committee. For one thing, as a mechanism designed for use only when a contract is inadequate and for use across a very diverse industry, the scheme must be all things to all men. Such compromises are rarely attractive on first acquaintance. We are also well aware that many had a problem with a procedure which was binding unless parties agreed otherwise. We explained why we adopted that approach, but appreciated that it did not sit easily with current practice in the industry.
It gave me especial pleasure to say, as I did before supper, that we concluded that it would be right that disputes which are subject to scheme adjudication could normally be reopened at practical completion of the contract and that we propose to amend the scheme proposals when we consult, following Royal Assent, because otherwise I would have been faced with the inevitability of going down before the noble and learned Lord, Lord Ackner, as I have seen so many other Ministers do on earlier Divisions.
What concerns me rather more today is that certain noble Lords opposite do not seem fully to have grasped the significance of subsection (2) of Clause 112, which reads,
"Before making any regulations under this section the Minister shall consult such persons as he thinks fit".
It is an enormous task to consult the whole of the construction industry. There are some 120 or more major trade groups within the industry, and we propose to consult all of them. We will also consult the major clients and client groupings, and specialists such as construction lawyers, insurers and academics. For the

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original consultation exercise on fair construction contracts, the Department of the Environment sought the views of around 1,500 institutions, companies and individuals. The exercise planned to follow Royal Assent on the scheme for construction contracts would be on a similar scale. But the noble Lords whose amendments we are considering would like to settle the scheme for construction contracts now, and impose something upon the industry which it has little chance to consider.
The scheme as it stands is in no state to be incorporated in the Bill. It is a document which is entirely open to discussion with the construction industry. We have not laid our life on the line on any aspect of it. It is an illustration of what a scheme has to do. It draws the industry's attention to the points that need to be addressed and we look forward to long and fruitful discussions with the industry so as to produce a scheme that is attractive to them. There is no way in which we can do that. Distinguished as the House is this evening, it is a very small House compared with the number of people in the construction industry with whom we must consult and the time available to us is limited compared with the time we intend to take.
It would be entirely inappropriate to embed into the Bill this scheme or any other possible version of it that we might dream up in the next few weeks and months. That would simply solidify something that would need to be completely changed by secondary legislation shortly thereafter and might well have been settled by secondary legislation anyway. We have no intention of implementing any scheme before a proper consultation exercise has been conducted. Because we were asked to do so by noble Lords, we produced a draft to demonstrate the sort of things which the scheme must cover. However, this is neither the time nor the place for settling matters of detail.
I recognise that noble Lords have legitimate concerns about the general shape of the scheme. By introducing amendments that relate to it, they are giving us an opportunity to consider their concerns and to indicate how they would have us adjust our proposals for the scheme. That strikes me as quite right and proper. On that basis, I am happy to offer some comments on the suggestions put forward by the noble Lord, Lord Howie, in Amendments Nos. 179 to 196.
On Amendments Nos. 179 and 183, the noble Lord conceded in Committee that complete independence may not always be desirable in an adjudicator. The Bill would require him to be impartial, and we believe that is clearer and more helpful from a legal point of view than specifying matters of spirit.
We have heard the noble Lord's arguments on Amendment No. 180 several times. What he outlines here may be relatively easy to achieve by contract, but will require careful consideration before we embark on a statutory instrument. However, we propose to provide for a resolution procedure where the dispute may be reopened on practical completion.
Amendment No. 181 would prohibit a firm or organisation from acting as an adjudicator. We have always believed that the adjudicator should he a single
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individual and, when it comes to drafting the scheme proper, we will make sure that neither a registered company nor a partnership can act as an adjudicator.
Amendment No. 182 concerns the right of a party to question an adjudicator's jurisdiction. We believe this is something for which we must provide. If the scheme were silent on the point parties would be much more likely to question jurisdiction in the courts. The section which the noble Lord, Lord Howie, would have us delete would reduce the prospect of court intervention rather than encourage it, as he seems to fear.
I mentioned Amendment No. 183. Amendments Nos. 184 and 185 concern time limits. These are clearly detailed matters on which we would like to take the views of the industry.
Amendment No. 186 would remove the right for an adjudicator to rule a dispute unsuitable for adjudication. This would be entirely inappropriate. It is a general rule of law that any tribunal required to adjudicate something can and should consider whether the matter brought before it is appropriate for decision by that tribunal.
Amendments Nos. 187 and 188 concern detailed procedural matters which should be left to industry consultation.
Amendment No. 189 would have the effect of restricting an adjudicator to consideration of material presented to him, rather than letting him decide procedures. However, we would not wish to restrict an adjudicator's ability to investigate cases without first considering the views of the whole industry.
Amendments Nos. 190 and 191 appear to concern the right of an adjudicator to award interest, but in fact they would have no effect upon the scheme description as drafted, short of removing the reference to an arbitrator. In Committee the noble Lord criticised us for lifting parts of the Arbitration Bill and "shoving" them into the scheme, but now we find him completing the process for us. Perhaps there are parts of the Arbitration Bill that he likes more than others.
What the noble Lord, Lord Howie of Troon, outlines with Amendment No. 192 will require most careful consideration. However, I would like to point out that our proposals for primary legislation are quite consistent with the intent of the amendment. Scheme details must await full consultations with the industry.
Amendment No. 193 affects paragraph 30 of the draft proposals for the scheme, which would allow an adjudicator to come to a provisional decision while he completed his deliberations. Clearly, any such decision would have to be confirmed or replaced by a final decision, even if the dispute were to be reopened later.
Amendment No. 194 would remove the right of a party to refer a dispute back to the adjudicator in the event that a non-monetary decision was ignored. Paragraph 52 of the draft scheme proposals was intended to allow a party to seek financial redress, through adjudication in such cases, and we think there is much to commend this. However, we will consult the industry on remedies for non-compliance.
Amendment No. 195 rather labours the point that an adjudicator should not he liable to anyone for an action taken in good faith. However, we have already said that

