Lords Sitting of 12 February 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 Oxford.

The Lord Bishop of Winchester
Michael Charles, Lord Bishop of Winchester— Was (in the usual manner) introduced between the Lord Bishop of Lichfield and the Lord Bishop of Norwich.

Treaty of Rome: Status of Animals
2.42 p.m.
Lord Elliott of Morpeth Lord Elliott of Morpeth asked Her Majesty's Government:
Whether they will press at the 1996 Inter-Governmental Conference for animals to be given a new status in the Treaty of Rome, as sentient beings, replacing their current status as goods or agricultural products.
Lord Lucas: My Lords, as announced on 6th February, we will be asking our European partners to use the opportunity of the Inter-Governmental Conference to add a new protocol to the Treaty of Rome. That protocol would place a formal legal obligation on the Council of Ministers to give full regard to considerations of animal welfare in the exercise of its powers on agriculture, transport, research and the single market. Our proposals for the precise wording of the protocol are still under consideration.
Lord Elliott of Morpeth:My Lords, I thank my noble friend for that most encouraging reply. Will he agree that to include in the protocol or, better still, in the treaty a new classification for animals, from being "agricultural goods" to being what they are— living creatures which know fear and pain— would greatly hasten the move towards the elimination in the Community of many inhumane methods of production? Could it also mean the end to journeys for livestock which are far too long?
Lord Lucas:My Lords, a new protocol along the lines which we suggest would help. In a way it would mark the general progress towards better animal welfare throughout the Community, through the efforts of voluntary bodies and others. It would provide a basis on which the Community could not so much push forward in the vanguard but ensure that its regulations accord with how people in general in the Community are now wishing their food animals to be treated.
Baroness Nicol: My Lords, will the Minister agree that animals should be treated as sentient beings? Alternatively, is he saying that the present classification can stand, that live animals are treated as being the same
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as the insides of animals? I believe that that is spelt out as guts, bladders and other pieces of animals. Should not the Government take a firm stand on the classification, whatever means they choose to reach their objectives?
Lord Lucas: My Lords, the question of the wording is difficult. In the dictionary definition, the word "sentient" means "possessed of senses". In other words, if something is capable of feeling touch, then it is sentient. However, the word has drifted a good deal to mean "possessed of emotions" and even "possessed of intelligence". It is a difficult word to define in English, let alone in the other Community languages.
Baroness Strange: My Lords, does the Minister agree that the Almighty created animals as well as human beings? Although animals have not eaten the fruits of the tree of good and evil, we who have should give due consideration to them.
Lord Lucas: Yes, my Lords.
Lord Bruce of Donington: My Lords, is the Minister aware that it is encouraging to hear the Government say that they are prepared to put forward a proposal amending the Treaty of Rome? Is he further aware that, notwithstanding anything that the Government ultimately succeed in incorporating in the treaty as a protocol, there will still have to be a proposal from the Commission in order for it to have any effect? What undertaking has the Minister received from the Commission that, if the protocol is inserted into the treaty, the Commission will bring forward a proposal? Otherwise, no action can be taken.
Lord Lucas: My Lords, I do not believe that we are talking about a proposal being imposed on the EU by Britain and then imposed on the EU by the Commission. It will happen because of the general will of the people of Europe and I am sure that the Commission will follow it.
The Earl of Halsbury: My Lords, will the Minister take particular care and obtain advice from biologists as to the wording of the proposal? It ought not to be the case that if you swat a fly you are in breach of an international treaty.
Lord Lucas: My Lords, I absolutely agree. But not many of us think of flies as food animals.
Lord Boyd-Carpenter:My Lords, is my noble friend aware that we eat oysters alive? Would the proposal interfere with that?
Lord Lucas: My Lords, in the old and proper sense of the word, oysters are certainly sentient beings in that they have senses. I can remember my father teaching me that, "Any kind of noise annoys an oyster, but a noisy noise annoys an oyster most".
Lord Gallacher: My Lords, on this side of the House we welcome the proposed protocol and recognise that both its enacting and its implementation will take some time. Meanwhile, can the Minister say whether United Kingdom meat exports on the hook are being vigorously

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promoted and will continue to be vigorously promoted? Will he also say where responsibility now rests for such promotion? We believe that it would make a major contribution towards the growing concern about the way in which animals are treated, once they are exported from this country.
Lord Lucas:My Lords, it is with great pleasure that I find myself in complete agreement with the Benches opposite. This is a very important matter to promote and the Government and the Meat and Livestock Commission are doing their best to push it. I believe that we now export 80 per cent. of our meat on the hook. The more butchering we do here, the more value we add in this country and the more jobs we provide, let alone the implications for animal welfare. We shall push to promote this and will give help, encouragement and advice in order to achieve it. We hope that we will continue to do better, as we have done in the past.

European Central Bank
2.50 p.m.
Lord Bruce of Donington Lord Bruce of Donington asked Her Majesty's Government:
Whether, at the Inter-Governmental Conference to be held in 1996– 97, they intend to propose that the Treaty of Rome be amended to provide that the European Central Bank shall be accountable to the Council of Ministers.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish):The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, no.
Lord Bruce of Donington:My Lords, is the noble Lord aware that I am most disappointed by that reply, particularly in view of the flexibility of mind exhibited in answer to the previous Question? Is the noble Lord telling the House that Her Majesty's Government believe that the independence of a European Central Bank is equivalent to infallibility, or is the Minister telling the House that they do not trust the Council of Ministers to be able to exercise any effective political control— that degree of political control, incidentally, demanded by my own party?
Lord Mackay of Ardbrecknish: My Lords, the Government's view is that many of these matters are still to be decided, hence the opt-out that we have. The position is that the European Central Bank, as currently proposed, would indeed be independent, and the governing council would be drawn from representatives of the central banks of all participating member states.
Lord Peyton of Yeovil: My Lords, does my noble friend share in the glow of satisfaction no doubt felt by his noble colleagues that the noble Lord opposite should prefer Ministers to bankers?
Lord Mackay of Ardbrecknish: My Lords, I am interested in that fact. I understand that it is not a view
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shared by every member of the party opposite. As I understand it, some of them would like the Bank of England to be independent. I wonder what our interest rates might be like now were that the case.
Viscount Chandos: My Lords, does the Minister accept that to have any serious prospect of influencing the constitution of the European Central Bank the Government must make our European allies feel that we have a fundamental, though not uncritical, commitment to the principle of a single European currency? Were that to be the case, would it not be so much easier to ensure the accountability my noble friend Lord Bruce of Donington advocates and which we endorse? Can the Minister not get his colleagues to understand that, in the words of President Theodore Roosevelt, the best policy in Europe would be "to talk softly and carry a big stick" rather than vice versa?
Lord Mackay of Ardbrecknish:My Lords, I still do not understand what is the policy of the party opposite in regard to the opt-out. I do not know whether it would abandon the opt-out immediately just as it would hereditary Members of this House, or whether it approves of the opt-out. We are at this moment involved closely in the workings of the European Monetary Institute, the forerunner of the European Central Bank. It is our policy to be fully involved in all the work that goes on in order to protect the United Kingdom's interests whether we are in or out of the European Monetary Union.
Lord Bruce of Donington: My Lords, I am not quite sure whether the Government are in favour of the infallibility of Ministers— or at any rate, their wisdom— or whether they agree with the observation that fell from the lips of a senior French official yesterday that the council has ceased to be a place of negotiation and become a place where you drop in to sign a press release.
Lord Mackay of Ardbrecknish: My Lords, I was not aware of that utterance by a French official. Those of my ministerial colleagues who attend the Council of Ministers certainly know that a great deal of hard work goes on there on the part of all the Ministers involved in order to try to advance the position of the European Union. Ministers from this Government who attend always ensure that they put British interests first.

European Commission: British Staff
2.54 p.m.
Lord Wallace of Saltaire Lord Wallace of Saltaire Masked Her Majesty's Government:
Whether they are satisfied with the proportion of European Commission staff who are citizens of the United Kingdom, and what steps they are taking to ensure that sufficient qualified British candidates are recruited in future.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, we are not yet satisfied with the

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proportion of Commission staff who are British. The Government are working both in the UK and in Brussels to rectify the shortfall. We are making good progress.
Lord Wallace of Saltaire: My Lords, I thank the Minister for that reply. Does she recall that it was the noble Baroness, Lady Thatcher, who, when she was Prime Minister, took the most decisive action to improve the level of recruitment of British citizens to the Commission, through the setting up of the European "fast stream". I understand that, since then, recruitment has improved very considerably. Can she assure the House that in current reviews of Civil Service procedures the European fast stream will be maintained, as this is a very long-term investment?
Baroness Chalker of Wallasey: My Lords, I am very pleased to say that it was my noble friend Lady Thatcher who initiated the European fast stream. In case noble Lords are not aware, this provides a programme of training and placements in UK departments for young, high-flying civil servants to assist their preparation for EU competitions. It has been running for just over five years, and has proved very successful. Thirty-five UK European fast-streamers were successful in four Commission competitions in the first three years. They represented 30 per cent. of the total UK successes. We intend to continue with the programme; it is a very good system.
Baroness Park of Monmouth: My Lords, I know that my noble friend the Minister is very committed to the European fast stream. Can she assure us that the obstacles that used to be placed in the way of re-entry into the Civil Service when people had been seconded have now been removed? Is it now possible for people not to lose promotion as they used to?
Baroness Chalker of Wallasey: My Lords, I wish I could agree with my noble friend that the obstacles had been removed. However, I do not yet feel that they have been sufficiently removed. We do our best by ensuring that wherever we spot under-representation we can put somebody into a place. We have also helped by making sure that a member of the Cabinet Office is seconded to work in the Commission on this very issue. However, we do not yet have UK government departments offering a hand to welcome people back. Until that happens, I regret to say that a lesser number will be prepared to go if they know that they cannot return to the British Civil Service after a spell in the European Commission.
Lord Ezra: My Lords, it is very satisfactory to note that efforts are being made to increase the number of British nationals serving in the Commission. However, will the Minister agree that it is surprising that over the years we have fallen behind such countries as Germany, France and Italy? At the present time each of those countries has 2,000 or more nationals serving in the Commission, whereas the number of United Kingdom nationals is less than 1,500— only slightly higher than
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the number from Spain,which has a substantially smaller population than ours. What is the reason for our falling behind for so many years?
Baroness Chalker of Wallasey: My Lords, I can tell the House the reason immediately. It is because we have not been so good at producing non-graduate linguists as have other countries. It is in the clerical, executive and secretarial grades that those other countries have a far higher proportion of good linguists. That is responsible for the high number from those countries which we cannot match. It is also the case that we now have a high proportion of secretaries who are bi-or tri-lingual. However, bi- and tri-lingual secretaries in this country normally have university degrees and are not then eligible for the secretarial grades within the European Commission. Therefore, we have to do something about non-graduate linguists, and a lot more, too.
Lord Beloff: My Lords, will my noble friend the Minister agree that when a well-qualified British member of the Commission staff is sacked for telling the truth about what goes on in the Commission, it is a disincentive to other British citizens to apply for positions in Brussels?
Baroness Chalker of Wallasey: My Lords, my noble friend is well aware of the case— I believe he joined in the discussion the last time that this particular question arose. When one works either in the British Civil Service or in the Commission, one has to abide by the rules. If one does not, then the disciplinary procedures will take place.
Lord Monkswell: My Lords, given the Minister's earlier statement that the problem in this country is partly due to a lack of language ability post-school, what steps is she taking to persuade her colleagues in the Department for Education and Employment that provision should be made for an increase in language teaching in our primary and secondary schools?
Baroness Chalker of Wallasey: My Lords, the Secretary of State for Education, Mrs. Gillian Shephard, who is trilingual, needs no encouragement from me to ensure that more language teaching takes place in schools. Indeed, she has been doing that ever since she went to that department. But the problem is not a recent one. It dates back to the 1960s, when, if I remember rightly, many people on the opposite side of this House did not believe in Europe at all and certainly did not encourage language teaching.
Baroness Farrington of Ribbleton: My Lords, can the Minister confirm whether or not this Government deliberately opted out of the Lingua programme for schools which applies in other member countries?
Baroness Chalker of Wallasey: My Lords, the questions asked of any programme provided by the European Commission must always be, "Is it good value for money?" or "Can we do it better at a national level?" That is subsidiarity. There are aspects of the Lingua programme which are good and other aspects which are not so good. I know that there has been a very special

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effort made to get on with the Lingua programme. But that does not have a direct relationship to the matter that we are discussing.
Lord Annan: My Lords, did I understand the Minister to say that graduates were debarred from holding secretarial posts? Surely, that is a ludicrous situation. No wonder there is graduate unemployment when that is the case.
Baroness Chalker of Wallasey: My Lords, the problem is that, although we may have very good secretaries, they are often graduate secretaries. In that case, there has been a rule in the Commission— which we have already tried to have changed— that those with degrees in languages cannot apply for secretarial posts, if that is what they wish. This would be thought by some other countries to be unfair to their secretaries who do not have a language degree but who speak foreign languages. That is yet another matter that has to be put right in Brussels.
Baroness Hayman:My Lords, with regard to language education in schools, will the Minister speak to her noble friend Lord Henley about a scheme for teaching geography to GCSE level in the medium of Spanish— I wrote to him about the matter— where our own authorities are providing a block to that very worthwhile scheme in a boys' comprehensive school?
Baroness Chalker of Wallasey: My Lords, obviously I do not know about the individual case mentioned by the noble Baroness. My noble friend Lord Henley reads Hansard avidly and I shall make sure that her remarks are noted by him.
Lord Wallace of Saltaire: My Lords, will the Minister give an assurance that, as the promotion of British citizens in the Commission is important to the maintenance of their morale, the British Government will give careful thought to encouraging promotions within the Commission to senior Al to A3 positions rather than parachuting in people from the outside?
Baroness Chalker of Wallasey: My Lords, the noble Lord is absolutely right but, as he well knows, achieving promotions within the Commission is not so straightforward a situation as we should wish. There is now a member of the British Cabinet Office in the Commission specifically directing attention to these matters, and this will help us. There is no doubt that we are under-represented in the Al to A3 grades, as we are in some of the non-senior grades.
Lord Stoddart of Swindon: My Lords, is the noble Baroness aware that many people in this House may have been shocked at the reply given to the noble Lord, Lord Annan? Does that reply mean that in Europe and in the Commission there is discrimination against excellence?
Baroness Chalker of Wallasey: No, my Lords, it does not mean that they discriminate against excellence. What has happened is that there are many people who,
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through their normal schooling in other countries of the European Union, grow up learning a number of languages and have perfectly good secretarial skills. It is obviously cheaper to employ somebody who has good secretarial skills and languages but who is not of graduate status, because that is the level at which they are paid. As I openly admitted to the noble Lord, there is a problem but we are trying to tackle it. It has been there for a very long time. Others have been unwilling to tackle it. We are willing to tackle it.

Group Personal Pension Schemes
3.4 p.m.
The Earl of Clanwilliam The Earl of Clanwilliam asked Her Majesty's Government:
Whether they intend to promote the use of group personal pension plans in industry, and, if so, how.
Lord Mackay of Ardbrecknish: My Lords, the Government are keen to promote all forms of private pension, both occupational and personal, including, where suitable, group schemes. We have produced a range of leaflets on private pension provision which includes information on group personal pensions. We are assisting the financial services regulators to develop suitable guidance on the sale of those products. We are also examining whether further steps are needed to promote the growth of group schemes among employers otherwise making no pension provision for employees.
The Earl of Clanwilliam: My Lords, I thank my noble friend for that very encouraging reply. I congratulate him and his right honourable friend on the start that they have made with the group personal pensions. It is vitally important that employers should he encouraged to provide pensions for employees. In that respect, does he have any special plans, such as rebates on NICs, to encourage employers to start up such schemes? Secondly, in view of the fact that there is an upper limit to personal pension provision, does he agree that it might also be an advantage to indicate a basic minimum?
Lord Mackay of Ardbrecknish: My Lords, I am grateful to my noble friend for his remarks about group personal pension schemes. Certainly they are very suitable for smaller and younger companies which do not have occupational pension schemes. They are a way of providing a scheme with reduced administrative costs and of facilitating an employer's contribution. If the scheme is approved, it will be eligible to receive the contracted-out rebate which is for both employers and employees. If I heard my noble friend aright, I must tell him that we have no plans to give employers a national insurance contributions rebate in order to encourage them.
On my noble friend's last point, it is an interesting idea that we should recommend a minimum payment. Of course there is a minimum payment which is compulsory and is, in fact, slightly under 5 per cent. It is the sum going to SERPS or to contracted-out

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provision for an appropriate scheme. I am not convinced that it would be appropriate to raise that figure and go for some kind of compulsory saving via a pension scheme.
Lord Haskel: My Lords, does the Minister recall that the last time that the Government became involved in promoting private pensions, it resulted in the misselling of pensions on a large scale'? Is he aware that the process of sorting out the problems associated with that have hardly made any progress at all? Does he agree that with such a record it is best for the Government to keep out of promoting anything to do with pension plans?
Lord Mackay of Ardbrecknish: My Lords, I certainly do not agree with the noble Lord's last point. It is vitally important that we give every person in this country the opportunity to belong to a second, preferably funded, pension scheme. That was one of the principles behind the Pensions Act which I took through your Lordships' House last year. I believe that the misselling of personal pensions is now a matter largely in the past. Investors are now better able to make informed choices. There are new and tougher rules on disclosure of charges, commission and policy surrender values. Higher standards of training and competence set by the financial regulators will underpin those changes. One aspect to which I referred in my original Answer is that we must, of course, ensure via the Securities and Investments Board that any selling of group personal pensions is conducted in a rigorous manner as well.
Lord Shaw of Northstead: My Lords, can my noble friend say how much has been put aside nationally to meet the future needs of pensions in this country? How does that record compare with the record of other countries?
Lord Mackay of Ardbrecknish: My Lords, we have been extremely successful in this country in the build-up of funded pension schemes. In fact, on the last valuation, we had something like £600 billion of funded pension schemes set aside for retirement and future retirement. That is more funded pensions capital than the whole of the rest of the European Union put together. Indeed, a recent OECD report contrasted our position with that in many other developed countries. We were in an extremely favourable position. By the year 2030, our position would be hugely better than that of France, Germany and Japan, to name but three countries.
Baroness Farrington of Ribbleton: My Lords, will the Minister comment on the Government's decision in the light of his reply? Does he agree that they have accepted the need to tighten up and ensure that people are sold schemes which are genuinely in their interest and that they have changed the way in which that is done? Do the Government accept any responsibility for those people who under the previous lack of regulation were sold schemes which are not in their interest?
Lord Mackay of Ardbrecknish: My Lords, the noble Baroness asks me about the present situation of
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those people who were missold pension schemes. As she is aware, the Securities and Investments Board introduced a programme to secure redress for investors who opted out of or transferred funds from occupational pension schemes and suffered loss as a result of advice which fell short of the regulatory standards then in force. We believe that the people who gave that advice should pay to redeem the position for those to whom they gave it.
Lord Taylor of Blackburn: My Lords, if, as the figures the Minister produced indicate, we are doing so well with our pension schemes, is there any chance of our subsidising other EC countries at a later date?
Lord Mackay of Ardbrecknish: My Lords, I should jolly well hope not.
Lord Stoddart of Swindon: My Lords, can the Minister give an absolute assurance that, if we join a single European currency in the third stage of EMU, through taxation transfers we will not in fact be doing exactly what my noble friend suggested'?
Lord Mackay of Ardbrecknish: My Lords, both noble Lords raise a serious point of which we arc well seized. We, as a government, will certainly guard against any proposition that would enable some of our European friends who have not the same sensible pension provision as ourselves to tap into our taxpayers to make up for their shortfalls.
Lord Haskel: My Lords, can the Minister tell us what progress has been made in sorting out the problems referred to by my noble friend Lady Farrington, rather than simply telling us what are the Government's intentions?
Lord Mackay of Ardbrecknish: My Lords, as I said in response to the noble Baroness, Lady Farrington, the Securities and Investments Board introduced a programme; that programme is making progress. Certain problems arose involving insurance, but I understand that some of those have been resolved. Letters are going out and progress has been made.
It is worth underlining that not every personal pension was missold. For many people, unlike what the party opposite think, a personal pension was the only way for them to obtain a second pension. Either they were not employees or they were employees of companies which did not provide a personal pension. One wonders whether the Opposition would like people to have remained pensionless in those circumstances.

Business
Lord Strathclyde: My Lords, at a convenient moment after 3.30 p.m. my noble friend the Leader of the House will, with the leave of the House, repeat a Statement that is to be made in another place on the Northern Ireland peace process.
Audit (Miscellaneous Provisions) Bill
Brought from the Commons; read a first time, and to be printed.
Law Reform (Year and a Day Rule) Bill
Brought from the Commons; read a first time, and to be printed.
Non-Domestic Rating (Information) Bill
Brought from the Commons; read a first time, and to be printed.

Community Care (Direct Payments) Bill [H.L.]
3.13 p.m.
Report received.
Clause 1 [Direct payments]:
Lord Rix Lord Rix moved Amendment No. 1:
Page 1, line 10, leave out from ("services,") to the end of line 12.
The noble Lord said: My Lords, I make no apology for repeating the proposals for changes to this Bill by one deletion—Amendment No. 1—and one new clause—Amendment No. 12—in which I am supported by the noble Lord, Lord Addington, and which I tabled also at Committee stage.
I thought the sweet reasonableness of what I proposed would win immediate acceptance, as indeed it did from almost everyone except the Minister. The passage of time has not persuaded me that the changes I propose are other than reasonable. I am happy to note that People First, in the briefing it supplied, support me in my attempt to deprive the Government of the opportunity to behave unreasonably and stress the need to allow people with learning disabilities to have as great a say as possible in their own lives with appropriate support when necessary.
I say "Amen" to that. But I harbour an unworthy suspicion that the Minster will be minded to respond by pleading the incomplete consultation exercise to which I referred at Committee stage. Your Lordships will be aware that those who manage those matters on our behalf have not been minded to let us have our debate after the consultation period which, ironically perhaps, has the advantage that we are again contributing to the consultation.
As I should not like to think that your Lordships are debating matters today to no purpose, I shall remain optimistic. After all, this is a House in which reason tinged by passion is thought by some to have the edge on politics tinged by passion. My aim is now, as it has been from the outset, to ensure that those people with learning disabilities for whom direct payments are an appropriate means of securing community care services should not be denied that opportunity because local or central government are prejudiced against them. Moreover, I want those who are to be covered to be
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covered from the beginning and not to be considered some way down the line once others have had the new option for a year or two.
I note all that has been said about festina lente—testing the waters before plunging into them—but I am bound to say that, since local authorities will have complete discretion in regard to introducing schemes and discretion on an individual basis as to who is admitted to a scheme, a rush to destruction seems highly improbable. We are, I would guess, talking about a relatively small group and not, certainly in the shorter term, about a huge change in the services available.
We are all anxious to get this right. Given the experience already developed I suggest that the best way of getting it right is to allow the inclusion of modest numbers from a wide range of disabilities. I share the view of People First that there is a certain illogicality in testing a scheme on one group of people to see whether it works for other totally different groups of people. I beg to move.
Lord Addington: My Lords, briefly, Amendment No. 1 touches on one important fact. The noble Lord, Lord Rix, is talking about the rights of an individual, regardless of the label, to receive benefit and to direct that benefit to wherever he or she chooses to receive care and support.
It is true that the consultation period is not over; it is true also that we shall not be in a strong position at the end of that period to he able to make a realistic contribution to the Bill. Thus I recommend that the House listens to what is being said. All we are doing is trying to ensure that groups are not excluded. Surely that is something which is beneficial to all groups and will not be damaging to the general thrust of the Bill.
Lord Hayhoe: My Lords, the noble Lord, Lord Rix, was brief in his proposal of this amendment, as he had already spoken at Committee stage in like vein. I too hope to follow his excellent example.
We are seeing one of the inexorable laws of politics; that is, if a sensible, widely agreed and desirable reform is introduced, the Opposition could not possibly oppose it and say that either it was too little or too late. Indeed, the noble Lord, Lord Rix, used both arguments: "too little" because at the moment the scope of the Bill is limited, as we acknowledged when debating this matter at Committee stage; and, if the sort of group that he has particularly in mind comes in at a later stage as a result of consultation and fully in accordance with the provisions of the Bill which allow such extensions to take place, the "too late" argument is used.
I therefore reiterate that the Government have brought forward a useful and good piece of legislation. It would be right for us to give it a run as a new scheme, starting slowly in a modest and seemly fashion with proper monitoring. We should allow the monitoring to take place always with the possibility that, following on from the consultation and monitoring, the Government—without any primary legislation and within the provisions of the Bill—will be able to make provisions for the sort of extensions which the noble Lord, Lord Rix, has in mind. In those circumstances, the arguments

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are persuasive in supporting the Government, maintaining that flexibility and taking a sensible small step forward rather than perhaps trying to take too large a leap at this stage which could in the long run be against the interests of the Bill itself.
Baroness FaithfullMy Lords, I support the Government on the Bill, although in some ways I am sorry to oppose the noble Lord, Lord Rix, who does such splendid work for people with learning difficulties. With any new Bill, particularly a Bill like this which takes us into strange waters where we have not been before, there are bound to be difficulties. In fairness to those with learning difficulties, it is far better to know what those difficulties are so that people do not feel they have made a mistake in purchasing whatever it is they need and want. When working in a social services department I often found that someone with learning difficulties would come to me and say, "Why don't you help me?" One feels that one wants to help people with learning difficulties but one does not want them to make mistakes. There are bound to be mistakes at the beginning. It is far better for us to know what mistakes have occurred before giving them the opportunity to purchase these services.
Baroness Hollis of Heigham: My Lords, as the noble Lord, Lord Rix, said, the amendment seeks to avoid restricting the payment of money for the provision of services in advance and confining it exclusively, as the Government intend, to physically disabled people under the age of 65. That would mean that by category those with learning difficulties or adults over 65 with physical handicaps would be excluded from receiving direct payments. Whether they wished to or not, they would instead receive only services.
What is the nature of the Government's objection to the amendment? Local authorities, voluntary organisations and disabled people wish to see the possibility of direct payments being made to all disabled people. What is the nature of the Government's argument? It cannot be that the Government oppose the proposal on financial grounds. It is clear from all the research that for local authorities direct payments are cheaper than services. The average cost of direct payments is around £5 an hour; the cost of services, with overheads, is around £8 an hour. Direct payments are cost neutral and certainly far cheaper for local authorities than the alternative of offering residential care. So the Government cannot resist the proposal on financial grounds. Direct payments are likely to be cost neutral and may very well save us all money. So the argument is not one of cost.
What is the next government argument? It appears to be the floodgates argument, on which the noble Lord, Lord Hayhoe, touched. The argument is that local authorities would be overwhelmed and that therefore we should start slowly and gradually build up. That assumes that all local authorities are coming new to the issue of direct payments. They are not. Some schemes have been in operation for 14 years and already extend to far wider groups of disabled people than the Bill envisages. Without the amendment, in some local authorities fewer people will he eligible for direct payments as a result of the Bill than they are today. That is what it means. Some
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people will lose direct payments which they are currently receiving through third-party agencies and may have to go back to residential care—certainly the evidence of Kingston suggests this—even though they arc currently enjoying and experiencing direct payments from a well-run and well-managed scheme funded by the local authority. Far from the noble Lord, Lord Hayhoe, being right, he is profoundly wrong. The Bill will narrow and take away opportunities which disabled people are currently enjoying.
Is it true, nonetheless, that if the amendment were passed the floodgates would open? All the research shows that only a small proportion of disabled people are likely to want and to take advantage of the scheme. The suggestion is that only around 100 of every thousand physically disabled people under 65 are likely to take up direct payments. The number could be more—I hope very much that it will be—but that is the evidence so far. Far from local authorities being overwhelmed, the problem is much more that unless we have adequate support and advice systems in place they will be underwhelmed and will need to build up the confidence of disabled people to take up these packages. The Government need not fear the floodgate factor any more than they need fear the cost factor.
The third argument the Government have adduced has been repeated by the Minister's supporters on the Back Benches. It is that local government must go slowly and build up confidence. Local authorities are already running such schemes. There are 60 in existence. Most have a remit to help far wider groups of people than the Bill envisages. I have every confidence that directors of social services who are starting direct payment schemes from scratch will not seek to extend them to people beyond the capacity of their authority to deliver them. The directors of social services are not stupid. They will not arouse expectations which they cannot deliver. They will not try to encourage demand which they cannot meet. Being professional, skilled and highly responsible people, they will want to ensure that people's needs and people's demands and authorities' ability to cope are aligned.
What does the Bill as it stands do? What it does is stereotype. The noble Lords, Lord Rix and Lord Addington, are exactly right. The Bill says that irrespective of the needs, the abilities, the desires or competences of the individual person, the Secretary of State will say, "Certain categories of disabled people will be discriminated against. They will not be eligible to receive direct payments even though some of them are receiving them now." That is ruling out direct payments, not by assessment, not by judgment, not by demand, not by need, but by category and by discrimination. That is not proper. It is right that the local authority should exercise its professional judgment in conjunction with the needs and views of the disabled person. We do not need the Secretary of State double thinking the local authority. Trained professional social workers are always making fine and difficult judgments on issues like child abuse. We trust a social worker to make a judgment about child abuse but the Bill is saying that we do not trust a social worker to make a judgment about direct payments to disabled people who may

401
already be enjoying them. We do not need the Secretary of State to prejudge the situation in advance when local authorities wish to extend direct payments, when disabled people wish to receive them, and when it is at no additional cost and may very well save money for the taxpayer and council tax payer alike.
Let us not have discrimination by category. Let us recognise the human potential of every disabled person to be at the centre of the care system by organising services. Let us respect the local authority's professional judgment. Let us ensure that all disabled people who in the judgment of the local authority can benefit from direct payments and so take autonomy and control over their own lives are enabled to do so. Let us support the amendment today.
3.30 p.m.
Lord Campbell of Croy: My Lords, I and I believe others understand the principle that the Government follow in introducing a totally new system, except in Scotland, and taking certain categories to start with: that is to say, they do it gradually. No doubt that is what my noble friend will say in reply.
The noble Baroness, Lady Hollis, has raised a point to which I hope my noble friend will reply. Unless I misunderstood her, she indicated that the present local authority schemes, which were carried out through third parties, would come to an end. My understanding is that during the introduction of the new system local authorities will not have to bring to an end schemes that they have operated up to now. I should be grateful if my noble friend could comment upon the point. Is the noble Baroness right to suggest that at a certain stage the existing schemes will have to come to an end or, as I had supposed, will they continue while the new direct payments schemes are brought into effect? If that is correct, there should not be a situation where there will be fewer disabled people who receive payments than there are now.
Baroness Faithfull: My Lords, I did not understand one point in the speech of the noble Baroness, Lady Hollis. She placed responsibility on directors of social services to decide whether or not somebody should have something because he fell into a certain category. Since this a new scheme, is it not rather unfair to place that responsibility on directors of social services?
Baroness Hollis of Heigham: My Lords, with the leave of the House, I should like to respond to the question put by the noble Baroness, Lady Faithfull. Local authorities will be in very different situations under the terms of this Bill. Many local authorities have no experience of direct payments; others have run schemes for up to 14 years for categories of people which are wider than those currently envisaged by the Bill. When directors of social services come to construct schemes for direct payments within the framework of the Bill, they will extend it to such categories as they believe their local authorities are competent to handle. If there are currently third party schemes that give direct payments to people with learning difficulties, or people
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over 65, there is absolutely no reason on this earth why they should not feel competent to continue to do so. But, if they are new to the area and this is the first time that they have put their feet into the water, they may well wish to start with a more narrowly focused scheme. That is a judgment that must be made locally in the light of local experience rather than predetermined at arm's length by the Secretary of State, who does not know what the local situation is.
Baroness Hamwee: My Lords, just as the noble Baroness, Lady Faithfull, has no wish to disagree with the noble Lord, Lord Rix, I have no wish to disagree with her, but I think I do. Quite rightly, she refers to protecting people from making mistakes. I do not suggest that she says that in any paternalistic fashion. I know that she has the best of intentions to help those individuals to progress. However, at the last stage your Lordships considered whether the provision in Clause 1(1) for local authorities to make payments should be discretionary or mandatory. It is discretionary. The amendments proposed by the noble Lord, Lord Rix, and later by my noble friend Lord Addington, will not affect the discretion of the local authority to judge the individual case. It deals with discrimination against groups of people, to which this amendment is addressed.
The noble Lord, Lord Campbell of Croy, makes an interesting point. If local authorities are able to continue their current payments to individuals who may not fall within the categories that are to be approved, is it not ironic that others who are within those categories cannot be paid, if by their current actions those local authorities have shown that they are capable of dealing with categories of that type?
Baroness Gardner of Parkes: My Lords, can we be assured that anyone who is currently in receipt of a direct payment can continue to receive it? Will that not cover the point raised by the noble Baroness, Lady Hollis? I believe it has been said that these people receive the money from third parties rather than from local authorities. That tends to complicate the issue. I am not sure how that will affect the position. It seems to me that in many situations in life to put in a "no worsening" provision would cover it.
Lord Swinfen: My Lords, when we discussed this clause at Committee stage I suggested that it might be incompatible with the Disability Discrimination Act 1995. I am glad to say that my noble friend the Minister has written to say that expert opinion is that this Bill is compatible with that Act. Despite the legality of it, I have a feeling that the way in which this Bill is proposed to be put into effect is definitely against the spirit of the Disability Discrimination Act 1995. There will be discrimination if the payment of direct grant starts only for a certain category. What of the position of two cousins, one who receives a direct grant because he is just under the age of retirement and the other who will not receive it because he is just over the age of retirement, possibly by only a few days? I understand that once the grant has been agreed it will go on into the old age category.

