Lords Sitting of 19 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 Chester.

Sir Leon Brittan: The Times Article
Lord Bruce of Donington Lord Bruce of Donington asked Her Majesty's Government:
Whether, in the light of an article by Sir Leon Brittan, a European Commissioner, in The Times of 7th February, headed "Rifkind should beware", in which demands are made for them to behave in a specific manner within the ambit of British political controversy, they propose to make any rejoinder.
The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood):The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood): My Lords, no.
Lord Bruce of Donington: My Lords, is the noble Lord aware that in that article Sir Leon Brittan is presuming to criticise a Minister of the Government and to tell him what line he ought or ought not to take in a matter which is subject to British political controversy? Does the Minister believe that that is appropriate or does he wish to minimise his sense of solidarity with his colleague in the Foreign Office?
Lord Inglewood: My Lords, if Sir Leon Brittan criticised my right honourable friend the Foreign Secretary, the criticism is not to be found in the article of 7th February this year, which succinctly lays out a case close to the British Government's approach to these matters and is very much supportive of it.
Lord Peyton of Yeovil: My Lords, does not my noble friend agree that the supplementary which came from the noble Lord, Lord Bruce of Donington, was of extremely liberal construction, even in these days when such things are popular?
Lord Inglewood: My Lords, my noble friend is absolutely right. It was so liberal that it appears to have no basis in the document from which it is alleged to be derived.
Lord Bruce of Donington: My Lords, is the noble Lord aware that the article to which I referred, under the authorship of Sir Leon Brittan, says,
"Don't pander to the sceptics".?
It continues,
"This Government must show that such fears are unfounded, and must highlight the benefits of EU membership. It has chosen to do so in its reaction to the new era in Euro-American relations, and wisely so. It must apply the same approach elsewhere".
Since when has any government in the United Kingdom been responsible to a Eurocrat for the line they take in regard to their policies? Would it not be better
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if the Eurocrats kept themselves within their own business and for once criticised the Government of Germany for being well behind in their legislation dealing with the single market?
Lord Inglewood: My Lords, the remarks by Sir Leon Brittan quoted by the noble Lord, Lord Bruce, from the article in The Times underscore precisely the Government's policy in this respect. In speaking of the attitude to the European Union, Sir Leon Brittan says,
"It must apply the same approach elsewhere, weighing up every issue in the balance of British interests".
That is the Government's policy. We believe it to be the right policy for this country and intend to continue in that respect.
Lord Campbell of Alloway: My Lords, does my noble friend agree that on this exceptional occasion the noble Lord, Lord Bruce, has gone right over the top? Anybody is free to criticise or support this Government as they wish.
Lord Inglewood: My Lords, my noble friend is absolutely right. Whether or not the Government would normally use the words "over the top" to describe the noble Lord, Lord Bruce, they are appropriate in these circumstances.
Lord Harris of Greenwich: My Lords, perhaps I may squeeze in a word on this occasion. Is the noble Lord, Lord Inglewood, aware that many of us believe that freedom of speech should be applied even in the case of Sir Leon Brittan?
Lord Inglewood Lord Inglewood: My Lords, I am most reassured.
Lord Jenkins of Putney: My Lords, I believe I heard the noble Lord refer to this matter as one of government policy. Can he say whether there are any guidelines in connection with it?
Lord Inglewood: My Lords, this is long-established policy. In respect of the European Union, this Government approach issues on their merits, putting in the balance whether or not the policies, whichever way they go, are in the best interests of the people.
Lord Ezra: My Lords, will the Minister please note that we on these Benches object to the use of the word "liberal" in connection with the question of the noble Lord, Lord Bruce, particularly bearing in mind that our stand in relation to the European Union is rather different from his?
Lord Inglewood: My Lords, I find the remarks of the noble Lord, Lord Ezra, most helpful. However, I am reluctant to enter into an inter-Opposition dispute on the matter.
Lord Pearson of Rannoch: My Lords, can my noble friend tell the House how a member of the European Commission who is also a Privy Counsellor reconciles his oath as a Privy Counsellor and that which he takes

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as a European Commissioner when the subject under consideration is in conflict with one of the two positions?
Lord Inglewood: My Lords, there is no conflict, as was clear from the extracts I read out to your Lordships.
Lord Stoddart of Swindon: My Lords, is the noble Lord aware that, far from going over the top as was suggested by his noble friend Lord Campbell of Alloway, my noble friend was entirely reasonable? Indeed, I think he was uncharacteristically mild. Does he not agree that there is an increasing tendency for members of the European Commission to act, behave and speak as if they were the European Government? Perhaps it is about time that the British Government, who consist of elected people, told the European Commission to keep in its place.
Lord Inglewood: My Lords, the European Commission is not now, never has been, and never will be, if this party has anything to do with it, a European Government. With regard to the other part of the noble Lord's question, I suspect that the noble Lord was being as reasonable as he was previously liberal.
Lord Richard: My Lords, is the noble Lord aware that my noble friend Lord Bruce of Donington is always uncharacteristically mild—thank heavens? Is he further aware that my noble friend has a very basic view, which is that British Commissioners should not criticise British politics but that British Commissioners should criticise the politics of every other member of the EU?
Lord Inglewood: My Lords, I am grateful to the noble Lord for explaining the position so succinctly.
Lord Bruce of Donington: My Lords, is the noble Lord aware that that is not my position at all? Is he further aware that on the question of free speech, which was raised by the noble Lord, Lord Hams of Greenwich, when I ventured to criticise M. Jacques Delors for criticising the British Prime Minister at that time, he retorted to me, "Well, it's a free country, isn't it?"?
Lord Inglewood: My Lords, it is not for me to come between the Leader of the Opposition and one of his battalions.

Secure Training Centres
2.46 p.m.
Lord Allen of Abbeydale Lord Allen of Abbeydale asked Her Majesty's Government:
What is the present state of the programme for providing five secure training centres under the provisions of the Criminal Justice and Public Order Act 1994.
The Minister of State, Home Office (Baroness Blatch):My Lords, tender proposals for the first two secure training centres were received on 12th June 1995. Contracts will be signed as soon as the terms of the
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contractual agreement have been settled. An invitation to negotiate in respect of a third site will be issued shortly, and for the other two sites once outline planning permission is obtained.
Lord Allen of Abbeydale: My Lords, I am much obliged for the information given in that reply. However, since I remain opposed to the concept of these penal-type institutions for 12 to 14 year-olds, I feel that it does not fall to me to express disappointment at what seems to be a rather slow and patchy progress. But some important issues are raised. If just one centre is working or a second centre starts working a little later, as appears to be the case, what will the catchment area be? Will some of these children find themselves detained hundreds of miles away from their families, with all the difficulties of visiting, and hundreds of miles away from the professionals who will be concerned with that part of the sentence which is to be served under supervision in the community? Are there not real difficulties ahead?
Baroness Blatch: My Lords, the noble Lord is right that there are two issues here. One is the policy, to which, as we all know, the noble Lord is opposed; the second is the progress that is being made. As to the specific answer to the question posed about implementation of the policy, that will be a matter for the terms of the secure training order when it is put into place. Therefore, I cannot give an answer except to say that there will be 12 to 14 year-olds who are persistent offenders for whom this sentence will be appropriate.
Baroness Faithfull: My Lords, perhaps I may ask my noble friend whether my right honourable friend the Home Secretary is fully aware of the position with regard to local authorities' secure training units, which are of course near to the children's homes. There are already 257 such places, which is obviously not enough. The Department of Health's capital programme is designed to increase the number of places by 170. I understand from the local authorities that many are already under construction, have planning permission and will be open by the end of the year and that another 62 will be open next year. Is this not of concern to us all? Are the two departments working against one another or with one another? How is it that £30 million a year will be spent on the secure training units run by the Home Office under private control which will be far from the children's homes while at the same time the local authorities are increasing the number of their places? Are we not wasting money?
Baroness Blatch: My Lords, the policies are certainly not in conflict. It is true that there are to be 170 new places in local authority secure accommodation, most of which will be in place by the end of this year. These places are not always appropriate because they are very scattered. The young people falling into the specific category of persistent juvenile offenders aged between 12 and 14 years will be very scattered and in very small numbers. There are also economies of scale in the new units. The needs of this particular category will be met by putting them into units of 40 in five institutions, with a very concentrated

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and highly disciplined programme of education and training. I believe that they are different from the provision made by local authorities.
Baroness David: My Lords, can the Minister tell me when the Home Office is going to pay local authorities for the children who are sent to local authority secure units by the courts? I understand that there was some agreement between the Home Office and the local authorities that it would pay for those children, but so far no payments have been made.
Baroness Blatch: My Lords, there is money in the system for sending young people to secure training units. That is already taking place. No one is saying that there is not always tension about what can be provided. Therefore, I do not know what specific question the noble Baroness is asking.
Baroness David: My Lords, I am sorry that I did not make it clear. I understood that when the courts send children to local authority secure units the Home Office had agreed to pay the necessary fees.
Baroness Blatch: My Lords, when the courts send a person to a secure training unit that will be the arrangement.
Lord Acton: My Lords, is the Minister aware that there has been speculation that the contracts for the secure training centres are for 15 years? Can the Minister give any information about that?
Baroness Blatch: My Lords, I cannot enter into detail about the particular negotiations for the contracts because we are in the throes of doing that at the moment. What is very important is that the contract should cover a reasonable length of time because the private sector is putting up the money to provide them.
Lord McIntosh of Haringey: My Lords, in her first reply the Minister said that tenders had been received on 12th June 1995. As I understand it, she is now saying that the negotiations are continuing. Does that mean that the contractors have been asked to submit revised tenders and, if so, does that mean that the planned opening dates of autumn 1996 for Gringley and March 1997 for Cookham Wood will no longer apply and will have to be delayed?
Baroness Blatch: My Lords, that is an appropriate question because the tenders that were received were non-compliant with the specific terms of the specifications. What is being negotiated at this moment is a contract which is agreeable to the Government and the contractors.
Lord Williams of Mostyn: My Lords, can the Minister tell us what provision for secure training centres is to be made for Wales?
Baroness Blatch: My Lords, none of these five units will be located in Wales. They will all be located in England.
Baroness Farrington of Ribbleton: My Lords, is the Minister aware that the local authority increase in the
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number of places is matched by an increase in the number of staff training under the auspices of Caldecott College? What plans do the Government have to ensure that they will have found trained staff for the new Home Office secure units when they open?
Baroness Blatch: My Lords, when the secure training units are opened they will be properly staffed. That is in the terms of the contract.
Lord Harris of Greenwich: My Lords, can the Minister say what will happen if Parliament subsequently decides to end the practice of having secure training centres? Do I understand that the agreement between the contractor and the Home Office is for 15 years? If that is so, what will happen if, during that period, Parliament decides to remove itself from this very unsatisfactory arrangement?
Baroness Blatch: My Lords, it will be a matter for any subsequent government to look at the terms of any contract arranged by a previous government. It will be for that government to consider whether there are penalties for reneging on any previous contract or bringing the terms of the contract to an end. Perhaps I may also say to the noble Lord and all noble Lords opposite who opposed this particular policy, that we have in this country a small, hard-core of young and very persistent offenders. We should not wring our hands and say, "What shall we do about them?". The Government have taken courage to do something about them. I wish them well in finding a successful policy to rid ourselves of this daily menace.