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an adjudicator should not be liable except where he acts in bad faith, so he could not then be liable to anyone in particular. Amendment No. 195 is simply unnecessary.
Lastly, Amendment No. 196 would give an arbitrator the same powers as the court in the event of a case being reopened. The noble Lord has made an interesting point, and we must look closely at the powers of anyone who is asked to rule on a reopened dispute. I thank him for drawing it to our attention.
I hope that that gives some indication of our openness on matters of detail and, indeed, on matters of principle that are there in the scheme.
I would like to turn my attention to the "rival" scheme of the noble Lord, Lord Howie of Troon, since he has offered it to the House, and since it offers my hard-pressed officials a chance to throw back at the noble Lord, Lord Howie, something of what he has been throwing at them over the past few days.
First, the noble Lord criticised the government version of the scheme at Second Reading for its length. A close reading of Hansard suggests that he then believed the whole matter could be dealt with in as few as 14 lines. Now that the noble Lord has tried his own hand, I hope he will agree that the matter is rather more complex than he first suggested. Indeed, I believe that the only reason his scheme is shorter than our own version is that, in many important respects, it is much less satisfactory.
As the noble Lord said, he has based his scheme on the Conciliation Procedure published by the Institution of Civil Engineers in 1994. Indeed, it almost looks as though the noble Lord has been through that publication and crossed out the word "conciliator" each time it appears, replacing it instead with "adjudicator". Perhaps that is why we see the adjudicator making parties meet each other in paragraph 9 and struggling to help them reach agreement in paragraph 11.
We must be quite clear—the noble Lord's scheme has been tailored for use in civil engineering, with little regard to the construction industry as a whole. No doubt this is why it allows upwards of three months to reach a decision, when many smaller disputes require movement within days or weeks. More importantly, it offers conciliation and not adjudication. In his report, Sir Michael Latham distinguished the two quite clearly. His conclusion was:
"Most disputes on site are, I believe, better resolved by speedy decision—i.e. adjudication".
I wish to turn now to another point and one on which the government description of the scheme has been roundly criticised. We have been told over and over again by the noble Lord and others that what the industry wants is for disputes to be resolved until practical completion but that it should be possible to re-open them thereafter. That is what we will provide if—as I suspect it will—that view holds throughout consultation. But the Howie scheme, if I may call it that, makes no mention of the effect of adjudication. According to his scheme, the adjudicator produces a recommendation and then starts collecting his fees. Whether parties are bound by what he says, or for how
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long, or whether they have rights of appeal, is left entirely vague. That is one of the reasons why the scheme is shorter than ours.
Finally, I should like to consider briefly the nature of the decision-making process, if indeed this rechristened conciliator can be said to reach a decision at all. This is a strange process. In paragraph 10 we are told that the adjudicator may conduct proceedings,
"in any way that he wishes".
In paragraph 11 we hear that the adjudicator may consider confidential information which he is not allowed to divulge. In paragraph 16 we are told that the recommendation,
"need not necessarily be based on any principles of contract, law or equity".
And yet, from this quixotic, covert, inequitable creature—be he conciliator or adjudicator—there is no right of appeal. If parties wish to sign away their rights like this in contract, that is their own look out. But the noble Lord is surely not seriously telling us that we should enshrine it in statute as the back-up for people who do not have a proper contract.
It was with some relief that we saw the amendments put forward at the end of last week by the noble Lord, Lord Berkeley. They certainly make a bad scheme better, although they still do not make it right. It is helpful that the noble Lord, Lord Berkeley, should recognise that the adjudication procedure must have some force and be able to produce a result which requires the parties to act. Since the adjudicator must he called upon to resolve the dispute, the term "decision" is much to be preferred to "recommendation". The noble Lord is also to be congratulated on attempting in Amendment No. 197B to offer the industry a means of resolving its disputes which does not focus solely on the interests of civil engineers.
However, the noble Lord, Lord Berkeley, is still asking us to impose a dispute resolution procedure where the parties' legal entitlements are considered only,
"within the practical constraints of a rapid and economical adjudication process",
whatever that may mean. Is this cheap and cheerful, or just quick and dirty? I am also more than doubtful about the adjudicator being asked to take a,
"fair and commercially reasonable view".
Again, these may be matters for a contract, but not for legislation.
In addition, while I welcome the noble Lord's attempts to remedy the deficiencies in proposals that fail to indicate the effect of an adjudicator's decision, I have one or two reservations. In particular I am worried about the effect on certain common law rights of the last sentence of paragraph 16A, and I am also doubtful about decisions which may be immediately overturned by an arbitrator or in the courts. That would not help much in many construction disputes and runs counter to what most in the industry have told us they want.