403
The Independent Living Fund and the Independent Living (Extension) Fund have operated for a number of years, and have given direct grants. The lessons have been learned and can quite easily be disseminated to local authorities without direct experience. Local authorities talk to each other. Social security directors are in constant touch and talk of different problems and ways to overcome them. They learn lessons from each other and from their authorities. I believe that it would be for the benefit of disabled people and those in receipt of community care as a whole if everyone were to be included at this stage. The Bill is discretionary. It is up to local authorities to decide whether or not to make grants. It is also up to the individual whether or not he or she wishes to accept the grant. I strongly support the amendment.
Baroness Seccombe: My Lords, this is an exciting new scheme. As the noble Lord, Lord Rix, has said, all of us are anxious to get it right. Many authorities have wide experience but others do not. There will be a need for monitoring, which can be very time consuming. Although my heart says that in due course I should go with the noble Lord, Lord Rix, my head tells me that I should support the Government now.
Baroness Masham of Ilton: My Lords, I support what the noble Baroness, Lady Gardner of Parkes, has said. I hope that the Minister will answer her question.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, at the risk of boring your Lordships, I reiterate the views expressed by my noble friends today that direct payments are a new and a largely untested development. The Government want to see them introduced on a limited scale so they can see how they work and so local authorities have the best chance to make them a success. We propose to limit the scale by restricting the size of the potential client group. Amendment No. I would remove the power to do that.
The noble Baroness, Lady Hollis, said that some local authorities had been operating schemes through which payments were made to individuals and that they would find that experience useful. But the noble Baroness has also said that not all local authorities have that experience. Even those that do may find that the making of direct payments as part of mainstream community care brings new challenges for which they are not prepared. We cannot assume that local authorities are ready to hit the ground running. If we remove the power to limit eligibility, that is what we are asking them to do. I am concerned that by removing the ability to limit the eligible client group we shall actually hinder the implementation of direct payments. Some authorities which would be happy to offer direct payments on a limited scale may not feel ready to offer them to all client groups. They may then decide that they would prefer not to offer direct payments at all in order not to appear discriminatory.
My noble friend Lord Swinfen mentioned the Independent Living Fund. That experience is useful hut it is not directly applicable. The role of local
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authorities in relation to the Independent Living Fund is very different from the role they will be taking on in making direct payments. The Independent Living Fund fulfils a different role, with a different target population. By starting relatively small, we will enable local authorities to focus their attention on making direct payments work well. We are making no assumptions about whether people outside the initial eligible group would be able to manage direct payments, given the opportunity. That is why the client group we propose in the consultation paper does not exclude people with physical disabilities who also have learning disabilities. That is why if there is an age restriction we do not propose that people who have been receiving direct payments should cease to be eligible when they reach the age of 65. This is not about discrimination.
Our aim is to select a group of an appropriate size who are keen to take on this new freedom. Within the eligible group, the discretion over whether direct payments are appropriate for each individual remains with the local authority. Local authorities will be able to get used to direct payments with the limited group and the Government will be able to see clearly how they are working. As the noble Lord, Lord Carter, said in Committee, we are entering something of a minefield. We believe that by starting cautiously we shall build a firm foundation for the long-term future of this important new venture.
We are not suggesting, as I think the noble Lord, Lord Rix, believes, that making direct payments to a limited client group will give local authorities experience of every type of challenge they would face if eligibility were drawn more widely. But there are many aspects of managing direct payments which are the same whatever the particular needs or characteristics of the recipients. For example, local authorities will need to set up monitoring and accounting systems to keep track of the money. Limiting the client group will keep it on a manageable scale while people are getting used to the concept of direct payments.
We do not propose to reach a final decision on the client group before we have considered the responses we receive to the consultation paper. We have already said that we will consider carefully whether all people with learning disabilities should be eligible. Specifying the client group in regulations means that it can be adjusted without the need to amend primary legislation. I have given your Lordships an undertaking that we will keep the position under review once direct payments are available.
The noble Baroness, Lady Hollis, suggested that people on current schemes may lose the direct payments that they receive now. That point was also raised by my noble friend Lord Campbell of Croy and by the noble Baroness, Lady Masham. The Bill will not make existing schemes illegal. Those that are

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there now can continue. Therefore, there is no need to follow the suggestion of my noble friend Lady Gardner of including a "no-worsening" clause.
Baroness Hollis of Heigham: My Lords, does that mean that the Minister accepts in principle the argument that it is right for many disabled people (who are excluded on the face of the Bill) to receive direct payments but that she is asking local authorities, which she is trying to protect from bureaucracy, to have the additional bureaucracy of not only running their own schemes but funding extra clients through third-party schemes because they cannot include them in their own scheme? Is that a wise way of helping local authorities by making them fund direct payments through two systems simultaneously?
Baroness Cumberlege: My Lords, the purpose of the Bill is not necessarily to legalise existing ultra vires arrangements. That is not right. The purpose of the Bill is to lay down a practical framework for the future. It is for local authorities to ensure that their schemes operate within the law, but the Bill will not make existing schemes illegal. Those authorities which already operate such schemes can continue to do so.
I understand the desire of the noble Lords, Lord Rix and Lord Addington, to see direct payments being made available to everyone who wants to receive them and is able to manage them. Amendment No. 12 shows that those noble Lords do not want to see local authorities deciding not to offer someone direct payments on the basis of the nature or extent of their disability. In determining whether to offer someone direct payments, local authorities must take account of all relevant considerations. That would automatically include a person's wishes and ability to benefit from a direct payment. In addition, the Bill already explicitly requires that a direct payment can only be made with a person's consent. We must take great care when imposing restrictions of the kind set out in Amendment No. 12 on the way in which local authorities make those determinations. If the nature or extent of someone's disability is not relevant—
Lord Rix: My Lords, I am sorry to have to interrupt the noble Baroness and I thank her for allowing me to do so. But does that mean that local authorities can make such payments to people with learning disabilities under the Bill when it becomes an Act?
Baroness Cumberlege: My Lords, that depends on the responses that we receive to the consultation document. It would be very wrong of the Government to put out a document for consultation and to decide, prior to receiving responses, on the action that they wish to take. Sadly, the noble Lord will have to be patient a little longer.
If the nature or extent of someone's disability is not relevant to the authority's judgment of whether direct payments are appropriate for them, the authority could not take that into account in any case. But if those matters are relevant at all, authorities should be able to take them into account and it would be wrong to prevent them from doing so by this legislation. It is not a matter of
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discrimination but of common sense. Along with my noble friends Lord Hayhoe, Lord Campbell of Croy, Lady Faithfull and Lady Seccombe, I urge your Lordships to reject the amendment.
Lord Rix: My Lords, I am very grateful to those of your Lordships who have supported the amendments and perhaps not quite so grateful to those who have not. Perhaps I may respond first to the noble Baroness, Lady Faithfull. As I said in my introductory speech, nobody is suggesting that people with learning disabilities do not receive support and advice, where appropriate, in pursuing the question of direct payments. The noble Lord, Lord Swinfen, said that he had wondered whether the provisions breach the Disability Discrimination Act which we passed only last November. He has been assured that that is not so, yet the Minister said that the Government will be limiting eligibility—I should have thought that that was discrimination; that people could be included who had physical as well as learning disabilities—I should have thought that that too was excluding people with learning disabilities alone; and that local authorities might well be able to make such payments in spite of the Bill going through in its current form—that seems slightly inexplicable.
In Committee I complained that the consultation period could extend beyond this Report stage and I asked whether the business managers could arrange for Report stage to take place after the consultation period; otherwise all of us are speaking in a vacuum. However, I received a very gentle rebuke from the Minister who said:
"That is a question for the business managers. I certainly would not dream of giving such an undertaking".—[Official Report, 15/1/96; col. 380.]
I am afraid that we have seen the result today. There is a fairly even split on both sides of the House as to whether people with learning disabilities should be included in the provisions right at the beginning. There is no compulsion on local authorities to make direct payments, but that group of people must be included. I am speaking on behalf of a constituency of 1.2 million people with learning disabilities. That is a lot of people. I am not suggesting for one moment that they would all be in receipt of direct payments, but it is a very large constituency. Therefore, in view of my constituency and of those who have supported me, I have no option but to seek the opinion of the House.
3.49 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 107; Not-Contents, 113.

Division No. 1

CONTENTS

Acton,L

Barnett,L

Addington,L.[Teller.]

BirK,B

Allen of Abbeydale,L

Blackstone,B.

Allenby of Megiddo,V.

Borrie,L.

Annan,L.

Bristol,Bp.

Archer of Sandwell,L.

Broadbridge,L.

Avebury,L.

Bruce of Donington,L.

Bancroft,L.

Carmichael of Kelvingrove,L.

407

Chapple, L.

Mallalieu, B.

Clinton-Davis, L.

Mar, C.

Darcy (de Knayth), B.

Mar and Kellie, E.

David, B.

Marsh, L.

Desai, L.

Mason of Barnsley, L.

Donaldson of Kingsbridge, L.

Meston, L.

Donoughue, L.

Milner of Leeds, L.

Dormand of Easington, L.

Molloy, L.

Drogheda, E.

Monkswell, L.

Dubs, L.

Morris of Castle Morris, L.

Eames, L.

Nelson, E.

Falkland, V.

Nicol, B.

Farrington of Ribbleton, B.

Ogmore, L.

Fisher of Rednal, B.

Oxford, Bp.

Fitt, L.

Plant of Highfield, L.

Gallacher, L.

Prys-Davies, L.

Gladwin of Clee, L.

Richard, L.

Glenamara, L.

Ripon, Bp.

Gould of Potternewton, B.

Rix, L. [Teller..]

Graham of Edmonton, L.

Robson of Kiddington, B.

Gregson, L.

Sainsbury, L.

Grey, E.

St. Edmundsbury and Ipswich,

Halsbury, E.

Bp.

Hamwee, B.

Sefton of Garston, L.

Hanworth, V.

Shannon, E.

Harris of Greenwich, L.

Shaughnessy, L.

Haskel, L.

Simon, V.

Hayman, B.

Smith of Gilmorehill, B.

Healey, L.

Southwell, Bp.

Henderson of Brompton, L.

Stallard, L.

Hilton of Eggardon, B.

Stedman, B

Hollis of Heigham, B.

Stoddart of Swindon, L.

Holme of Cheltenham,L.

Strabolgi,L.

Howie of Troon, L.

Swinfen, L.

Hughes, L.

Taylor of Blackburn, L.

Hylton-Foster, B.

Thomas of Walliswood, B.

Jay of Paddington, B.

Thomson of Monifieth, L.

Jenkins of Hillliead, L.

Tordoff, L.

Jenkins of Putney, L.

Wallace of Saltaire, L.

Judd, L.

Walton of Detchant, L.

Kilbracken, L.

Wedderburn of Charlton, L.

Kintore, E.

Wharton, B.

Lawrence, L.

White,B.

Lovell-Davis, L.

Williams of Elvel, L.

McIntosh of Haringey,L.

Williams of Mostyn, L.

Mackie of Benshie, L.

Winchester, Bp.

NOT-CONTENTS

Aberdare, L.

Chesham, L. [Teller.]

Addison, V.

Clanwilliam, E.

Ailsa, M.

Clark of Kempston, L.

Alexander of Tunis, E.

Coleraine, L.

Ampthill, L.

Constantine of Stanmore, L.

Archer of Weston-Super-Mare, L.

Courtown, E.

Astor, V.

Craig of Radley, L.

Astor of Hever, L.

Cranborne, V.[Lord Privy Seal.]

Barber of Tewkesbury, L.

Crathorne, L.

Belhaven and Stenton, L.

Cuckney, L.

Beloff, L.

Cullen of Ashbourne, L.

Birdwood, L.

Cumberlege, B.

Blaker, L.

De Freyne, L.

Blatch, B.

Dean of Harptree, L.

Boardman, L.

Denham, L.

Boyd-Carpenter, L.

Denton of Wakefield, B.

Brigstocke, B

Downshire, M.

Brougham and Vaux, L.

Eden of Winton, L.

Bruntisfield, L.

Ellenborough, L.

Butterworth, L.

Elles, B.

Cadman, L.

Elliott of Morpeth, L.

Campbell of Croy, L.

Elton, L.

Carnegy of Lour.B.

Faithfull, B.

Carnock, L

Ferrers, E.

Chalker of Wallasey, B.

Father, B.

Charteris of Amisfield, L.

Fraser of Carmyllie, L

Chelmsford, V.

Fraser of Kilmorack, L.

408

Gage, V.

Mowbray and Stourton, L.

Gardner of Parkes, B.

Munster, E.

Geddes, L.

Murton of Lindisfarne, L.

Goschen, V.

Newall, L

Gray of Contin, L.

Noel-Buxton, L.

Hamilton of Dalzell, L.

Norrie, L.

Harlech, L.

Northesk, E.

Hayhoe, L.

O'Cathain, B

Hemphill, L.

Orkney, E.

Hooper, B.

Oxfuird, V.

Howe, E.

Park of Monmouth, B.

Huntly, M.

Rankeillour, L.

Johnston of Rockport, L.

Rawlings, B.

Knollys, V.

Romney, E.

Lindsay, E.

St. Davids, V.

Liverpool, E.

Seccombe, B.

Long, V.

Shaw of Northstead, L.

Lucas, L.

Shrewsbury, E.

Lucas of Chilworth, L.

Skelmersdale, L.

McConnell, L.

Strange, B.

Mackay of Ardbrecknish, L.

Strathcarron, L.

Mackay of Clashfern,L. [Lord Chancellor.]

Strathclyde.l.[Teller.]

Terrington, L.

Mackay of Drumadoon, L.

Teynham, L.

Macleod of Borve, B.

Thatcher, B.

Merrivale, L.

Thomas of Gwydir, L.

Mersey,V.

Trefgarne, L.

Miller of Hendon, B.

Trumpington, B.

Milverton, L.

Wade of Chorlton, L.

Mountevans, L.

Westbury, L.

Resolved in the negative, and amendment disagreed to accordingly.

Northern Ireland
4 p.m.
The Lord Privy Seal (Viscount Cranborne): My Lords, with the leave of the House, I shall now repeat a Statement on the Northern Ireland peace process made in another place by my right honourable friend the Prime Minister. The Statement is as follows:
"With permission, I will make a Statement on the bomb explosion in the South Quay area of London last Friday, the declared end to the IRA ceasefire and the implications for security and the peace process in Northern Ireland.
"There is no doubt the evil act in London was the work of the IRA. It has all the hallmarks of their operations with the callous sacrifice of innocent lives. The bomb followed shortly after an IRA statement, given to the Irish broadcasting organisation on the evening of 9th February, that the complete cessation of hostilities ordered in August 1994 was now at an end. The IRA admitted its responsibility on 10th February.
"The facts of the incident are briefly these. Around 17.45 last Friday warning calls were made that a large bomb had been placed at South Quay Station, Marsh Wall in London. Local police arrived at the scene shortly after six o'clock, and anti-terrorist branch officers shortly after that. At around 18.30 a suspect vehicle, a Ford flat-backed lorry, was identified, and the immediate area cleared. While the area was being evacuated, the vehicle exploded, causing extensive . damage to buildings in the area, and a large number
of casualties.

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"Two people were killed, and 43 injured, two critically. Three police officers were among the casualties. The House will join me in extending our deepest sympathy to all the innocent victims and their families. It is little short of a miracle that the casualty list was not much longer. I would like to pay tribute to the efforts of the emergency services. Despite being hampered by a fractured gas main at the scene, they responded magnificently and they richly deserve all our thanks.
"This may not be the last such atrocity. More may follow, both here in the mainland and in Northern Ireland, if the IRA ceasefire is not renewed. We will do all we can to prevent them and to catch all those responsible. The protection of the public will be our first priority.
"In Great Britain, security has immediately returned to pre-ceasefire levels. In Northern Ireland itself, we had been careful from the very first moment of the ceasefire to take no irreversible steps to downgrade our security capability. All necessary measures to cope with the present situation are now in place. The RUC is on full alert. We have sought to make an appropriate and proportionate response to the increased threat without disrupting daily life more than necessary.
"The IRA has brought the 17 month-old ceasefire to an end. There is no shred of an excuse for this return to violence, least of all now, when all-party negotiations were clearly in sight.
"After the August 1994 ceasefire declaration, we called repeatedly on the IRA to make clear that it was permanent, despite criticism by some for doubting IRA good faith. We did doubt its good faith, and the IRA did not say it was permanent. Nonetheless, after a prudent period of time, in order to move the process forward, we were prepared to act on the working assumption that the ceasefire would last.
"In the months that followed we reduced the more visible and inconvenient aspects of security. We took soldiers off the streets and opened all the border crossing points. We did everything possible to create new jobs in Northern Ireland through renewed inward investment and helped to produce a remarkable economic upsurge. We talked to Sinn Fein leaders at official and ministerial level. We constantly sought to move the peace process on to the all-party negotiations that everyone agrees are necessary.
"No one—no one—took more risks for peace than this Government. But we never lost sight of the fact that the IRA commitment had not been made for good. No responsible government could have done otherwise. That was why we and others saw a start to the decommissioning of illegal arms as a way of creating confidence in Sinn Fein's acceptance of democratic peaceful methods, and showing that the violence really had ended.
"But all the time that Sinn Fein were calling for all-party talks, we knew that the IRA continued to train and plan for terrorist attacks. Punishment beatings and killings continued. It remained ready to
410
resume full-scale terrorism at any time. We could never be confident that its behaviour was that of an organisation which had decided to renounce violence for ever. This was not a true peace.
"I regret to say that the events of last Friday showed that our caution about the IRA was only too justified. The timing of the return to violence may have been surprising. The fact that violence could resume was not.
"We must now continue the search for permanent peace and a comprehensive political settlement in Northern Ireland. Let there he no doubt that the Government's commitment to this is as strong as ever.
"We will work for peace with all the democratic political parties and with the Irish Government. But a huge question mark now hangs over the position of one of the parties: Sinn Fein. Its leaders have spoken often of their commitment to peace and peaceful methods. But they have always ducked and weaved when they have been questioned about the IRA and their methods. After the events of last Friday, their ambiguity stands out starkly.
"The test for eligibility to take part in all party negotiations was set by the British and Irish Governments in paragraph 10 of the Downing Street Declaration: they should be democratically mandated parties which establish a commitment to exclusively peaceful methods and which have shown that they abide by the democratic process.
"Sinn Fein's leaders claim that they did not know about the bomb at South Quay and the IRA's ceasefire statement. But they have refused either to condemn or to dissociate themselves from either. Sinn Fein must decide whether it is a front for the IRA or a democratic political party committed to the ballot not the bullet. Meanwhile, one thing is clear: in the absence of a genuine end to this renewed violence, meetings between British Ministers and Sinn Fein are not acceptable and cannot take place.
"That is also the position of the Irish Government. They have made it clear to Sinn Fein that their attitude and willingness to meet at political level will be determined by whether the IRA ceasefire is restored. We and the Irish Government are at one on this: the ball is in the court of Sinn Fein and the IRA, if indeed that distinction means anything. It is for them to show, through their words and actions, whether they have a part to play in the peace process or not. I am not in the business of slamming doors; but the British and Irish peoples need to know where Sinn Fein now stands.
"The people of a democracy are not passive spectators to events. They have the right to make their views clear on issues like this. The people of Northern Ireland, from both communities, have consistently done so. The popular will for peace has never been clearer. The peace process will go on. I commend all those who have had the courage and sense, in the face of this latest atrocity, to work to prevent a wider return to violence.

411
"My right honourable friend the Secretary of State for Northern Ireland and I have met all the parties in the last two weeks. This process will he intensified with those parties which have not, for the present, disqualified themselves. The aim is, as it has always been, to establish the necessary confidence to enable negotiations between all the parties to start.
"I want everyone to be absolutely clear on this point. The objective of all our actions and policies before and since the ceasefire has been to get to a position where all constitutional democratic parties can get round a table together. Everything else is a means to that essential end.
"I told the House on 24th January that, if the paramilitaries would not start decommissioning their illegal arms, one alternative way forward was through elections to give the electoral mandates and confidence which could lead straight, and straightaway, to negotiations. As proposed by the Mitchell Report, decommissioning could go ahead in parallel with those negotiations.
"The proposal has been consistently misrepresented by Sinn Fein and misunderstood more widely. I repeat now that its purpose is to lead directly and speedily to negotiations between all parties committed to peaceful and democratic methods, aimed at reaching a comprehensive political settlement. An elected body would have to be broadly acceptable and would be strictly time limited. I am not proposing an assembly with legislative and administrative powers. Any suggestion of a return to old-style Stormont rule is manifest nonsense.
"The proposed elections are a door to full negotiations. I continue to believe that they provide the most promising opening available. We will pursue the proposal and seek to persuade all concerned that it is indeed a way forward, not a means of delaying progress.
"Our ideas are still in discussion with the parties; but I do want to assure the House that there are ways forward to negotiations with all the parties, and that these could include Sinn Fein but only, of course, if there is an unequivocal return to the ceasefire.
"Others have ideas too, including the Irish Government. Our minds are not closed. Nor, I know, are theirs. I have talked to the Taoiseach twice since the bombing. We plan to meet in London soon to discuss all the possibilities. I intend to find a way through to the negotiations with all those committed to democracy.
"The peace process in Northern Ireland has received a serious setback from the men of violence. But it is not over, not by any means. We have seen the benefits of what has been achieved since the ceasefire: the freedom to live and work normally, and to enjoy life; increased prosperity and new jobs; and new hope for the future. These must not be thrown away.
"This Government will not be deterred by terrorism. The people of Northern Ireland have tasted peace, a peace that changed their lives. I have told the House before that I will leave no stone unturned in
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the search for peace. That is true today and will remain true in the future. The people of Great Britain and Northern Ireland deserve no less".
My Lords, that concludes the Statement.
4.13 p.m.
Lord Richard: My Lords, perhaps I may begin by thanking the noble Viscount the Leader of the House for repeating the Statement made by his right honourable friend the Prime Minister in another place. As the noble Viscount underlined, this is a sad day and a grave occasion. When we adjourned last Thursday, I do not believe that any of us could conceivably have expected that today we would have to listen to a Statement of this nature. Perhaps I may express once again—that is, if it needs repeating—our total condemnation of this unjustified and unjustifiable action by the IRA. I join the noble Viscount in expressing our deep sympathy and condolences to the families of those who were so tragically killed, and also to all those who were injured in the attack.
Listening to the Statement, I cannot help reflecting that it is fortuitous that the death toll was not a great deal higher. The fact that it was not was hardly due to any deliberate moderation on the part of the IRA. To explode a bomb of that size in such an area at 7 o'clock on a Friday evening, the intention must have been to cause casualties.
If we are all saddened by the ending of the ceasefire, we must now ask ourselves: where do we go to from here? The peace process has been gradual. Given the historical background, it could not have been otherwise. Indeed, getting the peace process off the ground in the first place was an historic achievement for all concerned. It is possible that progress has not been fast enough for some; perhaps a little too fast for others. However, there is no excuse for renewed violence by the IRA. As a matter of priority, Sinn Fein must give an unambiguous guarantee that it is committed to the peace process.
We on this side of the House have always supported the Government in their policies towards the peace process. That support is again forthcoming today. This is not the time to apportion political responsibility for the breakdown, and I do not intend to go down that particular road today. There will be plenty of time for analysis and consideration in the future. I merely express the hope that the Government will succeed in relaunching the peace process and that this severe setback will not prove fatal. It may require new thinking and a change of attitude by some of those most closely involved. If that is what is necessary, I hope it will be forthcoming.
The Government are consulting closely with the other parties involved. I reiterate our view that it is vital that the two governments proceed together. The co-operation and the co-ordination so far have on the whole been impressive. It is crucial that that should continue. Secondly, I re-emphasise—if it needs re-emphasising—that it is now for Sinn Fein to establish its commitment to a peaceful process for change. Thirdly, we should not forget the people of Northern Ireland. It is they who

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have suffered much in the past; it is they who are watching apprehensively the events taking place today with mounting concern as to what the future might bring. I believe that we owe it to them to use every endeavour to resume the search for peace.
Lord Jenkins of Hillhead: My Lords, my experience in making statements after terrorist outrages—which, 20 years ago, I did with depressing frequency when dreadful incidents in Birmingham, Guildford and the Tower of London followed fast on each other's heels—has led me to the view that little constructive is likely to emerge from such aftermath exchanges. Indeed, they are liable to become almost a competitive exercise in expressions of the horror that we all feel. Therefore, I propose to be brief.
Friday night's bomb was a bitter disappointment, although not, perhaps, an entirely unexpected one. Even if it marks—which I hope it does not—the end of the phase of hope, 17 months without violence has been gained. That in itself fully justifies the effort. But those 17 months have also underlined just how heavy would be the price of returning to the old pattern of intermittent horror. The price for Belfast above all but also for London and other major English cities, and perhaps even for Dublin, would be very heavy. It is not just the threat of death and mutilation, but the return to a whole dreary regime of life under semi-siege, symbolised by the reappearance of armed check-points in the City of London.
I hope and believe that the Prime Minister will make every effort to put the peace process back on the rails. I welcome the assurances to that end in the Statement. However, I am disturbed by the gap which has opened between the British and the Irish governments. The Irish Government are clearly deeply affronted by what Sinn Fein/IRA have done. But that has not brought them closer to London.
When Mr. Major announced his attitude on the Mitchell Report on 24th January, I, together with nearly everyone else, endorsed his proposal for Northern Ireland elections. I believe that I was wrong to do so. At any rate I was wrong to endorse such an exclusive concentration on the electoral route. It was a mistake to single out that one aspect of the Mitchell package, particularly as the problem of Northern Ireland is not that of identifying the majority—everyone knows what the majority is—but the infinitely more subtle and historic problem of getting that majority to live in peace and mutual tolerance with the large minority, and indeed vice versa. In the peculiar circumstances of Ulster, just counting votes will not do that.
Finally, disunity between the Irish and the British governments could be just as damaging to the peace process as bombs and bullets, deplorable though they are and devoutly though I hope that the ceasefire will be renewed.
Viscount Cranborne: My Lords, I am extremely grateful to both noble Lords who have spoken for the spirit in which they have approached the tragic events of last Friday. The noble Lord, Lord Jenkins, doubted
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the value of what he called these aftermath exchanges. I have to admit to a degree of sympathy with what he said. Nevertheless, the fullhearted support which the noble Lord, Lord Richard, and, with one exception—to which I shall return in a minute—the noble Lord, Lord Jenkins, have given this afternoon is enormously helpful to Her Majesty's Government in expressing the united horror of the British people to terrorist methods which are wholly alien to the traditions of parliamentary government in this country.
I, of course, wholly endorse the condemnation that both noble Lords gave, and I need not report that. However, I wish to underline something which my right honourable friend said in his Statement and to which the noble Lord, Lord Richard, drew attention a moment ago. Someone up there was watching over the East End of London. It does not make it any better for the dead and the injured but we were extraordinarily lucky not to have suffered more severely than we did. I wish to emphasise how much we owe to the courage of the police and of the rescue services, particularly of the police who with reckless disregard for their own safety cleared the area and investigated it to discover where the bomb was.
Noble Lords: Hear, hear!
Viscount Cranborne: My Lords, I am delighted to hear that the House wishes to be associated with those remarks. The noble Lord, Lord Richard, made an important point when he emphasised that it is for Sinn Fein to establish once again its commitment to peaceful methods. Bombs create a reaction. The danger always has to be that if one explodes a bomb one will ultimately encourage other people to start doing so in return. It is not only viciously dangerous for the victims but it is also viciously dangerous for the future of parliamentary government in our country. I am delighted to hear the noble Lord, Lord Richard, associate himself so eloquently with that principle this afternoon.
The other point the noble Lord made is one that I also wish to associate myself with. Anyone who has visited Northern Ireland since the declaration of the ceasefire will, I suspect, be more struck by one phenomenon than any other; and that is the extraordinary change of atmosphere that has taken place over the past 17 months. It is not only the remarkable economic changes that have begun to occur, many of which have been directly encouraged by my noble friend Lady Denton who is responsible for these matters in the Northern Ireland Office, but also the almost spontaneous way in which those who are responsible for domestic industry, commerce and inward investment have realised what an admirable place Northern Ireland is, without the bombs, for industry and commerce to flourish. It has taken little time for peace to enable that to happen.
The noble Lord, Lord Richard, emphasised that the two governments in Dublin and London should proceed together. It is clearly important that that should happen and I wholly endorse that wish. My right honourable friend in his Statement made it perfectly clear that he has been in contact with the Taoiseach since the explosion of the bomb. I can certainly undertake on