Armed Forces Pension Scheme
2.55 p.m.
Lord Chalfont Lord Chalfont asked Her Majesty's Government:
Whether they have yet reached any decisions on the changes to the Armed Forces Pension Scheme recommended by the committee chaired by Sir Michael Bett on the pay and conditions of the Armed Forces.
The Parliamentary Under-Secretary of State, Ministry of Defence (Earl Howe): My Lords, the recommendations made by Sir Michael Bett on pensions were among a large number that he made in his report on personnel issues in the Armed Forces. We are studying his proposals carefully but have not yet reached any decisions on possible changes to the Armed Forces Pension Scheme.
Lord Chalfont: My Lords, I thank the Minister for that reply. Can he at least give us some assurance or comfort that when the Bett proposals come to be considered, if there are, as seems likely, substantial savings to be made in the pensions budget in the Ministry of Defence, some of the savings will be kept within the pension regime and put to good purpose such as, for example, extending the provision of war widows' pensions to recognised service before 1978?
Earl Howe: My Lords, I understand the point that the noble Lord makes. It chimes in with our debates on this

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issue last month in response to a question from my noble friend Lord Campbell of Alloway. There is one point that I can make at this stage. As I have said, we have yet to reach conclusions about the final shape of the pension scheme. The difficulty with the idea that the noble Lord puts forward is that any new scheme will apply only to future service personnel. Therefore any savings would not start to accrue until about 20 years from the start. In other words, there would be no new money to fund retrospective improvements to the existing scheme. The Government are not treating this exercise as a way of creating savings, but at the end of the day there is unlikely to be a lot of spare money looking for a home.
Viscount Slim: My Lords, is it not a fact that the overall military pension system today is grossly unfair? The way that length of service, time of service and similar rank are treated is most inequitable. Whatever the Bett report decides, is it not time that the overall system of military pensions was completely revamped and modernised? Whether that can be done in retrospect is another matter. But does the noble Earl not agree that the present arrangements are probably the most old-fashioned of any that we have in this country and indeed when compared to any other country?
Earl Howe: My Lords, I agree with the noble Viscount that there are elements of the current scheme which could usefully be improved. We are looking at a number of recommendations, as he is aware, in the light of Sir Michael Bett's report. But I believe that the special nature of the commitment of service personnel is fully recognised by the Government and is reflected in their pension arrangements at the moment. Taken overall, the value of the benefits of the Armed Forces Pension Scheme is considerably greater than in most other public service schemes. In addition to that scheme, generous benefits are paid under the Department of Social Security war pensions scheme in cases of death or injury as a result of military service.
Lord Mayhew: My Lords, although it is easy to see the force of the noble Earl's argument that it is difficult to add to the new scheme the duty of removing injustices from the old scheme, would it not be equally unjust to start the new scheme while leaving the old injustices in the air and doing nothing to overcome them? Can the Minister say when the Government will be ready to make a decision on this matter and what consultations they are having with the forces?
Earl Howe: My Lords, we hope to make a definitive announcement in the summer. We aim to give a detailed account of our proposals and decisions on all Sir Michael's recommendations at that stage. We are consulting widely as we consider these matters. It is important to look at Sir Michael Bett's
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proposals in the round rather than to single out one or other aspect for special treatment. At the end of the day it is the package which will matter to servicemen.
Lord Bramall: My Lords, Armed Forces pensions are of course a matter of infinite complexity, but can the noble Earl give the House some assurance that if a new, modern, contributory pension scheme is introduced—I agree that there would be advantages and although I do not agree with my noble friend that the present scheme is as bad as all that, there are certain anomalies in its application—it will be properly funded and independently administered in accordance with the best civilian practice, as well as using this opportunity, as the noble Lord, Lord Mayhew, suggested, to correct some of the anomalies of uneven application which have for so long brought the present scheme into disrepute?
Earl Howe: My Lords, I fully understand the points raised by the noble and gallant Lord and shall ensure that his remarks are brought to the attention of my right honourable friend. As I have said, we have reached no conclusions as yet, but it is important that we look at Sir Michael's proposals in the round. It is also important that at the end of the day we have a pension scheme which bears comparison with similar schemes in the public and private sectors.
Lord Campbell of Alloway: My Lords, may I ask my noble friend with respect whether Parliament will be in a position to consider the announcement to which he referred before any definitive decision is taken?
Earl Howe: My Lords, I am sure that if your Lordships would like a debate on the issue that is a matter for the usual channels. At present the Government are considering the proposals. We have no specific plans for a parliamentary debate.
Lord Williams of Elvel: My Lords, although I agree that the Bett proposals should be taken as a totality and should not be considered as a series of single items, does the noble Earl agree that in the light of the timetable that has been announced for implementing the proposals, this matter will stretch into next year and possibly beyond? Therefore, in order to keep the Armed Forces out of any party political debate, would it not be sensible to consult the Opposition parties before the Government arrive at any final decision on the proposals?
Earl Howe: My Lords, I am always ready to listen to the opinions of noble Lords opposite. I am grateful to the noble Lord for his suggestion.
Lord Chalfont: My Lords, does the noble Earl recall—he may be too young to do so—that in May 1980 the right honourable Member for Huntingdonshire said in another place on the subject of pensions:
"Service men, by virtue of their profession, are in a special position and should be treated accordingly".—[Official Report, Commons, 2/5/80; col. 1846.]?

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Will the Government take that into account when they implement the Bett Report?
Earl Howe Earl Howe: My Lords, yes.

Prison Service: Director General
3.2 p.m.
The Earl of Longford The Earl of Longford asked Her Majesty's Government:
What steps they are taking to replace the Director General of the Prison Service.
Baroness Blatch: My Lords, this is an important and sensitive appointment which needs the most careful consideration. My right honourable friend the Home Secretary will make an announcement as soon as possible. In the meantime, Mr. Richard Tilt is doing an excellent job as acting director general.
The Earl of Longford: My Lords, may I congratulate the noble Baroness on evading the issue with her usual charm and skill? Is she aware that The Times tells us today that the job has been touted around all over the place without success? In view of the disgraceful treatment of Mr. Derek Lewis and the low esteem in which government policies are held throughout the Prison Service, is the noble Baroness surprised that no one will touch that post with a barge pole?
Baroness Blatch: My Lords, this is not the first Question from the noble Earl which I have answered when he has accused me of avoiding the Question and not responding to his points. I have given the noble Earl an honest Answer, which is the only Answer that I can give. I must advise the noble Earl that I do not take my guide from The Times or from any newspaper. The post has not been touted around. We have not yet advertised the post.
Lord Marlesford: My Lords, does my noble friend see this moment as an opportunity to give the administration of prisons a United Kingdom dimension? May I thank my noble friend for the most interesting information (which she gave me in Written Answers on 29th January) about the computerisation of the records of those in prison in the United Kingdom? I was astonished to find that the police forces in England have no direct access to prison computer records; that the same situation prevails in Scotland; and that there is no link between Scotland and England and Wales on this? The Minister wrote that a centralised computer register of all persons detained in Her Majesty's penal establishments in Northern Ireland does not exist. Has not the time come to give a UK dimension to the administration of prisons?
Baroness Blatch: My Lords, my noble friend makes a very important point. It is certainly true that a great deal of work needs to be done to make sure that one part of the criminal justice system communicates with
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another, using state of the art technology. I can give my noble friend the assurance that there is at present a great deal of activity on that front.
Lord McIntosh of Haringey: My Lords, without dissenting from what the Minister says about Mr. Richard Tilt, are not her earlier replies rather strange? The post became vacant last year, but the Minister now says that the post has not touted around—I assume that that means that nobody has been asked either directly or indirectly whether they are interested in applying for or taking the post—and that it has not yet been advertised. Why the delay?
Baroness Blatch: My Lords, there are people who are interested in the post. I know personally that people are interested in the post. That is a fact. As the noble Lord knows, there is currently a review within the department about the relationship between the agency, the Government and the Home Office. As I have already mentioned, it is a sensitive post which needs thinking about carefully. In the meantime, Mr. Richard Tilt is doing an excellent job, which means that the urgency is not quite as strong as the noble Lord suggests.
Lord Harris of Greenwich: My Lords, does that mean that the Government are relaxed about allowing this "sensitive" position, as the noble Baroness described it, to remain open for several more months? When are we going to get a replacement for Mr. Lewis? Is the Minister aware that the reason that it is such a sensitive position is the deplorable way in which Mr. Lewis was sacked by the Home Secretary? Can the Minister say what stage has been reached in the action that is being taken by Mr. Lewis against the Home Secretary over the circumstances in which he was dismissed from his post?
Baroness Blatch: My Lords, I said that the Home Secretary will announce further progress as soon as possible. I also said that Mr. Richard Tilt, who is the acting director general at the moment, is doing an excellent job, so there is not the vacuum which the noble Lord suggests. It would be inappropriate for me to say anything at all about the progress that is being made with Mr. Derek Lewis. It is probably not correct to say that the matter is sub judice, but negotiations are continuing and it would be quite wrong of me to use this moment to say anything other than that the matter is in hand.
Lord Mishcon: My Lords, will the Minister kindly indicate to the House what applicants will be told about the ministerial responsibility of the Home Office in regard to the post holder's activities?
Baroness Blatch: My Lords, it is absolutely essential that any appointment is made on the basis of understanding the proper role of the director general and the post's relationship to the Home Office, recognising the responsibility and accountability to Parliament of the Home Secretary of the day.

Criminal Procedure and Investigations Bill [H.L.]
3.8 p.m.
Read a third time.
Clause 2 [General interpretation]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 1:
Page 2, line 21, at end insert—
("( ) References to material which might undermine the case for the prosecution are to material which may cast doubt upon the prosecution case.").
The noble Lord said: My Lords, the House will be aware that throughout our consideration of this Bill one of our most important concerns has been the adequacy of the definition of the primary disclosure by the prosecutor to the defence which will in turn trigger disclosure by the defence, both of which were recommendations of the Royal Commission on Criminal Justice.
We have been very dissatisfied with the definition used in Clause 3(1)(a), which states:
"The prosecutor must—
(a) disclose to the accused any prosecution material which has not previously been disclosed to the accused and which in the prosecutor's opinion might undermine the case for the prosecution against the accused".
We have attempted by arguments in Committee and on Report to suggest an alternative wording to that subsection. We have not succeeded in getting the support of the Government (and therefore of the Government's troops) for any changes of that kind. So we are adopting a different tack today. In Amendment No. 1 we propose to add a definition of "undermine" to the subsection in Clause 2 which deals with definitions. The definition we propose is that "undermine" should be a reference to:
"material which may cast doubt upon the prosecution case".
I believe that it will be agreed that in the English language "to cast doubt" on something is rather less demanding than "to undermine the case".
"Undermine" is a curious metaphor in any case to find in legislation. It is a metaphor from mining engineering, which one might say has no particular place in legislation in the first place. We are encouraged to include it because the Home Office itself, in discussions with the Law Society, has said that by "undermine" it means cast doubt upon. It is important that we should have a rather less rigid and prescriptive definition of the basis upon which the prosecution should disclose information to the defence, because we are worried, and have been worried throughout consideration of the Bill, that too much of a burden is being placed on the prosecutor in selecting what material should go to the defence.
The Government, throughout the Bill, from Second Reading onwards, have argued that one of the principle justifications for the Bill, and for the departure from the recommendations of the Royal Commission and from
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judge-made law—practical judgments made in courts since the Royal Commission's report—is that at present there is too much of a burden on the prosecution.
Those who have been seeking to persuade me of their case in this matter have been the Criminal Bar Association and the Law Society. They are both convinced—and their views should be listened to—that it is the selection rather than the supply of a bundle of unused material which is in fact the real burden on the prosecution, and that if the prosecution were not to assume the role of deciding on behalf of the defence what may be relevant, we might achieve a better balance between defence and prosecution, and we might in fact reduce the burden on the prosecution.
As I have said, we have taken the wording of the amendment from the indications which have already been given by the Home Office in discussion with the Law Society. The slight difference in emphasis provided by the phrase "cast doubt upon" rather than "to undermine" will go a small but significant and useful way towards reducing the burden on the prosecution and improving the balance between the powers of the prosecution and those of the defence. I beg to move.
3.15 p.m.
Lord Renton: My Lords, I shall be interested to hear what my noble friend the Minister says in answer to the amendment. It deserves careful consideration because, speaking from my own recollection which noble Lords may think is now becoming rather rusty, I do not recollect the word "undermine" being used in the law of evidence or in relation to the burden of proof in criminal cases. It may be that that does not matter greatly; it may be that when the matters dealt with in the early clauses of the Bill come before the courts, the courts will have no difficulty in understanding what is meant by the word "undermine". Having said that, it is necessary that we should get as near as possible to the terms of art already in use rather than introduce a new one.
Baroness Blatch: My Lords, the noble Lord explained his concern that the test for primary prosecution disclosure may be too restrictive. I hope to be able to convince him, and my noble friend Lord Renton, and to be able to allay their concerns.
The Government have given considerable thought to the test for primary prosecution disclosure. We want to ensure that the prosecutor discloses at the first stage material which, generally speaking, has an adverse effect on the strength of the prosecution case.
Let me give two examples of the kind of material we have in mind. The first is a witness statement containing a description of the alleged offender which is different from the description of the accused. The second is a psychiatric report showing that the main prosecution witness has a history of psychiatric disorder with a tendency to fantasize. In both cases the material should as a matter of principle and of law be disclosed to the accused.
The test of "undermine the prosecution case" is wide enough to require the disclosure of material such as I have described. It is the test which we used in the