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I apologise for replying at such length. However, I thought it appropriate when noble Lords have taken a great deal of trouble to put down these individual amendments.
Lord Howie of Troon: Dear me. I thought the Minister was a little severe about civil engineers—as though they had nothing whatever to do with construction. They are right at the heart of it. The right of appeal is enshrined in the civil engineering contract anyway. My amendment, inadequate though it may be—all the amendments of my noble friend Lord Berkeley are a great improvement on my humble efforts—describes a method of adjudication, not a method of proceeding to arbitration and other things of that nature. So we can forget all that fustian that the noble Lord had written out for him. I cannot believe that he would have approached me in those terms off his own bat. I am perfectly sure that that is not so.
The noble Lord said that he was going to consult people. We in this House feel that in matters of legislation in an area of which many of us know something, we should be consulted and not just the industry as a whole. As far as we are being consulted, the noble Lord should remember that, few of us as there are, as he pointed out, we are the tip of an iceberg. That iceberg is represented by the comments which my noble friend Lord Berkeley produced. The noble Lord, Lord Elton, suggested that this should be a consensual matter. It is anything but that, as the comments of my noble friend Lord Berkeley showed.
I have no more to say except to welcome entirely the intervention of the noble and learned Lord, Lord Ackner. I wish I had been able to put the issue as concisely, correctly, totally and truthfully as he did. I also welcome the support of the noble Viscount, Lord Ullswater, for Amendment No. 192. It may be that my amendment has certain inadequacies, but we have here a parliamentary system where they can be put right, and they often are, as a Bill goes through both Chambers. I have to take the opinion of the House on this matter.
9.56 p.m.
On Question, Whether the said amendment (No. 159) shall be agreed to?
Their Lordships divided: Contents, 29; Not-Contents, 48.

Division No. 2

CONTENTS

Ackner, L.

Gould of Potternewton, B

Berkeley, L.

Graham of Edmonton, L. [Teller.]

Blackstone, B.

Carmichael of Kelvingrove, L.

Haskel, L.

Carter, L.

Hilton of Eggardon, B.

Dean of Thomton-le-Fylde, B.

Hollis of Heigham, B.

Donoughue, L.

Howie of Troon, L.

Dormand of Easington, L.

Jay of Paddington, B.

Dubs, L. [Teller.]

Judd, L.

Farrington of Ribbleton, B.

McIntosh of Haringey, L.

Gladwin of Clee, L.

Monkswell, L.

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Morris of Castle Morris, L.

Turner of Camden,B.

Nicol, B.

Williams of Elvel, L.

Peston, L.

Williams of Mostyn, L.

Richard, L.

Winston, L.

NOT-CONTENTS

Addison, V.

Kingsland, L.

Annaly, L.

Long, V.

Blatch, B.

Lucas, L.

Bridgeman, V.

Lucas of Chilworth, L.

Carnock, L.

Lyell, L.

Chesham, L [Teller.]

Mackay of Ardbrecknish, L.

Clark of Kempston, L.

Mackay of Clashfern, L. [Lord Chancellor]

Courtown, E.

Cross, V.

Mackay of Drumadoon, L.

Cumberlege, B.

Marlesford, L.

Dean of Harptree, L.

Miller of Hendon, B.

Pilkinpton of Oxpnford, L

Denton of Wakefield, B.

Rawlings, B.

Digby, L.

Renwick, L.

Dixon-Smith, L.

Seccombe, B.

Elles, B.

Skelmersdale, L

Elton, L.

Soulsby of Swaffham Prior, L

Glenarthur, L.

Strathclyde, L. [Teller]

Goschen, V.

Swinfen, L.

Harlech, L.

Trumpington, B.

Harris of Peckham, L.

Ullswater, V.

Hayhoe, L.

Wakeham, L.

Henley, L.

Wilcox, B.

HolmPatrick, L.

Wynford, L.

Howe, E.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
10.4 p.m.
[Amendments Nos. 160 to 162 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No. 163:
After Clause 125, insert the following new clause—
SECRETARY OF STATE TO REPORT ON ANNUAL FINANCIAL ASSISTANCE
(". The Secretary of State shall report on an annual basis on the exercise of his powers pursuant to section 123 including—

(a) the amount of financial assistance given under section 123;

(b) the form of such assistance;

(c) the terms on which such assistance was given;

(d) the numbers of bids addressing each of the activities referred to in section 123(2) at the stages of outline bids, final bids and approved bids;

(e) the role of community and voluntary organisations in the activities concerned;

(f) the methods used to assess priorities for assistance; and

(g) any distinctions between regions in the provision of assistance.").