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behalf of my right honourable friend and on behalf of Her Majesty's Government that we shall endeavour, as best we can, to ensure that Dublin and London can proceed together and can promote the democratic principles which we both hold dear.
I return to the query of the noble Lord, Lord Jenkins, with regard to whether we were right to place so much emphasis on the electoral route. It might just be worth asking your Lordships what the practical consequences are of no talks happening at all. The practical consequences of no talks are a continuation of the horrors that the Province has endured since 1969. If talks are to happen, they have to include all parties who are committed to parliamentary government and democratic principles. It is no good for—to name names—the SDLP to be prepared to turn up under certain circumstances if the Unionist parties are not prepared to turn up. The same is true—if I may say so—vice versa.
How are we in practical terms to find a way for all-party talks to occur? There may be other ways than the electoral process. If there are other ways which can produce that result, we as the Government are entirely prepared to look at them in the most constructive way possible. As my right honourable friend constantly says, there is no question but that we are open to all suggestions. However, one thing is perfectly clear. If we are to produce a settlement, it must be a settlement which enjoys the consent of the people of Northern Ireland—the people of both main traditions. We have a way in this country by which we have managed in the past—not always perhaps elegantly, but on the whole successfully—to secure that consent by which governments have acquired the authority to govern, and that is through the ballot box.
If an elected body, which is elected through the ballot box, were to come into existence—as I made clear on the previous occasion that I stood at this Dispatch Box talking about Northern Ireland matters—and if options are open to negotiation about how we should proceed to negotiate from the existence of that body, and just supposing that the body itself agreed to mandate certain delegations from among its membership to take part in all-party talks, then at least those who negotiated would clearly have the consent of those who had elected them. I would merely say to your Lordships that that consent is one which I, for one, would be much happier to stay with than the consent which had been bludgeoned out of people by the explosion of bombs made of semtex.
4.29 p.m.
Lord Eames: My Lords, I assure the House, in line with the Statement we have just heard and the comments from the noble Lords, that nowhere in the United Kingdom has the disgust, the anger and the frustration at the events of Friday been more obvious than in Northern Ireland. I wish to assure this House that from a Province which for 25 years has suffered the hardship, the cruelty and the unending hurt of terrorist attack, that is a sentiment which was spontaneous. It came from Roman Catholics, Protestants, nationalists and unionists, and it came from north and south of the border. I wish to
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assure the House that those who carried out the atrocity on Friday did not have the mandate of the vast majority of the people of Ireland.
Secondly, on behalf of so many to whom reference has been made perhaps I may use this opportunity to express feelings of sympathy and sorrow to the relatives of those who lost their lives and to those who were so horribly injured. However, as we were so rightly reminded a few minutes ago, we must look ahead. I do not believe that the peace process is dead. I base that remark not just on political niceties but on what I know from my day and night ministry in the Province to be the yearning and feeling of ordinary people who, for a considerable number of months, have enjoyed a sense of freedom that some of them had never known.
Behind the headlines so much that is good and worthwhile has been achieved across the traditional gaps in society. Many noble Lords who have served in Northern Ireland or who have had contact with it will know that incredible cross-community contacts have been made possible during the period of peace. Because of that and because of the overwhelming feeling of disgust and disappointment at this moment, I am absolutely convinced that the House must be reminded that there are two sides to the peace process. First, there is that referred to by the Prime Minister in terms of contacts between governments and political parties. Secondly, there is the ongoing battle for the hearts and minds of the people. To a large extent, that battle has been won. I plead with the House to give every encouragement to the peacemakers who, with great personal courage, have achieved so much.
I echo the plea that the British and Irish Governments do everything possible to ensure that they are perceived to be acting in concert. Nothing plays into the hands of those who wish to dissuade the process of peace so much as the perception of division. There will he differences of approach; I beg and pray that they are minimised.
As expressed so frequently in this House with compassion, knowledge and understanding, trust has been the real casualty of the past 25 years. I appeal to paramilitary organisations which have made certain statements, particularly over the weekend, not to be drawn into the trap that is being set for them of retaliation or of becoming involved in attacks elsewhere. Through their political representatives they have shown surprising political knowledge and foresight. I beg, on behalf of so many people in Northern Ireland, that they do not fall into that trap.
In thanking the Prime Minister for his Statement, perhaps I may ask that, if it turns out that an elected assembly or forum is the right process to adopt, the formula for it will be definite, clearly stated and full of reassurance to the nationalist community, and that it will be elected for a limited, set period to do its task.
Viscount Cranborne: My Lords, I do not believe that the House could have been treated to a more authoritative or respected voice on this occasion and we are indeed fortunate to have the noble Lord adding to our deliberations today. I must be brief because many noble Lords wish to speak. I wholly take on hoard what

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the noble Lord said about the entire population of the island of Ireland being disgusted. I wholly agree that we must look ahead. As my right honourable friend said, we do not believe that the peace process is dead. Indeed, it is important that we ensure that the terrorists should not be able to demonstrate that they have a veto on the peace process. A minority of the population of Northern Ireland should not be allowed to dictate to the majority by these unacceptable methods.
I too pay tribute to the cross-sectarian achievements which the noble Lord mentioned. That has been one of the most dramatic developments not only during the past 17 months but, in certain areas of the Province, well before the peace arrived. As we are all well aware the noble Lord, Lord Eames, has made his own contribution to that.
I accept, as did my right honourable friend, that it is absolutely essential that the two Governments should proceed in tandem. As I have made clear in previous Answers, we will do our utmost to make sure that we keep the Dublin Government as fully informed as we are able about what we intend to do and that there should be no surprises as far as they are concerned. I also associate myself with the noble Lord's comments about paramilitaries from the other side of the divide. I hope only that the restraint and wisdom that they have shown so far will continue.
Lord McConnell: My Lords, I too welcome the Statement and join in the condemnation of this most callous and brutal bombing which has taken place in the City of London. I join in paying tribute to the emergency services and extend condolences to the relatives of those who were killed and to those who were injured.
The one thing that we must be quite determined about is that the Government do not give way to violence. The proposal that there should be elections may be right or it may be wrong. Personally, I am convinced that they are right. However, no matter which, it would be a great weakness on the part of the Government to give way and to say, "We are not going to have elections as a result of this bomb". That would point out a way for the future; that if you really want something you plant a bomb or indeed several.
I was disappointed to hear the Prime Minister of the Irish Republic say that to proceed along the course of elections would be adding petrol to the flames. I hope that he will reconsider that comment because it means that one should give way to terrorism. One can give way to argument and to democratic voting but I hope that we shall never give way to terrorism. Therefore, I hope and trust that the Government will stand firm against any menaces of this kind which are meant to produce political ends. I was glad to hear the noble Viscount the Lord Privy Seal say that the Government would not negotiate with Sinn Fein until it is clear that it has given up violence for good.
Viscount Cranborne: My Lords, I am grateful to the noble Lord. I believe that perhaps the Provisional IRA is under the strong misapprehension that exploding
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bombs in London or in the Province of Northern Ireland will induce Her Majesty's Government to change their stance. I hope that the events of the coming days and weeks will disabuse it of that; and that it will realise that the only way in which it can participate in the government of the Province and of the political processes of the United Kingdom is through the use of the methods which we ourselves employ through the constitution of this country.
Lord Eden of Winton: My Lords, while the Prime Minister's personal and passionate commitment to peace has been further underlined in the Statement read to this House, will my noble friend take this opportunity roundly to condemn the calumny which was given widespread currency over the weekend: that the Prime Minister had somehow devised a series of obstacles designed to hinder progress towards peace which in its turn justified the fiendish and cowardly action by the IRA?
Viscount Cranborne: My Lords, of course. We must be well aware in this House that there is only one organisation responsible for last Friday's outrage, and that is the IRA itself. No matter how many arguments others may have against the approach of this Government to the peace process, such arguments could never justify the use of bombs and bullets.
I must emphasise that if Sinn Fein were as truly committed as it claims to be to exclusively peaceful methods it would, after all, accept that and condemn the IRA for its actions on Friday and for calling an end to its ceasefire. I have yet to hear such a condemnation.
Lord Fitt: My Lords, the massive wave of revulsion which has swept these islands since last Friday must surely indicate to the IRA that however many bombs it lets off here or in Ireland, or however many people it kills, at the end of the day it cannot succeed in bludgeoning a democratic people to accept its demands.
However, I believe that that should be made clear, and as yet it has not been made clear. In his original comments on the Mitchell Report, the Prime Minister laid stress on the elective process. He should have laid even greater stress on the six principles enunciated by Senator Mitchell. Those principles make it very clear that anyone who does not accept a rejection of violence has no part in the democratic process.
I have fought many elections in Northern Ireland. While in this present atmosphere I have slight reservations, I am of the opinion that if an election were held, and every candidate had either to reject or accept those six democratic principles enunciated by Senator Mitchell, it would give a clear indication that the people of Northern Ireland either accepted or rejected violence. That is what the six principles are about.
It has been most importantly stated this afternoon that day in and day out it should be made clear to the Nationalist population in Northern Ireland that there is to be no return to Stormont. Those who are opposed to these elections—Sinn Fein and others—are stressing that that is the real purpose behind the process.

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As regards the noble Viscount's remarks, Sinn Fein has said that it cannot condemn this atrocity because it would lose credibility with the IRA. If it does not condemn this atrocity, it will lose credibility with all free democratic people in these islands.
I freely support all those who say that the peace process is not ended. It will take a Herculean effort by all concerned to bring it back from the death throes in which it has been placed. But I believe that we can succeed in replacing it again.
Viscount Cranborne: My Lords, I am most grateful to the noble Lord. His personal experience of being a victim of terrorism is probably greater than any of us in this Chamber.
He is right about the six principles. They are six principles which the Government immediately accepted on publication of the Mitchell Report. I am happy to reiterate our commitment, and to draw the House's attention to Senator Mitchell's suggestion not only that all parties should sign up to those six principles but (and I quote the word he used) that they should also honour them. I believe that the noble Lord made his point far better than I could have done.
As the noble Lord will have noted, my right honourable friend emphasised—he said that we should all emphasise it and I am happy to repeat it now—that what is proposed in the possible elected body which is for discussion (which we do not insist on but it seems to be the only realistic possibility open to us at the moment in the absence of any other suggestion) does not mean a return to Stormont. It is a body whose purpose is clear: to form a basis for teams to negotiate on an all-party process. I am grateful to the noble Lord for giving me the opportunity of repeating that.
Lord Holme of Cheltenham: My Lords, the noble Viscount the Leader of the House rightly referred to public opinion in Northern Ireland. It is absolutely crucial in the coming hours, days and week or so, that the revulsion expressed in this House is expressed in every quarter in Northern Ireland, and that it finds a focus. The focus must be, "Give us back our peace". The focus must be a message to the IRA that the people of Northern Ireland will not tolerate a reversion to the dark ages through which they have lived.
In that context, will the noble Viscount refer to the constructive role that the President of the United States could play in that respect? Many fears have been expressed in this House and elsewhere that the role of the American Administration might not be constructive in Northern Ireland. I believe that it has been very constructive. The visit by President Clinton to Northern Ireland showed the most extraordinary outpouring of popular sentiment for the peace process. Are Her Majesty's Government working with the American Administration to make sure that in the days to come the White House will not return to any semi-flirtatious relationship with Sinn Fein but will focus all its efforts on trying to mobilise opinion in Northern Ireland behind a resumption of peace, let alone the peace process?
Viscount Cranborne: My Lords, I am most grateful to the noble Lord for enabling me to answer that point.
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Of course we welcome the constructive role that the United States has played and continues to play. Any further contribution that it can make along the same lines would he extremely welcome.
The main message that we need to get across is exactly the one that President Clinton expressed so eloquently to the men of violence when he was in Belfast. I believe that I quote him exactly in saying: "You are of the past. Your time is gone".
As the former most reverend Primate of all Ireland said a moment ago, the people of Northern Ireland, above all, can make it plain that this kind of behaviour is no longer acceptable to them.
Lord Beloff: My Lords, my noble friend referred to the undesirability of circulating reports which suggested that there could ever be any political reason for a resort to mass violence. Is the Minister aware that in the course of bulletins over the weekend the BBC consistently pressed people to give precisely that kind of answer? If he will not take my word for it, I am sure that a transcript of yesterday's lunch hour programme on Radio 4 would give him ample evidence.
Viscount Cranborne: My Lords, I was not fortunate enough to listen to that programme. However, I can give my noble friend the undertaking that I shall certainly examine what he said and write to him.

Community Care (Direct Payments) Bill [H.L.]
4.48 p.m.
Consideration of amendments on Report resumed on Clause 1.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 2:
Page 1, line 12, at end insert ("or
( ) the Secretary of State agrees to a representation from an authority that it wishes to exercise its discretion to make payments under this section to any person or persons who are willing and able to secure the provision of their own services,").
The noble Baroness said: My Lords, this is a compromise amendment. We on these Benches would prefer that the Minister did not restrict the categories of people eligible to receive direct payments. We would prefer that all disabled people who might benefit from them should be free to do so. However, the House voted very narrowly indeed to reject the amendment moved so ably by the noble Lord, Lord Rix. The Minister argued basically that the scheme should be phased in gradually so that local authorities should not be overwhelmed. We hope that Amendment No. 2, a fall-back amendment, will be acceptable to the Minister or that she will bring forward her own version.
What does the amendment do? It takes for granted that the local authority would have the power to make direct payments to physically handicapped people under 65, as the Government and the Bill envisage. The purport of the amendment is that, in addition, local

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authorities would also be able to seek consent from the Secretary of State to extend direct payments to other categories of people within their own local authority. To receive such consent from the Secretary of State, the Minister would have to be satisfied that local authorities were experienced and competent in running direct payments, that they would not be overwhelmed and that it would be a sensible action to take.
What are the advantages? First, some 60 local authorities have been running direct payment schemes in some form or another for up to 14 years. Local authorities are not all starting from the same point. Some are experienced and have led the campaign for direct payments; for others, it is a new venture. If local authorities come in with different experiences, why treat them all the same? Why not recognise that difference as a source of strength? The amendment would ensure that all local authorities would be able to make direct payments to physically handicapped people under 65, but that where the Minister was satisfied that an experienced local authority could expand the scheme he would have the power to give consent for it to do so. For example, 10,15 or 20 of the 140 local social service authorities might seek that consent, and the Minister might agree. That would mean that the Government benefit from a willing pilot group from which both the Government and other local authorities could learn before a more general extension of the scheme is contemplated.
One of the difficulties, particularly in social security and health legislation, is that national legislation reduces the opportunity to learn from feedback, to start pilot schemes and learn from them. The amendment would allow us to learn from feedback, both central government and local authorities. That must be useful.
Secondly, I emphasise that not only are all local authorities starting from different positions and therefore the amendment would give flexibility, but also the Secretary of State must be satisfied that local authorities would be right to take on that power. The Minister will only be satisfied if local authorities are clearly competent to do so and there can be no question of them being overwhelmed or failing to deliver. The right of consent remains firmly with the Government, they control the speed.
The amendment allows the Government to empower local authorities to extend their scheme. Without such an amendment, the Government may unnecessarily tie their own hands until they bring new regulations into force. With the amendment, the Government control the pace, speed and size of any advance beyond the original category. The Government have nothing to lose. They could say "no" to every request if they thought it wise to do so. The amendment would equally give the Government power to say "yes" to those requests which they believe are sensible and appropriate.
Thirdly, if the Secretary of State agreed, the amendment would meet the problems on which we have already touched of local authorities which are already making direct payments to a larger group than the Bill envisages. Some 60 local authorities make direct payments. Most have restrictions of one kind or another,
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but many go beyond the range of the Bill. We have discussed what may happen to disabled people. The Minister said that they may continue to receive payments through third party schemes. That means that, instead of running one scheme, an experienced local authority has to run not only its own scheme but fund and organise a second third party scheme, doubling rather than reducing the amount of bureaucracy. With our amendment and with the consent of the Minister, the local authority could bring all those it deemed eligible within the framework of one straightforward scheme.
The amendment is modest, sensible, cost-free and is a fall-back amendment on the one which the House so narrowly rejected. It would allow the Secretary of State to agree that individual local authorities could extend the range of their schemes. It would not hold back progressive and experienced local authorities and force them to go at the pace of the newest and slowest local authority. In the process, we would all benefit. It is a win-win amendment. The Secretary of State would benefit from having a pilot scheme on the ground. The local authorities would benefit because they could exercise their discretion according to their experience, with the consent of the Secretary of State. Disabled people would benefit. I hope that the House and the Minister will accept the amendment or that the noble Baroness will come back with something broadly similar. I beg to move.
Lord Hayhoe: My Lords, before the noble Baroness sits down after moving the amendment, perhaps she can answer a question. She said that, through the Secretary of State, the Government could reject every request. In those circumstances would all the decisions be subject to judicial review or application for judicial review?
Baroness Hollis of Heigham: My Lords, I shall have to take advice on that, I do not know.
Baroness Darcy (de Knayth): My Lords, I warmly support the amendment and was delighted to add my name to it. I am not at all happy with the Government's proposals to limit direct payments to physically and sensorily disabled people under 65, nor am I happy with any other possible groupings in the consultation paper. They all have drawbacks. I voted for the amendment of my noble friend Lord Rix because it is hardly logical merely to include people with learning difficulties if they also have a physical and sensory impairment, as the Government propose. It would be difficult to justify that in practice when dealing with real people in their homes. I do not like the idea of distinguishing between physically and sensorily disabled people on the one hand and people with learning difficulties on the other, singling out one group for special treatment.
Ideally, direct payment should be payable to all adults who are willing and able to manage them, with help if necessary and with no age limit. Local authority staff who have direct contact with the individual people concerned are in the best position to decide whom to include. However, as the noble Baroness said, the amendment is a sensible half measure to allow the Government, in regulations, to limit direct payments but

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to allow local authorities to approach the Secretary of State to bring in others. Local authorities are to be allowed to refuse direct payments to individuals, provided they act responsibly and reasonably. So why not let the local authorities act responsibly and reasonably in deciding whom to include?
As the noble Baroness, Lady Hollis, said, the amendment of my noble friend Lord Rix was lost very narrowly. When the Minister replied to it I was cheered, in a way, because she said that local authorities who already issue direct payments to categories other than the ones which she plans to make eligible would be able to continue to do so. That is cheering in a sense, but in a way it is even battier because it means that in some areas a category will receive the payments whereas in other areas it will not. Even in the areas issuing direct payments to non-eligible categories, will authorities be able to bring in more or will they have to say "no" to new claimants? The present wording creates several anomalies.
I hope that the Minister will respond positively to the amendment or that she will agree to have a long, hard think before Third Reading. Local authorities already making payments to other groups would be put on a sound legal footing and it would act as a pilot study which could be of help to the Government. If the noble Baroness cannot give a faintly encouraging reply, or say that her door is at any rate open to discussions, I should have no hesitation in following the noble Baroness, Lady Hollis, into the Lobby if she decides to divide the House.
5 p.m.
Lord Addington: My Lords, the amendment is very reasonable and almost cautiously supportive of the Government's stance. It provides in certain situations, where there is the expertise available, for a scheme to be introduced to which the Secretary of State can give his approval. Where the Secretary of State and the powers-that-be think it appropriate a scheme could be brought in. Surely such a proposal cannot offend anyone. It cannot be suggested that it would cause overloading since by its very nature it safeguards against taking on too much. I hope that the Minister will be able to take the idea on board.
Lord Swinfen: My Lords, this is purely an enabling amendment. It allows local authorities which feel capable of taking on a new category of direct payments to do so where they have the skills and where the need exists. The need will vary from area to area.
Under the amendment, the Secretary of State has a power of veto. He must satisfy himself that it is right and proper to agree to the local authority's request. It is a sensible amendment and one that allows different local authorities to proceed at different rates of learning. It would allow a group of authorities in different parts of the country to expand in slightly different sections so that there would be a much broader learning curve throughout the country as a whole. For instance, half a dozen local authorities might be given permission to make direct grants to those with mental disabilities. In other parts of the country another half dozen could be
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allowed to give grants to people over the age of 65. The knowledge acquired of how grants are best applied could be disseminated throughout all local authorities. It would be useful to learn how pitfalls were overcome. The amendment is eminently sensible; and I strongly approve of it.
Baroness Cumberlege: My Lords, as I have said throughout the course of this Bill we are bringing a new way of ensuring that people's needs are met into the heart of community care. As the noble Baroness rightly said, that is what lies behind the Government's proposal to restrict eligibility.
We want to limit the scope of direct payments for two reasons. The first is to allow local authorities to focus on a relatively small group as they begin to make direct payments. We do not want to put at risk the long-term future of direct payments by being over-ambitious in the short term. The second reason is so that the Government can assess how direct payments are working. It is a completely new way to deliver community care. It is radically different from the way local authorities currently arrange community care services. In many respects it is far more revolutionary than were the community care reforms that we introduced in 1993.
The Government want to limit the scale of direct payments so that we can see how they work in practice on a controlled basis. We shall need to see whether the framework we have put in place is the right one. Of course the policy proposals are those which we believe are best. They create the environment which we believe is most likely to lead to successful implementation.
But we are moving into uncharted waters. Existing experience is limited. Direct payments have not previously been in the mainstream of community care. We want to see how things go, how this policy works. Then we shall be able to judge whether we need to adjust the national framework.
The amendment would clearly undermine our second aim in restricting eligibility. If we make exceptions for some local authorities then the national framework is haphazard and it becomes far more difficult to judge on a national basis how direct payments are working. I also find it difficult to see how the provision might work in practice. It would be extremely cumbersome and bureaucratic for the Secretary of State to have to review every application in order to exercise his discretion. A great deal of information would be needed to form a proper judgment as to whether each individual local authority is in a position to make direct payments to a wider population.
The new system has to be fair. It is essential that there is a criterion that can be used in order for the Secretary of State to make his judgments. This Bill, when enacted, has to be fair to local authorities, to those who might benefit, and also to the Secretary of State. It would be difficult for him to retain his control if, as my noble friend Lord Hayhoe suggested, every decision could he subject to judicial review. That would put the Secretary of State in an impossible position.
I return briefly to the third party schemes mentioned by the noble Baronesses, Lady Darcy (de Knayth) and Lady Hollis. As I said in the previous debate, people on

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existing schemes could continue to receive direct payments. To clarify that, it is up to local authorities to ensure that their schemes are legal. If schemes are currently legal this Bill will not make them illegal. If schemes are currently illegal, then they may or may not be legalised by the Bill. As I said, it cannot be the aim of the Bill to legalise ultra vires arrangements. We are setting the legal framework that we believe will work best. That must be our aim.
The amendment would increase the variation between local authorities in the way they implement the legislation. That would make it extremely difficult for the Government to see, on a national basis, how direct payments were working. I urge the House to reject the amendment.
Baroness Hollis of Heigham: My Lords, I was very surprised indeed at that reply. Given the discussions that have taken place, I really had hoped that the Minister would think this a sensible, modest, "compromise" way in which we could all benefit from the experience of local authorities acting, as it were, as a pilot scheme for the Minister.
When it suits the Government—as with in-work benefits for couples and single people without children—they are very happy to have pilot schemes. They do not refer back to the need to have all schemes nationally implemented across the board all at the same time. When it does not suit the Government, the opposite argument is used.
The Minister gave three arguments; first, that she wanted the scheme to focus on relatively small groups and not be over-ambitious; secondly, that she wished to see how it was first working; and, thirdly, that she did not want the national framework to become haphazard. I suggest that the amendment addresses all three concerns.
First, for virtually all local authorities, except where the Minister gives explicit consent to do otherwise, the scheme will focus on the relatively small group of physically disabled people under 65. It will not, in the Minister's words, be over-ambitious. It is probable that only those local authorities which already have experience of, and are implementing, a scheme will be given consent by the Secretary of State to continue it within the existing framework. Therefore, the argument of wanting to focus on a relatively small group remains unaffected.
Secondly, the Minister said that she wished to assess how the scheme was working. All the Minister will be doing is assessing how part of the scheme will be working—that part which applies to those who are physically handicapped. We offer the opportunity for the Minister to see, in selected areas where the Secretary of State has confidence in the local authorities, how an extension of the scheme might work and therefore to see whether, on that basis, it makes good sense to extend it to all local authorities.
Most governments would be delighted to have such an opportunity to learn from willing pilot pioneers on the ground. In that way, and only in that way, can we
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assess how the scheme is working and, equally importantly, how it would work were it to be extended. But the Minister refuses the opportunity to learn from the experience of local authorities willing to pioneer with the support of the Secretary of State.
Thirdly, the Minister said that she did not want the national framework to become haphazard. That argument does not hold up. First, the national scheme will already be haphazard since it is a discretionary scheme. A quarter of all local authorities could decide tomorrow not to implement the Bill. The scheme will remain discretionary. In that sense it will be haphazard by its very nature. For the Government to complain that the amendment makes a haphazard scheme haphazard is perverse. Secondly, the amendment will allow the Government to learn what would happen if the categories were extended to other local authorities—if one moved from a narrow minimum standard to a wider more comprehensive one. One cannot learn from experience if that experience is not permitted to be piloted. Of what are the Government frightened? Local authorities which are currently involved in running such schemes or have that kind of experience will seek consent. The Minister has to be persuaded that they are competent to accept those schemes and to run them. If the Minister is not so satisfied, he will say no. Why should the Minister deny herself the power to say yes or no to local authorities which believe that they are competent to extend this scheme? Why should she deny herself that power? It is absurd, particularly when in most other fields of social security legislation the Government say that they want pilot schemes in order to learn from them and understand in what ways it makes sense to apply a scheme nationally.
I truly believe that this is a win-win scheme; and a win-win amendment. It is a win-win for the Government as they can learn from experience; a win-win for those local authorities which are already supporting disabled people beyond the scope of the Bill; and a win-win for disabled people—all at no cost to public expense. I am so disappointed by the Minister's reply. I had hoped that she would accept the amendment or give us some encouragement. I shall test the opinion of the House.
Lord Hayhoe: My Lords, before the noble Baroness sits down, perhaps I may comment. She stressed the positive aspects of the amendment. In Clause 1(6) of the Bill there is a fair amount of discretion. All the good things of which she spoke that the Government should seek will surely be available to the Government under subsection (6). Therefore, I cannot see why she pushes the amendment, when the good things that she mentioned seem to me—in my limited judgment of reading legislation, and I always acknowledge that it is easy to misunderstand it—to be covered by subsection (6). That subsection allows regulations to be made to:
"make different provision for different cases, and … include such supplementary, incidental, consequential and transitional provisions".
That is a very wide power that is available. All the good things—I stress that, as indeed the noble Baroness stressed it when she spoke in favour of her

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amendment—could be done. Therefore, I cannot see why she should press her amendment. I hope that she has a response.
Baroness Hollis of Heigham: My Lords, I am delighted that the noble Lord—in a phrase often used from the Government Benches—is absolutely right. Clause 1(6) does by regulation what the amendment seeks to do by an individual local authority making application to the Secretary of State. The noble Lord does not need me to tell him that there is a world of difference between the Secretary of State having the power to respond to individual applications and requiring each application to be laid by regulatory process.
Whether that is done by the negative procedure or the affirmative, it may take up time in both Houses for a judgment which I believe is very properly exercised by the Minister or Secretary of State in a professional capacity. The Minister will have to make that judgment anyway before laying a regulation. Why do we need to check that in Parliament? So there is not only a local authority making a decision about whether it wishes to empower a disabled person and the Secretary of State confirming the judgment of the local authority, but now Parliament has to confirm the judgment of the Secretary of State to confirm the judgment of the local authority. That is infinitely too cumbersome for what is suggested. The spirit of the noble Lord's remarks will best be met by this amendment. I hope that he will support it.
Baroness Cumberlege: My Lords, before the noble Baroness sits down perhaps I may just ask her—she has clearly thought through the amendment carefully—what criteria she would expect the Secretary of State to use when making a judgment as to whether a local authority was or was not able to implement the scheme broadly.
Baroness Hollis of Heigham: My Lords, I should expect the Minister to seek discussions with the ADSS—the Association of Directors of Social Services—and agree the common criteria. That would be the right way to proceed, following the response from the consultation documents. The kind of experience that I should expect the Secretary of State to take into account is, for example, whether an authority—such as, say, Kingston or Hampshire County Council—is currently running a third party direct payments scheme in which, for example, people who have learning disabilities or who are, say, over 65 are currently receiving payment. On that basis, the Secretary of State may well be satisfied that those authorities have that experience, are competent and should be encouraged to act as pilot schemes. That is the kind of consideration involved. There may well be others. They will be drawn up in discussion with the Association of Directors of Social Services, but those are the kind of criteria that I have in mind.
5.15 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 92; Not-Contents, 112.

Division No.2

CONTENTS

Acton, L.