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consultation paper on disclosure which we issued last May. A wide range of organisations responded to the consultation paper and none of them suggested replacing "undermine" with an alternative such as "cast doubt upon".
The noble Lord is concerned that the test of "undermine the prosecution case" could be interpreted in a restrictive way so that all that had to be disclosed was material which removed the foundations of the prosecution case. But the test extends to any material which might undermine the prosecution case. It is not confined to material raising a fundamental question about the prosecution. In that event, it surely is unlikely that the prosecutor would proceed with the case. Guilt must be proved beyond reasonable doubt, and, as the Code for Crown Prosecutors makes clear, the prosecutor may not bring proceedings unless there is a realistic prospect of conviction. The disclosure scheme is aimed at undisclosed material which might help the accused, notwithstanding that there is enough evidence to provide a realistic prospect of conviction.
I turn now to the alternative formulation suggested by the noble Lord. It, too, would require the disclosure of the kind of material I have described. But it would go further than that. It could, for example, cover material which slightly weakened a peripheral aspect of the prosecution case without having any real effect on it. Such a test would be rather closer to the existing test for prosecution disclosure, which, as I have explained in previous proceedings on the Bill, does not focus on the real issues in dispute in the case; and which, as has been widely recognised, creates great difficulties in practice. In the light of my response, I hope that the amendment will not be pressed.
Lord Renton: My Lords, before my noble friend sits down, I wonder whether I have understood her properly. I understand her argument to be that when the word "undermine" is used, it in no way interferes with the burden of proof on the prosecution to prove the case against the accused beyond reasonable doubt.
Baroness Blatch: My Lords, I can give my noble friend an absolute assurance on that point.
Lord McIntosh of Haringey: My Lords, I am relieved that, having undergone the scrutiny of officials in the Home Office, my amendment means what I intended it to mean, which is, indeed, to widen the basis upon which material should be released to the defence. I am so often told by lawyers that because of my ignorance of the details of these matters the things I suggest would not in fact have the effect that I intended. I still find it strange—and I am glad to have the noble Lord, Lord Renton, with me—that we should use such a term as "undermine", which is an engineering term—to be precise, it is a military engineering term, is it not?—in legislation of this kind.
We are talking about casting doubt on the prosecution case. My wording avoids the trap of metaphor and the trap into which the Government have fallen by their desire to select more rigidly the information which has to be disclosed. But I recognise that we are in danger of arguing about how many angels could dance on the head
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of a pin. I am afraid that unless the wording in the Bill is changed, it will lead to some of the miscarriages of justice which the setting up of the Royal Commission was intended to avoid. I believe that the balance of the Bill as drafted is tilted in the wrong direction. However, I do not believe that the difference between us is so great that I would be justified in seeking the opinion of the House. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 [Primary disclosure by prosecutor]:
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 2:
Page 2, line 27, after ("prosecutor's") insert ("reasonable").
The noble Lord said: My Lords, when this minor amendment was tabled on the previous occasion there was a significant amount of discussion. Clause 3 lays upon the prosecutor the duty and the burden of disclosing to the accused any prosecution material which has not previously been disclosed and which, in the prosecutor's opinion, might undermine the case for the prosecution.
When the matter was before the House on the previous occasion a number of your Lordships supported our case that this was an improvement. The context in which we discussed the matter was that many recent miscarriages of justice have arisen, as the Government well recognise in the scheme of their Bill, by virtue of non-disclosure. The criticism mounted against the present draft was that the prosecutor's opinion is left as being subjective and not subject to the objective test as to whether the prosecutor's opinion was reasonable.
On the previous occasion I was fortified by support from the noble Lords, Lord Renton and Lord Campbell of Alloway, the noble Viscount, Lord Bledisloe, and, not least, from the noble Viscount, Lord Runciman, whose commission did such sterling work in dealing with the problems. On that occasion I heard nothing convincing, or reasonably convincing, as to why the amendment was not properly seen as an improvement. I ask the Government, they having reflected in the meantime, to accept the amendment as an improvement to the present draft form. I beg to move.
Lord Ackner: My Lords, I support the amendment. I am surprised that two words have been used which are, or should be, unnecessary. The sentence should read:
"which might undermine the case".
The phrase "prosecutor's opinion" is surplusage because the test, if it is sound, is bound to be objective. Therefore, it needs no reference to the prosecutor.
However, since the draftsman has sought to include "prosecutor" his opinion must be characterised by "reasonable", otherwise it is subjective and one will have the answer made for non-disclosure, "I honestly believed that this would not undermine", even though it is apparent to any reasonable person that it would. If the draftsman insists that "prosecutor" should be included, the opinion of the prosecutor must be characterised by the word "reasonable".
Lord Renton: My Lords, with respect to the noble and learned Lord, whose case I well understand because

869
he put it so clearly, I should have thought that the view he expressed would be better met if the words "in the prosecutor's opinion" were left out rather than adding the word "reasonable".
Lord AcknerLords, I believe that it is my fault for not being as clear as my noble friend suggested. I wanted those words left out but if they are included the qualification "reasonable" must accompany "the prosecutor's opinion".
Lord Boyd-Carpenter: My Lords, I support those who criticise the clause as it stands. Although other amendments might be better, given that we are at Third Reading I offer my support of the amendment now in front of us. I hope that my noble friend the Minister will be prepared to accept it.
Lord Carlisle of Bucklow: My Lords, although I have not taken part in or been present during earlier stages of the Bill, perhaps I may support what was said by the noble and learned Lord, Lord Ackner, and the noble Lord, Lord Williams. Clearly, if one is to have a test it should be objective rather than subjective. While I totally agree that the number of papers now being required to be disclosed by the prosecution have become totally unreasonable, we must be careful that in bringing in this legislation we do not tilt the balance too far the other way.
Baroness Blatch: My Lords, as the noble Lord explained, the House debated similar amendments in Committee and on Report. As my noble friend Lord Boyd-Carpenter suggested, this is not the stage to be considering on the Floor of the House alternatives to the present amendment.
I have reflected on the points which were made in those debates. I have to say that I still take the view that Clause 3 should remain as it is. As I have previously explained, the Bill clearly places the prosecutor under certain duties of disclosure. In discharging those duties the prosecutor will have to bear in mind his duty to secure a fair trial. Prosecuting counsel, for example, are bound by the Bar's code of conduct which sets out that:
"Prosecuting counsel should not attempt to obtain a conviction by all means at his command. He should not regard himself as appearing for a party. He should lay before the court fairly and impartially the whole of the facts which comprise the case for the prosecution and should assist the court on all matters of law applicable to the case."
The code for Crown prosecutors provides that:
"Fair and effective prosecution is essential to the maintenance of law and order".
And also:
"The duty of the CPS is to make sure … that all relevant facts are given to the court … Court Prosecutors must be fair."
In considering what material is required to be disclosed to the accused the prosecutor will bring his best judgment to bear and, as I said, he will have to keep in mind these duties.
The amendment would require him to consider what a prosecutor's reasonable opinion might be and not just, as the Bill does now, what is his opinion. But, again as
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I have explained, the prosecutor will surely assume that his opinion is a reasonable opinion. I do not see how he could think otherwise, particularly since he is acting in a professional capacity and discharging duties prescribed by statute. I do not think that in practice, therefore, the amendments would achieve any improvement in the way the disclosure regime operates.
Lord Ackner:My Lords, before the noble Baroness sits down, does she accept that under the clause as drafted the prosecutor will have performed his duty if he honestly but unreasonably fails to produce the material?
Baroness Blatch: My Lords, certainly the prosecutor would have to be honest. If he were not honest he would have other problems; certainly he would be in breach of his own codes and could be contributing to an unsafe conviction. I am not sure that the point raised by the noble and learned Lord is appropriate in this case. If the prosecutor were inadvertently unreasonable—I believe that the noble and learned Lord is suggesting that he may be acting incompetently—that could be a contributory factor and could be challenged later on conviction.
Boyd-Carpenter: My Lords, before my noble friend finally sits down, in the circumstances is not a "reasonable" opinion exactly what is wanted? What harm could possibly be done by inserting the word at this stage?
Baroness Blatch: My Lords, the difference between us is that the prosecutor must act reasonably. He is not free to act unreasonably. During the course of his work he must, under a number of codes, act fairly, justly and reasonably. It seems unreasonable even to suggest the notion that one must put in statute that the prosecutor must act reasonably.
I remain of the view personally—as well as having been advised to advocate the view—that this is an unacceptable amendment. I invite the noble Lord not to press the amendment but, in view of the debate that we have had, I should like to reflect on the other points that have been made about the drafting. If the noble Lord is prepared to withdraw the amendment, then we shall reflect on the debate as a whole before the Bill goes to another place.
Lord Williams of Mostyn: My Lords, we have reflected for quite a long time. The Minister has valiantly, if I may say so, put forward a non-sustainable brief. I do not believe that she convinces any of us even on the balance of probabilities, let alone beyond reasonable doubt.
This is not a party point but is a determined effort to try to make legislation better than it is presently drafted. It is noteworthy that no one in the massed ranks which sometimes charge forward to support Home Office legislation has been able to do so. It is noteworthy also that either all or the overwhelming majority of noble Lords who have spoken are well familiar with Bar Council duties, having been subject to them, one way or another, for longer than most of us would care to reflect about.

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In answer specifically to the discriminating intervention of the noble Lord, Lord Boyd-Carpenter, that these were duties laid upon the Bar and that the prosecutor would be expected to behave reasonably, in a voice that was not so sotto voce, the noble Lord said, "Exactly". That is exactly what I reasonably suggest. Therefore, I intend to test the feeling of the House.
3.32 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 82; Not-Contents, 114.

Division No. 1

CONTENTS

Ackner, L.

Jay of Paddington, B.

Acton, L.

Jeger, B.

Addington, L.

Jenkins of Putney, L.

Allen of Abbeydale, L.

Kinloss, Ly.

Archer of Sandwell, L.

Kirkhill, L.

Attlee, E.

Lawrence, L.

Bancroft, L.

Longford, E.

Barnett, L.

McIntosh of Haringey, L.

Berkeley, L.

McNair, L.

Borrie, L.

Mason of Barnsley, L.

Boyd-Carpenter, L.

Mayhew, L.

Brain, L.

Mishcon, L.

Bruce of Donington, L.

Molloy, L.

Carmichael of Kelvingrove, L.

Monkswell, L.

Chester, Bp.

Morris of Castle Morris, L,

Cledwyn of Penrhos, L.

Nelson, E.

Clinton-Davis, L.

Ogmore, L.

Cocks of Hartcliffe, L

Palmer, L.

Darcy (de Knayth), B.

Ponsonby of Shulbrede, L.

David, B.

Redesdale, L.

Dean of Thornton-le-Fylde, B,[Teller]

Rodgers of Quarry Bank, L.

Sefton of Garston, L.

Donaldson of Kingsbridge, L.

Sewel, L.

Donoughue, L

Shannon, E.

Dormand of Easington, L.

Shaughnessy, L

Dubs, L.

Shepherd, L.

Farrington of Ribbleton, B.

Sherfield, L,

Fisher of Rednal, B.

Simon, V.

Gerard, L.

Smith of Gilmorehill, B.

Stedman, B.

Gladwin of Clee, L.

Stoddart of Swindon, L

Graham of Edmonton, L [Teller.].

Strabolgi, L.

Greenhill of Harrow, L.

Taverne, L

Grey, E

Taylor of Blackburn, L.

Halsbury, E

Thomas of Walliswood, B.

Harris of Greenwich, L.

Thomson of Monifieth, L.

Haskel, L.

Tordoff, L

Hayman, B.

Turner of Camden, B.

Henderson of Brompton, L.

White, B.

Hilton of Eggardon, B.

Williams of Elvel, L.

Hollis of Heigham, B.

Williams of Mostyn, L.

Howie of Troon, L

Winston, L

NOT CONTENTS

Aberdare, L.

Ashbourne, L

Addison, V.

Astor of Hever, L.

Ailsa, M.

Blaker, L.

Aldington, L.

Blatch, B.

Alexander of Tunis, E.

Boardman, L.

Allenby of Megiddo, V.

Brabazon of Tara, L.

Ampthill, L.

Bradford, E.

Archer of Weston-Super-Mare, L.

Braine of Wheatley, L.

Arran, E

Cadman, L.

872

Campbell of Croy, L.

Lucas, L.

Carnegy of Lour, B.

McConnell, L

Carnock, L

Mackay of Ardbrecknish, L.

Chelmsford, V.

Mackay of Clashfern, L. [Lord Chancellor]

Chesham, L. [Teller]

Constantine of Stanmore, L.

Mackay of Drumadoon, L.

Courtown, E.

Macleod of Borve, B.

Craig of Radley, L.

Marlesford, L.

Cranborne, V. [Lord Privy Seal]

Mersey, V.

Cuckney, L

Miller of Hendon, B.

Cullen of Ashbourne, L.

Milverton, L.

De Freyne, L.

Montgomery of Alamein, V.

Dean of Harptree, L.

Mowbray and Stourton, L.

Dixon-Smith, L.

Munster, E.

Eccles of Moulton, B.

Murton of Lindisfarne, L.

Elles, B.

Noel-Buxton, L.

Elliott of Morpeth, L.

Norfolk, D.

Erroll of Hale, L.

Norrie, L.

Faithfull, B.

Northesk, E

Ferrers, E.

Onslow, E.

Finsberg, L.

Orr-Ewing, L.

Fraser of Carmyllie, L

Oxfuird, V.

Fraser of Kilmorack, L.

Pearson of Rannoch, L.

Gainford, L

Pender, L.

Gardner of Parkes, B.

Peyton of Yeovil, L.

Gilmour of Craigmillar, L.

Pilkington of Oxenford, L.

Gisborough, L.

Pym, L.

Goold, L

Quinton, L.

Goschen, V.

Renwick, L.

Gray of Contin, L

Rippon of Hexham, L.

St. Davids, V.

Hailsham of Saint Marylebone, L.

Saltoun of Abernethy, Ly.

Hayhoe, L.

Seccombe, B.

Henley, L

Shaw of Northstead, L

Hertford, M.

Skelmersdale, L.

Hogg, B.

Strange, B.

Holderness, L.

Strathcarron, L.

Howe, E.

Strathclyde, L. [Teller.]

Hylton-Foster, B.

Sudeley, L.

Inglewood, L.

Terrington, L

Ironside, L.

Trefgarne, L.

Jenkin of Roding, L.