The noble Baroness said: My Lords, Amendment No. 163 takes us to that part of the Bill which is concerned with regeneration and repeats an amendment that I moved at the last stage but with a number of alterations which I hope reflect the concerns expressed then by the Minister.
The operation of the single regeneration budget is very much lacking in transparency and accountability. My amendment seeks to go a little way—and no further—to rectify that. It proposes that the Secretary of State shall report certain matters on an annual basis in order that the public, including those who hid 14 assistance under the regeneration arrangements, can

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understand how the scheme is proceeding. Both national and regional regeneration strategies ought to be understood and be the subject of public discussion. I have been in correspondence recently with the London Planning Advisory Committee, which I used to chair. As its name suggests, it is an advisory body. That body tells me it is suspected that the Government Office for London has an internal regeneration strategy but that it is not public. That comment seems to me to encapsulate a great deal of what is wrong with the way in which the single regeneration budget is operated.
The amendment proposes that a number of matters as set out in paragraphs (a) to (g) are reported. In drafting those paragraphs I have taken into account the current procedure. In responding to the report of the Environment Committee on the budget, the Government have produced a helpful document. One item is a table that shows the percentage of bids which address the SRB challenge fund objectives at each stage of the bidding process. Those objectives list matters such as employment, education, economic growth, crime prevention, quality of life and so on. The table shows the percentage of bids which address those objectives. Very many bids will address more than one objective at the outline stage. The table then shows the percentage of bids encouraged by the Government to proceed to the next stage. It shows the percentages at the final stage of bidding and the bids approved. That fairly simple reporting mechanism puts into accessible form information about the workings of the SRB budget which is desirable and necessary. The budget is operated on a "quango" basis. However good the intentions of those who operate it, nevertheless democracy and accountability are quite distant from the operating mechanism.
The noble Earl, Lord Ferrers, at that stage said he was concerned about the imposition of a bureaucratic burden in the reporting provisions I then proposed. I understand those concerns. That is why I have based my amendment on the report that the Government have themselves recently provided, which I understand is likely to be an annual exercise. The noble Earl also said that he thought it was important to encourage people to think of the project as a whole and not in terms of separate activities. Certainly, I would not expect the percentages addressing different objectives to add up to 100. They should add up to several hundred per cent. because many objectives are likely to be addressed by successful bids.
The noble Earl added that the Government were keen to establish precisely what achievements are realised by projects. Therefore, partnerships are required to report regularly on the output of their projects. I hope that the amendment fits neatly with that approach by the Government.
It is important for those whose bids have not succeeded to understand how theirs compared with the successful bids. The process of competition requires considerable effort by people in the public sector and their partners in the private sector. It would be a most unhappy situation if, having put in that effort, an adequate attempt were not made to assist those whose bids failed to understand where they might have failed
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by seeing how the Government are spending the regeneration budget and how they are reacting as a whole to the various bids that are made. I beg to move.
Lord Lucas: My Lords, the amendment would require annual reports from the Secretary of State about financial assistance given under Clause 123. I am pleased that the noble Baroness seems to have accepted that the information sought in the amendment she tabled in Committee would place a considerable and unnecessary bureaucratic burden on partnerships. However, I have to say that the proposed new clause could lead to information overload of a quite significant degree. In relation to the single regeneration budget, the published annual report of the Department of the Environment gives details of the amount of financial assistance made and the output or results from the projects supported.
In addition, summary information about outline and final SRB challenge fund bids is published by region, and copies of individual bids are made available for public inspection by government offices for the regions. This information includes the type of project supported and the nature of the partnership, including the involvement of community and voluntary organisations.
The methods used for assessing priorities for assistance are clearly set out in the bidding guidance for the single regeneration budget challenge fund, the latest version of which was published on 29th March. The financial allocations to each region are also published. The form of assistance and the terms on which assistance is given are set out in SRB challenge fund guidance notes Nos. I and 4.
All this adds up to a great deal of published information which is readily accessible to those with an interest, including the local authority associations, community and voluntary organisations and other bodies. The Department of the Environment also co-operates fully with the University of Birmingham in compiling a detailed analysis of the challenge fund which, again, is published in full and summary form. We are not at all clear whose interests would be served by having yet another report setting out all this information in a slightly different form.
I am aware that the noble Baroness made a number of detailed arguments to which I may not have replied exactly. I shall study what she said when I read Hansard. If I believe that I might have given a fuller reply I shall write to her. I hope that with that scant assurance the noble Baroness will feel able to withdraw her amendment.
Baroness Hamwee: My Lords, I am afraid that it is scant assurance, but perhaps that is not the fault of the Minister. He suggested that if a provision of this kind were accepted we would be likely to provide for an information overload. He went on to explain the detailed but not statutorily required provisions for providing information in a number of places, not necessarily easily accessible or comparable.
I do not think that it is a good argument to say, "The information is there but we shall not commit ourselves to continuing to provide that information, and, if we