Kilbracken,L

Addington, L. [Teller..]

Kirkhill,L

Ailesbury, M.

Longford,E.

Barnett, L.

Lovell-Davis,L.

Birk, B.

McIntosh of Haringey, L.

Blackstone, B.

Mackie of Benshie, L.

Borrie, L.

McNair, L.

Broadbridge, L.

McNally, L.

Carmichael of Kelvingrove, L.

Mallalieu, B.

Carnarvon, E.

Mar and Kellie, E.

Clinton-Davis, L.

Masham of Ilton, B.

Craigavon, V.

Mason of Barnsley, L.

Darcy (de Knayth), B.

Merlyn-Rees, L.

David, B.

Milner of Leeds, L.

Desai, L.

Mishcon, L.

Donaldson of Kingsbridge, L.

Monkswell, L.

Donoughue, L.

Morris of Castle Morris, L.

Dormand of Easington, L.

Nelson, E.

Dubs, L.

Nicol, B.

Falkland, V.

Prys-Davies, L.

Farrington of Ribbleton, B.

Rea, L.

Fisher of Rednal, B.

Redesdale, L.

Fitt, L.

Richard, L.

Gallacher, L.

Rix, L.

Geraint, L.

Robertson of Oakridge, L.

Gladwin of Clee, L. [Teller.]

Robson of Kiddington, B.

Glenamara, L.

Saltoun of Abernethy, Ly.

Graham of Edmonton, L.

Sefton of Garston, L.

Gregson, L.

Shannon, E.

Grey, E.

Simon, V.

Hamwee, B.

Stedman, B.

Hanworth, V.

Stoddart of Swindon, L.

Harris of Greenwich, L.

Strabolgi, L.

Haskel, L.

Swinfen, L.

Hayman, B.

Taylor of Blackburn, L.

Healey, L.

Thomas of Walliswood, B.

Henderson of Brompton, L.

Thomson of Monifieth, L.

Hollis of Heigham, B.

Tordoff,L

Holme of Cheltenham, L.

Warnock. B.

Hughes, L.

Weatherill, L.

Hylton-Foster, B.

Wedderburn of Charlton, L.

Jay of Paddington, B.

Wharton, B.

Jeger, B.

White, B.

Jenkins of Hillhead, L.

Williams of Elvel, L.

Jenkins of Putney, L.

Williams of Mostyn, L.

Judd, L.

Young of Dartington, L.

NOT-CONTENTS

Aberdare, L.

Cadman, L.

Addison, V.

Campbell of Croy, L.

Ailsa, M.

Carlisle of Bucklow, L.

Ampthill, L.

Carnegy of Lour, B.

Archer of Weston-Super-Mare, L.

Carnock, L.

Arran, E.

Chalker of Wallasey, B.

Ashbourne, L.

Charteris of Amisfield, L.

Astor, V.

Chelmsford, V.

Astor of Hever, L.

Chesham, L [Teller.]

Barber of Tewkesbury, L.

Clanwilliam, E.

Belhaven and Stenton, L.

Clark of Kempston, L.

Beloff, L.

Courtown, E.

Blaker, L.

Craig of Radley, L.

Blatch, B.

Crathorne, L.

Boardman, L.

Cuckney, L.

Bowness, L.

Cumberlege, B.

Boyd-Carpenter, L.

Dean of Harptree, L.

Braine of Wheatley, L.

Denham, L.

Brentford, V.

Downshire, M.

Brigstocke, B.

Eden of Winton, L.

Brougham and Vaux, L.

Elles, B.

Burnham. L.

Elliott of Morpeth, L.

Butterworth, L.

Faithfull, B.

429

Ferrers, E.

Milverton,L.

Flather, B.

Mottistone, L.

Fraser of Kilmorack, L.

Mountevans, L.

Gage, V.

Mowbray and Stourton, L.

Gardner of Parkes, B.

Moyne, L.

Gilmour of Craigmillar, L.

Munster, E.

Goschen, V.

Murton of Lindisfarne, L.

Gray of Contin, L.

Newall, L.

Greenway, L.

Norrie, L.

Hamilton of Dalzell, L.

Northesk, E.

Harding of Petherton, L.

O'Cathain, B.

Harlech, L.

Orkney, E.

Hayhoe, L.

Park of Monmouth, B.

Hemphill, L.

Plummer of St. Marylebone, L.

Holderness, L.

Rankeillour, L.

Hooper, B.

Rawlings, B.

Howe, E.

Rees, L.

Inglewood, L.

Rennell, L.

Johnston of Rockport, L.

Renwick, L.

Killearn, L.

Romney, E.

Kinnoull, E.

Seccombe, B.

Lauderdale, E.

Shaw of Northstead, L.

Lindsay, E.

Shrewsbury, E.

Liverpool, E.

Skelmersdale, L.

Long, V.

Soulsby of Swaffham Prior, L.

Lucas, L.

Strange, B.

Lyell, L.

Strathclyde, L.[Teller.]

McConnell, L.

Sudeley, L.

Mackay of Drumadoon, L.

Teviot, L.

Macleod of Borve, B.

Thomas of Gwydir, L.

Merrivale, L.

Trumpington, B.

Mersey, V.

Ullswater, V.

Miller of Hendon, B.

Wade of Chorlton, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.23 p.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 3:
Page 1, line 15, at end insert—
("( ) An authority shall not unreasonably refuse a disabled person access to direct payments from a scheme for the making of such payments to which subsection (1) above refers.").
The noble Baroness said: My Lords, Amendment No. 3 will ensure that a local authority may not unreasonably refuse direct payments to a disabled person who falls within the category of eligibility. In Committee the Minister said that if local authorities acted unreasonably or arbitrarily there was redress through the local authorities' complaints procedure, the local government ombudsman or judicial review. The Minister went on to say that, as local authorities were not allowed to act unreasonably, they would not do so and, if they did, there were abundant mechanisms to check their behaviour.
All that is entirely true and we all expect and hope that local authorities which introduce direct payments will be committed to making them successful. However, a local authority could come to a decision which does not further the interests of the disabled person if the present wording of the Bill is retained. At the moment, as long as a local authority has taken all relevant considerations into account and has not had regard to irrelevant considerations, it is unlikely to be held to be acting unreasonably unless its actions are so perverse that no reasonable authority could possibly act in that way.
A high standard of proof is required. It can entail a long and costly argument in which a disabled person may hesitate to engage, especially if, should they lose, they may then be regarded by the local authority as a difficult client. Amendment No. 3 will ensure that what the Minister intends to happen will happen. It will tip the checks and balances a little further in favour of the disabled person. The amendment makes the responsibility of the local authority unambiguous. It makes it clear that someone who is eligible for direct payments will receive them unless it is unreasonable to make that assumption. The test of reasonableness implied in the amendment is one that is well understood in professional local authority circles. I hope therefore that the House and the Minister will support the amendment. I beg to move.
Baroness Darcy (de Knayth): My Lords, I added my name to the amendment because I felt that it would be useful to have this message spelt out on the face of the Bill. As the noble Baroness, Lady Hollis, reminded us, in Committee the Minister said that an aggrieved person would be able to seek redress from the local authorities' complaints procedure, the ombudsman, judicial review or a combination of all three. But none of that is well known to the public at large.
I am sure that none of us, including the Minister, wants disabled people to go through such lengthy and difficult procedures. Therefore, while there may not be a strict legal requirement to repeat the need for reasonableness on the face of the Bill, there are good reasons for doing so. It will remind local authorities of their obligations in respect of direct payments and inform disabled people of their right to be treated reasonably. It will also remove any doubt that may arise in future, through some legalistic quirk of fate, that local authorities may not unreasonably withhold direct payments from an otherwise qualified person. I hope therefore that the Minister feels able either to accept the amendment or to table something similar to go on to the face of the Bill.
Lord Addington: My Lords, if we are to state that people who are qualified to receive direct payments should receive them if they so choose, and there is a legal requirement for them so to do, why not say it as loudly and clearly as possible? The best way of doing that is to include the requirement on the face of the Bill. If it does not change anything, it will at least ensure that the message is unambiguous. I support the amendment.
Lord Campbell of Croy: My Lords, Amendment No. 3 is word for word the same as an amendment moved at Committee stage. I do not believe that much has changed since then. At that time my noble friend Lady Cumberlege convincingly pointed out that the amendment was not necessary. Why, therefore, is it suddenly felt to be necessary?
I do not believe that while Bills are progressing through Parliament one should keep inserting statements that local authorities or other bodies should not act

431
unreasonably. As my noble friend said at the last stage, it would he illegal for a local authority to act unreasonably, and nothing has changed since then.
Baroness Cumberlege: My Lords, local authorities already have a responsibility to act reasonably. No amendment to the Bill is needed to prevent local authorities from exercising their discretion unreasonably. In any case, local authorities should not make whimsical decisions. They should consider whether direct payments are appropriate for someone who wishes to receive them, taking into account all relevant matters. That includes a person's wishes and ability to benefit from direct payment, as well as other considerations. We would normally expect that to mean that like clients are treated in like ways. Local authorities should not treat clients with similar needs and a similar ability to manage direct payments differently unless they have good reason to do so. If there is a good reason, we should not legislate to prevent them from taking it into account. They cannot treat like clients differently unless it is reasonable to do so.
My noble friend Lord Campbell of Croy said that a similar amendment was moved at Committee stage. That is correct. In her speech at that stage the noble Baroness, Lady Hollis, said that the exercise of a local authority's discretion must be capable of being reviewed against a test of reasonableness in the appeals procedure. That is already the case without this amendment, since local authorities must exercise their discretion reasonably. As the noble Baroness said, people can use the complaints procedure to challenge the local authority's decision not to offer them direct payments. They can expect to be told the reasons for the local authority's decision. If anyone is dissatisfied with the outcome, he or she may ask the local government ombudsman to investigate or apply to the courts for judicial review.
To go any further would effectively limit local authorities' discretion to decide whether direct payments are appropriate in each individual case. Local authorities must have discretion to base their decisions on the wider interests of the local population—for instance, taxpayers and other service users—and not just on the interests of the particular individual concerned. They have a responsibility to obtain value for money and to use their resources to meet the needs of all people in need of assistance in their locality, not just one individual.
Local authorities must act reasonably. It would not be appropriate to restrict their discretion further. I urge your Lordships not to support the amendment.
5.30 p.m.
Baroness Hollis of Heigham: My Lords, the noble Lord, Lord Campbell of Croy, and the Minister have basically said the same thing—that the amendment is unnecessary because local authorities already have to act reasonably. When moving the amendment, I tried to say, although obviously I was unclear, that the current test of reasonableness embedded in local authorities' procedures is a high standard of proof—that only if no reasonable authority could have acted in such a way would a test of unreasonableness be upheld. That is
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quite tough compared with what the wording in the amendment would ensure. It requires that local authorities may not unreasonably withhold their consent.
However, the Minister's words are in Hansard and they do enlarge on the issue. Given the time and the discussion we have had, I have no wish to press the House for a view on the matter. With the leave of the House, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 4:
Page 1, line 18, leave out from ("authority") to end of line 19 and insert ("shall, in determining how much to pay a person under that subsection, not require him to contribute more than it appears to the authority that it is reasonably practicable for him to contribute").
The noble Baroness said: My Lords, Amendment No. 4 also visits an issue which we discussed in Committee. I was not entirely happy with the answer we received at that time and we hope that the Minister may have thought again. One of the reasons for bringing back on Report amendments which were discussed at Committee stage is in the hope that the Minister will have taken further opinions on the issue, reflected further and decided to move a little beyond the Government's position in Committee.
The amendment seeks to provide for a more equitable basis for levying charges. The basis for local authority charging for social services—for example, for home helps—is founded in the 1983 Act. It says that an individual may be charged where the local authority is satisfied that it is,
"reasonably practicable for him to pay".
Where local authorities provide a free service, the individual will receive the service free; where his means are very modest he may contribute little or nothing for a service for which a charge must be made. What the amendment seeks to do is to bring the same wording, "reasonably practicable", of the 1983 Act which applies to charging policies for services into the charging policy effectively for direct payments. There will then be a level playing field between the two so that the assumptions about charging which apply to services will apply to direct payments in which an income will be offset against the money received.
The words of the Bill do not do that. Instead, the Government use the phrase,
"have regard to his financial circumstances".
That is a much harsher test than that of the 1983 Act, which uses the words "reasonably practicable". What this appears to presume is a means test, even though, where services are concerned, no means test is involved—the service is free.
If the Minister is anxious to ensure, as I believe she is, that there is a level playing field and that there should be no difference between the two, the best way of doing so is to have the same wording in the Bill. If we want local authorities to approach the charging claw-back on direct payments in the same way as they charge for services, we should have the same words. If the Minister wants them to do it in the same way, she should use the same words. If she does not want them to do it in the

433
same way and there are different words, that will suggest different practices. The Minister has suggested to us that she does not want that to remain. We want the situation to be unambiguous.
In Committee the Minister said that she would issue Section 7 guidance to clarify the wording. But why issue guidance to clarify the wording of the Bill when one can clarify the wording by amendment of the Bill? Why seek to tidy up ambiguity by guidance and regulation when one can tidy up ambiguity on the face of the Bill itself? Yet, by conceding that, the Minister agreed that there could be cause for concern and that local authorities might need to have further regulation or guidance. Why go for clarifying it by regulation or guidance when one can do it on the face of the Bill? I very much hope that the Minister will accept that the simplest and cleanest way to ensure a level playing field is to have the wording of the 1983 Act applying to services applying also to the claw-back mechanisms of direct payments. If there is any difference in the wording, local authorities can be forgiven for thinking that the Government do not expect them to behave in like ways in like circumstances.
I have one final point. Will the Minister may it clear that in assessing charging local authorities should be asked to take into account any extra expenditure that may be incurred because of the service user's disability or frailty? It would be helpful to have the Minister's views on that point. I beg to move.
Baroness Darcy (de Knayth): My Lords, I should like briefly to support the amendment which the noble Baroness has moved so clearly and comprehensively. In Committee I moved an amendment which sought identical means tests. I accept now that the word "identical" could present practical difficulties so I have now joined forces with the noble Baroness, Lady Hollis. I accept that we and the Government are at one in not wanting the means tests for services and for direct payments to allow a local authority to influence the decision either towards in-house services or towards private arrangements. The amendment seems to be a practical way of achieving that. I hope the Minister will agree to it.
Baroness Cumberlege: My Lords, we share the concern, as the noble Baroness, Lady Darcy (de Knayth), has said, that neither people who receive services nor those who receive direct payments should be treated more favourably than the other. On the question of the financial contribution which each is expected to make towards the cost of their care, they should be treated alike.
The Bill gives local authorities the discretion, when calculating the amount of direct payments, as to whether they require the person concerned to make a financial contribution. It does not require authorities to do so. If a local authority considers that an individual should contribute to the cost of his care, it would be unreasonable for the authority to expect him to contribute more than he can afford. The Bill also gives local authorities discretion on how they take someone's financial circumstances into account. This is intended to
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mirror the situation which currently exists in relation to charges for non-residential care where local authorities can decide whether to charge and how much to charge.
The Government's aim is to avoid perverse financial incentives in agreeing or refusing direct payments. As the noble Baroness, Lady Hollis, said, we believe that the best way to ensure equivalent treatment is to issue guidance under Section 7 of the Local Authority Social Services Act 1970. The guidance will stress that local authorities must treat people fairly and should treat both those who receive services and those who receive direct payments in an equivalent manner—that is, when considering the financial contribution that people make towards the cost of their care, those receiving direct payments will be treated in the same way under the authority's charging policy as they would have been had they been receiving the equivalent services. Of course, that still gives the local authority discretion over what charging policy is.
The Government have considered carefully the alternative of introducing language similar to that in existing legislation on charging, as is suggested in the amendment of the noble Baroness. However, to reproduce the words in existing legislation will not change the effect of Clause 1(2). We would still need to issue statutory guidance to ensure that direct payment recipients and service recipients received equivalent treatment. We have considered all of the options and do not see a need to amend the wording of the Bill. We believe that this amendment would have no effect. I urge your Lordships not to support it.
Baroness Hollis of Heigham: My Lords, before the noble Baroness sits down, even if she believes that additional guidance will have to be offered, will she explain the objection to the use of the same words? The Minister has assured us that the aim is to avoid unfairness and that guidance will still need to be issued so that the effect is the same, but what is wrong with using the same words?
Baroness Cumberlege: My Lords, we simply do not believe that it is necessary. The amendment as it is set out will have no effect, and therefore we believe that it is pointless to put it on the face of the Bill.
Baroness Hollis of Heigham: My Lords, the Minister says that the amendment is not necessary and that it will have no effect, but she has to have some words on the face of the Bill. Why do we not have the same words on the face of the Bill for direct payments as for services? That will make the situation unambiguous as far as local authorities and disabled people are concerned. The Minister may argue that it is not necessary, but she has not said why the same words should not be on the face of the Bill. What is wrong with having the same words?
Baroness Cumberlege: My Lords, I believe that I have made the situation perfectly plain. We do not want to clutter up the legislation with additional information that is not necessary. The amendment as set

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out here will have absolutely no effect. Therefore, we believe that it is ridiculous for the Government to accept it.
Baroness Hollis of Heigham: My Lords, I have not carried out a word count to see whether very many more words will be added, but I am convinced that this amendment will add considerable clarity to the intention of the Government. We agree with everything that the Minister has proposed. We want a level playing field. We do not want perverse incentives for people to move from charges to services, or hack to charges, because there are different financial implications in terms of what they have to pay. The easiest and most straightforward way to avoid any such misunderstanding is to use the same words on the face of this Bill as in the existing Act of 1983. I have not heard the Minister give a single reason why the words cannot simply be changed, because the 1983 words can replace the words in this Bill. If they need a little tidying up we have plenty of time to do it. We have all the Commons stage for that purpose. At least it will make clear what the Minister has in mind, instead of the Minister having to resort to guidance to explain what is in her mind.
I thought that legislation should be clear, simple and understandable. Our amendment would do precisely that on the issue of financial arrangements. I remain baffled. I understand why most of the time the Government do not accept our amendments: they cost money; they are ideologically unacceptable; they are administratively unworkable, or whatever. But I believe that as to a proportion of the amendments—perhaps 5 or 10 per cent.—if the Government had thought of them they would have proposed or accepted them. However, because they come from these Benches there is a knee-jerk reaction to resist, resist, resist. Here is an amendment that does everything that the Minister says she wants to do. It establishes a level playing field on the face of the Bill by repeating the wording used in the previous Act to establish the charging pattern for services. The Minister has not given one good reason why the words should not be changed, except that it is not necessary because we all know that it means the same thing anyway. If it means the same thing, why not use the same words?
Although I had not intended to do so, I seek the opinion of the House on this amendment.
5.44 p.m.
On Question, Whether the said amendment (No. 4) shall be agreed to?
Their Lordships divided: Contents, 75; Not-Contents, 105.

Division No.3

CONTENTS

Action,L.

Borrie,L.

Addington,L.

Carmichael of Kelvingrove,L.

Barnett,L.

Clinton-Davis,L.

Beaumont of Whitley,L.

Cocks of Hartcliffe,L.

Birk,L.

Craigavon,L.

Blackstone,B.

Darcy(de Knayth),B.

436

David, B.

McNair, L.

Desai, L.

McNally, L.

Donaldson of Kingsbridge, L.

Mallalieu, B.

Donoughue, L.

Mar and Kellie, E.

Dormand of Easington, L.

Masham of Ilton, B.

Dubs, L. [Teller]

Mason of Barnsley. L.

Falkland, V.

Merlyn-Rees, L.

Farrington of Ribbleton, B.

Milner of Leeds, L.

Fisher of Rednal, B.

Monkswell, L.

Geraint, L.

Morris of Castle Morris, L.

Gladwin of Clee, L.

Nelson, E.

Graham of Edmonton, L.

Nicol, B.

Gregson, L.

Palmer, L.

Grey, E.

Prys-Davies, L.

Hamwee, B. [Teller.]

Rea, L.

Harris of Greenwich, L.

Redesdale, L.

Haskel, L.

Richard, L.

Healey, L.

Rix, L.

Hollis of Heigham, B.

Robson of Kiddington, B.

Holme of Cheltenham, L.

Saltoun of Abernethy, Ly.

Sefton of Garston, L.

Hughes, L.

Simon, V.

Jay of Paddington, B.

Stoddart of Swindon, L.

Jeger, B.

Strabolgi, L.

Jenkins of Hillhead, L.

Taylor of Blackburn, L.

Jenkins of Putney, L.

Tordoff, L.

Judd, L.

Warnock, B.

Kilbracken, L.

Wedderbum of Charlton, L.

Kirkhill, L.

White, B.

Lawrence, L.

Williams of Elvel, L.

Longford, E.

Williams of Mostyn, L.

Mackie of Benshie, L.

Young of Dartington, L.

NOT-CONTENTS

Addison, V.

Faithfull, B.

Ailsa, M.

Ferrers, E.

Archer of Weston-Super-Mare, L.

Flather, B.

Arran, E.

Fraser of Kilmorack, L.

Ashbourne, L.

Gage, V.

Barber of Tewkesbury, L.

Gardner of Parkes, B.

Beloff, L.

Gilmour of Craigmillar, L.

Blaker, L.

Goschen, V.

Blatch, B.

Gray of Contin, L.

Boardman, L.

Hamilton of Dalzell, L.

Bowness, L.

Harding of Petherton, L.

Boyd-Carpenter, L.

Harlech, L.

Braine of Wheatley, L.

Harmsworth, L.

Brentford, V.

Hayhoe, L.

Brigstocke, B.

Hemphill, L.

Brougham and Vaux, L.

Holderness, L.

Burnham, L.

Hooper, B.

Butterworth, L.

Howe, E.

Cadman, L.

Inglewood, L.

Campbell of Croy, L.

Kinnoull, E.

Carnegy of Lour, B.

Lindsay, E.

Cannock, L.

Liverpool, E.

Chalker of Wallasey, B.

Long, V.

Charteris of Amisfield, L.

Lucas, L.

Chelmsford, V.

McColl of Dulwich, L.

Chesham, L. [Teller.]

Mackay of Ardbrecknish, L.

Clanwilliam, E.

Mackay of Drumadoon, L.

Clark of Kempston, L.

Macleod of Borve, B.

Colwyn, L.

Merrivale, L.

Courtown, E.

Mersey, V.

Craig of Radley, L.

Miller of Hendon, B.

Crathorne, L.

Milverton, L.

Crickhowell, L.

Mottistone, L.

Cuckney, L.

Mountevans, L.

Cumberlege, B.

Mowbray and Stourton, L.

Dean of Harptree, L.

Moyne, L.

Denham, L.

Munster, E.

Downshire, M.

Napier and Ettrick, L.

Elles, B.

Newall, L.

Elliott of Morpeth, L.

Northesk, E.

Elton, L.

O'Cathain, B.

437

Orkney,E.

Skelmersdale,L

Park of Monmouth, B.

Soulsby of swaffham Prior,L.

Plummer of St. Marylebone,L.

Strange,B.

Rankeillour,L.

Strathclyde,L [Teller.]

Rees,L.

Sudeley,L

Rennell,L.

Swinfen,L.

Renwick,L.

Thomas of Gwydir,L.

Romney,E.

Trefgarne,L.

Trumpington,B.

Seccombe,B.

Ullswater,V.

Shaw of Northstead,L.

Wade of Chorlton, L.

Shrewsbury,E.

Whitelaw,V.

Resolved in the negative, and amendment disagreed to accordingly.
5.52 p.m.
Baroness Cumberlege Baroness Cumberlege moved Amendment No. 5:
Page 1, line 19, at end insert—
("(2A) Subsection (2) above shall not apply in relation to the determination of how much to pay in respect of the provision of a service which, apart from this section, would be provided under section 117 of the Mental Health Act 1983 (after-care).").
The noble Baroness said: My Lords, this is a minor technical amendment to ensure consistency with existing legislation. Our intention is that local authorities should treat both those who receive services and those who receive direct payments in an equivalent manner. When local authorities decide the financial contribution people make to the cost of their care, they should treat both groups alike. Local authorities do not have the power to charge for services under Section 117 of the Mental Health Act 1983. These are aftercare services for people leaving hospital after compulsory detention under mental health legislation. This amendment is needed to make clear that that is also the case if direct payments are made instead of those services. Where local authorities do not have the power to charge, then neither should they have the power to take into account a person's financial circumstances when setting the level of his or her direct payment. I beg to move.
Baroness Hollis of Heigham: My Lords, we are happy to support the Minister's amendment. The Minister has just given the exact reply which, if only I had had access to the departmental staff, I should have given on the previous amendment. She wants words to say what they mean and to mean what they say and for them to be consistent with previous legislation. Obviously, that is wise, but I only wish that the same wisdom had been applied to the previous amendment because then we would not have needed to have a vote and to take up the time of Parliament as we did.
Of course, we support the intention to be clear. We support the idea that the Bill should say what is meant and for the provisions to be consistent with previous legislation. We should like such a principle to be accepted here and in all other aspects of the Bill. I do not know how the Minister could keep a straight face when she moved the amendment and gave her reasons for doing so, having stated precisely the opposite just five minutes previously. However, we support the noble Baroness on this amendment.
Lord Campbell of Croy: My Lords, I am afraid that I do not agree with the noble Baroness, Lady Hollis,
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who will not he surprised by that because I think that the reasons given for this amendment—about being consistent with other legislation in England and Wales—are quite different from the reasons given before the three recent Divisions when it was said that the amendments were not necessary.
Although I do not expect my noble friend the Minister to reply to me now and I do not want to hold up proceedings, I should like to raise a small but important point. In relation to the equivalent Scottish clause of the Bill, Clause 4, is my noble friend able to say that the Government are happy that there is no inconsistency between Clause 4 and any Scottish mental health legislation?
Baroness Cumberlege: My Lords, I thank the noble Baroness, Lady Hollis, for her generous comments, but should point out that no Section 7 guidance is involved here.
To reply to my noble friend Lord Campbell of Croy, I understand that no amendment is needed in Scotland as local authorities in Scotland have the power to charge for their equivalent to our Section 117 services. I commend the amendment to the House.
On Question, amendment agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 6:
Page 1, line 23, at end insert ("except where the person to whom payment is made is living alone or with another person who is unable to meet all of his care needs").
The noble Baroness said: My Lords, this amendment refers to the question of who may receive direct payments: relatives within the household and relatives outside the household. We explored the problem in Committee when a number of anomalies were raised. The Government are proposing to forbid by regulation the possibility of a disabled person employing a relative who lives in their home and paying them by direct payments. The Government are proposing to forbid by guidance—exceptions can be made—disabled people from employing a relative, such as a niece, who does not live within the household but lives, say, the other side of town.
In Committee the Government offered two arguments for extending the number of people who might not be paid with the direct payments. First, they said that they did not want to formalise informal care arrangements by paying relatives who were already offering family help. Secondly, the Minister said that the provisions offered protection for a disabled person who might not want to employ a relative and who would certainly find it harder to sack a relative than would be the case with any other employee. The Minister is right on that. Behind that lies a psychological truth which I shall share with the Minister: many disabled people receiving direct payments would prefer an impersonal employer/employee relationship which they control rather than to pay money to a family carer on whom they may depend. There is no difference between us on that point.
Having said that, however, I believe that the Government's position in their draft consultation paper goes too far and, as currently drafted, is too inflexible.