Trumpington, B.

Johnston of Rockport, L.

Vaux of Harrowden, L.

Killearn, L.

Westbury, L.

Kimball, L

Whitelaw, V.

Lauderdale, E.

Wilcox, B.

Layton, L.

Wolfson, L.

Leigh, L.

Wynford, L.

Long, V.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
3.40 p.m.
Clause 4 [Primary disclosure: further provisions]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 3:
Page 3, line 26, at end insert—
("( ) and, except where an issue of national security arises, the prosecutor has satisfied himself that the document includes all material except sensitive material.").
The noble Lord said: My Lords, with this amendment we return to the issue of sensitive material. Noble Lords who took part in the earlier consideration upon the Bill will remember that we were worried about a number of aspects of the definition and use of sensitive material in the disclosure process.
Our first concern was that it was the prerogative of the police, the investigator, alone to decide which material was or was not sensitive. We had some minor

873
worries about the definition of "sensitive material". But the principal concern was that the prosecutor who has to hand over all non-sensitive material in the primary disclosure process does not have any way of satisfying himself as to which material is and is not sensitive.
The code of practice which the Government helpfully published, and which is now, of course, to be subject to statutory instrument, sets out the definition of "sensitive material". That is due to the fact that we tabled it as an amendment so that everyone could see it, apart from it being available in the Library. Noble Lords will recall that the definition is very wide indeed. It starts with matters of national security and includes such things as foreign intelligence, but it goes on to include material, for example, which is given or gathered in confidence. Indeed, there is an extremely long list of types of material which may be considered sensitive.
When we proposed that the prosecutor should have the responsibility for satisfying himself as to whether or not material was sensitive, the noble Lord, Lord Campbell of Alloway, (who we are sorry not have with us this afternoon), objected to our amendment on the grounds that, in cases of national security, prosecuting counsel might not be cleared in security terms. I did not think very much of that argument, as the noble Lord realised at the time. However, in our usual reasonable way, we have attempted to meet the objection which might be raised and to be as modest and as helpful as we possibly can in drafting our amendment.
Under the amendment, the prosecutor would still have the responsibility of judging what is and what is not sensitive, except in cases of national security. I do not believe that we can go much further than that if we are to continue to express our serious concern at the imbalance of responsibility between the police—the investigator—and the prosecution in deciding what evidence shall be disclosed at the primary disclosure stage. Therefore, we very much hope that the Government will find it possible to accept the amendment, which has been drafted not in an adversarial spirit but in a genuine effort to seek the agreement of government. We hope that it will be acceptable also to the House. I beg to move.
Lord Renton: My Lords, if I may say so, the amendment—moved with the best possible motives—contains, from the drafting point of view, something which causes me a little uncertainty. I say that because the word "except" is used twice. Not having been able to be here during the Committee stage or, indeed, on the first day of the Report stage, it is possible that I have not understood the matter as well as I should have.
However, could it be that the reference to "sensitive material" in the amendment relates to national security? I think that must be so. Therefore, in effect, by the use of the word "except" twice, the amendment gives rise to a double negative. Even though the substance of the point made by the noble Lord is sound, I must confess that I am a little worried about the drafting of the amendment.
The Lord Advocate (Lord Mackay of Drumadoon): My Lords, since a similar—indeed,
874
identical—amendment was before the House, the Government have given further consideration to what they perceive to be the purpose which lies behind the proposal. Undoubtedly the point raised by my noble friend Lord Campbell of Alloway about national security has been addressed to some extent. However, the Government remain of the view that, despite the amendment not being extensive in terms, it would have a dramatic effect upon the balance which has been struck in the Bill between the duties placed upon the police as investigators and the duty on the prosecutor.
On one construction, the effect of the amendment would be that the prosecutor would be under a duty to satisfy himself that the schedule setting out the non-sensitive material contained all such material which had been held by the police in connection with the investigation, whether or not it was on the schedule of sensitive material. In other words, it would require the prosecutor to go right through the material available and carry out, again, the work which had been done by the police in the discharge of their duties under the scheme which the Bill proposes. The structure of the proposal is that the police are responsible for investigating, collecting material and making it available to the prosecutors with the relevant schedules. The prosecutor is then under a duty to consider what falls to be disclosed to the accused, whether initially under primary disclosure or in the continuing duty set out very clearly under Clause 9(2) of the Bill. Those duties are separate but complementary.
I repeat what I said on the last occasion when we considered the matter. Were it to be the case that the police knew in every instance that the work they carried out to categorise material as sensitive or non-sensitive would be reviewed on that approach by the prosecutor, there is a risk that they would not accept its importance and, therefore, would not fully implement the important duty which lies upon them.
I hear the noble Lord, Lord McIntosh, saying that that is a dreadful thing to say. In response, although I accept that that comment may have had an element of jocularity about it, I must point out that anyone who has practised as part of a team, who knows that he is the junior member of it and that a senior member of the team will review the work, cannot and will not—and indeed, never does—put that thought out of his mind. Certainly, any junior counsel who knows that senior counsel is the person who will be reviewing the pleadings and ultimately defending the position in court, knows that there is that failsafe mechanism, if I may put it in those terms, lying ahead. One cannot put that out of one's mind.
I suggest to your Lordships that if the police felt that their initial assessment was merely an initial assessment which the prosecutor would have to reconsider de nouveau, they would have a similar view to the one which I described. It is important that one considers these matters as two separate but complementary responsibilities.

875
Having reflected fully on the issues which were raised on the previous occasion, and which have been raised again today, I hope that the noble Lord will feel it possible not to press the amendment.
Lord Rodgers of Quarry Bank: My Lords, before the noble and learned Lord sits down, I hope I may ask him a question which may be an elementary one. Unlike the noble Lord, Lord Renton, who prefaced his remarks by saying he had not been present at the earlier stages of the Bill, I confess that I was here and therefore I probably have no excuse for my ignorance. The question arises from the amendment in the name of the noble Lord, Lord McIntosh. Who decides what is and is not an issue of national security? Recent experience has made plain that it is easy for those who wish to preserve secrets, or to deny the availability of documents, to argue that national security justifies that denial. It would be helpful to know who will decide and what safeguards there are as regards documents being withheld on grounds of national security which could have been made available.
Lord Mackay of Drumadoon: My Lords, on one view that question should be asked of those who tabled the amendment because it is not the Government who are suggesting that an issue of national security should be addressed at this stage. The point raised by the noble Lord is valid because were this amendment to be implemented as framed, on one view it would be the police who would take the view that a box of documents gave rise to an issue of national security. It would be for the police to say whether documents are sensitive and involve an issue of national security, and therefore the prosecutor does not have the duty which is proposed in this amendment. Whether or not that is a desirable approach is obviously another matter altogether. In the context of the Third Reading of this Bill I do not think that we wish to become embroiled in the important issues which may lie ahead. However, I suggest that one implication of accepting this amendment is that one would run into difficult territory as regards who would have the responsibility of indicating that in a particular case an issue of national security arises, and therefore whether the provisions of this amendment apply in that case.
Lord McIntosh of Haringey: My Lords, I wish to respond first to the noble Lord, Lord Renton, who queried whether the amendment contained a double negative in that the word "except" is used twice. The word is first used in the phrase,
"except where an issue of national security arises",
and that phrase is contained within commas. I do not think therefore that, syntactically, it can be said that the two words cancel each other out in creating a double negative. If I had used the words "other than" on one occasion rather than the word "except" that might have been more elegant. However, I do not think that would have affected the meaning. Indeed the noble and learned Lord the Lord Advocate in his response did not follow up that point.
I apologise to the noble and learned Lord the Lord Advocate in that he heard what I said to my neighbour on the Front Bench. I would not have wished to make
876
that remark directly to him from a seated position. However, as he repeated my remark, I shall repeat it too. What the noble and learned Lord said was a dreadful thing to say. It was also a dreadful thing to say on the previous occasion we discussed this Bill. On the previous occasion the noble and learned Lord the Lord Advocate said, as regards the work of the police in this area being reviewed, that that may,
"have the effect of lessening the importance which the police officer attaches to the obligation that is placed upon him".—[Official Report, 1/2/96; col. 1582.]
I still adhere to the response that I made at Report stage. I hope the House will permit me to read out my response. I said,
"I think more highly of the police. I believe that they will do their job properly because it must be done properly and because the code of practice provides for that. They will do it no less properly because someone else will look at their work afterwards. In the end, the court will look at all of the work that the police have done. That does not mean that the police have any less a sense of importance about adhering to proper standards".—[Official Report, 1/2/96; col. 1583.]
I feel as strongly about this issue now as I did on that occasion. The noble and learned Lord the Lord Advocate now says that the provision would have a dramatic effect on the way in which the Bill operates. I do not believe for a moment that it would have a dramatic effect. I believe that it would place the responsibility for passing material in primary disclosure to the defence where it should lie; namely, with the prosecutor, and not with the police. The whole structure of the Bill concerns primary disclosure by the prosecutor. Unless the prosecutor sees what material has been classified as sensitive and is able to make his own judgment, he is not able to fulfil his obligations under the Bill. I believe in that principle as strongly now as I did at Report stage.
The noble and learned Lord the Lord Advocate also said that the provision would put a burden on the police who would have to decide whether or not a matter was one of national security, and whether therefore it should be passed to the prosecutor. That, of course, is true, but how much less of a burden would it be than the present provision in the Bill which provides that all matters which may fall under any of the categories of sensitive material have to be adjudged as sensitive or not by the police and not in any way by the prosecutor? The argument that the police will not do their job properly because someone else is looking at their work, and, also, the argument that the provision is a burden on the police seem to me utterly unfounded. I believe that the Government are wrong on this matter and that they have misunderstood the responsibility of the prosecutor in deciding what the primary disclosure should consist of. The Government will regret that and I believe they will discover, when this Bill goes to another place, that there will be disagreement as regards the formulation in the Bill not just on the part of the Opposition but also on the part of legally qualified Members of their own party. However, we should not continue to divide on these matters at Third Reading. I shall withdraw the amendment but only because we are at Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 [Compulsory disclosure by accused]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 4:
Page 3, line 33, leave out ("condition in subsection (2) is") and insert ("conditions in subsections (2) and (2A) are").
The noble Lord said: My Lords, in moving Amendment No. 4 I wish to speak also to Amendment No. 5. This, again, is an issue on which we have sought to persuade the Government, rather than outvote the Government—fat chance of that!—that they are making a mistake in the terms of their own intention in devising this Bill. In serious fraud cases the defence is given, in return for the disclosure which is required from it, a clear statement of the Crown case in proper form before anything is demanded of the defence. In this Bill the situation is far from clear. One has to read across from Part I of the Bill to Part II of the Bill, and to the terms of the code of practice which are not included in the Bill.
It is possible that the prosecution could serve on the defence only material which meets the narrow definition—I insist that it is a narrow definition—of undermining the prosecution's case. It is possible that the schedule of material which is to be handed over will not be explicit enough and detailed enough for the defence to be able to identify the items in the schedule, or identify—this is more important—the importance of the items in the schedule. It is only too possible that the defence, with the best will in the world, may be unable to make a proper defence disclosure unless the prosecution has made a proper case statement in the first place.
I believe that the requirement for a case statement was supported by the Royal Commission. I believe that it is in accordance with the various judgments which have taken place since then that there should be a proper case statement; and I believe that it accords with the structure of the Bill—which is admittedly somewhat elaborate and clumsy, involving toing and froing—which will only be made to work if there is a proper case statement in the first place.
The arguments for having a case statement should not arouse the kind of antagonism which they have aroused in the past. Inevitably, if the prosecution is in a position to require a defence disclosure and therefore to make its primary disclosure, it will have made serious progress towards a case statement. The only difference here is not that the case statement should be prepared but that it should be disclosed before the disclosure process starts. I cannot see how it can possibly be argued that that will result in a longer or more difficult process of disclosure, any delay to the trial or any further burden on the prosecution. We say not that the prosecution should have to do more but that it should have to act earlier in the process and openly. I am convinced that that is in the interests of justice. I beg to move.
4 p.m.
Lord Renton: My Lords, if the words of Amendment No. 5 are to be included in the Bill Clause 5 is not the place to put them. I invite the attention of noble Lords
878
to the fact that primary disclosure by the prosecution is covered by Clause 3. Clause 4 relates to "Primary disclosure: further provisions", and Clause 5 deals with "Compulsory disclosure by accused". That clause elaborates on the obligations of the prosecution in Clause 3. I find it very strange that Amendment No. 5 should be tacked on as an afterthought when we are dealing with compulsory disclosure by the accused.
In any event, the amendment requires careful consideration. The matters which the prosecution has to deal with under subsection (2B) (d) include,
"any proposition of law on which the prosecution proposes to rely".
That is fair enough, but when that has been stated in other legislation an exception has been made for any reply which the prosecution makes to a point of law raised by the defence. I believe that the proposal needs qualification of that kind.
Paragraph (e) of the amendment refers to:
"the consequences in relation to any of the counts in the indictment that appear to the prosecutor to flow from the matters falling within paragraphs (a) to (d)".
The only consequence can be the prosecution's intention to aim at a conviction. I do not see the point of having paragraph (e) at all.
However, as I said, I believe that the amendment is flawed by being in the wrong place in the Bill, whatever its merits.
Lord Boyd-Carpenter: My Lords, I should like to support my noble friend Lord Renton in relation to his point concerning paragraph (e) of Amendment No. 5. The words,
"the consequences in relation to any of the counts in the indictment that appear to the prosecutor to flow from the matters falling within paragraphs (a) to (d)"
seem to me to put forward a most extraordinary proposition. I do not know whether it is intended to be an argument at considerable length in favour of the proposition that the accused is guilty or whether it should be simply an analysis of the possible effects of paragraphs (a) to (d). I believe that it would cause a great deal of difficulty and misunderstanding. As at present advised, I should certainly be against including it in the Bill.
Lord Ackner: My Lords, as I have in the past, I support the principle that if one expects the defence to provide more than a mere label to its defence such as "mistake", "provocation" or whatever it may be, and to provide the material which the Bill obliges it to provide, then the Government are ill-advised not to provide the defence with a clear statement of the prosecution case. It is just like civil litigation: unless there is a detailed statement of claim one cannot expect to require the defendant to put in a detailed defence.
The amendment is in error in that it goes too far. One does not want to make this situation analogous to the complex types of case for which there are special provisions. One wants to be stated what is set out in subsection (2B) (a); namely,
"the principal facts of the case for the prosecution",