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provide it, heaven forbid that we should make life terribly straightforward for anyone who is attempting to use the funds available from the regeneration budget in the best interests of the community".
I feel quite strongly on this subject. On the basis of the noble Lord's scant assurance, I look forward to hearing from him. I hope that he will respond to the points that I have made both in moving the amendment and in responding to it in time for me to consider what to do on Third Reading.
While I accept that the requirements of the budget are evolving and that it is an organic process, nevertheless, I believe that they are considerable and that it is appropriate to seek to find mechanisms for making the whole process a great deal more transparent. There needs to be a degree of accountability, which is sadly lacking. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10.15 p.m.
Lord Dubs Lord Dubs moved Amendment No. 164:
After Clause 126, insert the following new clause—
REGENERATION COMPANIES IN WHICH LOCAL AUTHORITIES HAVE INTERESTS
(". Part V of the Local Government and Housing Act 1989 shall not apply to any company whose sole purpose is the regeneration of an area in line with the published regeneration strategy of the local authority concerned.").
The noble Lord said: My Lords, local authorities may set up companies in order to undertake regeneration work in their localities. The difficulty is that if what they do is constrained by Part V of the Local Government and Housing Act 1989, any capital expenditure incurred by a local authority will be set against the local authority's capital limits. That would act as a serious constraint upon the ability of local authorities to fund other capital projects. Therefore, the main purpose of the amendment is to take away that constraint and give local authorities more freedom with which to undertake regeneration in their areas.
However, Part V of the Local Government and Housing Act also has other disadvantages. When a local authority sets up a company by putting in a small proportion of the equity of that company, it may well discourage the private sector from participating because it may sense that the local authority is not willing to make an adequate commitment to the project. Again, I believe that it is right that local authorities should have the flexibility to vary the amount of equity which they put into a company to reflect local circumstances. It may well be that where the private sector sees that the risk is high, the local authority must make a greater contribution to the equity stake of that company.
There is also the further point that there is uncertainty as to whether the private sector controlled companies are eligible to receive European Union funds. Therefore, the effect of the amendment would be to give the same exemption to companies set up specifically by local authorities to undertake regeneration schemes according
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to statutorily approved development plans. That would be a sensible amendment and would give local authorities more freedom of action.
Finally, the amendment would have the added advantage that it would avoid the need for the Secretary of State to have to exercise his discretion to give exemptions from Part V on a case-by-case basis. That is a rather burdensome piece of bureaucracy and this amendment would allow a more consistent approach. I beg to move.
Lord Lucas: My Lords, one of the aims of the regulatory regime introduced with Part V of the Local Government and Housing Act 1989 is to encourage local authorities to enter into joint venture arrangements where the private sector is in the lead. The exclusion of all regeneration companies from the regime would undermine that objective.
In any case, as has been said, the Secretary of State already has powers under Sections 68(1) and 69(1) of the 1989 Act to exempt local authority controlled or influenced companies from the restrictions imposed by order under Part V. Applications from regeneration-orientated companies will be considered on their merits. A number of time-limited exemptions have been issued to city challenge and SRB challenge fund companies. I suspect that the difference between us on the matter is entirely one based on politics and, therefore, for the purposes of this evening, irreconcilable. However, I shall take up the small point mentioned by the noble Lord about European funding and write to him on the subject.
Lord Dubs: My Lords, I was not aware that the difference between us was simply a matter of party politics. I was about to say that the Minister obviously wanted to be helpful on various occasions today. Indeed, I was hoping that he would be equally helpful on this amendment. But, alas, it was not to be. I fear that we shall not make much progress with the amendment this evening. Therefore, as the Minister is being totally intransigent, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 127 [Resolution by local housing authority to pay relocation grants]:
Lord Lucas Lord Lucas moved Amendment No. 165:
Page 74, leave out lines 5 to 18 and insert—

("(a) consider whether their resources are sufficient for the purpose of carrying into effect a resolution declaring the power to pay relocation grants to be exercisable as regards that area; and

(b) in deciding that question, have regard to such guidance as may from time to time be given by the Secretary of State.

(2) Where a local housing authority decide that their resources are sufficient for that purpose, they shall—

(a) consider whether to pass such a resolution: and

(b) notify every person on whom notice is required to he served under subsection (2B)(a) of section 289 of the Housing Act 1985 that they are so considering and invite him to make representations.

(3) In deciding whether to pass such a resolution, a local housing authority shall—

(a) have regard to such guidance as may from time to time he given by the Secretary of State: and

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(b) take account of any representations made by persons notified under subsection (2)(b).").