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When we explored this in Committee, we found that it produced all sorts of unnecessary tangles and complications. Although I respect the Government's concerns, I hope that the Minister will be able to accept the amendment which states that where someone is living alone or with someone else who is unable to meet all their care needs, they can employ a relative who is not a member of the household or living in the same house and pay that person with the direct payments. As I have suggested, such a person could be a niece or a brother-in-law living on the other side of the city.
There are two arguments behind our amendment. One relates to choice and the other to administrative practicalities. The Government have already conceded that local authorities may make exceptions with regard to relatives living outside the household who may receive direct payments. They may make exceptions in difficult situations, such as in rural areas where there might not be much choice. In ethnic communities there may be strong social and cultural pressures to employ only a relative within the family. The situation of someone with AIDS was also mentioned in Committee. All those examples relate to instances where it might not be possible to find someone from outside the household to act as a carer.
Perhaps I may cite another situation. I refer to the fact that somebody who receives direct payments may have fluctuating needs because of, for example, multiple sclerosis or severe rheumatoid arthritis. A relative living outside the home may be able to offer far more willing flexibility than would be possible within a formal employer/employee contract in which the carer clocks in for so many hours.
The first reason for saying that local authorities should permit disabled people to employ relatives who live outside the household for direct payments is that that will enrich and widen the choice available to disabled people of those they employ. Secondly—the practical argument—it would align the question of direct payments by local authorities with the system currently in operation within the ILF. The ILF permits disabled people to use direct payments to employ relatives who live outside the family home. The amendment would bring local authority practice into line with that of the ILF. It works well.
If we do not have the amendment, it could mean that a severely disabled person was receiving money from both sources. After all, direct payments from the local authority would go up to £200. ILF money comes in for the needs that can be purchased for the sum of between £200 and £500. One then clocks back to the local authority. Someone who needs two or three carers may well be receiving money from the local authority and the ILF. Let us say that a person's care package costs £350 a week. That means that they would be required to employ someone who is not a relative within or without the household for the local authority money but could employ a relative who lives outside the household for the tranche of money that comes from the ILF. That is silly. It means that instead of having one or two people producing continuous care, a disabled person has
440
to chop and change employees in order to fit the different rules applying to the local authority and the ILF for no good reason.
Thirdly, if a relative is living outside the home and is giving up the opportunity of paid work to work for a disabled person, why should that person not be paid? As with the ILF, we believe that it might be unreasonable to pay a relative living in the home because that constitutes being part of a family. However, a relative living outside the home (niece, nephew, brother-in-law) cannot be said to be part of the immediate family in the same way. It is not unreasonable that they should he paid and not merely exploited.
I believe the Government are afraid that unreasonable pressure would be applied where the relative lives outside the home. But that can be vetted by the local authority ensuring that the social worker talks through with the disabled person, at the point when the care package is constructed, the advantages and disadvantages of employing a relative who lives outside the home. If, after going through the advantages and disadvantages, the disabled person still thinks that that is the best choice for him or her, that choice should be respected. It is not the Government's job to restrict the choice of a disabled person, providing that that choice is an informed one and public money is not being abused. Otherwise, the Government are infantilising disabled people—protecting them from the consequences of employing a relative in case they cannot sack them. It is not the Government's job to do that.
The whole point of the Bill is to treat disabled people as moral adults, able to make informed and realistic choices about whom they employ to care for them with direct payments. If the disabled person seeks to employ a relative living outside the home, as they currently do with the ILF—it is not a requirement but a right—which may be sensible not just for those living in rural areas, ethnic communities or someone with AIDS but in a whole range of circumstances that we cannot currently envisage, then disabled people's choices should be respected. I hope that the House agrees. I beg to move.
Baroness Faithfull: My Lords, the noble Baroness puts forward a persuasive case, but I am worried about various aspects on a human level. I am worried about the employer-employee relationship. Elderly people needing help from a relative outside the home are not always objective. They will say things such as, "This is my niece. I am very fond of her. I do not think that she does the job awfully well, but she is my niece and she is out of work, so I would like her to have the job."
To provide good help for the disabled person there needs to be a proper, businesslike arrangement between employer and employee. I understand the points made by the noble Baroness. But if a disabled person has care from someone outside who is not a relative, that brings in another stream of interest.
What is a relative? Is it a cousin? Is it a niece? Have we qualified who is a relative? I feel that out of generosity a handicapped person who needs someone to

441
help will not choose wisely. They will choose kindly. We should stand by the proper, businesslike employer/employee relationship.
Baroness Darcy (de Knayth): My Lords, I put my name to the amendment, because, although I agree broadly with the proposal not to allow relatives to be paid as a helper—I listened to what the noble Baroness, Lady Faithfull, said—I have reservations. I believe, incidentally, that a relative is defined in the consultation document. I believe that it should be possible to employ a close relative living elsewhere without treating the case as exceptional. As the noble Baroness, Lady Hollis, said, the practice of employing a family member not living in the same household has worked well with the ILF. Why should it not work with direct payments?
Another important point relates to the Government's requirement, set down in the consultation paper at paragraph 33, that disabled people will be expected to make sensible arrangements so that they have adequate cover in an emergency. For example, if one of the usual assistants is taken ill I should have thought that it would be normal to ask a relative to stand by in case of emergencies. The current proposal would preclude payment to a relative in those circumstances. Is that reasonable or sensible? Perhaps the Minister will comment.
I come now to the question of the lodger and other persons living in, which the amendment does not cover. It is a point I raised in Committee. Paragraph 24 of the consultative paper and the Minister in Committee, at col. 411, say that such people cannot be paid unless they are people who have been specifically recruited to be live-in personal assistants. That means that a disabled person who has someone other than a close relative living in the household (a lodger or a friend) would be precluded from arranging for that person to become the helper unless the person came into the household after the disabled person had decided on direct payment.
The wording suggests that the person would have to be hired as a helper and then be given accommodation. That is too restrictive. It would rule out direct payments to people taking lodgers whom they subsequently decide to hire as helpers. There is surely nothing wrong with such a situation. It should be allowed. Under the ILF a lodger already in the house would be allowed. That is something we can perhaps clear up. I urge the Minister to think seriously about the question of the lodger or the friend; it is an important point. The amendment does not deal with it and, as I said, we may have to return to the point on Third Reading if the Minister cannot give us any words of comfort. Meanwhile, I support the amendment warmly.
Lord Campbell of Croy: My Lords, I shall say just a few words on what the noble Baroness has just said. She is right. For the purposes of consultation there is a definition in paragraph 24 of the consultation paper. It is clear, except for one point that I believe arises a great deal nowadays. At the end it says, "sister, or spouse, or
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partner". "Partner" is something which I think everyone understands but as far as I know it is not defined here or in other legislation.
Lord Swinfen: My Lords, I hope that my noble friend will take the matter away for study. There is the question of the position in rural areas and the difficulty of finding carers who are acceptable in certain ethnic groups, particularly certain strict religious sects. It would be useful to look at the matter and make certain that we have sensible provisions on the face of the Bill by the time that it becomes law.
Baroness Seccombe: My Lords, I feel that the employer/employee relationship would change the views of the family. Very often members of a family are only too glad that someone is coming in to help. Family members will give help willingly and voluntarily and through love. I feel that the exceptional circumstances about which we have heard provide the necessary flexibility and I could not support the amendment.
Baroness Cumberlege: My Lords, direct payments will be an alternative to community care services which would otherwise be arranged by the local authority. They are not intended to replace existing support networks within families and communities. As my noble friends Lady Faithfull and Lady Seccombe said, the relationship which someone has with family or friends who provide care is very different from the relationship someone has with a person who they are employing to provide care. The reason for the provision in Clause 1(3) is to avoid creating pressure for informal care to be put on a formal contractual basis.
We agree that there is a balance to be drawn between, on the one hand, preventing the formalisation of informal care and, on the other hand, not prohibiting sensible and appropriate arrangements. I can see that this amendment is also designed to find this balance.
In our consultation document we have set out our proposals for setting limits on who may be paid to provide care using a direct payment. As the noble Baroness, Lady Hollis of Heigham, said, we propose to make regulations under this provision which will prohibit people who get direct payments from paying their spouse, partner or a close relative living in the same household. In addition, we intend to issue guidance to say that it is not appropriate to use direct payments to employ or contract with close relatives who live elsewhere, or other people living in the same household, unless the latter are people who have been specifically recruited to be live-in personal assistants. Local authorities would have the power to make exceptions to this guidance in exceptional cases, where they were satisfied that there was no other way to find a suitable person to provide care. We are consulting on these proposals for regulations and guidance, and will take account of the consultation responses, and the comments of this House, before making our final decision.
Both the Government's proposals and this amendment seek to create a framework that sets some limits, but also contains flexibilities. The difference

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between us is that our proposals allow flexibility in the way those limits are applied to individuals, whereas this amendment allows flexibility in deciding which individuals are affected by the limits set in regulations. Our proposals apply the same rules to everyone, but allow for some exceptions if the circumstances merit it. This amendment applies one set of rules to one group of people, and a completely different set of rules to everyone else.
The noble Baroness, Lady Hollis, and the noble Baroness, Lady Darcy (de Knayth), referred to the Independent Living Fund. We are seeking to draw a balance between, on the one hand, preventing formalisation of care, as I have said, and, on the other hand, prohibiting sensible and appropriate arrangements. We believe that the ILF is a useful model and we propose to use the same restrictions in regulations as applied to the ILF. But there is no reason why that should be a blueprint. There are similarities between direct payments and the ILF but there are also differences. Direct payments will be part of mainstream provision and will potentially be available to a much wider range of people to pay for a wider range of services. They will also involve potentially much larger sums of money. We are seeking to provide the best framework for those circumstances. As I said, we are consulting on the restrictions that we propose to make in regulations and guidance.
The noble Baroness, Lady Darcy (de Knayth), asked how people would manage in an emergency when it may be sensible to use a relative. We are consulting on the restrictions and we shall consider very carefully whether that should be an issue which should be brought into final guidance.
The noble Baroness asked also about lodgers who live in the home. Again, we would expect local authorities to judge whether it is appropriate to make an exception to the guidance in those cases—I suppose so long as the lodger is not a partner, in which case we enter different territory.
The noble Baroness, Lady Hollis, said that relatives might offer more flexible hours than non-related employees. We have been told that one of the advantages of the direct payments scheme is that it allows a disabled person more flexibility. Disabled people can dictate the hours that should be worked and as far as we are aware they have not found it difficult to find people who are prepared to work flexible hours. Our proposals allow for exceptions as and when local authorities feel that that is appropriate.
We believe that our proposals are sensible and appropriate. They allow for some flexibility in order not to prohibit sensible arrangements and they are fair because they apply the same rules to everyone. Therefore, I urge your Lordships not to support the amendment.
Lord Swinfen: My Lords, before my noble friend sits down, will she tell the House whether there is a legal definition of the word "partner" in the sense in which it has been used this evening?
Baroness Cumberlege: My Lords, I have been on this territory' before when the noble and learned Lord,
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Lord Hailsham, asked me to define the verb to "ring-fence". On that occasion, I referred my noble and learned friend to the dictionary and said that I would find a definition for him. I will search.
6.15 p.m.
Baroness Hollis of Heigham: My Lords, I think that the definition which the Minister seeks may be found in social security legislation dealing with cohabitation. There is a notion of cohabitation which is well established in social security law. That may he helpful to the Minister.
I understand the anxieties raised by the noble Baroness, Lady Faithfull. But she referred to an elderly person perhaps employing a niece who lived outside the home. But as we have lost the previous amendment, elderly people will not receive direct payments. Therefore, the people who may feel pressured in the way that the noble Baroness described would not be eligible for direct payments in any event because those payments are confined to recipients aged under 65. Therefore, that situation is less likely to arise.
As regards who may be eligible and who counts as a relative—and I say this in response to the comments of the noble Lord, Lord Campbell of Croy, the noble Baroness, Lady Seccombe, and the Minister—we are talking about close relatives and the family. But one can see that if we look at paragraph 24 of the consultation document, we are not talking about close family at all. One of the problems is that the number and range of people caught by the provision is extremely wide indeed.
I have always understood "close family" to mean children, parents, siblings and spouse. But many others may be banned from employment as carers. Such a person may be somebody living outside the home, living across the city, who may be, for example, a trained nurse or someone who has worked for the local authority in the past as a home help carer. It may be somebody with a great deal of relevant experience who the disabled person would wish to employ because they are familiar and comfortable with each other. The Government's definition of a "close relative" is a parent, parent-in-law, aunt, uncle, grandparent, son, daughter, son-in-law, daughter-in-law and also a stepson or daughter, brother, sister, or the spouse or partner of any of those. Therefore, the partner of a stepson living across the city is regarded as a close relative. I suggest that the Minister may wish to consult a dictionary as regards what counts as a "close relative". Can a close relative really be said to be a stepson or stepdaughter or the partner of the stepson or stepdaughter? The partner of a stepson may well have been a nurse. Indeed, they may have come into contact through the needs of the disabled person. Apparently such a person is to be banned from being employed.
I would have far less of a problem if we were talking about immediate family. One understands that the Government may not wish to pay for the care that one expects to be provided within the family. I do not believe that there is any disagreement about that. We go along with the distinction which the Minister draws

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between somebody being within the household and outside the household. But the point is that the categories of people who may not be employed are so widely drawn that it seems to narrow unreasonably the choice of people from which a disabled person may wish to choose a carer who may have to perform such intimate tasks as, for example, toileting and bathing.
It seems to me that the real issue is to ensure that the disabled person is not pressured against his or her will or judgment to employ someone who they would rather not employ because, in some sense, that person is a member of the family. That is the real issue. Surely we can address that concern if we ensure that the choice for a disabled person is an informed one and that it is only possible with the consent of the local authority; in other words, the local authority must be satisfied that it is sensible and reasonable for a disabled person to employ, say, the partner of a stepson who lives across the city. Indeed, it is possible that such a person has only recently become the partner after starting off by being the nurse. However, at present, he or she would immediately be disqualified in such a situation.
As it stands, we cannot make the provision work. The best way of overcoming our difficulty would be for the Minister to give the House an assurance tonight—or, perhaps, return to the matter on Third Reading—that the discretion of the local authority, which the Minister said is in place, for difficult circumstances such as AIDS, ethnic minorities and, indeed, in rural areas, will he enhanced so that to employ any relative within the paragraph 24 definition the consent of the local authority must be sought and obtained. The discretion of the local authority should not be unduly fettered.
That may be the way for us to square the circle. The local authority must be satisfied that the disabled person is not being unreasonably pressured. If it was necessary for the local authority in such a case to be satisfied that it was reasonable to employ such a person, that would meet all of our objections. I hope that the Minister will be able to give us some encouragement in that respect, so that we may be able to revisit the matter on Third Reading.
Baroness Cumberlege: Yes, my Lords, we shall certainly have another look at the matter.
Baroness Hollis of Heigham: My Lords, in that case, I am happy to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Swinfen Lord Swinfen moved Amendment No. 7:
Page 1, line 23, at end insert—
("( ) The Secretary of State may issue guidance to authorities concerning the inclusion of a value added tax element in the calculation of a direct payment.").
The noble Lord said: My Lords, in moving the above amendment I shall speak also to Amendment No. 9. Amendment No. 8, tabled in the name of the noble Baroness, Lady Hamwee, is also included in this group. The purpose of the first amendment is to allow local authorities to meet the costs of value added tax if incurred in the purchase of care. The consultation
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document on direct payments issued shortly before the Committee stage—indeed, very shortly before—indicates that the Government do not aim to set a floor or ceiling on the amount of cash payment, but that they expect local authorities to make payments only where payments are at least as cost-effective as equivalent services. The amendment would ensure that the Secretary of State could issue guidance to local authorities concerning VAT, where such tax may be incurred. This is likely to be in a minority of cases, but without any element to cover VAT disabled people may face financial hardship or may have to reduce the number of hours of personal assistance that they receive.
After the Committee stage, my noble friend the Minister wrote a letter on VAT to our mutual noble friend Lord Jenkin of Roding, who unfortunately cannot be with us this evening. She was kind enough to send me a copy of that most helpful letter, which I appreciate. However, the letter did not cover all the circumstances. Currently, no VAT is payable on services provided, first, by agencies that are below the VAT threshold of £47,000 a year; secondly, by charities that provide care on a not-for-profit basis; and, thirdly, by agencies employing professional services of medically qualified staff, including unqualified staff under the supervision of qualified staff. However, the distinction between medical and social care is often hard to draw: for example, when is giving someone a bath considered to be social care or as being medically necessary?
So far as concerns direct payments, people who employ their own personal assistant, or who employ professional nursing staff, or agencies operating below the VAT threshold, would not be liable for VAT. But a problem may arise for the minority who may use the services of a home care agency which charges VAT on the services that it provides. VAT can only be recovered by people who are registered for such purposes, which includes local authorities when they are fulfilling a statutory obligation but not individuals.
Since the last stage of the Bill, I undertook some research through one of the care agencies in South Wales which is run by the John Groom Association for the Disabled, for whom I work. I am advised that 75 per cent. of the agencies in that area providing domiciliary care are liable to VAT as they are not medically qualified agencies. In the meantime, I have been talking to the United Kingdom Homecare Association which, although it has no firm figures, estimates that some 40 per cent. of agencies providing home care throughout the nation are liable to charge VAT.
The amendment would give the Secretary of State powers to issue guidance to local authorities about how VAT is handled. My concern is that disabled people who may choose to have some or all of their hours of personal assistance covered by agencies which are liable to that tax, are not unduly penalised for doing so. That is not likely to happen in the vast majority of cases as all the evidence so far indicates that the proportion of hours covered by such agencies is likely to be small. Indeed, the attraction of direct payments schemes for many disabled people is the opportunity to have choice

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and control through directly employing a personal assistant, rather than simply transferring from a local authority service to a private agency service.
Experience from the people who have received cash payments from the Independent Living Fund indicates that those who have used agencies have done so on a limited basis. As I understand it, only 44 per cent. of users in south-east London were using, or have used, agencies. However, as those agencies tended to be more expensive, users also tended to top up their ILF payments. The ILF has confirmed that currently payments from the fund include an element of VAT if the recipient indicates that that will be payable when he receives an offer.
In Committee my noble friend the Minister stated that, although VAT is not due on direct payments made by local authorities, some individuals receiving payments may have to pay VAT if receiving services from agencies which charge VAT; so I know that my noble friend is aware of the situation. However, service users will not incur VAT and if the intention, therefore, is to ensure that service users and payment recipients are dealt with in a similar fashion, people who use agencies and incur VAT as a result should not be disadvantaged in comparison with a service user. Without an element for VAT, some people using direct payments could face hardship. That is the situation that I should like to see addressed through guidance.
The purpose of Amendment No. 9 is to ensure that payments include not only elements for VAT but also for national insurance contributions, tax, advertising and all the other costs of employing an individual. The Independent Living Fund or social services indirect payments schemes have never had the same financial commitment enjoyed by equivalent indirect payment. There is no logic to that, other than that disabled people have accepted much lower payments when the schemes originated because they were only too willing to break free from direct services.
By and large, one encounters similar overheads in managing one's own care to that experienced by a larger organisation in establishing similar provision. If one is running a small business and hiring and maintaining staff, costs such as sickness and holiday pay, insurance, recruitment costs, accountant and possible payroll support and employers' National Insurance contributions must all be taken into account in addition to the hourly rate. In most cases, the hourly rate and a small amount of holiday or sick pay is all that is presently offered by the user—and, indeed, to the user—by the payer.
I understand that the Government are likely, through my noble friend the Minister, to tell me that it is the responsibility of individual local authorities to make such decisions. In Committee, my noble friend said that she believed that it should be left to local authorities to decide what the level of direct payments should be. However, when replying to my amendments I wonder whether my noble friend can let us know whether she is prepared to refer the matter to the Technical Advisory Group so that those who arc looking into the technical aspects of applying the Bill can take a proper look at the problem. I beg to move.
6.30 p.m.
Baroness Hamwee: My Lords, Amendment No. 8 is in my name. I shall seek not to repeat too much of what the noble Lord, Lord Swinfen, has said with regard to VAT as the amendment is addressed to the same issue although it goes rather further. As the noble Lord has explained, not all care agencies are able to avoid charging VAT, if I can put it that way round. This amendment seeks to tackle the problem of those who wish to purchase services from an agency. That, of course, will not comprise all the clients to whom this Bill is addressed, nor all the agencies. Therefore, to that extent, it is a relatively confined problem. I have sought to suggest a way in which the advantages of local authorities with regard to VAT are retained without putting local authorities and clients back into the position from which we are seeking to move them. The financial memorandum to the Bill states that the provisions of the Bill will be implemented within existing resources. That is not quite the same as saying that it will be cost neutral, because it raises the spectre that it might be an income-generating provision for the Government, in that VAT will have to be charged and paid—and will therefore accrue to the Exchequer—where it is not at present. I hope that the Minister can reassure noble Lords that generating income is the last thing that is in the Government's mind with regard to the area we are discussing.
I suggest, through this amendment, that a client may use a local authority as his or her agent to purchase the care and in that way avoid VAT. I use the word "avoid" and not "evade". That may not be a technically sound suggestion. If it is not, I hope that the Government will recognise the problem and will be able to suggest another mechanism to resolve it. I am concerned that, if the VAT element—an extra 17.5 per cent.—has to be borne by the user, it will be an unnecessary and inappropriate constraint in the choice of service. I appreciate that, if it is borne by the local authority, in a sense that would mean moving funds around between tiers of government. However, I shall not discuss at this stage whether this VAT element will be recognised in SSA and grant. Perhaps that is too detailed a point to discuss now. However, it would be sad if what is really a peripheral matter affects—perhaps fundamentally—the choice of service.
Baroness Seccombe: My Lords, two years ago I was involved in securing care from an agency for a relation. Funds had to be found and VAT had to be paid. If the amendment were accepted, it would mean that people who received direct payments would be better off than those who had to find the funds for themselves. Am I right or have I got that rather muddled?
Baroness Masham of Ilton: My Lords, we have a problem, in that the microphone has become severely disabled; in fact, it has broken its neck. However, I congratulate the noble Lord, Lord Swinfen, on his research. For severely disabled people, employing carers can be complicated because it may involve a rota system comprising several carers. Insurance, holiday pay, maternity leave and other such matters have to he taken into account. Help may need to be provided in resolving

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those matters. Is it possible for people to receive such help even if they receive direct payments from the local authority, because these matters can be complicated? Many severely disabled people are living on their own without family support.
Baroness Darcy (de Knayth): My Lords, I support the noble Lord, Lord Swinfen, as I have added my name to Amendment No. 9. He gave a clear and comprehensive explanation. I steered clear, nervously, of adding my name to a provision which concerned VAT matters, but nevertheless I support this whole group of amendments as they are important.
Baroness Gardner of Parkes: My Lords, I do not know whether my next point has already been discussed at an earlier stage, but I should say that a body can amass a fairly large turnover before it has to register for VAT. I should have thought that such a provision would encourage those using carers to use people who had small businesses or who were setting up in business. The provision may be a good one in that sense.
Baroness Cumberlege: My Lords, I understand your Lordships' anxiety which lies behind these amendments. The level of a direct payment must be sufficient to enable the recipient to buy the services the payments are intended to cover. It must also enable someone who gets a direct payment to purchase the services legally. By that I mean that a local authority cannot set a payment at such a low level that the only way someone could purchase the relevant services would be to break the law, by not, for example, complying with legal responsibilities to pay tax. If a local authority deliberately offers an amount in direct payments which would not enable the recipient to buy adequate services, taking into account any financial contribution he may be required to make, that is effectively the same as the local authority not offering direct payments at all. It would not be a proper exercise of local authorities' powers and it could be challenged.
The Bill leaves it to local authorities to decide on the level of a direct payment. To do this, the local authority will have to reach a view on how much it will cost the individual to buy the relevant service. The authority's assessment of costs will have to take account of the legal responsibilities involved. I can give a commitment to my noble friend Lord Swinfen that the Section 7 guidance that we shall issue will say that the direct payment should—taking into account any financial contribution that the authority is asking the individual to make towards the cost of his care—be sufficient for the individual to purchase the relevant service, and should take account of the fact that there may be legal responsibilities, such as paying VAT or national insurance, in doing so. However, local authorities also have a duty to obtain value for money, so the payments will not automatically cover specific costs where there is a more cost-effective way of securing the service. Local authorities cannot be required to fund the cost of a person's preferred method of purchasing a service if, in fact, a service of adequate quality can be purchased more cheaply in another way.
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So, for example, the cost of the services may include a value added tax element, but it may not need to if the person can secure adequate services from a provider who is not required to charge VAT. It will be for the local authority to decide on an appropriate level of direct payments. Clearly the payment of VAT is something that individuals will wish to consider when deciding what arrangements they will make using their direct payments, just as they will take into account other factors which cause variations in cost and quality of service from different providers.
No amendment is necessary to enable the Secretary of State to issue guidance, as Amendment No.7 aims to do. Clause 3(3) already gives him the power to issue guidance by adding direct payments to the list of social services functions in Schedule 1 to the Local Authority Social Services Act 1970. Sections 7 and 7A of that Act authorise the Secretary of State to issue guidance and directions in relation to local authorities' exercise of their social services functions. Amendment No. 7 is therefore not required.
Amendment No. 9 raises the question of what being a "good" employer means. People have different views and different expectations about what a good employer is. It is not clear what the amendment means in this respect and it would therefore be difficult to implement, or enforce. It is a rather unclear and open-ended commitment. It could result in local authorities being required to set the direct payment at a higher level than they thought appropriate. That would interfere with their ability to use their resources efficiently and to help all the people for whom they are arranging services.
I now turn to Amendment No. 8. I understand the concern of the noble Baroness, Lady Hamwee, in that she wishes to see that people who receive direct payments are not disadvantaged with regard to paying VAT. I have already explained that, where people use their direct payments to purchase services upon which VAT is charged, they will not be able to recover the VAT. There is a special provision which enables local authorities to recover the VAT in relation to their non-business activities but there are strict limitations imposed by EC law on the bodies to which this provision can be applied. These limitations preclude members of the public, so VAT cannot be refunded to individuals.
Amendment No. 8 seeks to enable local authorities to recover the VAT which people who receive direct payments incur. There are two possible scenarios but neither appears to achieve what the noble Baroness intends. In the first a local authority pays an agency to provide a service to an individual. In that case, the local authority will be able to recover any VAT, but then it will not have made a direct payment. The Bill already allows for the possibility that people may continue to receive services arranged by the local authority or a combination of direct payments and services. If the local authority does not pay the money to the individual but pays it directly to the care agency, that is effectively what has happened. The individual does not receive or spend any direct payments.

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In the second scenario, the local authority does make direct payments to the individual. The individual receives the payments and decides to purchase services from an agency which is required to charge VAT. Under Amendment No. 8 the individual may ask the local authority to act as agent and purchase the services on his behalf from the care agency. The individual passes the money hack to the local authority, which passes it on to the care agency. For VAT purposes, the supply would still be considered to have been made by the care agency to the individual, not to the local authority. The local authority is acting only as an intermediary. Even though the local authority may have paid the agency, it cannot recover the VAT.
I have already said that we intend to use Section 7 guidance to say that direct payments should be sufficient—together with any financial contribution from the individual—for people to purchase the relevant service taking account of the fact that there may be legal responsibilities such as paying VAT. But local authorities also have a responsibility to obtain value for money, so the payments will not automatically cover specific costs where there is a more cost-effective way of buying the service. Individuals cannot recover the VAT they may have to pay. That is not something we can change. The payment of VAT is something that individuals will wish to consider when deciding what arrangements they will make using their direct payments, just as they will take into account other factors which cause variations in cost and quality of service from different providers. A difficulty arises if we seek to advantage purely for VAT purposes those receiving direct payments but not those who pay for their own care. As my noble friend Lady Seccombe said, we believe that that would be a very unfair arrangement.
My noble friend Lord Swinfen asked whether we would refer the question of paying VAT to the technical advisory group. The general issue of matters which will affect the level of direct payments has already been considered by the technical advisory group, but I have mentioned what we intend to say in guidance. I hope it will be reassuring if I say that the technical advisory group will be consulted on that guidance and we will be undertaking a wider consultation generally.
The noble Baroness, Lady Hamwee, asked whether I could give an assurance that generating income is not in the Government's mind. I can give that very firm assurance.
The noble Baroness, Lady Masham, asked whether someone could obtain help from the local authority on VAT issues. Local authorities may offer advice but probably the best way to obtain guidance is through Customs and Excise. The noble Baroness asked whether services will be provided by local authorities. The purpose of direct payments is that they are instead of services which are provided. It is possible for a recipient to receive both direct payments and services together, but clearly one would not have a home help and then receive direct payment to pay for a home help. I hope that I have made that matter clear. The noble Baroness looks mightily puzzled and perhaps we can discuss it afterwards.
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We believe that Amendment No. 8 is ingenious but we do not believe that it achieves its desired effect. If the local authority purchases the services, then VAT may be recovered but no direct payment is made. If the local authority purchases the services acting as the individual's agent, then the supply is to the individual and the local authority may not recover the VAT. We believe that the amendments should not be supported.
6.45 p.m.
Lord Swinfen: My Lords, I thank my noble friend for a long and comprehensive reply. I was encouraged when she indicated that all proper taxes and so forth must be included in the grant. However, I was a little disappointed when she gave me the impression that people in receipt of grants might lose some of their independence by not being allowed to use the care agency that they particularly want in case there is a charge for value added tax.
I am grateful that some of these matters will be considered by the technical advisory group and by other bodies when my noble friend and those in her department are taking advice. I wish to read the reply because it was long and complicated and I shall reserve my right to come back to the matter on Third Reading. In the meantime, I beg leave to withdraw the amendment.
[Amendments Nos. 8 and 9 not moved.]
Lord Addington Lord Addington moved Amendment No. 10:
Page 1, line 27, at end insert—
("( ) Regulations shall provide that each local authority shall ensure that recipients of payments under subsection (1) above have access to personal assistance support services to help with the management of direct payments.").
The noble Lord said: My Lords, Amendments Nos. 10 and 13 relate to advice and support for those who will be purchasing their care requirements for the first time. It takes no great leap of imagination to realise that many of the issues will be difficult and complicated for people to deal with, in particular those who have not previously purchased their own community care requirements. The vast majority of us when confronted by a new form, shiver when we first see it and wonder what it means. I wonder how many noble Lords are totally familiar with legalese and how often they see it. It is frightening to many of us.
Both amendments provide for ways in which support can be given. Amendment No. 10 is similar to an amendment tabled in Committee and is put forward in hope and expectation. It provides that guidance shall be given. However, if the Government have not changed their decision about such support being on the face of the Bill, we ask them to consider Amendment No. 13. That provides that the Government will be able to give support and is tabled in response to a reply given by the Minister in Committee. She stated:
"We intend to issue guidance to local authorities to ensure that they are aware of the importance of support. However, we feel that to go beyond that and give local authorities a legal duty to provide advice and assistance would be onerous and probably inappropriate".—[Official Report, 15/1/96; cols. 389.]
Amendment No. 13 merely enables the Government to give guidance and is therefore in line with the Government's own thinking. Without such support

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many people who are supposed to benefit from direct payments will not be able to do so simply because they will be unable to understand the system. They will be frightened off, or, even worse, some people will not be able to follow through and give the correct help to the employees and may have legal action taken against them.
There is a practical problem as regards understanding and implementing the regulations. Surely some direct form of guidance would be appropriate and I invite the Government to accept Amendment No. 13 if they cannot accept Amendment No. 10. Such advice is vital to the operation of the scheme, which we all hope will work. I beg to move.
Baroness Hollis of Heigham: My Lords, I am happy to support the amendments. I should prefer a regulatory power. However, a Section 7 guidance might meet the point, as the noble Lord said.
The issue is simple. Many disabled people who have only received services from a local authority would prefer to receive cash payments to buy those services but are apprehensive about being an employer. People who have been employers are familiar with the situation. However, as a mother in full time work, with two young children, employing a mother's help, I found it difficult to cope with national insurance, tax and all the other requirements of an employer. Many disabled people will be similarly nervous, especially as they may need to employ not one mother's help but two or even three carers, some of whom may be on the PAYE system or self-employed, as well as turning to the back-up support of an agency.
It is easy to make mistakes. The ILF has experience of people who have done so and who have run up arrears of national insurance, tax or the like. But whereas someone like myself in full-time work was able to throw money at the problem (if I may use that expression) and sort it out with the tax and national insurance offices, a disabled person might not have the finances to sort out the financial problem retrospectively.
Most local authorities recognise that when skilled people find themselves unemployed and, perhaps with a redundancy payment in hand, consider moving into self-employment or setting up a small business—they may wish to start a taxi service, a sandwich delivery service or engage in desktop publishing, all small businesses which I was involved in establishing in local authority days—the biggest single obstacle is the ability to cope with the paperwork as an employer. That is what deters most people when employing someone else. They need to be able to cope. Most local authorities, including my own, have enterprise agency trusts precisely to give the wrap-around support and guidance to help small businesses avoid being broken by bureaucracy in the first two years of trying to fly.
What is available in most authorities for a fit and able person starting up a small business employing an individual should also be available to a disabled and unfit individual employing someone. An employer who employs an individual performs in the same way as a small business. It makes good sense. The amendment
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ensures that direct payments are properly spent and there is no risk of misuse—I do not say abuse—of public moneys. It ensures that the disabled person acts as a good employer. He does not rely on cheap labour and casual arrangements which leave the employee without adequate holidays, sick pay or the like. The amendment avoids the risk of financial problems. With the knowledge that there is a support package in place, many more disabled people will take the risk of moving from services to cash payments.
We want the Bill to succeed. We know that the Minister wants the Bill to succeed. We want local authorities to take on this provision with goodwill. But we also want disabled people to have the courage to manage their own affairs. They will do so with the support package. They will not do so if there is no support package. If the Minister cannot provide by regulation, will she please use her best endeavours to ensure that the provision is in place by guidance.
Lord Swinfen: My Lords, the measure to extend cash grants to people who have community care and wish to manage their own care will, I fear, have limited success unless support services are also available. This is, I understand, the view of organisations such as the British Council of Organisations of Disabled People and the Disablement Income Group, both of which have considerable experience. They argue that many more people could become confident and competent employers of their own personal care assistance if practical advice, training and other support were provided. Support for people who are managing their own personal assistance arrangements goes beyond the provision of leaflets about the legal requirements for tax and national insurance. Information on a range of issues has to be up to date and available to each individual as he embarks upon independent living.
It is important that resources are made available for the production of written material for direct payment users and that organisations with a track record of producing guidance are involved in its production. A handbook for direct payment users would be a step in the right direction. I hope that the Government will make resources available.
The Earl of Mar and Kellie: My Lords, I support my noble friend's amendments. Last week I visited a lady in Alloa. She has cerebral palsy and receives direct payments. She has achieved her own specially modified home through her local housing association after many years of having to live in residential care. The lady is determined to live independently with 24-hour care, and, to many people's surprise, she is successful. She cannot tackle wages or other employment issues. Those are handled for her by the Whins Independent Living Scheme set up by Central Region social work department. However, she can select her own assistance and prepare on the computer the 24-hour rotas. She lends her staff in emergencies to other members of the scheme. Quite simply, the amendment would enable that situation to occur in England and Wales.
Baroness Cumberlege: My Lords, both amendments deal with the support which will be provided to people