879
so that a story is told which the defence has to deal with. The defence should be entitled to know any inferences which the prosecution seeks to draw from those facts. That is all. That should impose on the prosecution a very light burden. The prosecution must know what its case is; it has been the subject matter of some report before the prosecution was launched. It must therefore be in a position to tell the story to the accused so that he may put in his answer.
I hope that the Government, perhaps at a later stage in another place, will consider the wisdom, which will redound to the advantage of the prosecution, of providing the defence with a detailed account of what the defence has to meet so as to be able to see how the defence proposes so to do.
Viscount Runciman of Doxford: My Lords, not for the first time in discussions in this House on this Bill, I should like heartily to support the remarks of the noble and learned Lord, Lord Ackner, which, I am pleased to say, I arrived just in time to hear. I echo his hope that the matter may be considered further by the Government in another place.
Lord Mackay of Drumadoon: My Lords, in rising to oppose the amendment I shall deal first with the contributions made by my noble friends Lord Renton and Lord Boyd-Carpenter. They serve to illustrate the point that I sought to make on the previous occasion that the proposal is nothing like as straightforward or lacking in consequences in terms of the burden that it would place on the prosecution as those who support it suggest.
I have carefully considered the issue since the matter was last before your Lordships, not least because of my own experience of prosecution, which does not require giving notice to the accused in advance of the case in anything like the detail and volume of information which applies in this jurisdiction. I am in a position to assure the House that the matter has been considered carefully, not only by those who advise me but also by myself. Having said that, I remain of the view that it is unnecessary to proceed with the amendment in the limited form which may appeal to those who contributed to the debate.
It is important to bear in mind what is done when a case is transferred to the Crown Court for trial. As noble Lords know, the prosecutor is required to serve a great deal of specified information about a case, including a set of documents containing the evidence on which the charges are framed. In two special kinds of case (serious or complex fraud, and certain cases involving violent or sexual offences), the information will be a copy of the documents containing the evidence to which a notice of transfer has been given.
It cannot be denied that that information provides a full account of the evidential material on which the prosecution intends to rely. I venture to suggest that, when that information is read, the story which the noble and learned Lord, Lord Ackner, wishes to have told is there to be read. A person who is charged with the defence of a man and provided with all that evidential material would not look at the summary of the story as set out in the prosecution case statement under the terms
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of subsection (2)(a), (b) or (c). He would look at all the available case papers before seeking to explain the accused's position under the later parts of Clause 5.
Some information was placed before your Lordships' House at an earlier stage as to the likely consequences for the Crown Prosecution Service were an amendment to be accepted. As I recollect, the figure mentioned was some £4.5 million per annum. Further information has been considered as regards how that sum was estimated. In the last full year available, the costs were calculated in relation to the number of defendants who had been sent to the Crown Court for trial. I am in a position to assure noble Lords that considerable sums of money would be involved. However, more importantly, it would involve the prosecutors preparing a document at a comparatively early stage in the case when, on one view, their efforts would be better geared to discharging the responsibilities with regard to disclosure.
The more one considers the provisions of the amendment relating to propositions of law or consequences, the more premature it seems for the prosecutor to be setting out at that stage what his position will be once the case is ready to go for trial.
I assure the House that the matter has been given consideration. However, having regard to the fact that material benefit would be gained in few cases, and bearing in mind the other procedures available for dealing with complex cases where greater consideration is appropriate, I invite the noble Lord not to press the amendment.
4.15 p.m.
Lord McIntosh of Haringey: My Lords, first, let me address the point made by the noble Lord, Lord Renton, about where such an amendment should be placed. He suggests that it should be in Clause 3 rather than Clause 5. I remind the noble Lord that, although Clause 3 is headed Primary disclosure by prosecutor, it is entirely devoted to the definition of material which should be disclosed. The provision applies to all cases, whether before magistrates' courts or Crown Courts. On the other hand, Clause 5 relates only to cases before the Crown Court, and not the vast majority of cases which come before the magistrates' courts only. Subsection (1) contains the preconditions for compulsory disclosure by the accused.
In this amendment we do not say that there should be a change in the evidential material but that there should be a change in the words produced by the prosecutor himself before the trigger of the compulsory disclosure by the accused. Therefore I believe that this is the right place for the amendment. It is right that the provision should apply only in Crown Court cases. It is right that the case statement should not be confused with external evidential material with which the previous clause is concerned.
Noble Lords criticised the wording of Amendment No. 5. I suppose that means that they have not read far enough into the Bill to see that the wording we have used is taken directly, and without amendment, from subsection (5) of Clause 24. I do not wish to misrepresent the thoughts of the noble and learned Lord

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the Lord Advocate on Clause 24. However, he argued that the production of a case statement was inappropriate until the case was completely ready to go for trial. But Clause 24 applies to a preparatory hearing. Subsection (5) refers to the matters which, before a preparatory hearing, the judge may order the prosecutor to produce. Therefore the prosecutor has to prepare exactly that sort of case statement, in exactly the wording that I use in the amendment, before or at the preparatory hearing. Therefore the argument about the time when the case statement has to be prepared does not seem to me to have any real validity.
It is possible to make a balance in one of two ways. One was the way adopted by the Royal Commission, which said that the demands of primary disclosure by the prosecution should be reasonably limited. However, it also said that the defence disclosure should be very much more limited than is proposed in the Bill. The Royal Commission proposes, if you like, the low level of equilibrium. However, the Bill proposes a very much more detailed defence disclosure.
These amendments provide that, if the defence disclosure is to be as detailed as is stated in Clause 5, then the primary disclosure by the prosecution has to be that much more explicit for two reasons: first, at that high level of equilibrium the balance has to be maintained; and, secondly—and more practically—unless there is a defence statement in advance, the quality of the defence disclosure demanded by Clause 5 will be that much poorer and the process will not work.
The Government have chosen one way of addressing the problem. It was not the way chosen by the Royal Commission, but it could have been made to work if there had been equality between prosecution and defence. The Government have chosen not to provide equal opportunity between prosecution and defence. I predict that, unless it is altered at a later stage, the effect of this part of the Bill will be to encourage miscarriages of justice.
I have exactly the same desire to avoid miscarriages of justice and to convict the guilty as do the Government. Our intention is exactly the same. But we do not believe that the Government have the balance right. Again, because we are now on Third Reading and for no other reason—not at all because I am convinced of the quality of the arguments against the amendment—I beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendment No. 5 not moved.]
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 6:
Page 4, line 4, at end insert ("unless in the opinion of the court it is not in the interests of justice for him to do so").
The noble Lord said: My Lords, the principle for which I contend as underlying the amendment is that for the efficient conduct of criminal trials it is essential that a discretion should be vested in the presiding judge to control the conduct of the trial. As noble Lords have seen, the amendment allows a presiding judge in a criminal case to dispense with the service of a defence
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statement if the court comes to the conclusion that it is not in the interests of justice for the defendant to be obliged to serve such a statement.
Clause 5 has the rubric: "Compulsory disclosure by accused". Subsection 5(3) provides that:
"The accused must give a defence statement to the prosecutor".
He is obliged to do so. There is no discretion vested in the trial judge to waive that requirement. I suggest that that is a nonsense. It is far too strict a regime. It is inflexible and inefficient for the sensible conduct of many criminal cases.
What is proposed as a consequence of the amendment, if it were accepted, is that a waiver may be given in some circumstances. One can think of them quite easily from normal practice and I suggest that those who have been in practice will recognise them. First, there is the problem of the non-represented defendant, the illiterate defendant, the defendant who is barely competent. Then there is the question of intimidation of witnesses because the defence statement involves not simply a statement setting out the nature of the accused's defence, the matters on which he takes issue with the prosecution and the reason he takes issue with the prosecution, but also includes an alibi defence which must give particulars of witnesses.
There are often cases when prosecutor and defence counsel agree that a defence statement adds nothing to the efficiency and sense of criminal proceedings. In many cases, a prosecutor might be disposed to agree with defence counsel: "We don't wish to have a statement in this case, it adds nothing. What is the point of that absurd inflexibility?" In those circumstances, we put the question: why does one need prescriptive rules without the discretion which ought to remain vested in the trial judge who presides? After all, at present he has a wide discretion. He can, and frequently does, waive the requirement on alibi. Under Section 78 of the Police and Criminal Evidence Act 1984 he is specifically empowered to exclude evidence which would otherwise be inadmissible if it had a disproportionately unfair effect on the conduct of the trial.
Therefore, the principle for which we contend is not new. It is the principle of utility in the conduct of criminal trials. There must be many cases which one can understand and envisage where one does not need the statement in that rigid form. The amendment simply gives authority to the court to waive the requirement. I can see no argument in principle against it or any intellectual basis for objecting to it. I beg to move.
Lord Carlisle of Bucklow: My Lords, I confess that I rise probably in ignorance. Do I understand from what the noble Lord, Lord Williams, said, that there will be a requirement in every case before a Crown Court for such a statement to be given?
Lord Williams of Mostyn: Yes, my Lords, because Clause 5(1) provides that the requirement clause applies by virtue of Clause 1(2), which relates to indictable offences that have been transferred for trial to the Crown

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Court and summary offences where they are tagged on. I need not trouble with that because it is a detail. Many cases are so simple that the statement is not required.
Lord Carlisle of Bucklow: My Lords, I am grateful for that explanation. If that is so, I wish to ask the Minister whether we are in danger of imposing in every case an additional stage which often may not be necessary? I reflect that, sitting as a recorder, many cases come before me where the issues are clear from the committal papers and statements made by the defendant.
It is true, as the noble Lord said, that from time to time a defendant appears who is unrepresented. However, even in cases where defendants are represented, I should be concerned if a blanket requirement to give a defence statement led to a matter having to be adjourned because such a statement had not been given when in the normal circumstances the case could take place immediately. If that is the effect of the clause, then some form of flexibility should be included.
What worries me more than anything else, when one sits as a recorder, is the number of cases which have to be adjourned for particular reasons. That greatly increases the expenditure and time taken on the cases. I hope that we shall not unintentionally be adding an extra stage when in many cases of a simpler nature it would be unnecessary.
Baroness Blatch: My Lords, first, I believe that the issue between us concerns the means to an end rather than the end itself. I say to my noble and learned friend—is he learned?
Lord Hailsham of Saint Marylebone: Fairly learned!
Baroness Blatch: I shall address the point which my noble friend made about the additional stage.
Lord Carlisle of Bucklow: My Lords, I am probably riot "learned" after my intervention, although I might have been before I rose.
Baroness Blatch: My Lords, as I said at Report stage, there are good reasons for requiring defence disclosure and secondary prosecution disclosure, as well as primary prosecution disclosure in Crown Court cases. It is meant to ensure so far as possible that the issues in dispute are narrowed and identified before the trial starts, so that the trial itself may be conducted more efficiently. Also, if the accused does not disclose his defence in a defence statement it will not be possible for the prosecutor to assess whether he has any additional undisclosed material which might assist that defence. 'The advantages of formalising the defence in a defence statement apply across the range of Crown Court cases, as the noble Lord said.
I appreciate the point that was expressed in respect of the small number of defendants that may be disadvantaged by the Government's proposals.
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Although the amendment is intended for a small number of cases, it is of general application and, as such, it would be open to abuse by defendants generally.
I am grateful to the noble Baroness, Lady Mallalieu, for her courtesy in giving me notice that she intended to raise the matter again. Her colleague, the noble Lord, Lord Williams, was speaking for her as she is unable to be present today. In correspondence she suggested that a preliminary hearing would be the occasion on which the judge would be able to exercise a discretion to dispense with the requirement on the accused to provide a defence statement. In that way, it has been said that the amendment would not add an additional stage to the proceedings. However, I submit that the amendment removes one set of procedural requirements only to create another. It would still be necessary to devise a procedure for applications to a court for an exemption and for the consideration of the application by the court to take place at some point after primary prosecution disclosure. To enable the court to form a view on whether it was in the interests of justice to require a defence statement, the accused would need to set out the circumstances of the case in sufficient detail, and the prosecutor would have to be able to make representations about the application. Disputes would need to be resolved at that hearing.
I assume that the preliminary hearing to which the noble Baroness referred in correspondence would be the plea and directions hearing. The effect would be to move the plea and directions hearing away from its primary purpose of case management and into the realm of issue resolution: a function for which such hearings are not well suited. In that way, the amendment would add to court business as a whole and slow down the delivery of justice. In cases where the judge decided that the accused should provide a defence statement, the process of defence disclosure will have been delayed until after the plea and directions hearing, with the possibility of a further hearing being needed if disputes about the extent of disclosure arose subsequently.
In the cases where the noble Lord thinks an exemption might be justified, it would be simpler—and here I refer back to my statement about "means to an end"—for the accused simply not to make a defence statement at all. The only direct sanction for such failure is that it would be open to the prosecutor to seek leave to comment on this trial under Clause 10. But Clause 10(3) provides that,
"the court or jury may draw such inferences as appear proper in deciding whether the accused is guilty".
If there is a good reason for the failure to provide a defence statement, the court will decide that the only proper inference to be drawn is that the accused was justified in not providing a defence statement. It will depend on the circumstances of the case.
In respect of unrepresented defendants, I strongly agree that the accused must not be put in the position of not producing a defence statement simply because no-one told him he had to produce one. I can assure the House that we are considering the options for giving information to the accused in advance of the disclosure regime so that he is aware of its requirements. This is a matter which we are committed to resolving before the