The noble Lord said: My Lords, in moving the amendment I shall, with the leave of the House, speak also to Amendment No. 166. Local authority associations have pressed us to make these two amendments, the purpose of which is to remove the obligation on local housing authorities to consult those who are to be displaced by area clearance about the possibility of giving relocation grants if the authority does not have the resources to make such grants available.
As currently worded, Clause 127 imposes a duty on authorities to consult people in the area clearance before they decide whether they should make the power to give relocation grants available in that area. The requirement could raise expectations that grant might be forthcoming even though an authority then finds that it does not have the resources to pay the grant. Clearly this is unsatisfactory from the point of view both of the authority and of the people who are being consulted.
Amendment No. 165 will enable authorities to consider the question of resources first so that they need only consult if they are satisfied that resources are available. They will be required to have regard to the Secretary of State's guidance on the matter. Amendment No. 166 is consequential. I beg to move.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 166:
Page 74, line 25, leave out ("(2)(b)") and insert ("(1)(b) or (3)(a)").
On Question, amendment agreed to.
Clause 129 [Relocation grants: qualifying persons and qualifying dwellings]:
Lord Dubs Lord Dubs moved Amendment No. 167:
Page 75, line 23, leave out ("if') and insert ("whether it is new or existing, provided it is considered by the local housing authority to be of a suitable size and condition and").
The noble Lord said: My Lords, the purpose of the amendment is to ensure that local authorities have the opportunity to pay relocation grants not only for new build dwellings but also in relation to existing dwellings providing that the local authority considers them to be suitable. As I understand it, without the amendment there would only be the power to pay relocation grants for new build dwellings. That seems excessively restrictive.
The grants about which we are talking can be offered by local housing authorities to people who lose their homes as a result of clearance activity. The grants will supplement existing compensation provisions to enable the people affected to purchase a replacement dwelling within the same clearance area or within any other area designated by the local housing authority, having regard, of course, to any guidance issued by the Secretary of State. Again, it seems to me that the amendment would add flexibility and make it easier for local authorities
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to achieve their aim of clearing areas by offering the wherewithal for decent, alternative housing. I beg to move.
Lord Lucas: My Lords, I appreciate that this amendment is intended to give authorities some measure of control over the kind of dwellings which would qualify for relocation grant. The stipulation that the qualifying dwelling should be a new or an existing dwelling is, in our view, unnecessary since, in the absence of any qualification to the word "dwelling", both are implied. That is certainly what we intend, and we shall no doubt make this clear in our guidance to authorities on the new provisions.
The more substantive point is whether it should be a matter for local housing authorities to decide whether a dwelling is of a suitable size or condition for the person applying for grant. Clearly it is important that a person should not be given more funding than is necessary to buy a home which will meet his family's reasonable housing needs. Conversely, it may be a poor investment to fund the purchase of a home which is in poor condition or which is likely to lead to overcrowding. We had intended to meet these concerns by specifying conditions as to the size and physical state of the property using the powers in Clause 128(2)(c). Further, authorities will have the power under Clause 130(1) to decide the amount of grant that they are prepared to give in particular cases.
We believe that these powers should enable us and authorities to ensure that grant is only paid in appropriate cases. However, although I cannot promise anything, we will certainly look at the noble Lord's suggestion more closely to see whether additional local authority discretion would help here. I hope that in the light of that improved forecast compared with the previous amendment, the noble Lord will be prepared to withdraw the amendment.
Lord Dubs: My Lords, I am delighted that the Minister has changed tack and is being helpful and conciliatory. In the light of what the Minister has said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 131 [Relocation grants: condition for repayment on disposal]:
Lord Lucas Lord Lucas moved Amendment No. 168:
Page 77, line 24, leave out from ("in") to ("as") in line 25 and insert ("a hospital, hospice, sheltered housing, residential care home or similar institution").
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 12 on the first day of Report, but there was some confusion about whether the amendment was on a Marshalled List. To put the record straight, the purpose of this amendment is to extend the list of care institutions to which an elderly or infirm person may go to live without triggering the requirement to repay relocation grant, to include a hospital, hospice or similar institution, bringing Clause 131 into line with the corresponding provisions on renovation grants in Clauses 11 and 48 of the Bill. I beg to move.
On Question, amendment agreed to.
Clause 137 [Home energy efficiency schemes]:
[Amendments Nos. 169 to 172 not moved.]
Lord Swinfen Lord Swinfen moved Amendment No. 173:
After Clause 137, insert the following new clause—
PROVISION FOR DISABLED PEOPLE IN CONSTRUCTION OF NEW DWELLINGS
(" . The Secretary of State shall exercise his powers under section I of the Building Act 1985 to introduce an extension to Part M of the Building Regulations 1991 in order to ensure that in the construction of new dwellings reasonable provision shall be made for disabled people to gain access to and to use the dwelling, including sanitary conveniences.").
The noble Lord said: My Lords, this is a similar amendment to one that I moved in Committee. As can be seen from the wording, it is designed to ensure that, on this Bill becoming an Act, the Secretary of State shall exercise his powers to extend Part M of the building regulations so that,
"in the construction of new dwellings reasonable provision shall be made for disabled people to gain access to and to use the dwelling, including sanitary conveniences".
The Government have already indicated their intention of bringing in regulations under Part M for new residential dwellings. This will bring privately funded new housing into line with publicly funded housing as housing association and local authority housing is already built to this standard.
In January 1995 the Department of the Environment produced a consultation paper with representations to be submitted by the end of April last year. This matter has therefore been under consideration for nearly a year. In Committee my noble friend Lord Lucas stated that he was unable to say when there would be any movement in this matter. Perhaps, three weeks later, he will be able to give the House more encouraging information. I understand that the major concerns over the extension of these regulations to dwellings are, first, a general dislike of regulation. That, of course, is understandable, but unjustifiable in this case. Only a level playing field and clear, simple, minimum standards will bring about necessary change in practice. The construction industry had similar reservations about the introduction of Part M to non-domestic buildings 10 years ago, which have proved in practice to be unfounded.
Secondly, there are worries about cost. The Department of the Environment's cost compliance assessment (for Part M applied to new housing) demonstrated that cost is not a significant factor. It also showed that the application of Part M would not affect valuations—that is, that new housing would retain value vis-à-vis second-hand housing on the market.
Thirdly, there is fear of change. Current house types are popular. Will changes in design brought about by regulation put off potential house buyers? Accessible features are attractive and add rather than detract from the appearance of a new house. A recent user evaluation of Lifetime Homes (by the University of Humberside) established that all 62 respondents who were older but not necessarily disabled people held a very positive view and were impressed with the flexibility of use that the new houses offered.
Fourthly, there is the possible reduction on some sites in the number of dwellings that can be built. This, I think, would be on very few sites. But this was also the case when other regulations on light, air, parking and depths of gardens were introduced.
The question that should be answered then is not whether regulations should be introduced but what prevents their introduction. In recent housing debates the Government have argued that it is difficult to allow special treatment for particular groups of people; for example, the elderly and people with disabilities. Special treatment becomes necessary only if ordinary arrangements do not take everyone's needs into account. It has been amply demonstrated, through Lifetime Homes and the adoption of accessibility standards by housing associations over the past two to three years, that ordinary new houses can provide for most people, irrespective of age or disability.
In replying to the amendment, can my noble friend say whether he would be prepared to arrange a meeting with me to discuss this matter as it may well be the best way to resolve the difficulties? I beg to move.
10.30 p.m.
Lord Dubs: My Lords, I support the amendment moved by the noble Lord, Lord Swinfen, with his usual persuasive powers.
I believe that these arguments have been put forward on a number of occasions during Committee and this stage of the Bill. The Government have moved part of the way towards accepting the force of the argument but have never given the complete commitment that I and the noble Lord would like.
The proposition in this new clause is reasonable. If we do not achieve the aim of the new clause, we run the risk that new buildings will be built; they will not have the facilities for disabled people; and when occupied by people who eventually become disabled the cost of adapting those buildings will be much greater. Alternatively, people will have to leave those buildings and find other accommodation more consistent with their needs and developing disabilities.
There is a backlog. Many buildings in this country are occupied by elderly people who may become disabled and need adaptations. If we were to make the move now and undertake what the amendment provides, we would begin the process of ensuring that all buildings over a period of time are suitable for use by disabled persons.
It is a reasonable proposition. I hope that the Minister will accept it. It represents long-term economy. It represents the proper way of meeting the needs of disabled people and makes complete sense. It does not involve the Government in having to lay out a lot of money. I cannot understand why the Government do not accede to the persuasive arguments of the noble Lord. Lord Swinfen.
Baroness Hamwee: My Lords, when the noble Lord. Lord Swinfen, moved a similar amendment at the previous stage, at about the same hour of the evening. I felt that the response which he obtained was unhappy.