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who receive direct payments. I agree wholeheartedly with the noble Lord, Lord Addington, that forms can be very intimidating. As the noble Baroness said, employing others is not an easy option. Amendment No. 13 also deals with the choice available to people who receive direct payments. On the question of choice, we have already said that we hope local authorities will allow people who receive direct payments as much freedom as possible in how they use them. But we have also said that ultimately the authority must be satisfied that the money is appropriately spent.
Both amendments seek to ensure that local authorities provide advice and support to those people who receive direct payments. It is not necessary to amend the Bill to enable local authorities to do that. The Government agree that experience to date has shown that direct payment schemes work better where there is support, and we intend to encourage local authorities to do so. We see this as a matter of good practice.
We shall be issuing practice guidance on direct payments in addition to Section 7 policy guidance. Our practice guidance will cover the issue of support to direct payments recipients and will stress its importance. We shall be discussing the content of both sets of guidance with the direct payments technical advisory group and we shall also consult more widely on both sets of guidance before they are issued. We have already said that we intend to tell local authorities that they should inform people to whom they are offering direct payments that they may have responsibilities as employers before the individual decides to accept direct payments.
Amendment No. 13 talks about safeguarding the terms and conditions of people who are employed by those who receive direct payments. People who use their direct payments to employ staff will have the same legal liabilities as every other employer. That means that those who are employed will have the same safeguards as other employees. I do not think that it is either necessary or desirable to attempt to use the legislation to do something different for this particular group of employees than for the workforce generally. Nor do I think it right that the Secretary of State should tell people who receive direct payments what terms and conditions of employment they should use.
Amendment No. 13 places a duty on the Secretary of State to issue guidelines on the issues of choice and employment terms. We have already said that we intend to issue guidance and that we shall consult on that guidance in draft. But we do not think it right to use the Bill to limit the Secretary of State's discretion over what that guidance covers or contains.
The Government are also considering producing a guide to managing direct payments for the people who receive them. We intend to discuss the matter with the technical advisory group to see if it thinks that that would be useful and, if so, what it might contain. If we do produce such a guide I am sure that it would cover the issue of employing staff, although I must stress that it would not be an exhaustive, authoritative guide on employment liabilities. That would not be appropriate. Authoritative information and advice are already
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available from the appropriate sources such as the Inland Revenue and Contributions Agency. It would not make sense to attempt to duplicate. In addition to the guidance we shall issue, we intend to produce training materials to help local authorities train their staff to implement direct payments. We have not yet decided what exactly to produce, as again we intend to discuss the matter with the technical advisory group.
The Government intend to encourage local authorities to provide support or arrange for it to be provided by some other agency such as perhaps a voluntary organisation of disabled people. We do not, however, think it right to go beyond that and require local authorities to provide support, as Amendment No. 10 proposes. We think that it should be left to local authorities to decide on the level and type of support they provide, taking into account local needs, circumstances and priorities. Local authorities are best placed to decide what is appropriate, just as, for community care generally, local authorities decide on the level and nature of services to arrange. It is clear that direct payments will only work with the commitment of local authorities to the policy. I am sure that authorities who want to make direct payments a success will want to help and support direct payments recipients.
Lord Addington: My Lords, that is an answer I have become used to hearing. "Yes, we agree with you in principle, but not here", is the sub-text. I would rather have the provision on the face of the Bill but it is not worth dividing the House now, although I may change my mind. The Minister's answer should be studied. There is one remaining stage of the Bill and considering the hour and the number of Divisions that have already taken place, it is appropriate that the matter should be taken away and considered. However, I give no guarantee that I shall not bring it back on Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7 p.m.
Baroness Cumberlege Baroness Cumberlege moved Amendment No. 11:
Page 2, leave out lines I to 4 and insert—
("(5) If the authority by whom a payment under subsection (1) above is made are not satisfied, in relation to the whole or any part of the payment—

(a) that it has been used to secure the provision of the service to which it relates, or

(b) that the condition imposed by subsection (3) above, or any condition properly imposed by them, has been met in relation to its use,

they may require the payment or, as the case may be, the part of the payment to be repaid.").
The noble Baroness said: My Lords, in moving Amendment No. 11, I wish also to speak to Amendment No. 16. In Committee I gave a commitment to bring forward an amendment to give effect to the Delegated Powers Scrutiny Committee's recommendation. The scrutiny committee wanted the provision for local authorities to require direct payments to be repaid written on the face of the Bill instead of taking a regulatory power. Amendment No. 11 fulfils that commitment and Amendment No. 16 is a similar amendment to the Scottish provisions.
The amendments give local authorities the power to recover mis-spent funds; there is no duty placed on them to do so. As I explained in Committee, the Government do not believe that local authorities should have a duty to recover money which is mis-spent. To impose such a duty could force authorities to pursue trivial sums which could well be less than the cost of recovery. Giving them a power rather than a duty also gives authorities discretion to take into account hardship considerations when deciding whether to seek repayment. Local authorities' existing duties to ensure that they manage their resources with due regard for propriety and value for money are sufficient to ensure that they will seek recovery of funds in appropriate cases.
The amendments provide that local authorities may require all or part of a direct payment to be repaid where they are not satisfied that it has been used for the purpose for which it was intended or that the conditions properly imposed on its use have been met. A local authority will only make direct payments on the basis of someone's assessed needs, and it must be able to recover money which is not used to secure services to meet those needs. We intend to encourage local authorities to use their discretion to allow individuals as much flexibility as possible over how they use their direct payments but ultimately the authority must be satisfied that the money is appropriately spent. Local authorities have a duty to ensure that public funds are not mis-spent and so the final judgment on what is appropriate must remain with local authorities. They must be satisfied that the money is spent for the purpose for which it was intended.
The amendments also provide for direct payments to be recovered where the conditions on their use have not been met. This part of the subsection is needed to recover funds if payments are used to employ someone who is excluded by regulations under Clause 1(3) or the related Section 7 guidance we propose.
The amendments place the onus of proving that direct payments have been spent properly with the recipient rather than requiring the local authority to satisfy itself that the money has been mis-spent. That will ensure that local authorities can lay down the monitoring arrangements with which they expect people who receive direct payments to comply. Our guidance will emphasise the importance of local authorities making clear to people—before they start to receive direct payments—what the money may or may not be spent on, and what information on expenditure the authority will require for audit purposes.
The wording of the amendments ensures that local authorities can recover only that part of a direct payment which they are not satisfied has been spent properly to ensure that there is sufficient flexibility to deal with whatever circumstances arise. I beg to move.
Lord Campbell of Croy: My Lords, I thank my noble friend for explaining the reasons for the amendment. I moved amendments in Committee to enable discussion to take place on two suggestions
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by the Delegated Powers Scrutiny Committee. The Government then announced that they intended to adopt one of the options which was to include a general provision to give a power to local authorities and to do so in the Bill in the primary legislation. These amendments carry out that proposal out and I welcome them. The scrutiny committee had suggested that if that did not happen, then the regulations under subsection (5) should be subject to the affirmative resolution procedure in the first instance. That is not now necessary. However, I note that in Amendment No. 19 the noble Baroness, Lady Hamwee, proposes that all regulations under the Bill should be subject to affirmative resolution in the first instance. I shall keep my comments on that until we reach the amendment.
I welcome Amendment No. 16, the Scottish equivalent of the one being discussed. As a former member of the scrutiny committee—a new committee which is only three years old—I am glad to witness yet another case in which the Government have moved to adopt one of the committee's suggestions.
Baroness Masham of Ilton: My Lords, with all the problems of employing people which we have been discussing, can the Minister say what happens if someone who receives direct payments gets into debt?
Baroness Cumberlege: My Lords, I thank my noble friend for his support for the amendments. As regards the noble Baroness's question, the social services department would clearly wish to try to help the individual concerned if it felt that it was not a wilful debt but was incurred through lack of knowledge or something similar. Ultimately the social services department could decide that that person was unable to manage direct payments. In that case it would want to discuss the matter with the person concerned and possibly provide services instead of direct payments. However, it would be for the local authority to keep an eye on such situations and use its discretion.
On Question, amendment agreed to.
[Amendment No. 12 not moved.]
[Amendment No. 13 not moved.]
Baroness Faithfull Baroness Faithfull moved Amendment No. 14:
After Clause 3, insert the following new clause—
REGULATION OF INDIVIDUAL INDEPENDENT CARERS
(". After consulting all persons who appear to him to be interested, the Secretary of State shall establish a body for the regulation of individual providers of home care to recipients of payments under section 1(1) above.").
The noble Baroness said: My Lords, the purpose of this amendment is to establish a regulatory body to ensure that all providers of direct payments to recipients work to a satisfactory and uniform standard of conduct and practice. In that way, recipients of direct payments, and the local authorities responsible for those payments, would be assured of a high standard of care.
The regulatory body would be along the lines of a general social work council. The membership of such a body would be an important factor. It would be fair to all concerned that it should have representatives from among users, local authorities, professionals, voluntary and statutory bodies and other interested parties. It would regulate powers of competence, which would effectively mean the power to issue a licence to practise that in the event of incompetence could be withdrawn.
In 1970, Professor Parker of Bristol University carried out a study that made a compelling case for the setting up of a general social services council. At that time local authorities were entirely responsible for the work of their department. It was felt that it would be duplicating their responsibilities.
Times have changed. Local government increasingly assumes the role of enabler of services. We now have a purchaser-provider system involving the public, the private sector and the voluntary sector. Thus, it is necessary to ensure a uniform service of high quality, both within the local authority and throughout the country. The setting up of a general social work council would ensure that the recommendations made in this Bill would be carried out effectively; and, as I said earlier, would ensure uniform standards of conduct and practice, not only within the local authority but throughout the country. The medical and nursing professions, with whom social services work closely, have such a council. The time has come to set up a general social work council to monitor and help in the implementation of this Bill. I beg to move.
Lord Addington: My Lords, my Amendment No. 15 is grouped with this one. Although it takes a slightly different approach, the idea is the same. Those who provide care that can be purchased directly should be regulated in some way. Bad care, cowboy operators, or call them what you will, are apparent in most walks of life. It would be tragic beyond belief if people who do not know what they are doing enter this service and, for instance, advertise at cheaper rates. The capacity for a series of very unpleasant little tragedies is immense. Surely, some form of regulation should be in place. It does not matter which of these amendments—the one aimed at services or that aimed at individuals—is accepted. There must he some form of regulation. If the Minister can prove that there is already some form of legal framework to provide that, all well and good. But there must be protection. Without it, we tread extremely dangerous ground. Without regulation, we almost guarantee that at some point there will be a total abuse of this new system.
The Earl of Mar and Kellie: My Lords, to back up the remarks of my noble friend I give an example from Scotland. On Friday I was told of an appalling case history. Prior to the setting up of the local independent living scheme, a student with brittle bones had a directly employed carer who liked to receive a loan whenever the direct payment arrived. The carer would make the threatening remark, "You know, I could drop you". Not surprisingly, the student lived in terror of his carer. Subsequently, and fortunately, the student joined his local independent living scheme. After interview, the
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scheme manager was able to tackle the dismissal of that wholly inappropriate carer. The student's life improved dramatically with his next carer.
7.15 p.m.
Baroness Darcy (de Knayth): My Lords, I direct my remarks mainly to the amendment of the noble Baroness, Lady Faithfull, dealing with the regulation of individual carers rather than agencies, as in the amendment of the noble Lord, Lord Addington. I stress that this does not relate to her general point, but to individual carers in the context of this Bill. I have enormous respect for the noble Baroness. As she knows very well, normally I happily follow her through any Lobby. However, this amendment worries me, as a disabled person who is at the moment lucky enough not to need personal assistance. It also causes concern to the British Council of Organisations of Disabled People (BCODP), many of whose members were in the forefront of the independent living movement which campaigned for disabled people to employ and train their own personal assistants and direct their care according to their own particular needs and ways.
BCODP feels that to impose upon disabled people carers who are professionally trained to do the job by people other than disabled people themselves would serve only to perpetuate the professionalism and administration of disabled people's lives. That is, after all, the very thing that this Bill tries to get away from.
I should like to ask the noble Baroness, Lady Faithfull, a few questions as to how her amendment might affect a disabled employer's freedom and independence. For instance, how would a disabled person be certain that he or she would be able to employ the personal assistants of his or her choice? Those persons may not be on the register. Would the local authority then restrict employment only to those on the register? Many users recruit from other European countries. They would lose a potential source of labour if new regulations meant that such recruits had to be accredited before starting work. Would they be safeguarded? Would local authorities set dual standards for the pay and conditions of registered and non-registered personal assistants? How would a national register respond to local and cultural differences? How would the standard for going on the register be decided? There are currently no qualifications or training for personal assistants; so what criteria are being suggested? Whose interests do they serve? Did the noble Baroness, Lady Faithfull, consult disabled people and their organisations on this amendment? Did she specifically consult the British Council of Organisations of Disabled People, which has great expertise in this area?
I appreciate that the noble Baroness's amendment states that the Secretary of State should consult all interested parties before establishing a regulatory body, but it also states that, after consultation, it shall then he set up.
I very much hope that, if such organisations as BCODP were not consulted, the noble Baroness might feel able to withdraw the amendment—I do not know

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whether she put it forward at this stage only for discussion. I hope that she will not press it and will be willing to consult disabled people's organisations. BCODP says that it is very willing to consult. It would be very regrettable if a move designed to protect instead ended up forcing people back into dependent relationships.
I should like to give two brief quotes from Cashing in on Independence, written by Zarb and Nadash. They are quotes from people who use direct payments. The first is:
"Some people impose their own ideas and I've still got mine, even if I haven't got my legs".
The other is:
"Being able to chose the right person—personality, attitude to disability, how they fit in with the family. I'm able to retain my self respect".
Those are examples of what it is all about. I hope that the noble Baroness will think very carefully and perhaps consult.
Lord Swinfen: My Lords, the general idea behind both these amendments is admirable. The amendment of the noble Lord, Lord Addington, which aims to ensure proper standards with care agencies, is very much easier to implement than is that of my noble friend. With a care agency, as with medically qualified agencies such as nursing agencies, at the moment one can insist that the senior person in the agency has obtained certain qualifications and that the individuals supplied by the agency are working under the proper supervision of qualified people in the agency.
However, with the individual carer who is recruited on an individual basis, the standards and work required are so varied that adequate qualifications will be extremely difficult to produce. A carer may perform some very complicated tasks providing care for six, seven or eight hours a day for a very severely disabled person. On the other hand, a carer may go for half an hour or an hour in the morning to get someone out of bed, washed and dressed and possibly go in at other times just to give a bath. A great deal of professional knowledge is not required, only a certain amount of genuine common sense.
I am delighted that both the amendments have been brought forward. It is absolutely essential that we make certain that the carers who will be produced once the Bill is implemented—I am sure that agencies will spring up throughout the United Kingdom and more disabled people will seek individual carers—have the right standards.
The amendment of the noble Lord, Lord Addington, is quite easy to implement because it deals with qualifications which managers and staff may have. The amendment of my noble friend Lady Faithfull is much more difficult for the individual. I should like to hear her reply to the questions put by the noble Baroness, Lady Darcy (de Knayth), although I doubt whether she had time to take down all the questions and may have to deal with them at Third Reading—she may write shorthand, whereas I do not, so she has the advantage of me.
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I support the principles behind both the amendments.
Baroness Hollis of Heigham: My Lords, I shall be brief. Most of my points have already been made. We support the amendment moved by the noble Lord, Lord Addington, for the regulation of agencies. It seems to me absolutely right that where people operate a commercial service in a sensitive area of care, they should be registered and appropriate qualifications checked.
Like other noble Lords who spoke, I too have some unease about the amendment of the noble Baroness, Lady Faithfull. Nobody in this House can match her experience in the fields of health and social service. She is absolutely right to remind us that when we move to direct payments there is a risk of abuse. Clearly her amendment aims to offset that risk by seeking to professionalise the role of carer.
The problem is that professionalising the carer generates other problems in turn and may, but not necessarily will, displace the disabled person from the centre of the care network and again make him dependent on it. By virtue of their training, professionals bring assumptions to bear—that is what their training is about—which may not always be appropriate in the eyes of the individual. If they seek to retain their authority as employer, it can make things difficult.
Perhaps I may suggest a more appropriate route. The noble Baroness was right to remind us that there is a risk of abuse in this area and we should safeguard against it. I suggest that the right route is less through seeking a general council or regulation through that device than by revisiting the amendment so ably moved by the noble Lord, Lord Addington, a few moments ago, which seeks to ensure that local authorities have in place support and advice packages for disabled people which will strengthen them in their abilities and competences when it comes to selection and recruitment of staff. That seems to be the right way to work with the grain of what disabled people want rather than seek to meet the fears that the noble Baroness addressed along routes that they clearly do not want.
In those circumstances and given the strength of experience of the noble Baroness, I wonder whether the Minister may, on reflection, be able to move even further down the road of Amendment No. 10 moved by the noble Lord, Lord Addington, than she was previously minded to do.
Baroness Masham of Ilton: My Lords, I should like to add a few words. One needs flexibility and freedom for the individual but also one needs protection. The example given by the noble Earl, Lord Mar and Kellie, was a real one. Recently there have been some unpleasant cases of abuse in homes for handicapped people in Yorkshire. Disabled people could be very seriously abused even more so in their own homes where there are no other people around. Also there is now the growing problem of alcohol and drug abuse. Therefore, I hope that the Minister will look closely at some acceptable way of protection for the individual.
Baroness Cumberlege: My Lords, I am very much aware of the commitment and support of my noble

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friend Lady Faithfull for a social work council and regulation generally. The noble Lord, Lord Addington, and the noble Earl previously expressed their concern with regard to regulation in this area. We share that concern. We are now undertaking a major review of the way in which social services are regulated and inspected. Part of the remit of that review is to consider whether non-residential services should be subject to regulation. As my noble friend Lord Swinfen and the noble Baroness, Lady Hollis, pointed out, this is a very difficult area. I do not envy the task of the review team. But we consider that it would be jumping the gun to introduce regulation of the kind of independent provision about which we have been talking tonight in the context of direct payments while the whole subject is being reviewed.
The review was launched by the publication of the consultation document Moving Forward in September 1995, fulfilling our earlier promise to consider the need for statutory regulation of day and domiciliary care services. We appointed an independent assessor, Tom Burgner, to lead the consultation process. His job is to receive and assess written responses to Moving Forward and to hold direct discussions with relevant bodies. We believe that Tom Burgner's background as a successful public servant, most recently as Secretary of the Chancellors and Vice-Principals of the Universities, has equipped him well to distil the outcome of a major public consultation exercise and to make recommendations balancing all interests.
Responses to the consultation document have to be submitted to Tom Burgner by the end of this month. He will then make his report to Ministers in the summer. We expect the report to be published. How the issues are handled after that will, of course, depend on the recommendations and their legislative implications. We do not know what the outcome of the review will be and whether it will recommend that we regulate non-residential care. But once we know the outcome of the review we shall consider its implications for direct payments.
Baroness Faithfull: My Lords, I thank the Minister for her reply and also thank all those who have spoken. I believe that the noble Baroness, Lady Darcy (de Knayth), made nine points. I hope that she will forgive me if I do not go through all of them. First, if such a council were to be set up, it would include the voluntary organisations, as I said, and there would be co-operation between the two. Also, there must be co-operation between the local authorities and the voluntary organisations, to which she referred.
I was asked to move the amendment by the Directors of Social Services, the Association of Metropolitan Authorities and the Association of County Councils. It is not a question of one taking over from the other. It would be co-operation between the two. It is very important that the statutory and voluntary bodies work closely together.
I did not envisage that the amendment would deal with details. Those will be for the local authority and the voluntary organisations concerned. It concerns much more the policies and structures. However, I realise that
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we have not consulted with the bodies and we shall do so before the next stage. I shall also answer the nine points made by the noble Baroness. It is absolutely essential that there are joint policies between voluntary organisations and the local authorities.
Obviously, I do not intend to press the amendment. I should be grateful if I could discuss it further with the Minister and bring it up at the next stage of the Bill. I withdraw it for today.
Amendment, by leave, withdrawn.
[Amendment No. 15 not moved.]
Clause 4 [Direct payments]:
7.30 p.m.
Baroness Cumberlege Baroness Cumberlege moved Amendment No. 16:
Page 3, leave out lines 26 to 30 and insert—
("(5) If the authority by whom a payment under subsection (I) above is made are not satisfied, in relation to the whole or any part of the payment—

(a) that it has been used to secure the provision of the service to which it relates, or

(b) that the condition imposed by subsection (3) above, or any condition properly imposed by them, has been met in relation to its use,

they may require the payment or, as the case may be, the part of the payment to be repaid.").
The noble Baroness said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
The Earl of Mar and Kellie The Earl of Mar and Kellie moved Amendment No. 17:
Leave out Clause 4.
The noble Earl said: My Lords, perhaps I may explain why I seem to be opposing the extension of this good scheme of reasonably sound principle to Scotland. I believe that it is a little too restrictive and I ask the fundamental question: is it necessary in Scotland? I have already given examples which indicate that the scheme is already being practised in Scotland to some extent and that it is legal.
I received two written Answers to parliamentary Questions which were extremely helpful. The first was a response from the noble Earl, Lord Lindsay, when I asked about local authority powers under Section 12 of the Social Work (Scotland) Act. He replied that a local authority may give cash to,
"any person aged at least 18 years who is in need, within the meaning of the Act, and requiring assistance in exceptional circumstances constituting an emergency, and where to do so would be more cost effective".—[Official Report, 25/1/96; col. WA81.]
Clearly two conditions need to be fulfilled before a local authority can give cash, so the latter part of the Answer was extremely helpful.
Similarly, on 7th February the noble and learned Lord, Lord Mackay of Drumadoon, in response to a further written Question, came up with the helpful reply that:
"Local authorities have powers under Section 10(3) of the 1968 [Social Work (Scotland)) Act to make payments to certain voluntary organisations which may be used to assist individual adults purchase community care services".—[Official Report, 7/2/96; col. WA25.]
I feel quite confident therefore that the schemes which are presently running in Scotland and any others which may come along are working from a legal base and are therefore not in need of further legislation.
I wish to mention three schemes that are already running in Scotland. Both in Strathclyde and Lothian there are centres for integrated living and the Lothian scheme is already helping with direct payments for people with physical handicaps, learning disabilities or mental health problems or who are elderly. The main problems encountered by that scheme relate to arguments with social security and taxation departments.
I have already mentioned in passing the Whins Independent Living Scheme. Perhaps I may give a number of examples of what that scheme does on a broad base. It provides a 24-hour package of assistance for an individual who is tetraplegic and returned to the community from an acute hospital unit following a road accident. It provides 24-hour assistance for an individual who is deaf and blind who moved into the community from long-term hospital care. It provides 24-hour assistance for an individual who suffered a brain injury and recently moved from the family home to his own home in the community. It provides 24-hour care Monday to Friday for a physically disabled person who has a learning disability: there are flexible care hours at the weekend when his elderly mother returns from hospital where she is currently receiving treatment for cancer. The scheme provides constant overnight assistance for a terminally ill person, providing support and respite for the daughter who is the main carer. It provides 24-hour assistance for a physically disabled single parent who has a young daughter, and assistance three days a week for a physically disabled child while attending a family centre. I am certain that noble Lords will agree that that is a broad client group rather wider than that envisaged by the provisions for England and Wales.
The Whins Independent Living Scheme is already providing 3,000 hours of assistance, which represents £500,000. It delivers that help to 100 members and employs 140 assistants. I should point out that the scheme helps members to select their own assistants; it trains the assistants; it offers employer services and will help clients work out rotas; it offers a relief scheme through which members often loan staff to each other in the event of illness and, if necessary, the scheme's headquarters will provide emergency staff. The scheme negotiates with the Department of Health and Social Security in Stirling. The key is that each member has the determination to live independently, and I praise the Central Region social work department for that bright idea.
In Scotland there is anxiety among social work departments and voluntary organisations in relation to the guidance and who will write it for Scotland; there is considerable anxiety also in relation to the age restrictions of 18 to 65 for the physically handicapped. We hope that that regulation will not apply in Scotland. Indeed, perhaps the Minister can tell us who will control
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the regulations in Scotland. I hope the answer is that it will be the Secretary of State for Scotland, and I look forward with interest to the Minister's reply.
To add a little political dimension to the argument, the issue I am raising concerns the classic problem of a split in administrative and legislative devolution. I am certain that it could be more easily dealt with in a Scottish parliament with less confusion—but I suspect that I would think that.
I believe that the Bill would give us duplication of legislation. In the case of many amendments that I have tabled in the past I have been firmly rejected on the grounds of being unnecessarily explicit when the Government believed that a more implicit approach was appropriate. I hope therefore that it can be established that this legislation is not necessary for Scotland and that fewer restrictions will be imposed for Scotland. I beg to move.
Lord Campbell of Croy: My Lords, I am glad to follow the introduction by the noble Earl, Lord Mar and Kellie. I say straight away that I have known him for many years, in fact since he was at school, and that he has an immense knowledge of social work in Scotland, having worked for many years in that field himself. We should therefore take note of what he suggests.
When I saw Amendment No. 17 I was not sure whether the noble Earl simply did not want the Bill to apply to Scotland; whether he wanted alternative drafting for Clauses 4 and 5; or whether he wanted a separate Scottish Bill, which was another possibility. Having heard him speak, I recognise that he does not want the Bill to apply to Scotland.
The noble Earl referred, as I have done several times in your Lordships' House in recent years, to the fact that it is not illegal in Scotland to make direct payments in certain circumstances and that that has been practised in Scotland without the need for it to be done indirectly through a third party. However, it is not something which all local authorities have felt able to do.
The noble Earl was able to help the House by showing that the system operates in Scotland but only in certain circumstances. When the proposals came forward for a system of direct payments in this country, I was keen that it should extend to Scotland and that if there was to be fairly complicated legislation, which all of us now realise is the case, it would be a pity if Scotland were to miss an opportunity to address the whole subject of direct payments.
Therefore, while I follow and understand what the noble Earl suggested, I would prefer a discretionary system for all local authorities in Scotland along the lines—it cannot be in the same words as we have different systems in Scotland—that apply to the rest of the United Kingdom. I shall not go into all the other details about people moving north and south of the Border and having different systems. Given this opportunity of a United Kingdom Bill—we have separate clauses dealing with the Scottish system and Scottish law—it would be a pity for Scotland to be taken

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out of the Bill, as suggested by the noble Earl, although I recognise and respect his reasons for putting forward the suggestion.
Baroness Masham of Ilton: My Lords, as a Scot—even though I live in England, once a Scot always a Scot—may I ask the Minister for an assurance that the good schemes now working in Scotland will not be restricted by the legislation. Such an assurance might please the mover of the amendment.
Baroness Cumberlege: My Lords, it is always with trepidation that I cross Hadrian's Wall and although I am quite tempted I am not so foolish at this hour of the night to become involved in constitutional issues.
I am advised that the amendments prevent direct payments being made available in Scotland. We would not want to deny people in Scotland access to the new freedom on the same basis as the rest of the United Kingdom. As my noble friend Lord Campbell, a former Secretary of State for Scotland, undoubtedly knows, Scottish local authorities have a power under the Social Work (Scotland) Act 1968 to make cash payments to individuals. But those cash payments may be made only in exceptional circumstances constituting an emergency; for example, to pay for food, fuel or accommodation. It is a very limited power. Those cash payments may not be used to substitute for mainstream community care provision on a planned and regular basis.
The noble Baroness, Lady Masham, asked whether payments would be jeopardised by the Bill. My understanding is that they will not. I shall write to the noble Baroness and to the noble Earl if that is not the case.
Local authorities also have powers under Section 10(3) of the 1968 Act to make payments to certain voluntary organisations. As part of their own activities, those organisations may themselves make payments to assist individual adults to purchase community care services. Neither of those powers is equivalent to the powers created by the Bill. Clause 4 will enable local authorities in Scotland to pay money directly to individuals on a planned and regular basis to enable those people to secure for themselves the community care services they need. With the amendment, local authorities in Scotland would not have that new power. Accepting the amendment would disadvantage disabled people in Scotland who would be deprived of the opportunity to receive direct payments on the same basis as people in the rest of the United Kingdom.
Clause 5 makes a minor technical amendment to ensure that the provisions of Section 13 of the Social Work (Scotland) Act 1968 continue to relate to Section 12 of that Act as originally intended. We see no reason to remove it. With that explanation, I hope that the noble Earl will see fit not to press the amendment.
The Earl of Mar and Kellie: My Lords, I said that I am in favour of this type of activity. There is a good deal of confusion in social work as to how the provisions of Section 12 are to be interpreted. It is confusing not just for me hut for all those trying to provide a service. There is a genuine debate about the
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remarks of the noble Earl, Lord Lindsay. I am glad to see that he is in his place. In his Written Answer he referred to people requiring assistance in exceptional circumstances constituting an emergency and where doing so would be more cost effective. I would interpret that as two separate conditions; others have not done so.
I was hoping that the noble Baroness could tell me who would be responsible for issuing the guidance for Scotland. If she can tell me, I would he very appreciative.
Baroness Cumberlege: My Lords, I am sorry that I did not mention it. It is the Secretary of State for Scotland.
The Earl of Mar and Kellie: My Lords, it has become easier to withdraw the amendment. I am extremely grateful for that last piece of information. Without more ado, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 [Consequential amendment]:
[Amendment No. 18 not moved.]
7.45 p.m.
Baroness Hamwee Baroness Hamwee moved Amendment No. 19:
Before Clause 7, insert the following new clause—
POWER TO MAKE REGULATIONS
(". In this Act the power to make regulations shall be exercisable by a statutory instrument which—

(a) on the occasion of the first exercise of any such power shall not be made unless a draft has been laid before and approved by resolution of each House of Parliament; and

(b) thereafter shall be subject to annulment in pursuance of a resolution of either House of Parliament.").