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implementation of the scheme, although it is not, I submit, necessary to resolve it through the Bill itself. In a similar vein, we shall need to ensure that practitioners who will need to operate the new scheme are offered the necessary training.
Finally, if I may turn to one further point made on Report, it was suggested that the unnecessary additional costs would be incurred by the Legal Aid Fund should defence statements be required in relatively straightforward cases where the issues are clear. The waiving of the requirement for a defence case statement in such cases is unlikely to have any effect on legal aid costs. These cases, whether in the magistrates' court or the Crown Court, are likely to fall into the arrangements for standard fees and as such no savings would result. The issues would still have to be considered and the task of putting them into a defence statement is likely to be fairly simple. As I have said, I fear that the procedure for dispensing with a defence statement would add to court business as a whole and slow down the delivery of justice.
For the reasons I have given today and at earlier stages of the Bill, I remain of the view that the advantages of formalising the defence in a defence statement apply across the range of Crown Court cases, and that the drawbacks of creating an exemption outweigh any benefits that might accrue.
Finally, the prosecutor may only comment at trial on the failure to give a defence statement with the leave of the court. If he does, it will be for the jury to decide what inference may properly be drawn. In so doing they will have the benefit of the summing-up by the trial judge in which he or she can direct them as to what inference it is proper to draw. If it really is not in the interests of justice for the accused to have given a defence statement, that is bound to affect whether the judge allows inferences to be drawn.
4.30 p.m.
Lord Williams of Mostyn: My Lords, I think the Minister has elided a number of different questions. Case management cannot sensibly be seen as wholly distinct from issue resolution. I suggest that it is not helpful to speak of the whole range of Crown Court cases. They range, after all, from shoplifting a jelly at Tesco to murder. But many murders are infinitely simpler in trial than shoplifting bananas or jellies from Tesco.
The noble Lord, Lord Carlisle of Bucklow, and I have both practised in the Crown Courts. We have prosecuted and defended serious cases. Let me take murder as an example. In many a case, if the noble Lord said to me (he prosecuting and I defending): "What's the issue?", I should simply tell him self-defence or diminished responsibility. The judge might well ask him: "Lord Carlisle, do you really want a full defence statement in these circumstances?". He would say, "No, of course not. We need no adjournment; we need no extra costs".
Our contention is that there is a significant number, perhaps a minority, of cases where flexibility is the friend of the saving of time and expense, and
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inflexibility is the ally of delay and waste of money. The Government seem intent at present—unless they rethink before the matter goes to another place, or while it is in the other place—on imposing a wholly rigid structure on a range of criminal cases that is infinitely diverse.
It is not an answer to say that the sanction on the non-provision of a defence statement is the comment under Clause 10(3). That is a sanction. We seek to attend not to sanctions, but to whether the defence statement is required in every case. At the moment, the words in Clause 5(3) of the Bill are that,
"The accused must give a defence statement to the prosecutor",
and the particulars are fully set out. It is a recipe for inflexibility, expense and delay, and therefore one that is best torn up and thrown away.
I hope that the Government will think again on this matter. I am bound to say that when I have put propositions of this sort either to the Minister or to the Lord Advocate, they have been more than willing to deal fully with them in correspondence. I suggest that the amendment would improve this piece of legislation and make the conduct of criminal cases much easier. However, this matter has been traversed for a little while now and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Mackay of Drtnnadoon Lord Mackay of Drtnnadoon moved Amendment No. 7:
Before Clause 11, insert the following new clause—
PUBLIC INTEREST: REVIEW FOR SUMMARY TRIALS
(".—(1) This section applies where this Part applies by virtue of section 1(1).
(2) At any time—

(a) after a court makes an order under section 3(6), 7(5), 8(5) or 9(8), and

(b) before the accused is acquitted or convicted or the prosecutor decides not to proceed with the case concerned,

the accused may apply to the court for a review of the question whether it is still not in the public interest to disclose material affected by its order.
(3) In such a case the court must review that question, and if it concludes that it is in the public interest to disclose material to any extent—

(a) it shall so order, and

(b) it shall take such steps as are reasonable to inform the prosecutor of its order.

(4) Where the prosecutor is informed of an order made under subsection (3) he mdust act accordingly having regard to the provisions of this Part (unless he decides not to proceed with the case concerned).").
The noble and learned Lord said: My Lords, in moving this amendment with the leave of the House I shall speak also to Amendments Nos. 8, 9 and 10, which are related to it.
The House will recall that we debated similar amendments on Report. The main purpose of those amendments, which in turn had been brought forward following a debate in Committee, was to exempt a magistrates' court from the duty to keep under review an order that it was not in the public interest to disclose certain material to the accused. On Report, the Government withdrew the amendments for further consideration of comments made during the debate by

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the noble Lord, Lord Williams of Mostyn, and my noble friend Lord Renton. Since that debate those points have been given full consideration.
The noble Lord, Lord Williams, made three points. His first concern was that, in placing the onus on the accused to apply for a review of a non-disclosure ruling, an unrepresented defendant might be disadvantaged. The question arose as to whether legal representation should be made available in such circumstances. As was explained to the noble Lord, the number of applications made to magistrates' courts to withhold material on public interest grounds is fairly low. The existence of a claim for public interest immunity may well be a reason for a magistrates' court to consider committal for trial to the Crown Court. In fact, an informal count over the past two years revealed only six applications. In all cases the defendants were legally represented.
Most defendants tried in a magistrates' court have legal representation, either privately or under the legal aid scheme. Nevertheless, I accept that very occasionally the situation could arise where an application is sought in respect of proceedings against an unrepresented defendant. I also accept that such applications can pose particular difficulties for the layman. While, therefore, the discretion whether or not to grant a legal aid order must remain with the court, the Lord Chancellor's Department accepts that it should issue guidance to magistrates' courts advising them of the new provisions and the opportunities to invite unrepresented defendants to apply or re-apply for legal aid. So the court will be able to review the entitlement to legal aid in the light of the new circumstances.
I should also point out that courts will normally draw an unrepresented defendant's attention to the benefits of representation whenever complex issues arise during the course of the trial. It seems likely that a possible application to the court for a review of an order by the court that disclosure is not in the public interest would fall into that category. It should, of course, be recognised that very little, if anything, can be done for those defendants who choose not to be represented notwithstanding their eligibility for legal aid or that they have the means to pay for private representation. When such cases arise and the defendant declines the advice of representation, the courts have to deal with the situation as best they can. Courts operate a duty solicitor scheme so that advice is available immediately if a defendant who has chosen to be unrepresented changes his mind.
The noble Lord also asked whether the review should be carried out by a judge rather than a magistrate. While I understand the argument that these difficult matters should be reserved for members of the professional judiciary, it is important to bear in mind that we are concerned here with the summary trial of cases. These will either be less serious matters, which Parliament has in the past taken the view are best dealt with summarily, or cases where the accused and the court have both agreed that the trial should proceed summarily. Other either-way cases would of course be tried in the Crown Court. In those circumstances it seems to me to be wrong to seek to remove to another forum decisions on matters which are undoubtedly important but are not
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matters which, I think, anyone is suggesting are automatically in all cases outside the competence or ability of properly advised lay magistrates. Granted, they may give rise to delicate questions of balance, but such cases will be rare in magistrates' courts and it is prudent therefore to provide an appropriate mechanism to avoid having to resort to disproportionately complex procedures.
Finally, the noble Lord, Lord Williams, commented that, should such decisions have to be made by magistrates in the first instance, there ought to be an avenue of appeal to the Crown Court. I do not think that it is necessary to provide specifically for an appeal in such matters. It is of course open to an aggrieved person to question the proceedings in the High Court by way of judicial review or case stated, and that right would be unaffected by our proposals. In the event of a conviction, the decision would effectively be reviewed by the Crown Court if there was an appeal against conviction. An additional appeal to the Crown Court adds an element of duplication and, unless carefully circumscribed, could become almost automatic if the magistrates decided against the accused.
I fully accept that the points raised by the noble Lord, Lord Williams, merit consideration, and consideration has been given to them. They are matters of balance. But I invite your Lordships to take the view that Amendment No. 7 avoids any risk of injustice in the magistrates' courts without requiring us to depart from the essential nature of a simple summary procedure.
In the debate at Report, my noble friend Lord Renton drew attention to a double negative in subsection (3) of the new clause before Clause 11. As tabled, that required a court to make an order,
"if it no longer believes that it is not in the public interest to disclose material".
Parliamentary Counsel has taken the opportunity to improve the drafting of the new clause, and he has removed the double negative. The court must now make an order,
"if it concludes that it is in the public interest to disclose material".
That has the same effect as the previous formulation: it either is or is not in the public interest to disclose material, and if it is not in the public interest not to disclose it, then it must be in the public interest to disclose it. I hope that the removal of that double negative finds favour with my noble friend. I beg to move.
4.45 p.m.
Lord Williams of Mostyn: My Lords, on the last occasion we had an extensive, wide-ranging discussion on the question of non-disclosure rulings. The Minister and the Lord Advocate undertook to consider those difficult questions with care. I am bound to say that they did so because the Minister was good enough to write, on 14th February, setting out a full, reasoned scheme of explanations why my proposals could not be accepted.
Public interest immunity is not always an easy matter, even for Attorneys-General.
Lord Carlisle of Bucklow Lord Carlisle of Bucklow: My Lords, or even for Lords Justices.
Lord Williams of Mostyn: My Lords, or Lords Justices, but Lords Justices sometimes say that they may be wrong, which is not a necessary qualification for the post of Attorney-General. We are looking at a difficult situation but, as the Lord Advocate said, in practice quite small—six cases in two years. That puts the matter into a helpful context.
It is an enormous advantage, and I am grateful that the noble and learned Lord the Lord Advocate repeated it in your Lordships' House, that the Lord Chancellor's Department will give guidance—obviously subject to the discretion of the magistrates' courts—in regard to the necessity or the desirability of having representation available. I leave that on one side, grateful as I am for that indication.
I still suggest that these matters are better dealt with by judges than by magistrates. I do not in any way disparage the magistrates; I have the greatest admiration for their work. But with such a small body of experience—six cases in two years—no magistrates' court will be able to build up a body of judicial experience which is useful in dealing with such tricky questions. I simply suggest again that, if these questions arise so rarely, would it not be better to have the liaison presiding Crown Court judge to deal with them?
The question of appeal goes hand-in-hand with my last suggestion. If magistrates are to deal with those matters, a quick, simple, local appeal ought to be available to the Crown Court. On page 3 of the letter dated 14th February to which I referred, it was suggested, and the Lord Advocate repeated to your Lordships this afternoon, that,
"It is of course open to an aggrieved person to question the proceedings in the High Court by way of judicial review or case stated".
Then, almost within the next breath, he spoke of avoiding delay and expense. An expedited hearing for judicial review in the Crown Office list is lucky to get on in nine months at the moment. I am suggesting a quick, cheap appeal to the local Crown Court which would be much more effective in practice.
Those are matters which I hope to coax the Minister to reflect on a little further. The problem is small numerically and can be dealt with on the basis of the scheme I proposed. I repeat how grateful I am for the approach adopted by the Minister and the Lord Advocate.
Lord Renton: My Lords, the Government should be congratulated on what they have done. I do not go along with the noble Lord, Lord Williams of Mostyn, in saying that when a case is before a court which happens to be a magistrates' court—most likely a stipendiary—the public interest immunity point should nevertheless not be decided by that court but should go necessarily to a High Court judge.
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Our judicial procedures are elaborate, time-consuming and costly. We should avoid adding to them. The Government have got this right. Also, I thank my noble friends for getting rid of the double negative to which I referred earlier.
Lord Rodgers of Quarry Bank: My Lords, perhaps I may ask the noble and learned Lord a question. In referring to the circumstances where the defendant is not represented in a magistrates' court—I fully understand that those are rare occasions—the Lord Advocate said that it should be recognised that very little if anything can be done for a defendant who chooses not to be represented. He then referred to eligibility for legal aid and to the question of whether a defendant has the means to pay. There will be those defendants who are not eligible for legal aid in any circumstances but do not judge that they have the means to pay. It is a subjective matter and they may decide that they cannot afford to pay.
The noble and learned Lord went on to say that,
"the courts have to deal with the situation as best they can".
He continued by referring to the duty solicitor scheme. When he says that the courts will deal with the situation as best they can, can he explain to the House how indeed they can deal with it and what the options open to them will be?
Lord Mackay of Drumadoon: My Lords, perhaps I may reply to the point that has just been raised. Where an accused person or defendant is determined to represent himself, the court, to use the words I adopted, will have to deal with the situation in the best way it can. The first tack is normally to seek to persuade the defendant to change his mind, and if he is eligible for legal aid, to grant such an order. However, from time to time there come before the courts people who for whatever reason are determined to represent themselves. Experience suggests that in that situation the court—whether it be a member of the professional judiciary or the magistracy—does a good deal more than it would normally do to ensure that the argument that falls to be made on behalf of the unrepresented person is brought into the discussion.
This can be done in a variety of ways. It can be done by leading the defendant to put forward an argument which one feels ought to be made on his behalf; or it can be done by saying to the prosecutor, "Well, the defendant's answer to the point you make is this way". The court tends to adopt a more interventionist role than it would normally do if both sides were professionally represented. That is what I had in mind in saying that the court would deal with the situation in the best way it could. It is a commendable practice which courts are required to adopt from time to time when they are faced with an unrepresented accused who is determined to decline whatever offer of legal assistance is made in his direction.
On this occasion I am in the fortunate position of having my noble friend Lord Renton entirely on my side. Although I have not been in your Lordships' House for long, I am well aware of what a great pleasure and a great benefit that is. It is a balance to be struck whether