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It combined the astonishment of the Government at the large number of replies to their consultation on the White Paper and the apparent inability or lack of enthusiasm on their part to move speedily in assessing those responses with a request to the noble Lord, Lord Swinfen, to contain himself in patience. When he asked his noble friend whether he could give an indication of when there would be movement, the answer was entirely to the point. It was "no".
I remember being a little startled that after a response which seemed to be sympathetic to the subject matter of the amendment, the Government could not even produce an emollient and encouraging response. Perhaps one should admire them for their honesty. However, it is an appropriate point to raise again. I hope that this time the Government, having heard the arguments and had an opportunity to reflect on the bluntness expressed last time, may be more encouraging and constructive in their response.
Lord Lucas: My Lords, my noble friend asked three questions. He asked whether anything has changed since Committee. No, my Lords. He asked whether we will pre-judge the consultation which is taking place. No, my Lords. He asked whether we would have a meeting with him to discuss this. Yes, my Lords, I shall set it up tomorrow.
Lord Swinfen: My Lords, at last we appear to be getting somewhere, for which I am extremely grateful. I have not only raised the matter on this Bill, I have been raising it for a number of years in the House, as have other noble Lords. I am certain that honourable and right honourable Members in the other place have been doing the same. However, with my noble friend's assurance that he will set up a meeting, perhaps we will be able to move forward in that way. I know that it is not essential for the matter to be in the Bill because the powers are already on the statute book. Therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 139 [Housing action trusts: orders for dissolution]:
Lord Dubs Lord Dubs moved Amendment No. 174:
Page 82, line 11, leave out subsections (2) to (4) and insert—
("(2) In subsection (2)(b)(ii) omit "any person" and insert "the relevant local authority".
(3) In subsection (2)(b)(iii) omit "any person" and insert "the relevant local authority".
(4) After subsection (4) insert—
"(5) When determining the financial terms for any such disposal or transfer mentioned in subsection (2)(b) above, the Secretary of State shall have regard to ensuring that no local authority is financially disadvantaged.".").
The noble Lord said: My Lords, the amendment stands in my name and that of my noble friend Lord Williams. In moving it, I wish at the same time to speak to Amendment No. 175. The amendments are concerned with housing action trusts, and Amendment No. 174 in particular deals with the requirement that where property is transferred and the rights and liabilities remain with a housing action trust at its dissolution to the relevant local authority the Secretary
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of State should be required to consider how to avoid financial disadvantages from such a transfer. Amendment No. 175 is to ensure that property occupied by secure tenants is not disposed of or transferred using the amended dissolution procedure introduced by the clause.
The Government have on a number of occasions given undertakings that when housing action trusts are dissolved, assets should be transferred to the local authority but that the local authority should not have to bear the burden of any outstanding liabilities that those trusts incurred. The housing action trusts were introduced by Part III of the Housing Act 1988. At that time, the Government's White Paper said:
"There are some areas of local authority housing, particularly in some of the inner urban areas, where social problems and housing disrepair are so serious that in the Government's view more direct action involving both public and private sectors is needed to obtain improvements over a reasonable timescale. The Government therefore proposes to take powers to establish bodies analogous to urban development corporations in designated areas to take over responsibility for local authority housing, renovate it and pass it on to different forms of management and ownership, including housing associations, tenant co-operatives and approved private landlords. These new bodies, to be known as housing action trusts, will provide scope for tenants in these areas to have a diversity of landlord and ownership. The HATs will have a limited lifespan. Their remit will be to secure the improvement of the stock transferred to them in their area and then to hand it over to other owners and managers".
As originally envisaged, HATs would have been established regardless of the wishes of the tenants in the local authority housing area affected. Subsequently, that was changed. To cut a long story short, when Sir George Young became housing Minister a different model of housing action trust was established, starting in 1991. That involved significantly improved levels of tenant consultation and involvement, including places on the board and an informal promise that tenants would be allowed to return to the local authority once the work of the HAT had been completed. So we are talking about undertakings given by the Government as regards the HATs that were then established.
With this amendment I want to achieve an easy transfer, and one from which a local authority will not incur any particular financial disadvantage. If that were to be the case, there could be a speedy transfer of HATs that were being dissolved to the local authorities. That is the proper way for such matters to be handled.
Property remaining with a housing action trust at the time of dissolution should be returned to the local authority in the area for a number of reasons. In most instances such property will originally have been in the ownership of the local authority. Therefore it is only right and proper that it should be returned to the local authority. Secondly, local authorities are clearly the most appropriate bodies to determine what part such a property should play in future housing provision for the area. Thirdly, and very importantly, local authorities are democratically accountable for the decisions they take. It is right and proper that housing action trusts should be returned to bodies that are elected and are democratically accountable to local people in the area.
As I said, it is important that no financial disadvantage should attach to the transfer of the property remaining with a HAT at its dissolution. If liabilities