The noble Baroness said: My Lords, the amendment replicates one I moved at the previous stage. It proposes that regulations should in the first instance be the subject of the affirmative resolution procedure and thereafter the negative resolution procedure. In her answer to the amendment in Committee the Minister said that the main drawback was the need to find parliamentary time every time the Government wished to amend. She also said that the amendment would be inconsistent with existing legislation in the community care field where Members have been content to allow the negative resolution procedure. It was quite late when we discussed the amendment on that occasion and I did not pick up that the criticism was the need for parliamentary time. I want to clarify that point and to suggest that we have not yet fulfilled what I think are parliamentary responsibilities because of the order in which we are dealing with different issues. I am suggesting that there should be one occasion when parliamentary time is required unless there is a problem in your Lordships' eyes or in the eyes of Members of another place.
Although parliamentary time would be required if the amendment were agreed to, it would not be excessive parliamentary time. I am sure your Lordships agree that Parliament is the servant of those whom we represent or serve, that Parliament should not he master, and that parliamentary time should not be our master beyond

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what is reasonable. We are dealing with the Bill at a time when details are out for consultation. A response is not required until 23rd February and the Minister cannot, I imagine, say tonight how long it will take for the Government to react to that consultation. By definition, until it is over it will not be known what the level of response is. I do not know about quantity, but it is clear that in terms of quality there is a very considerable response.
One of the things that has impressed me most since I arrived in your Lordships' House is the level of contribution by members of the public and by interest groups. We ask for their contributions. We regard ourselves as a pluralist society and therefore we should listen to their contributions very carefully and consider them formally. I say that in the context of what I believe to be an increasing blurring of the line between the legislature and the Executive. We are by definition dealing here with legislation. There are aspects of this legislation that should be considered by Parliament. They will come within regulation. I accept that they may be subject to annulment, but is it not right and proper that we set ourselves the goal of devoting parliamentary time to consideration of the specific issues that we believe may he addressed by the consultees? With regard to the client groups, the Minister said that the Government will not consider those groups until after consultation. That alone appears to answer my argument in the affirmative; namely, that it is proper to come back to your Lordships' House with that response and consider it in a formal manner. I beg to move.
Lord Campbell of Croy: My Lords, the amendment of the noble Baroness, Lady Hamwee, will introduce the affirmative resolution procedure in the first instance and then the negative procedure for all of the regulations that will arise under the Bill. The Delegated Powers Scrutiny Committee, of which I was a Member until last November, suggested that that concept should be used only in relation to regulations under subsection (5) if a change was not made in primary legislation. That has been done. Today, we have supported an amendment by the Government that carries out the recommendation of the scrutiny committee to include what would have been subsection (5) in primary legislation; that is, this Bill. Therefore, the alternative suggested by the scrutiny committee of the affirmative procedure in the first instance and then the negative procedure for that section is no longer necessary.
The concept of affirmative procedure in the first instance and subsequently negative procedure is a new one. It has been proposed by the scrutiny committee and has already been adopted by the Government on two or three occasions in other Bills. I am attracted by this procedure, as I believe noble Lords will remember from previous debates on other Bills. I understand the concept that the noble Baroness has espoused, but in this Bill the committee did not think that the procedure was necessary for any of the other regulations which would arise. The committee considered that the negative procedure was appropriate for all of them. All of that can be looked up in the first report of that committee in this Session. While I am personally delighted that this idea has commended
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itself so remarkably, particularly to the noble Baroness, I cannot support its inclusion for all or any of the regulations to be generated in due course under the Bill. That was not considered necessary by the scrutiny committee because those provisions were to be introduced gradually. One of the reasons why the scrutiny committee thought that the negative procedure was appropriate for all of the regulations was that the Government intended to bring in client groups and categories gradually.
Baroness Cumberlege: My Lords, I understand the concern of your Lordships to have the opportunity to express views upon and influence the content of the secondary legislation; but I have given, and will repeat, the assurance that we will take into account the views of this House in making our decisions on the content of regulations. We will also be taking into account the responses to the major consultation exercise that we have initiated on the regulations.
The main drawback to the proposed amendment is that it requires the Government to find parliamentary time while the negative procedure provides for parliamentary scrutiny, if your Lordships feel that that is necessary. Your Lordships will he aware that that is the usual approach for regulations of this kind. To make regulations subject to affirmative resolution in the first instance is highly unusual. Parliamentary time is not always easy to find. It would be undesirable to be constrained to find that time if no further discussion of the point was needed, particularly as it might hamper progress towards the implementation of a very exciting scheme that enjoyed wide support in the country as well as in your Lordships' House.
As my noble friend said, the question of the appropriateness of the Government's proposals on secondary legislation was considered by the Delegated Powers Scrutiny Committee. We have accepted that committee's recommendation on Clause 1(5). However, it made no recommendation on the rest of the proposed regulatory powers and was content with our proposal that negative resolution regulations should be made. Therefore, I urge your Lordships not to support the amendment.
Baroness Hamwee: My Lords, I recognise that the Delegated Powers Scrutiny Committee dealt with only one subsection in its comments on the Bill. I have deliberately sought to go further. I confess that I did not expect to achieve entire acceptance of this amendment. However, it is a pity that we have dealt with the Bill in the order in which it has been dealt. False constraints are applied by the parliamentary timetable and the artificial end of the parliamentary year. We are dealing with a Bill where so much depends upon detail. Those affected have been asked for their comments on the detail. We do not have the benefit of it in dealing with the legislation of a stage where no doubt it will get far more detailed scrutiny than in another place. It is a great pity that that is the order in which it has been dealt with, and that is why I feel it is necessary to raise the point. Having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Hong Kong (Overseas Public Servants) Bill
7.58 p.m.
Lord Chesham: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee. —(Lord Chesham.)
On Question, Motion agreed to.
House in Committee accordingly.
[The DEPUTY CHAIRMAN OF COMMITTEES (Baroness Nicol) in the Chair.]
Clauses 1 to 3 agreed to.
Clause 4 [Pension supplements]:
Lord Redesdale Lord Redesdale moved the amendment:
Page 2, line 23, at end insert —
("( ) Notwithstanding any other provision of this Act or of any Order in Council made under it, it shall be the duty of the Secretary of State to ensure that no Hong Kong overseas public servant in receipt of a pension shall, if paid his pension in pounds sterling, suffer a loss of more than 20 per cent. in the real value of the amount payable as a result of any adverse fluctuation in the rate of exchange of the Hong Kong dollar against the pound sterling relative to the exchange values prevalent on the date of retirement of the Hong Kong public servant concerned.").
The noble Lord said: This is a very simple amendment and I am sure that the idea behind it will secure the agreement of the Government if not the actual substance of the amendment. The amendment will affect a limited number of people. It will affect a maximum of 700 people for a finite period, which is the time during which they will claim their pensions. The problem that I flagged up at Second Reading, and the reason for moving this amendment, was the concern among Hong Kong pensioners that their pensions in future might not be of the same worth as they now believe them to be. That is because of the figures which the Government used to work out the rate of exchange for the Hong Kong pension. I am talking about the divisor of 21 Hong Kong dollars to the pound. That was the divisor given in 1992, when the real exchange rate was 14.6 Hong Kong dollars to the pound. Many Hong Kong pensioners feel a degree of uncertainty. Obviously, with Hong Kong passing into Chinese rule there is a fear —it may not happen —that the value of the Hong Kong dollar may fall.
The purpose of the amendment is therefore to ensure that Hong Kong pensioners are protected. I cannot believe that the Government would not want that to be the case. The amendment is really a fall-back position so that pensioners will be no more than 20 per cent. worse off if the value of the Hong Kong dollar falls by more than that. On Second Reading, the noble Lord, Lord Chesham, said that that would not be the case, although he could not give examples. However, I should like him to explain the case of the Zimbabwean pensioners, who were protected but who, because of the fall in the Zimbabwean dollar, are now far worse off than they would have been. To give an example, a pension which would have been worth £10,000 per year in 1979 is worth about £500 at today's exchange rate.
The amendment is simple. I realise that the Government may not accept it, but I hope that they will say that they will look again at the issue rather than simply dismiss it. After a lifetime of service, Hong Kong pensioners should have the security of knowing that their pensions will not fall too far below their value today. That is the nub of the issue.
Another point is that, if the Hong Kong dollar fell significantly, the pensioners who would be the worst off would be those who earn the least at present, not those who earn very large sums of money. Therefore, the amendment would affect most the less well off. If those who earn the least during their working lives are then going to be hit the hardest when they are pensioners, we need to give some thought to providing them with a pension safety net. I beg to move.
8 p.m.
Lord Blaker: In view of the fact that the noble Lord, Lord Redesdale, has moved his amendment, I do not intend to move my Motion. I agree with the noble Lord in believing that the Government's scheme for a divisor of 21 is not satisfactory. I support the noble Lord in the objectives of his amendment, as I understand them, but if, as I suspect, my noble friend is likely to say that the amendment is defective on technical grounds, I nevertheless hope that he will give the objectives of the amendment his sympathetic consideration.
On Second Reading, the point was made that Parliament has a particularly heavy responsibility to make sure that the pension safeguard scheme is fair because of the unusually large part that Hong Kong's civil servants have played in Hong Kong's successful development. This is because Hong Kong has never had a ministerial system. Those civil servants have also played a large part in ensuring that Hong Kong has never been a burden on the United Kingdom's aid budget. That point should be relevant to Her Majesty's Treasury.
In discussing the Government's scheme and the one I wish to put forward, I am afraid that I must be technical. In calculating the point at which the safeguard scheme begins to operate, as the noble Lord said, the Government propose to use an exchange rate of 21 Hong Kong dollars to the pound and a base date of 1st January 1992. That differs from the practice in almost every other colony where sovereignty has been transferred from the United Kingdom since the war, where the actual exchange rate at or near the date of transfer of sovereignty has been chosen. As the noble Lord said, the exchange rate on 1st January 1992 was 14.6 Hong Kong dollars to the pound, a rate which would be much more favourable to the pensioners than that which the Government propose.
The reason given by the Government for choosing a divisor of 21 is that Hong Kong Civil Service salaries and pensions are in general above the levels of those in the United Kingdom. Regarding the reason why the date of 1st January 1992 was chosen as the base date, as the Minister of State, Mr. Hanley, wrote to me in a recent letter which I shall not quote extensively, the Treasury needs the time to do its sums —although why it should

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need five-and-a-half years I am not clear —and the Treasury would not be prepared to accept increases in pensions and salaries in Hong Kong after 1st January 1992. I do not find those reasons convincing, because if those factors are relevant in the case of Hong Kong, how was it that they were not relevant for the Treasury in the case of all the other colonies which have come to independence in the past 50 years?
I believe that a divisor of 21 is unfair because the methodology for arriving at a divisor of 21 is wrong. The methodology has been to divide the Hong Kong salary of a particular grade by the salary of the equivalent United Kingdom grade, and to multiply the resulting figure, which is called the "differential", by the number of Hong Kong civil servants in that grade. One then adds up all the resulting figures and divides them by the number of Hong Kong civil servants affected. That gives the figure of 21.
However, that figure of 21 conceals a divisor of 11.11 at one extreme of the civil service range for one grade and of 28.5 at the other extreme for another grade. My noble friend may say, as Mr. Hanley said, that any system of averaging is bound to leave some people doing better than others. That is true, but one does not have to have a system of averaging and, even if one has such a system, one should surely choose one which does not hurt the less well off. The Government's scheme does hurt the less well off, as the noble Lord, Lord Redesdale, pointed out.
Let me give an example of what the Government's scheme does. It uses United Kingdom Civil Service Grade 7 as a parallel for 289 Hong Kong public servants ranging in salary from 500,000 Hong Kong dollars a year to 800,000 Hong Kong dollars a year. The Government argue that there has to be a system of broad groupings of this kind because there are not always direct equivalents in the United Kingdom Civil Service. That also is true, but that is because the Hong Kong Civil Service includes many jobs which, while in the public sector in Hong Kong and the United Kingdom, are not in the United Kingdom Civil Service. I refer, for example, to marine jobs and to work connected with civil aviation, local government and medicine, as well as to the judiciary and prison officers.
However, no reasonable person would argue that, because Her Majesty's Government have failed to look into those other parts of the public service in the United Kingdom for more appropriate analogues, the bunching that I have mentioned of Hong Kong grades as analogues for United Kingdom Civil Service Grade 7 is a fair solution. No one who knows Hong Kong's cost-conscious Government would believe that it would pay salaries ranging from 500,000 Hong Kong dollars a year to 800,000 Hong Kong dollars a year for jobs of the same value.
If Hong Kong civil servants are over-paid relative to United Kingdom civil servants, one would expect the United Kingdom Government's scheme to favour, if anyone, the less well-paid Hong Kong civil servants —generally speaking that means those with a low differential compared with their UK counterparts. In fact, the scheme does the opposite: it means that those
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with a low differential will be subsidising those with a high differential who are in general the highest paid. The scheme is kinder to the officer with a differential of 28.5 than one with a differential of 11.11.
The scheme would be described by a statistician, I am told, as absolutely biased. The fact that it favours some grades at the expense of others is not accidental—it is built into the system. OSPA cites one case as an example, where, under the government scheme, a Hong Kong pensioner whose pension would be protected on a salary base of £8,422 per year is compared with a so-called UK equivalent whose pension would be calculated on a salary base of £15,920—89 per cent. higher. That, OSPA tells me, is one case among many.
The fact that the Government scheme is regressive may help to explain why OSPA is opposed to it while serving officers in HMOCS have accepted it. The latter tend to have higher salary bases than the former, OSPA representing, as it does, those who have already retired. The Minister of State says that the government scheme would protect on average over 80 per cent. of the original purchasing power of pensions of existing pensioners, but if, as the Government also say, some will be protected at 100 per cent., that implies that some will be protected at 60 per cent.
OSPA believes that the right course would be to take a conversion rate of 14.6 to the pound. But if the Government are not prepared to do that, OSPA would favour a different system of averaging. That is known as median averaging. In that system, all the items to be averaged would be arranged in order of size, and the middle one is taken as the median. That would suggest a divisor closer to 18 rather than 21. That would have the advantages, first, that the extreme differentials at each end of the scale would not affect the median average; secondly, the bias against the lower paid would be reduced; and, thirdly, that scheme balances the calculations by disregarding the size of both the Hong Kong and UK pensioner populations.
These are complicated matters, and not easy to explain in debate. I am sorry to have spoken at some length, but I believe that a divisor of 18 has merit and deserves more study. I therefore urge my noble friend that the Government look again at this whole question.
8.15 p.m.
Lord Wilson of Tillyorn: There is some difficulty in dealing with the Committee stage of the Bill. It is that what is written on the face of the Bill is all right; indeed, a great deal of it is admirable, and the sooner it is brought into operation the better. The problem lies with what the Bill allows to happen later; that is, in the Orders in Council, or one particular Order in Council. Through the courtesy of the Government in putting the details potentially for one of those Orders in Council for sterling safeguards, we know what is intended.
The amendment goes to the heart of the problem; that is, trying to devise a scheme which is seen by those concerned as being fair. For that reason, I am content, like the noble Lord, Lord Blaker, not to press the amendment that is in my name also.

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The crux of the issue is surely that we need a scheme which deals correctly with the fears of those people who have been or are members of Her Majesty's Overseas Civil Service in Hong Kong who have provided excellent, exemplary service during their careers, and who, as they set out on those careers had certain expectations. As members of HMOCS they could, after all, see what happened in other dependent territories when those territories went to independence. When they looked at their own future they thought that it must be highly likely that there would be changes in 1997, but they had reasonable expectations that something similar would be done for them.
The difficulty is that, if one pursues what appears to be the present intention of using the divisor of 21 Hong Kong dollars to £1 sterling, one finishes up, as the noble Lords, Lord Redesdale and Lord Blaker, have said, with a system that is not seen by those concerned as being fair. Much of that looks very abstract, so perhaps I may give one actual example. It is what would happen to an individual who was a senior police officer in Hong Kong and who I happen to know gave extremely good service during his career. He now rates a pension which would be the equivalent of £23,000 a year —a respectable, reasonable pension. If however it reached a stage when the guarantee was triggered, what he would finish up with would be a pension of just over £10,000 a year, which is very different indeed.
Of course there are a great many different individual cases that could be brought forward, but I want merely to make the point that many will be disadvantaged, and to echo what the noble Lord, Lord Blaker, said: that those most disadvantaged are those on the lower end of the scale —those about whom we should be most concerned.
There are of course other ways of calculating differentials. The noble Lord, Lord Blaker, has gone into admirable detail of one way of doing that —of producing a median instead of an average, and finishing up with the figure of 18 Hong Kong dollars to the pound sterling. I am sure that those concerned will argue primarily for the divisor of just over 14 Hong Kong dollars to the pound, which looks reasonable in an historical context, but I feel sure too that, if the Government were inclined to move to an alternative divisor —say, 18:1 —that would get rid of a large part of the concern felt by those involved. I would point out in relation to what the noble Lord, Lord Blaker, said, that it is not just those who are already retired who are concerned; it is those who are still in service. Those still in service have as a prime concern the desire that the arrangements for compensation should be put in place, but they are concerned also about the future of their own pensions.
It may be that the Minister can tell us in more detail about the arrangements for supplementary provision for overseas service —the so-called SPOS —and give us examples of how that will be brought in over a period of time to deal with part of this problem. However, we still return to the issue of producing a solution which is seen by those concerned as fair and equitable.
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Perhaps I may say on behalf of my noble friend Lord MacLehose of Beoch that he is sorry that he is unable to be here. He has had an operation for glaucoma, and he is unable to come here from Scotland. He asked me to say, first, that he was sorry' not to be here; and, secondly, that he is supportive of the efforts to improve the conditions for members of HMOCS, and is concerned especially that those involved should not feel at the end of the day that they have been disadvantaged or discriminated against.
The Bill provides for two Orders in Council. One of them, on compensation and arrangements to help people to find alternative employment, needs to be brought in very soon. It is entirely admirable and desirable. I trust and hope that it will be brought in very soon. The second Order in Council on safeguarding the sterling value of pensions is, so far as I can see, not a matter of any urgency. Therefore, there is time for the Government to consider carefully what would be right. I support the intention behind the amendment moved by the noble Lord, Lord Redesdale. I hope that the Minister will be able to tell the Committee that the Government will look at these issues and take time to reach a solution which is seen by those concerned to be fair and correct.
Baroness Blackstone: I have some sympathy with the intention behind the amendment, particularly in view of the fact that all three noble Lords who have spoken in support of it are particularly concerned about those Hong Kong Civil Service pensioners who have been on the lowest pensions and the lowest salaries. However, I regret that on these Benches we cannot support the amendment. As the noble Lord, Lord Wilson of Tillyorn, has just admitted, it is all rather abstract. One of the reasons for that is that it is exceedingly unlikely that there will be a catastrophic fall in the value of the Hong Kong dollar of the kind which is envisaged by the amendment.
I understand that for Hong Kong Civil Service pensioners to lose out on average, the Hong Kong dollar would have to fall to one-third or even less than one-third of its present value. With great respect, I do not believe that we can compare Hong Kong with Zimbabwe in these matters. At least I very much hope that the comparison is inappropriate. Therefore, we are talking about a hypothetical situation which is very unlikely to materialise. I hope that we can express rather greater confidence in the future of Hong Kong than this amendment implies.
I do not wish to go into detail as regards the amendment or why it does not seem to me to be appropriate. I shall leave that to the Minister. But perhaps I may assume that the Government will agree to consider the situation again if, due to some unforeseen circumstance, a circumstance which we must all hope and pray will never arise, there is a calamitous collapse of the Hong Kong dollar. As Clause 4 stands, it provides the flexibility to do that. Assuming that the Government are prepared to use that flexibility in this respect —and I believe that the Government have already indicated in another place that they would do so —there seems to me no need to alter this Bill on the basis of a totally hypothetical and, indeed, exceedingly unlikely change in the situation.

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Moreover, the Bill is a compromise which was reached after five years of discussion and negotiation between the Association of Overseas Civil Servants in Hong Kong and the Government. Representatives of that association there believe that the Bill will provide reasonable security for civil servants in Hong Kong. They wish the legislation to be passed as proposed, as I understand it. Members of OSPA apparently think rather differently, but I do not believe that they have been directly involved in the negotiations.
I am not usually able to support the Government on matters of this kind but on this occasion I believe they have got it about right and their proposals are fair and reasonable.
Lord Chesham: As has already been said, this amendment is technically flawed. Hong Kong pensions are not paid in pounds sterling. They are and will continue to be paid in Hong Kong dollars. Also, the amendment makes no mention of dependants.
Putting aside those points, I am still uncertain what the noble Lord proposes. Is it his intention that the British Government should provide assistance to Hong Kong pensioners when the Hong Kong dollar/sterling exchange rate falls to 20 per cent. below the exchange rate at the date of the pensioner's retirement —in other words, if the pensioner had retired when the exchange rate was 10 Hong Kong dollars to the pound —or provide assistance if the rate fell to 12? Is the noble Lord suggesting that the scheme should protect 80 per cent. of the original sterling purchasing power of the pension? It is not clear from the amendment what is his intention. We believe that both of those solutions are flawed.
It may be useful, without repeating the points that I made on Second Reading, to make a few key observations about our proposed pension safeguard scheme. Hong Kong officers are not in the same position as their predecessors in other territories. Their pensions are not paid on the basis of a fixed rate of exchange with sterling and they receive on average pensions which are considerably higher than their UK counterparts and predecessors.
The British taxpayer will fund any liability under this scheme. The Government would be accused of irresponsibility if they did not seek to balance the interests of HMOCS and those of British taxpayers.
We are talking about a new benefit here. At the moment Hong Kong pensioners do not receive any protection of the sterling value of their pensions, and we are not asking HMOCS pensioners, many of whom are very well off, to give up any rise in their pensions as a result of an increase in the value of the Hong Kong dollar. Our proposal is essentially a free insurance scheme.
Our proposed scheme would ensure that over 75 per cent. of Hong Kong HMOCS pensioners would still be better off than their predecessors and their UK counterparts if there were a severe decline in the value of the Hong Kong dollar. As the noble Baroness, Lady Blackstone, said, the chances of the Hong Kong dollar falling substantially in value in the foreseeable future
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are remote. That does not mean that we should not be prudent but it should give confidence to Hong Kong pensioners.
There has been a great deal of comment about the figure of 21-to-one. Obviously when an average is used some people are better off and others are worse off. Our calculations show that for comparability to be achieved for police grades in 1992 the divider should be set at 19-to-one and at 23-to-one for non-police grades. It is a fair criticism of the scheme that a divider set at 21-to-one offers better protection to non-police grades than it does to police grades. That is something about which we were concerned. Therefore, we suggested to the HMOCS Association that a range of safeguard rates could be set which would mirror better comparability than only one rate based on an average. For example, the pensions of Hong Kong police officers could be protected at 19-to-one and those of non-police officers at 23-to-one. OSPA were also aware of that possibility. However, the HMOCS Association rejected that on the grounds that it would be divisive among its members. OSPA has not asked us to pursue that. That is why the scheme has one safeguard rate rather than a range of rates which would reflect better comparability for different grades.
I turn to various points that were raised. The noble Lord, Lord Redesdale, mentioned Zimbabwe. That has been a largely self-governing colony since the 1920s. The British Government do not accept any special responsibility for Zimbabwe public service pensioners as they do for the Hong Kong HMOCS pensioners. Therefore, there is no protection for Zimbabwe pensioners, who are much worse off as a consequence than would be the case for Hong Kong pensioners. They have no sterling safeguard.
My noble friend Lord Blaker asked why 1992 was chosen as a reference point for Hong Kong while no such point applied to other territories. The key reason is that in the case of other territories a fixed rate of exchange existed against sterling.
He said also that it is not fair to bunch grades. We could have tried to separate the grades, but to have done so would have resulted in many grades in Hong Kong being equated to grades lower than Grade 7. That would not have been to the benefit of Hong Kong pensioners.
We are aware of the case mentioned by the noble Lord, Lord Wilson. I should point out that the pensioner concerned had already received compensation and a commuted pension of some £600,000. That is more than the capitalised pension of his UK counterpart.
The noble Lord also asked about the SPOS regulations. They ensure that, like UK pensions, increases in all HMOCS pensions keep pace with inflation in Britain. As most HMOCS pensions were taken over by the British Government after colonies became independent and are paid in sterling, applying SPOS is a simple matter of uprating an officer's pension from the date of his retirement in line with UK inflation.
However, application of the regulations is more difficult for Hong Kong, as the Hong Kong Government continue to award pension increases, and as exchange rate movements can affect the sterling value of Hong

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Kong pensions. At present, any SPOS payments for Hong Kong pensions are reduced to take account of the sterling value of any pensions increase awarded by the Hong Kong Government, and also any increase in the total value of the pension due to exchange rate movements.
Hong Kong pensioners have complained that Hong Kong pension increases could be greater than the rate of inflation in Britain, but that the sterling value of their total pension could still decline and they would get no SPOS payments. We propose to amend the regulations to allow Hong Kong pension increases to be used to bring the Hong Kong pension up to its original sterling value. Only the balance left after that has been done would be taken into account to determine the amount of SPOS which should he paid. This amendment would help offset any pension losses arising from minor reductions in the sterling value of the Hong Kong dollar.
I should like to point out that the HMOCS Association is clear that it wants the Bill enacted as drafted. The Government have proposed a generous scheme. I believe that the principle of comparability which underlies it is fair and justified. I cannot accept the proposed amendment.
8.30 p.m.
Lord Redesdale: I thank the Minister for his response. It was not my intention to press the amendment; indeed, I neither foresaw a cataclysmic fall in the Hong Kong dollar, nor did I actually believe that the Bill was fundamentally flawed. The purpose of the amendment was really to give Hong Kong pensioners some kind of peace of mind which I had hoped the Minister would be able to provide.
I was surprised when the Minister said that he had to he responsible to the taxpayer because, throughout his speech, he made mention of the fact that the proposed provision would probably never be used in any event. Therefore, even if the Minister accepted the amendment, it would never, in theory, be triggered if the Hong Kong dollar did not fall. However, I believe that some degree of peace of mind has been given. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
Remaining clauses agreed to.
House resumed: Bill reported without amendment; Report received.

Health Service Commissioners (Amendment) Bill
8.34 p.m.
Baroness Cumberlege: My Lords, I beg to move that the Bill be now read a second time.
Most commercial firms, companies or organisations —both private or public —are diligent when it comes to complaints made about their products or services. They set up special sections, are imaginative in redressing wrongs and are quick to offer
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compensation in terms of refunds or exchange of goods. In order to stay in business, they know that they have to cherish customers and care for clients. A speedy response when things go wrong is just as important as a new sale. If that is true of the competitive world, how much more important when the customer has little choice but is reliant on a monopoly provider. How much more important when the commodity is irreplaceable —someone's health, well-being or life —perhaps someone you love, perhaps even yourself.
In government, and in the NHS, we are very conscious of this, and, with initiatives to strengthen the influence and power of patients, we wish to strengthen the NHS complaints procedures.
The Bill before your Lordships' House will amend the Health Service Commissioners Act of 1993. It removes the statutory barriers which prevent the ombudsman from investigating complaints concerning family health services and clinical judgment exercised by all clinicians in the field. We are not seeking to make any radical changes to the nature of the commissioner's jurisdiction. What we are doing is to widen it, so that, if Parliament approves the measure, patients and their relatives will be able to complain to the ombudsman about all aspects of care and treatment provided by the NHS.
The proposed extension of the ombudsman's jurisdiction was recommended by the Select Committee for the Parliamentary Commissioner for Administration in its first and sixth reports of the 1993 –94 Session. My right honourable friend Mrs Bottomley, who was then Secretary of State for Health, also established an independent committee under the chairmanship of Professor Alan Wilson to review the complaints system. Following extensive consultation, the Government announced their acceptance of the main recommendations in March 1995, and at the same time responded to the parallel recommendations made by the Select Committee.
The proposal to extend the ombudsman's jurisdiction, and the other recommendations made by the committee, were widely welcomed, as was the Government's intention to put them into effect. There was wide agreement that the new procedures would improve the way that complaints are handled at every level.
The recommendations were made against a background of increasing public dissatisfaction with the current arrangements. Many people found that the existing procedures simply did not meet their needs. They wanted to receive a speedy explanation of what had happened and, where appropriate, an apology and an assurance that the same mistake would not happen again. They were particularly frustrated by the current limits on the commissioner's jurisdiction. For instance, people found that he could investigate their complaint that a hospital doctor failed to communicate with them but not complaints about carelessness resulting in a wrong diagnosis. Neither could he investigate any aspect of their care by a GP.
Very often people react to a complaint by being negative and defensive. It is a natural reaction, but handling complaints responsibly and sensitively is a service which people expect from a quality organisation.