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to leave the matter with the magistracy or to introduce the Crown Court into the situation. In all questions of balance a professional judgment has to be taken. In this instance my noble friend Lord Renton and I share the same professional judgment. Having listened to the helpful comments made by those on the Benches opposite, I intend to sit down, having invited your Lordships to agree to the amendment.
On Question, amendment agreed to.
Clause 11 [Public interest: court to review orders]:
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendments Nos. 8 and 9:
Page 8, line 2, at beginning insert—
("( ) This section applies where this Part applies by virtue of section 1(2).").
Page 8, line 13, leave out ("no longer believes that it is not") and insert ("concludes that it is").
The noble and learned Lord said: My Lords, these amendments have already been spoken to. I beg to move.
On Question, amendments agreed to.
Clause 12 [Rules of court]:
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 10:
Page 8, line 26, leave out from ("provision") to end of line 29 and insert ("mentioned in subsection (1A).
(1A) The provision is provision as to the practice and procedure to be followed in relation to—

(a) an application under section 3(6), 7(5), 8(2) or (5), 9(8), (Public interest: review for summary trials)(2) or 11(3);

(b) an order under section (Public interest: review for summary trials)(3);

(c) an order under section 11(4) (whether or not an application is made under section 11(3)).").

On Question, amendment agreed to.
Clause 19 [Effect of code]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 11:
Page 12, line 32, after ("conducting") insert ("or participating in").
The noble Lord said: My Lords, this amendment relates to Clause 19 which seeks to apply to a very limited extent—to investigators other than the police—the code of practice which has been described in the preceding clauses. Although I recognise that Clause 19 is based on Section 67 of the Police and Criminal Evidence Act 1984 it is nevertheless a very feeble clause. It provides:
"A person other than a police officer who is charged with the duty of conducting an investigation … shall … have regard to any relevant provision of a code which would apply if the investigation were conducted by police officers".
We had a number of debates on this point at Second Reading and in Committee. The first argument put forward, which wisely was withdrawn, was that it would be impossible for a code to apply to other than police officers because the other investigating agencies were under the control of different Secretaries of State. The Minister recognised that that was not a sound argument. We then went on to consider the status of the phrase
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"have regard to". A number of noble Lords in all parts of the House pointed out the weakness of the phrase "have regard to a code of practice". One can have regard to a code of practice, then go away and do something different, and get away with it.
The distinction between having to "have regard to" and "comply with", which is what we proposed at Report stage should be the wording in the Bill, is of great importance in legislation. The phrase is used very frequently. When I have wanted to weaken, for example, the control by central government of local authorities I have always argued that local authorities should "have regard to" the directions of central government. Conversely, when Ministers want to assert strong central control, they use the words "comply with". I suggested at Report stage that the words "comply with" were the only way of ensuring that an investigation, which could be carried out, and very often is carried out, by investigative agencies other than the police, should be in accordance with the code—in other words, that the words "comply with" were more appropriate. However, on a Division, the House took a different view.
So we are stuck with the words "have regard to". We cannot raise that issue again but we now seek to do something more modest which is appropriate to our deliberations after Third Reading but is still worth doing. The duty of conducting an investigation under Clause 19(1) refers to all kinds of other agencies. It refers to Her Majesty's Customs and Excise, to the inspectors of the Serious Fraud Office, to local authority trading standards officers and to the Health and Safety Executive, which, as the Minister pointed out last time, has the duty of prosecuting as well as investigating. It is certainly true that Clause 19 covers those investigating authorities. But it does not cover people on behalf of whom we expressed a great deal of concern at earlier stages—people like expert witnesses, particularly forensic scientists.
It is true to say that forensic scientists and other expert witnesses need not be covered by the whole of the code of practice. But the code of practice has been—and if it has not been, it certainly can be—drafted in such a way that it only applies, as appropriate, to those people. However, it is surely of great importance that those who are participating in an inquiry, like forensic scientists, should be covered, as appropriate, by the code of practice. For exactly the same reasons as we gave last time it is important that the code of practice should cover the investigation in a criminal case. If there are any defects in the drafting of Clause 19 then the investigation will be broken backed. The code of practice will only apply fully to police officers; it will apply in the "have regard to" sense to other investigating authorities; it will not apply at all, even in so far as they are concerned, to those who are participating in an inquiry, like forensic scientists.
When one looks at the code of practice, surely it is important that all the rules about the proper copying of material, its retention, and the reporting and recording of material, are all in the hands of people like forensic scientists who are participating in the investigation as well as in the hands of those who are conducting the investigation. I am grateful to my noble friend

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Lord Williams for pointing out that my original word "assisting" could have led to misunderstanding since I believe the phrase "assisting the police in their inquiries" has a specific meaning, at least in the tabloids. I am grateful to him for suggesting that "participating" is the right word. I believe that it is and that this amendment is constructive and helpful. I commend it to the House. I beg to move.
5 p.m.
Lord Mackay of Drumadoon: My Lords, I fully accept that the noble Lord, Lord McIntosh, puts forward this amendment in a constructive frame of mind. But, on closer scrutiny, I suggest that it is not a necessity to the structure of the scheme and it might go beyond that to create practical difficulties to at least some of the people to whom it might apply.
It is important to bear in mind that the code of practice, as provided for in the scheme, is directed to those charged with conducting investigations. Inevitably, from time to time, they are required to seek "assistance" from others, whatever construction one puts on that word. That assistance can come from people such as forensic scientists and police surgeons. It is right that your Lordships should be satisfied that outside experts instructed to assist in investigation have proper regard to their professional responsibilities.
But, when one looks at the steps that the Forensic Science Service takes to impose a proper level of professional standards and discipline upon its work, it is quite clear that in its case there is no necessity for what this amendment provides. As you Lordships may know, the Forensic Science Service has been an agency since 1991. It exists to provide a service not only to the police but to defendants and indeed to anyone who supplies material to it requesting that it be scientifically examined. It is therefore independent of the police and that has become much clearer since it changed to agency status.
Its established practice is to retain all documentation dealing with the material submitted to it for examination, whether or not the prosecution relies upon the results and they are disclosed to the accused. This documentation is retained for several years after the proceedings have been concluded.
Material which is submitted to the Forensic Science Service for examination is either retained by the service or returned to the police or whoever gave it the material in the first place. If the material is kept by the Forensic Science Service, it is kept with the documentation to which I have referred. If it is returned to the police, then obviously it will fall within the provisions of the code of practice. As many of your Lordships will know, witness statements which members of this service provide for court purposes are much fuller in detail than they used to be. They explain in detail how the witness has gone about dealing with the material received from the police, what hypothesis the police asked the witness to test for, and what results, if any, were found.
An independent check on the service's procedures is afforded by the fact that it is accredited by the National Measurement Accreditation Service and its
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administrative procedures are accredited by the British Standards Institute. On the basis of that information there can be little doubt that the public have every right to be confident that the Forensic Science Service will do its work in this field to the highest possible professional standards.
In moving the amendment the noble Lord concentrated particularly on the forensic scientist but in the course of his remarks he said that it can apply to other experts. That takes us into the field of such experts as medical experts, which was a subject discussed during Report stage in the context of an amendment moved by the noble Lord, Lord Rodgers of Quarry Bank. He was concerned that a requirement to abide by a clause amended in these terms would cause difficulties for doctors in view of their existing duty of medical confidentiality. On that occasion, my noble friend Lady Blatch gave an assurance to the House that Clause 19 as currently drafted does not apply to doctors acting as police surgeons and indeed that, if it did so apply, the Government were required to bring forward an amendment to remove that difficulty.
Unfortunately, one consequence of the amendment proposed by the noble Lord, Lord McIntosh, would be that the House would be going in the opposite direction to the amendment tabled by the noble Lord, Lord Rodgers. It would be going in the opposite direction to the assurance given to the House by my noble friend Lady Blatch.
Similar difficulties might well arise in other fields where professional experts were called in to assist. In those circumstances, with the assurance that experts are members of professional bodies who strive to adhere to the highest possible standards, it is in my view correct for the Government to take the view that the code of practice is directed to those conducting the investigation and not to those who may be instructed to assist in one small part of it. For those various and several reasons, I hope that the noble Lord will feel it possible to withdraw his amendment.
Lord McIntosh of Haringey: My Lords, it goes without saying that I am in no way impugning the professional integrity of the Forensic Science Service, nor indeed of anybody else involved as a forensic scientist in investigations, because, as the Lord Advocate will recognise, not all forensic science investigations are carried out by the Forensic Science Service. There is, for example, still the Metropolitan Police forensic science laboratory and there are also independent accredited forensic science laboratories which also work to full professional standards. I acknowledge the validity of the point about police surgeons, but that can be very easily remedied by an amendment to the Bill, as the Lord Advocate said, as it goes to another place.
However, the fundamental point has not been addressed. The Government have recognised and considered it right that the investigation should be held under a code of practice by providing one in accordance with the wishes of the Delegated Powers Scrutiny Committee and by providing that the code of practice shall be laid before Parliament and subject to its