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were to exceed assets it is right and proper that the local authority should be fully compensated for that. Indeed, Sir George Young said in the Commons at the Committee stage of what became the Leasehold Reform, Housing and Urban Development Act 1993:
"It might be helpful if I were to make clear at this stage that government policy is that any such transfers will be at nil cost. The local authority will not be required to pay for the properties".
That is a very clear undertaking and the amendment seeks to give effect to it. I beg to move.
Lord Lucas: My Lords, Clause 139 amends the provisions for winding up housing action trusts, making clear that residual responsibilities can be passed to an existing body, such as a residuary body, set up to handle matters from several public bodies. But other arrangements, including transfers to local authorities, are not precluded. In particular, the clause does not affect the right of secure tenants of a trust to return to being tenants of their local authority if they so choose. Those secure tenants have a right to choose where they go to. So most of the assets of a trust in that form are going where the tenants want them to go.
In practice, trusts will not be wound up until they have disposed of most of their assets, including their housing and their liabilities. In all probability what will be left is a mix of miscellaneous liabilities for which someone must take responsibility but which do not justify prolonging a trust's life.
The amendments tabled by the noble Lord, Lord Dubs, seek to direct such residual matters to local authorities only and to exclude any secure tenancies from the wind-up process. In my view it would not be sensible to restrict our options in this way; nor would many local authorities be keen on arrangements that see them as sole recipients of a bundle of miscellaneous liabilities, whether on financially neutral or any other terms.
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We should retain flexibility to make wind-up arrangements that are best suited to the circumstances we find at the time—though I suspect that local authorities are a very convenient and apposite recipient for these liabilities in many instances. Accordingly, I invite the noble Lord not to press his amendment.
Lord Dubs: My Lords, I listened to what the Minister had to say. I would just make the point in relation to secure tenancies that Amendment No. 175 provides that,
"Property which is subject to the provisions of this section shall not include dwellinghouses subject to secure tenancies".
I thought I had dealt with that point. However, it is late. I have heard the Minister's response and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 175 not moved.]
Clause 141 [Orders, regulations and directions]:
Lord Lucas Lord Lucas moved Amendment No. 176:
Page 83, line 14, after ("for") insert ("—

(a) orders subject to affirmative resolution procedure (see sections 103(5) and 104(4)),

(b)")

On Question, amendment agreed to.
Clause 145 [Commencement]:
Lord Lucas Lord Lucas moved Amendment No. 177:
Page 84, line 21, at end insert—
("() The Secretary of State may by order under subsection (3) make such transitional provision and savings as appear to him to be appropriate in connection with the coming into force of any provision of this Act.").
The noble Lord said: My Lord, I spoke to this amendment with Amendment No. 104. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 178 to 197N not moved.]
Schedule 2 [Architects]:
[Amendments Nos. 198 and 199 not moved.]
House adjourned at thirteen minutes before eleven o'clock.