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If complaints are investigated fully and objectively without automatically finding fault with staff, then valuable information can be gained about how to improve services to others. That is why we want to see a new system introduced.
The new procedure will have three tiers. This Bill deals only with the third tier. The first two tiers will be introduced through regulations and directions. The first tier will be called Local Resolution. It will involve the local provider seeking to resolve the problem directly with the complainant. Where possible, the provider will do that through a speedy and effective informal approach. Where necessary, Local Resolution will involve a more formal investigation or an attempt at conciliation. If the complainant remains dissatisfied, he may move to the second tier and ask a non-executive director of the trust, health authority or health board involved —who will be called a convener —to decide whether a three-person independent review panel should be set up to review the complaint. The panel will have access to independent professional advice on clinical issues. If both those fail, the complainant may activate the third tier and approach the ombudsman, who is completely independent both of the health service and of government.
If the Bill meets with your Lordships' approval and is passed by Parliament, we hope that its provisions can be brought into force on 1st April 1996, at the same time as the first and second tiers are implemented through subordinate legislation. We want all patients to have access to the third tier of the reformed complaints system as soon as possible.
The detailed provisions of the Bill are as follows. Clauses 1 and 2 add those professionals who were previously the responsibility of family health services authorities; that is, GPs, dentists, pharmacists and providers of NHS ophthalmic services to the list of those whom the Health Service Commissioner can investigate. These clauses also bring people in the independent sector who provide services to NHS patients explicitly within the commissioner's remit. Independent providers include private companies, independent professionals and voluntary organisations. The clauses set out the ombudsman's remit in respect of the investigation of complaints about family health service practitioners and independent providers.
Clause 3 brings Schedule 1, which deals with supplementary and consequential provisions relating to family health service and independent providers, into effect. Clause 4 brings the Mental Welfare Commission for Scotland within the commissioner's jurisdiction and specifies certain functions which are excluded from investigation. This restores the position in Scotland to that in England and Wales where the Mental Health Act Commission is already within the commissioner's jurisdiction. The functions of the Mental Welfare Commission relating to the review and discharge of detained patients, which in England and Wales are carried out by the mental health review tribunals, will remain outside the commissioner's jurisdiction.
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Clause 5 ensures that the first two tiers of the new procedures are exhausted before the commissioner can investigate a complaint but allows him discretion to investigate where he considers it unreasonable for the complainant to exhaust all other procedures. The new complaints system provides an opportunity for independent review within the health service. It would normally be reasonable for a complainant to have tried to resolve his complaint through this procedure before he refers it to the ombudsman. There may, however, be circumstances in which this would be unreasonable; for example, where there has been excessive delay in considering the complaint locally.
Clause 6 removes the statutory block which prevents the commissioner investigating complaints concerning clinical judgment. The 1993 Act prevents the commissioner questioning the merits of a decision taken without maladministration. In the past there had to be evidence of maladministration in a decision taken by a clinician in order for the commissioner to be able to uphold a complaint. For instance, he could investigate and uphold complaints about poor communication or poor record keeping but not about poor diagnosis. The clause allows for complaints to be investigated about decisions which arise solely as a result of clinical judgment.
In considering whether or not to uphold such a complaint the commissioner will need to take account of clinical advice; for example, as to whether the judgment was of an acceptable professional standard. The commissioner has made available to your Lordships a paper entitled Responsibilities of the Health Service Commissioner setting out how he proposes to exercise his new jurisdiction should Parliament approve the Bill. This paper sets out in some detail how he proposes to approach questions about clinical judgment, including the principles which he is minded to follow in seeking professional advice, and other issues arising from the provisions in the Bill. I commend the commissioner's paper to your Lordships' House.
Clause 7 removes the statutory barrier which prevents the commissioner investigating complaints about family health services. It also ensures that he cannot investigate action taken by a health authority or health board which is investigating an alleged breach of terms of service. This is in line with the existing provision in Section 7 of the 1993 Act which prevents the commissioner investigating personnel or disciplinary matters.
Clause 8 amends the provision in the 1993 Act which provides that the commissioner shall not investigate action taken in personnel matters to include service under the National Health Service and Community Care Act 1990. This is simply a tidying up measure. Clause 8 also ensures that the commissioner can investigate action taken by a health service employer when operating a complaints procedure. The general public can complain to the commissioner about the way a complaint has been dealt with. Clause 8 ensures that NHS staff, those professionals contracted to work in the NHS, and those who work in the independent sector providing services for NHS patients, are given the same right in the interest of equity. Health service employees would, by virtue of the provisions in Clause 5, normally

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need to invoke and exhaust established grievance procedures for dealing with such complaints before the ombudsman could investigate.
Clause 9 abolishes the requirement that a health authority, board or trust be given an opportunity to investigate a complaint. This is overtaken by the provisions in Clause 5 about the exhaustion of the NHS complaints procedures. Clause 10 requires the commissioner to send a report of an investigation to the relevant health authority, board or trust. This is simply to take account of the fact that health service bodies can be reconfigured during the period of an investigation. Clause 10 also fulfils the Government's commitment to implement certain recommendations made by the ombudsman's Select Committee. It removes the requirement to inform the relevant health authority, board or trust that the commissioner has decided not to investigate a complaint. It also requires the commissioner to lay his special, annual and other reports directly before Parliament rather than via the Secretary of State.
Clause 11 extends the exemption from giving evidence in proceedings to the commissioner's advisers. This is necessary because of the need to obtain advice from external advisers once the commissioner's remit is extended to include clinical judgment. The clause also allows the commissioner at his discretion to disclose information to the appropriate regulatory or health service body or employer where he considers it necessary for the protection of the health and safety of patients. At present any information that he discovers during the course of an investigation may not be passed to another person other than for the purposes of the investigation. Therefore if during the course of an investigation the commissioner discovers information which does not need to be disclosed in his report he may not disclose it to any person outside his own office. Clause 11 allows him to disclose information if it indicates that a person constitutes a threat to the health or safety of patients. In the interest of natural justice the clause requires the commissioner to inform the person about whom he has disclosed such information.
Clause 12 makes financial provision for the Bill. The provisions increase expenditure by the Health Service Commissioner's office under the 1993 Act. The cost is to be met by transfer from the relevant votes of the Department of Health and the Welsh and Scottish Offices. The costs arising from the Bill will be met from existing resources. Clause 13 gives effect to Schedule 2 which deals with repeals to the 1993 Act. Clause 14 makes provision for any Act arising from the Bill to be brought into force by means of commencement orders made by statutory instruments and for different parts of the Act to come into force at different times in different parts of the United Kingdom.
Clauses 15 and 16 deal with extent and citation respectively. The Bill only extends to Northern Ireland the provisions which amend the 1993 Act and which extend to Northern Ireland. These relate to the commissioner's procedures. The Bill has two schedules. Schedule 1 deals with amendments to the 1993 Act which are supplementary and consequential to the main
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provisions of the Bill on family health service and independent providers. Schedule 2 sets out the repeals to the 1993 Act provided for in the Bill.
At the risk of disappointing the House when I am sure your Lordships are keen to know the full and detailed explanation of both schedules, I shall resist the temptation and only mention that there is a new provision in paragraph 2 to Schedule 1 which enables the commissioner to investigate contractual or commercial transactions by GP fundholders which relate to the purchase of services for NHS patients from independent providers.
I have tried to give a thorough and businesslike review of the Bill's detailed provisions. In conclusion, I would just like to say that generally complaints are welcomed. They are in any walk of life a way of maintaining standards and when properly dealt with can prevent litigation. We have to be conscious that the NHS can be destroyed by litigation or by the practice of unreasonable defensive medicine. People's expectations of perfect results grow daily but they cannot always be delivered. There is a fine line between negligence and reasonable expectation. We have doctors, nurses and scientists of extraordinary talent with worldwide reputations, but they cannot be everywhere. Medicine is an inexact science because every patient is different and every treatment is unique to each individual. We must all be aware of medicine's limitations and try to put the needs of many in front of our own; that is the only way that the NHS can work for the common good. I hope that the Bill will help some people who might otherwise have felt obliged to take legal proceedings in order to find out what happened and, where appropriate, obtain an apology and an assurance that things will be put right. We hope that the Bill strikes the right balance and is fair to all sides. I commend it to the House. I beg to move.
Moved, That the Bill be now read a second time. —(Baroness Cumberlege.)
8.50 p.m.
Baroness Jay of Paddington: My Lords, I thank the Minister for introducing this short but somewhat complex Bill with great clarity. After all, clarity is one of the primary requirements of any successful complaints system, particularly one which deals with such a vast and labyrinthine organisation as the NHS.
Complaints about the NHS are rising; they were up by nearly 30 per cent. during the past year. At the same time, users of the health service are finding that in the fragmented structure of the internal market it is becoming difficult to pin down responsibility. Patients now report being passed from place to place and person to person across the purchaser/provider divide as they seek any redress for what may seem to them a rather simple complaint.
We on these Benches, therefore, welcome the Bill, which seeks to extend the role of the health ombudsman. Together with the proposals of the Wilson Report which the Minister has explained the Government have accepted and are implementing, it will unify and simplify the entire health service complaints procedure.

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It is one NHS reform which is long overdue. The current situation is an unfriendly maze and was summarised critically, but I suspect correctly, in the 1993 report of the Select Committee for the Parliamentary Commissioner for Administration, which stated:
"The complaints system in the NHS seems designed for the convenience of providers of the service rather than complainants".
The Bill is certainly an important step towards increasing the rights of complainants and patients. At the same time, it should be seen as part of a general trend towards trying to improve the overall quality of service, to increase internal medical audit and to raise the standards of professional care. I see the Bill as part of the move that went with the Bill we discussed earlier in the year, which is now the Medical (Professional Performance) Act passed by your Lordships' House last Autumn.
I was pleased that in the revised guidance of the General Medical Council, which was published in October 1995 in the wake of the passage of that Act, great emphasis was laid on the duties of a doctor to respect, consult and inform patients. That guidance is an essential part of what the Royal College of Nursing has called a culture of change. It is a culture of change in the health service which seeks to involve service users as equal partners in improvements. In order to be effective a complaints system has to be seen to be open and fair. Patients must not feel that managers or professionals are being unsympathetic or placing unnecessary bureaucratic obstacles in the path of what they see as a legitimate complaint. Equally, service providers must work in a culture where criticism can be viewed as constructive and where individual professionals are not afraid that a complaint will automatically mean that they are personally exposed and victimised. If we can get this right we can, as the Minister suggested, avoid the totally unhealthy atmosphere that exists, for example, in the United States of America where the shadow of legal malpractice suits seems to hang over every medical consultation.
The Bill amends the powers of the Health Service Commissioner so that he can consider complaints from the public in three major areas of NHS activity which have been previously excluded. They are the matters relating to the clinical judgment of doctors, nurses and other clinical professionals; complaints about family health service practitioners; and complaints about independent providers. We on these Benches welcome all these changes. It is a considerable extension of the ombudsman's powers which it is estimated will lead to an enormous increase in the volume of his work. As the Minister explained, further resources will be provided but there is concern about the level of those resources and the ambitious timetable which is designed to put all the new complaint systems in place by next April.
Today the noble Baroness was confident, and during the passage of the Bill in another place other Ministers were equally confident, that that could be successfully achieved. But it will be a matter of only a number of weeks if the Bill passes through your Lordships' House on schedule. I must tell your Lordships that that confidence is not universally echoed in the field. For
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example, at a large meeting of local trusts and health authority chairmen in which I was involved last week there was surprising unawareness and lack of information about the details of this major innovation, which will hit people in the field at the same time as all the other organisational changes which will take place in April.
At the GP level, the BMA is emphasising that a considerable amount of GP and staff time will be necessary to be used in training, setting up, operating and monitoring practice-based procedures. The General Medical Services Committee of the BMA is, I understand, advising GPs to bid for additional practice staff funding to cover the staff time that will be spent in dealing with these procedures. The BMA has rightly challenged the claim made on 19th December in Committee in another place by the Parliamentary Secretary of State for Health that:
"the total annual cost arising from the expanded legislation will be £100,000 to doctors as a whole and £10 per practice".
The BMA states that it is quite sure that this estimate of £10 per practice is ridiculously low.
I hope, therefore, that having brought forward these proposals, perhaps rather belatedly, the Government have left sufficient time for thorough staff training and systems testing and will provide adequate additional resources. It would be a great pity if these useful reforms themselves became the subjects of complaints because they were misunderstood or inadequately implemented. I hope that the Minister will be able to reassure your Lordships further on that point when she replies.
The extension of the powers of the Health Service Commissioner which have caused most discussion, in particular among medical professionals, are those in Clause 6. That brings into his jurisdiction complaints about clinical judgment. Mr. Reid, the ombudsman, states that,
"it would be helpful if staff in all professions look at complaints not as a personal affront but as a valuable contribution to audit and to improvements in service".
He is, of course, quite right but the delicate supremacy of clinical judgment is near to the heart of medical ethics and this new power will be extremely difficult to enforce legitimately and fairly. It is an area in which it is almost impossible to include precise guidance in primary legislation. I am sure that the noble Baroness will remember the debates that we had during the passage of the Medical (Professional Performance) Bill about how to define in that context adequate or inadequate professional performance. Precisely the same kind of difficulties seem to arise here. After all, clinical judgment necessarily involves personal, individual decisions which may well be taken by health professionals at times of crisis or stress both for the patient and the professional involved.
If the result of a clinical judgment leads to a complaint it may well be because in what were considered to be the best interests of the patient a doctor or nurse took a risk or stepped outside normal practice and did not succeed. It is extraordinarily difficult to see how one can second guess those kind of situations, particularly many months after what may have been a

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dangerous emergency. As the noble Baroness remarked in her opening speech, the health ombudsman has published an extremely helpful paper which includes in paragraphs 42 to 49 his description of how he will deal with the issues of clinical complaints. On the other hand, he does not actually address the essential point about how these issues may be contained in any form of precise guidance to the profession.
In raising these issues I must assure your Lordships that I do not in any way oppose the proposed extension of the powers to clinical judgment, but those who are investigated must be properly judged by their professional peers with scrupulous fairness. I therefore welcome the proposals which the ombudsman has already published about the clinical advice he will seek in these new cases. The RCN has noted the importance of including the voice of nurses in that advice and is rightly pleased that the plan is to recruit nursing staff, and indeed midwives and health visitors, to the ombudsman's office.
I understand that the BMA is already discussing with that office a range of issues about the medical assessors who will be empowered to investigate clinical complaints and, importantly, the level of proof needed before a complaint is upheld. The BMA is also concerned in raising the issue of confidentiality of a complainant's medical information if a clinical judgment case is to be thoroughly investigated. It is important that at all stages of any procedure the complainant must be informed as to whom his or her personal medical information is being disclosed; and a procedure should be in place for the complainant to be invited to give valid consent for that information to be disclosed.
Perhaps when the Minister replies she could give your Lordships a progress report about how the discussions with the BMA on these and other issues are progressing.
Another potential problem is the difficulty of drawing a clear line between clinical and management judgements. For example, if we take recent headline-making cases where a joint clinical/managerial decision has been taken to transfer a critically ill patient to hospital B because of a lack of intensive care beds in hospital A it is, at least in common sense terms, hard to insist that the decision is taken either primarily on clinical grounds or primarily on managerial grounds. Equally, if a doctor judges that a diagnosis does not require using an MRI scanner, in part at least because the local scanner is unavailable —as happened in another rather notorious recent case —is he clinically culpable or is the complaint more properly addressed to the health service administration? It seems likely that many complaints may be in equally murky territory and it is not immediately clear what impact the blurring of those boundaries will have on the ombudsman's procedures.
There may be a case for instituting a new power to investigate management judgement as well as clinical judgement; or perhaps the Department of Health and the health ombudsman think that that automatically falls into the category of maladministration. It is important that those distinctions as well as those overlaps are made clear, but as yet I do not think that that is totally covered by the proposals.
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As the Minister said, Clauses 1 and 2 add family health service providers and independent providers to the list of those whom the ombudsman may investigate. The addition of family health services is welcome, particularly since the abolition of the old FHSA procedures from April make it vital to underpin local procedures for complaints against GPs, dentists, pharmacists, and so on. I echo the Minister in saying that I hope that under the new system most of those complaints will be locally resolved.
The inclusion of independent providers is important. As your Lordships know, local health purchasing agencies increasingly use private providers for services like nursing homes and to clear waiting lists for surgical procedures. However, as I understand it, independent providers will not be involved in the local initial stage of the new complaints procedure. But NHS patients being treated in the independent sector may take their case to the ombudsman. It seems on the face of it unfortunate that the speedy local resolution of complaints which will now be offered in the first two stages of the new system to those treated in NHS facilities will not be offered to those treated by independent providers.
Paragraph 60 of the ombudsman's document states that independent providers will be required under their contracts with health service bodies or GP fundholders to have in-house arrangements for investigating complaints equivalent to those of health bodies' local resolution procedures. But it does not say how those will be instituted, what their legal force will be, or indeed how any organisation which does not institute those procedures can be policed. Again, perhaps the Minister will help us in her summing up by giving further guidance on that.
As the noble Baroness, Lady Cumberlege, said in introducing the Bill, it represents only one, although a significant, part of the general reform of the NHS complaints procedure. I regret that your Lordships have not had the opportunity to consider the new system as a whole and perhaps explicitly to consider the interrelation of the new complaints procedures before us together with the Medical (Professional Performance) Bill. They are all part of an overall attempt to streamline and clarify the organisation and at the same time to raise overall levels of quality.
Those are laudable aims which we support. We shall return to our detailed concerns about some aspects of specific provisions of the Bill at Committee stage. There is no better summary of our position than that of the health service ombudsman himself who, in his last report to Parliament, said:
"Aspirations about more effective complaints handling are hot air. They need now to be matched by performance".
9.6 p.m.
Baroness Robson of Kiddington: My Lords, I, too, thank the Minister for so clearly and succinctly introducing the Bill, particularly in view of the marathon afternoon session that she has had in dealing with the Community Care (Direct Payments) Bill. It has been a hard day's work.

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I agree to a large extent with what the noble Baroness, Lady Jay, said. We on these Benches welcome the Bill. It is about the right of patients to have a clear-cut and easily understood complaints procedure which makes the NHS responsive, accessible and, above all, accountable to the people who use the service. However, as the noble Baroness, Lady Jay, said, in legislating we must ensure that the Bill also creates a fair system for the professionals involved in the service. That is important if the system is to work.
The extension of the health commissioner's jurisdiction to cover family health service providers, dentists, ophthalmic providers and independent care providers who care for NHS patients under contact with health authorities and health boards, as well as GP fundholders, is welcome. One might almost say that it is long overdue. The streamlined three-tier system for local resolution of a complaint, or the appointment if necessary of a three-person independent panel, should enable most complaints to be resolved locally; but, most importantly, it leaves the complainant with the right to take his or her complaint to the ombudsman if not satisfied with the answer. The overriding requirement for the new procedure to be a success is for there to be adequate publicity so that patients are aware of their rights under the new system. Patients have been very confused about their rights under the previous complaints procedure. This Bill is the opportunity to make it perfectly clear what everyone's rights and duties are. It is important that it is widely publicised.
Another point which we on these Benches welcome is that from now on the commissioner is to lay both his special and his annual reports before Parliament rather than merely reporting to the Secretary of State.
However, some aspects of the implementation of the new system give cause for concern. First, the increase in the commissioner's workload is bound to be substantial. Even without the additions in the Bill, his workload increased last year by almost 30 per cent. That has resulted in investigations taking longer to complete. In 1994 the average length of investigations was 45 weeks but in 1995 it had grown to 60 weeks. By any standards, that is an unacceptably long time for both professionals and patients to have to wait for the results of an inquiry.
I am aware that the commissioner is being given an additional 130 staff, but a large number of them are needed purely to reduce the time taken for each investigation at the moment. The staff will not all be available for the new duties.
The need for the ombudsman's powers to include clinical judgment means that he will have to have access to independent clinical advice from a range of health professionals, including nurses. That clinical advice will take place at two levels. The ombudsman will need advice to screen complaints in order to determine whether they are of a clinical nature, to identify which parties are likely to be involved in an investigation and to decide whether the complaint is within his remit. Once a complaint is taken up, the ombudsman will again need professional clinical advice. That will all require extra staff within his department. I agree with the noble
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Baroness, Lady Jay. I am delighted that the independent clinical advice will include advice from nurses and midwives. We also welcome the ombudsman's right to refer certain cases to the General Medical Council.
What will be the cost to GPs, dentists and ophthalmic practitioners of implementing the new system? At Committee stage in another place the Minister claimed,
"that the total annual cost arising from the expanded legislation will be £100,000 to doctors as a whole and £10 per practice". —[Official Report, 19/12/95; col. 12.]
I believe that £10 per practice is a ridiculously low estimate of what it will cost considering the staff time that will have to be taken up in training and setting up operating and monitoring practices based upon complaints procedures.
General practitioners will receive guidance from the NHS Executive on practice-based procedures which will include model guidance for practice staff. It will also mean that they will have to put up publicity notices and information leaflets and produce complaint report forms. All that will be costly for general practitioners. It is too much for anyone to believe that the cost will be only £10 per practice.
Lastly, I have a matter which I would like to discuss and will probably raise again at Committee stage: the possibility of a complainant taking legal action should not prevent the commissioner from investigating a case. Complainants will want an investigation by the commissioner. They will want to pursue a court case independently in order to seek damages. They should not be prevented from doing so. The two actions achieve completely different results. The commissioner's investigation can offer an explanation, make recommendations to the health service body and offer assurances that it will be dealt with. Legal action cannot do that, but it can provide financial compensation. So the outcomes are very different. My concern is that a complainant who wants to take legal action for negligence will be debarred from doing so because of the length of time —60 weeks —that the investigation of a complaint might take. He might be debarred for overrunning the time for taking legal action. It should therefore be considered whether it would be possible for a complainant to take action in both directions at the same time.
I look forward to the detailed discussion of amendments in Committee. I welcome the Bill. It must create the right climate for co-operation between professionals and patients in the National Health Service.
9.14 p.m.
Baroness Cox: My Lords, I am pleased to add a warm welcome to this Bill, and to add my thanks to those already expressed to my noble friend for her lucid and succinct introduction. I must declare a professional interest as vice-president of the Royal College of Nursing, which has given its support to the principles and provisions of the Bill.
First, I endorse the contribution that the proposed legislation will make towards ensuring accountability in the provision of health care. Patients, clients and their

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families are inherently vulnerable. They may find great difficulty in mustering enough courage to initiate a complaint in the unhappy event of maladministration in the provision of care, or of an error in clinical judgment. Such natural reluctance to challenge the often daunting system of the health care establishment may be exacerbated by complicated procedures.
Therefore, the provisions of this Bill, together with proposed changes to complaints procedures, are intended to introduce a single, simplified and comprehensive complaints procedure covering all providers of health care, including family health services and the independent sector. They should make it easier for any inadequacies in the quality of care to be identified, for appropriate responses to be made to those who have suffered as a result, for problems to be rectified and for recurrence of problems to be prevented. The provisions are thus a very important part of a commitment to enhance quality of care and to ensure that the highest possible standards are maintained for all who use our health services.
While warmly welcoming the Bill, I take this opportunity to ask my noble friend for clarification on two issues: training and mixed sector complaints. I turn first to training, an issue already raised by the noble Baroness, Lady Jay. The health service commissioner's extended powers are to be seen as part of the package of reforms of the complaints system. It is the intention to introduce the other two stages in the system by 1st April this year, on the same date as the new health authorities are to be established. This is a massive agenda for the health service on a very tight timescale.
It is clearly important that there should be a speedy and successful introduction of the new, simplified system. However, in many parts of the National Health Service it will require a cultural change in the ways in which complaints are managed. In the past, as my noble friend has already recognised, there has naturally sometimes been a tendency to deal with complaints negatively and defensively. In future, they are to be seen in a more positive light, as part of the assessment of the quality of care and as a tool to improve service to patients.
It is therefore essential that a culture of openness be encouraged. Staff should be encouraged to help patients to make their views known if the care they receive is unsatisfactory. So nurses, doctors and other staff will need training in the new system if it is to work and if they are to respond positively to complaints and learn from them. Will my noble friend therefore give a little information on what training and resources will he available to ensure that the new system will he implemented quickly and successfully?
The second area is that of mixed sector complaints —a variation on a theme already raised by the noble Baroness, Lady Jay. The ombudsman's powers cover those providing health services. However, the dividing line between health and social services is often blurred, particularly, for example, in the area of continuing care.
Responsibility for patient care may not always he clear-cut. For example, if a patient moves from residential nursing care provided by a health authority
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to accommodation provided by a local authority and develops pressure sores, there may he a dispute as to when the problem began and who was the responsible authority. In such a case there might be a lack of clarity as to who would be responsible for convening the complaints panel. I therefore ask my noble friend what the ombudsman would be able to do if there were problems with such a mixed sector complaint of this nature.
I conclude by strongly supporting the Bill and assuring your Lordships that the Royal College of Nursing warmly welcomes it. I suggest that Her Majesty's Government should be commended for bringing it forward and I hope that it will pass through all its stages with maximum speed, so that its important provisions can come into effect on 1st April and its objectives be achieved as soon as possible, to the benefit of all who receive health care and all who have responsibility for its provision.
9.20 p.m.
Lord Harmsworth: My Lords, I apologise for speaking in the gap. I was a few minutes late advising the Whips Office that I should like to speak. In my greenness, I did not realise how sharply the list of speakers was removed from the clipboard at noon. I hope your Lordships will forgive me for my failure to ensure my name was on the list.
I suspect that the Bill is uncontroversial in its intent and largely in its approach. Representations have been made on various aspects of the Bill. I received parliamentary briefing from the National Consumer Council, which I wish to consider with care. As my noble friend the Minister will see —I have given a copy of the letter to her officials —the briefing relates to one or two points of detail. They include the provision of certain information to the complainant as well as to the body complained of in an area which must be fraught with difficulty, not least because of the complexity which most treatments must represent to a layman, and the provision of monitoring and review in the first three years of operation under the commissioner's new jurisdiction.
I look forward to hearing the Minister's response to those points at a later stage of the Bill. I wish the Bill a fair wind.
9.22 p.m.
Baroness Cumberlege: My Lords, I am grateful to noble Lords for their consideration of the Bill at this time. I am very appreciative of the welcome that all your Lordships have given it. The provisions of the Bill reflect the deliberations of honourable Members in another place as well as the findings of the independent committee appointed to review the subject. The Ombudsman's Select Committee and the Wilson Committee on NHS complaints procedures, having heard extensive evidence from patients, relatives, practitioners and staff working in the NHS, and indeed others, both recommend that complaints concerning clinical judgment and those about family health services should be brought within the ombudsman's jurisdiction.

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The Government, following extensive consultation, were left in no doubt that those measures have very broad acceptance not only among the general public but with professional bodies, patient representative groups, NHS bodies and others. So we are at one on all that.
In future, the vast majority of complaints will be resolved at local level. That is our intention. I am glad that the noble Baroness feels that we should aim for that. We believe it right that the public should be able to discuss their concerns directly with those responsible for the services and get answers on the spot.
We are also injecting a significant amount of independence. A lay person will be involved in every decision as to whether to establish a review panel and the panel will always have a majority of independent members. I believe that we have struck about the right balance. We are avoiding creating a whole new complaints bureaucracy which would rob the NHS of all responsibility for putting things right. On the other hand, we are not allowing it complete autonomy which could lead to a reluctance to acknowledge mistakes and learn lessons for the future.
I wish to address some of the points raised during the debate. I agree very much with the view expressed by the noble Baroness that at the moment the complaints system is an unfriendly maze. We also accept that the timetable is very challenging. We have a lot of work to do before 1st April if we are to have the service ready for the changes. We agree with the noble Baroness, Lady Robson, that we have to inform users. It is no good having a good system if people do not understand that it is there and how to use it.
I do not agree with the noble Baroness, Lady Jay, that our reforms have fragmented the NHS —I am sure she would not expect me to. On the contrary; we believe that they clarify responsibilities in a way that has never been done before and our proposals about complaints are similarly clear, specifying the precise roles of GP practices, NHS trusts and health authorities.
The noble Baroness, Lady Robson, was concerned about the time it takes at the moment for the health service commissioner to deal with complaints. That is something with which we very much agree. Indeed, I know that Mr. William Reid is addressing that matter at the moment to see how he can streamline his procedures without losing their valued and deserved reputation for thoroughness. Clearly there is a balance to be struck.
With regard to litigation, the noble Baroness was concerned that sometimes the delay can prevent people from going to court or from going to the health service
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commissioner. I understand that the commissioner is unable to take on a case when it is already before the courts. But often, when it comes to deciding what route a complainant should take —a point raised by the noble Baroness, Lady Jay; that is, whether a complainant should go to the ombudsman, to the GMC or to the courts —the test is to ascertain what a complainant is trying to achieve. Once the complainant has made that clear, then the route also becomes clear. However, I do not want to give the false impression that it is always clear what is a clinical case and what is a case that should be dealt with through disciplinary procedures; there will always be grey areas.
My noble friend Lady Cox asked a specific question in that regard, concerning a mixed complaint involving social services. There is a provision in the 1993 Act to require consultation between the health service ombudsman and the local government ombudsman where he receives a complaint of that sort to ensure that the complainant has access to the right person. I agree with my noble friend that it is an increasingly complex area, and the department is in consultation with both the health service and the local government ombudsmen to ensure that complainants know which route is the most appropriate.
I am conscious that a number of issues have been raised and I am sure that we shall return to many of them during the Committee stage of the Bill. Perhaps I may address the question of resources, because I know that it is one that concerns your Lordships. We have agreed with the ombudsman's office the amount of money that he is assessing in the early stage and there is a transfer of £5 million rising to £6.5 million. That is to some extent an estimate, in that we do not know exactly how many complaints there will be. Though our estimates allow for a 10 per cent. increase, we shall need constantly to review the resources necessary for this new procedure and sometimes the movement may be downwards, though I suspect sometimes it may be upwards.
I hope that I have addressed most of the points raised. I look forward to my noble friend's detailed points when it comes to the Committee stage. Perhaps I may conclude by paying tribute to Mr. William Reid. He has an extremely difficult job and he does it with great thoroughness. He is highly respected, both within the NHS and by the public as a whole. It is right that we should be seeking to extend his role into clinical areas and thereby, I hope, reduce the acceleration towards litigation. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House
House adjourned at twenty-nine minutes past nine o'clock.