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approval. If it is considered right for the investigation to be covered by a code of practice, then that must be right for all parts of the investigation, including those parts which are subcontracted to experts. As the Lord Advocate is now claiming that professional codes of conduct are sufficient for the purpose, then there is no reason to have the code of practice which is before us and which Parliament will be invited to approve.
I do not believe that the Government can have it both ways. We are arguing for a code of practice which gives the only assurance that matters; namely, that the investigation was carried out according to common standards. There will need to be variations for experts and for different types of investigator and investigation, and nobody denies that. But the principle that they should all be covered and be responsible ultimately to parliamentary approval is what I am sure the Delegated Powers Scrutiny Committee intended and what the Government now intend. I am sad that they do not recognise the validity of the point of providing for the inclusiveness of the code of practice, which is what is really needed. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 22 [Power to order preparatory hearing]:
Baroness Blatch Baroness Blatch moved Amendment No. 12:
Page 14, line 20, leave out ("person").
The noble Baroness said: My Lords, in moving Amendment No. 12, I should like to refer also to Amendments Nos. 14, 15, 16, 21, 22, 24 and 25 and to Clauses 40, 41, 42, 54, 59 and Schedules 2 and 3.
I can give an explanation of the detailed effects of the amendments if the House would find that helpful, but they are all either technical or designed simply to tidy up the drafting of the Bill. I beg to move.
On Question, amendment agreed to.
Clause 37 [Indemnification of justices and justices' clerks]:
Baroness Blatch Baroness Blatch moved Amendment No. 13:
Leave out Clause 37.
The noble Baroness said: My Lords, your Lordships will recall that on Report the noble and learned Lord, Lord Ackner, successfully moved an amendment to Section 53 of the Justices of the Peace Act 1979. The intention underlying the amendment was to strengthen the indemnity which Section 53 provides to justices and justices' clerks against orders for costs and other sums in respect of matters arising from criminal jurisdiction. Perhaps I should just remind your Lordships at this point what the terms "indemnity" and "immunity" mean in this context. Indemnity here means the payment by the magistrates' courts committee of any sums which have been ordered to be paid by a justice or justice's clerk, whereas immunity means protection against a costs order being made against them. As your Lordships will recall, the effect of the amendment was to bring the test of whether indemnity should be given to justices in criminal matters in line with the test for immunity in respect of actions arising from matters outside a magistrate's jurisdiction.
The amendment which your Lordships have before you today does not seek in any way to challenge the substance of that amendment. Far from it: the aim is simply to improve the drafting and to clarify that amendment. The noble and learned Lord, Lord Ackner, will, I hope, welcome the spirit of that response.
As your Lordships will see, the proposed new clause would insert a new subsection, to be numbered 1A, into Section 53 of the Justices of the Peace Act. This new subjection sets out the provisions which apply to matters arising from criminal jurisdiction and provides that indemnity shall be given unless it is proved that the justice or justice's clerk acted in bad faith. That is the new provision which the noble and learned Lord introduced by his amendment. The existing subsection (1) will cover all other cases. In those such cases, there is an entitlement to indemnity if the justice or justice's clerk acted reasonably and in good faith.
There will thus be an important distinction between the provisions which will now apply to criminal matters and those which apply to cases arising from civil jurisdiction. In civil matters, the magistrates' courts committee has a general power to provide indemnity and is obliged to provide indemnity if the justice or justice's clerk acted reasonably and in good faith. In criminal cases, indemnity will have to be given unless bad faith is proved: in civil cases, indemnity has to be given if good faith and reasonableness are demonstrated. The Government believe that it would aid clarity and avoid confusion to set out the different criteria which, reflecting the will of the House as expressed at Report stage, will now arise under the two jurisdictions in separate subsections in the way which is proposed.
Your Lordships will also remember that when I spoke on this matter previously I explained that my noble and learned friend the Lord Chancellor was aware of the concerns which justices have about their potential liability for costs and, in particular, their view that, as a matter of principle, they should be given immunity against such orders. The amendment moved by the noble and learned Lord, Lord Ackner, and approved by your Lordships, does not address the question of immunity. In addition, it is restricted to criminal cases because to have included civil cases would have taken it outside the scope of the Bill. Although it therefore does not cover many of the cases which have given rise to the anxieties which justices feel, it is very much in keeping with the Lord Chancellor's approach to look for ways of giving protection provided there has not been bad faith. The Lord Chancellor still believes that it would be right to consult before bringing forward legislation to address this and intends to issue a paper in the summer.
While this work on immunity is under way, my noble and learned friend the Lord Chancellor has also said that he will look at ways of improving the arrangements for providing indemnity so that, in the interim, justices and justices' clerks can have confidence that the current statutory provisions will work.
Finally, commencement provisions have been included. The amendment, while improving the position of justices and justices' clerks, does, in theory at least,

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have financial implications for magistrates' courts committees. For that reason, it follows established principles in providing for commencement to be on a date as soon as possible after Royal Assent. I beg to move.
5.15 p.m.
Lord Ackner: My Lords, in moving Amendment No. 13, the noble Baroness spoke also to Amendments Nos. 20 and 23, which appear with it on the groupings list. That tells the whole story which she has recounted.
I accept the amendments proposed since they are designed to put in the form which is considered most appropriate the amendment which I moved, and succeeded in, on Report. Your Lordships will appreciate that my amendment removed from justices the potential liability to pay costs in criminal cases where it was considered that they had acted unreasonably, and restricted it in future to cases where they had acted in bad faith. It was limited to criminal cases, not through any lack of ambition to safeguard them from the unusual and surprising liability with regard to civil cases, but because I was restricted to criminal matters as a result of the nature of the Bill. I hope that my noble and learned friend the Lord Chancellor, with whom the noble Baroness has so successfully interceded, will deal with that anomaly as soon as possible.
The noble Baroness will no doubt be pleased to know that the amendment has given great comfort to some 30,000 magistrates, although they appreciate that it is hoped that there will be more to follow. In particular, the noble Baroness has made very contented a Somerset magistrate on the Western circuit, my old circuit, who has been looking forward to what we have partially achieved since, he says, 1989, when my noble and learned friend the Lord Chancellor made a promise of indemnity for magistrates in a speech in which he undertook to,
"introduce legislation at the earliest opportunity".
I hope that "the earliest opportunity" will not involve a wait of another seven years.
Perhaps I may add this for the benefit of the noble Baroness: since that amendment was moved, my post has revealed that two class members of the judiciary are left out in the cold. My heart yearns for the first, the general commissioners of income tax; while the second class, to which I refer with some anxiety, comprises coroners. Again, I express my gratitude to the noble Baroness.
Lord McIntosh of Haringey: My Lords, these amendments reveal the wisdom of the noble and learned Lord, Lord Ackner, not only in arguing the case but in pressing the matter to a Division on an evening when the Conservative winter ball was being held outside the Palace of Westminster while the Labour Peers' party was being held inside the Palace of Westminster. I think we deserve a little credit for providing his troops, even if not for helping with his arguments. I accept that the Government are acting reasonably and in good faith,
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otherwise I should be worried about removing Clause 37 without being certain that they were going to put in the new clause after Clause 53.
Lord Ackner: My Lords, the noble Lord may wish to know that I concede that it is not my powers of advocacy but chance that brings forth the occasional victory. The last one occurred, I think, when it was Ladies' Day at Ascot.
Lord Rodgers of Quarry Bank: My Lords, I would say only that not everyone was enjoying a party downstairs with the Leader of Her Majesty's Opposition. There were others who were not being so entertained, and we were much persuaded by what the noble and learned Lord said. Although I had looked at the papers which had been circulated in advance of our debate on Report, it was only the noble and learned Lord's speech which brought me to my feet in support of his amendment.
Perhaps I may admit also that I was slightly equivocal on that occasion, not about the virtues of the amendment, but about the possibility of a Division being held and carried. So perhaps I was a little remiss in suggesting that, if the amendment were not pressed, the Government would bring forward their own amendment. That was an optimistic position to have adopted. I am delighted that the amendment was pressed to a Division and that the noble and learned Lord the Lord Chancellor accepted it. However, I cannot help but say that, when the noble and learned Lord the Lord Chancellor expressed the view in your Lordships' House on 15th January that considerable examination in depth of the problem was required before Parliament brought forward a solution, he was either ill advised or had a different timescale from the rest of your Lordships. Considerable examination in depth has been accomplished in a remarkably short time, and your Lordships are grateful.
Lord McIntosh of Haringey: My Lords, before the noble Lord sits down, in case he feels that he is the victim of social exclusion, as a member of the Hornsey and Wood Green Labour Party perhaps I may assure him that any application from him to rejoin would be treated with all seriousness.
On Question, amendment agreed to.
Clause 40 [Non-appearance of accused: issue of warrant]:
Baroness Blatch Baroness Blatch moved Amendment No. 14:
Page 23, line 22, leave out ("above").
The noble Baroness said: My Lords, I spoke to this amendment with Amendment No. 12. I beg to move.
On Question, amendment agreed to.
Clause 41 [Either way offences: accused's intention as to plea]:
Baroness Blatch Baroness Blatch moved Amendment No. 15:
Page 26, line 1, leave out ("above").
The noble Baroness said: My Lords, I spoke to this amendment with Amendment No. 12. I beg to move.
On Question, amendment agreed to.
Clause 42 [Enforcement of payment of fines]:
Baroness Blatch Baroness Blatch moved Amendment No. 16:
Page 26, line 12, leave out ("above").
The noble Baroness said: My Lords, I spoke to this amendment with Amendment No. 12. I beg to move.
On Question, amendment agreed to.
Clause 49 [Orders in respect of certain assertions]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 17:
Page 29, line 36, at end insert (", or may permit the person about whom the assertion is made to make a statement in open court in refutation of the assertion, after determination of sentence.").
The noble Lord said: My Lords, I shall speak also to Amendment No. 18. Let me say at once that these are probing amendments, partly because I have only been able to bring them forward on Third Reading and it would clearly inappropriate to press them and partly because they contain an error in English usage which I detest profoundly and for which I apologise. They use the words:
"a statement in open court in refutation of the assertion".
The word "refutation" means to prove falsity or error. It is misused frequently to mean the weaker words "rebuttal" and "response". So if the amendment were to be pressed, it would have to be in terms of response rather than refutation.
I, like the Minister, have been in correspondence with the Guild of Editors, which has expressed its concern about the reporting restrictions introduced in Clause 49 and succeeding clauses about derogatory assertions made in open court, normally in a plea in mitigation. In these clauses the Government have imposed reporting restrictions, alternatively temporary or permanent, in case someone should be defamed and not have an opportunity to reply.
The Guild of Editors has urged me to put forward amendments which would remove the Government's provisions on reporting restrictions and replace them with an opportunity for what it calls refutation, and what I would call response. I do not feel that that is the right course of action. Although I am of course in principle opposed to reporting restrictions whenever any question of freedom of speech is in issue, nevertheless, I was persuaded by the Government's argument on this matter that reporting restrictions might well be necessary to avoid damage to innocent people and possible damage to subsequent trials.
I thought that it was worth raising the issue by putting forward the possibility of a response as a option available to the court in considering whether to impose a reporting restriction. The court might feel that there are circumstances in which reporting restrictions would not be appropriate but that an opportunity for response might meet the case.
As Clause 49 and the subsequent clauses are all couched in the term "may"—in other words, they are permissive for the court to take action—I thought that it would not do any harm to raise the issue to see whether
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the Government felt there was any mileage in the alternative suggestion which in no way damages the Government's proposals in these clauses. I beg to move.
Lord Mackay of Drumadoon: My Lords, I am grateful to the noble Lord for the measured and frank way in which he raised this issue. The matter has been given consideration, and the Government remain of the view that the best way to prevent harm to victims, something which Clause 49 is designed to achieve, is to prevent reporting altogether.
Allowing a right of rebuttal to a victim or any other witness who might be attacked in the manner set out in Clause 49(4) might to some extent serve to increase the distress which such a witness had already suffered. The person might already have been a victim, as proved by the jury's verdict, of a serious crime. If that person's character has been attacked in a false and improper way, he may have suffered stress. To raise the possibility that such a person might have to have the full issue revisited by statements being taken from him, or made on his behalf, would give rise to a serious risk of further distress being caused. What is perhaps much more important, is that there could be no guarantee that any rebuttal made in court along the lines which the amendments are designed to achieve would be reported, let alone reported in the full manner in which the allegations were made.
We are all familiar with reading stories in the newspapers on one day alleging some story about a named individual, and reading a few days later, tucked on the inside pages in small print at the bottom of a column, what is said to be a full apology on behalf of the editor for the fact that an error was made, whether by the editor or those who made the comments which the editor has published subsequently. There could be no guarantee that members of the Guild of Editors would give anything like the prominence to the rebuttal statements that they had to the original allegations.
It is for that reason—on the limited basis which Clause 49 provides—that the Government are persuaded that preventing reporting altogether is the correct attitude to adopt. The noble Lord acknowledged that there was a justification for the Government to have Clause 49 on that basis. He brings forward these probing amendments, as he describes . them, to test the Government's attitude.
The Government remain committed to the principle that proceedings in open court should be reported as fully as possible except in strictly limited and exceptional circumstances. When one is dealing with the sort of behaviour set out in Clause 49(4), one has such exceptional circumstances which are strictly limited. Although the amendment was put forward in a responsible manner, I regret that it is not one that the Government can accept.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble and learned Lord for that response. He was unfair only in one small respect. He described the pain that might be imposed on the victim in having to make a statement and of it being repeated in court. The amendments provide only that the person about

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whom the statement has been made will be permitted to adopt the procedure. Nothing would ever be forced upon him. However, in the light of the noble and learned Lord's response, with which I largely agree, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 18 not moved.]
5.30 p.m.
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 19:
Before Clause 53, insert the following new clause—
USE OF WITNESS STATEMENTS
(".—(1) If the prosecutor reasonably believes that the accused may use a written statement made by, or photograph of, a person who is named in the charge for a purpose other than the preparation of his defence or appeal, he may apply to a court for an order restricting access by the accused to such statement or photograph.
(2) An order made by a court under this section may prohibit the accused's legal representative from—

(a) making or permitting any person to make a copy of the statement or photograph;

(b) releasing the statement or photograph to the accused; or

(c) making or permitting any disclosure of the statement or photograph or its contents to any person except when in the opinion of the accused's legal representative it is necessary in the course of preparing the defence or appeal.

(3) An order made by a court under this section may require the accused's legal representative—

(a) to ensure that the statement or photograph is always kept in a locked, secure container when it is not being used; and

(b) to return the statement or photograph to the prosecutor when the legal representative is no longer instructed in the matter.

(4) An order made by a court under this section shall not prevent the accused from inspecting all material which should be disclosed by the prosecutor to the accused.").
The noble Lord said: My Lords, the amendment proposes the introduction of a new clause which will offer a safeguard to a significant class of people who have no such safeguard. The burden of the new clause is to entitle and empower a court to prohibit the publication of material which has come into the hands of an accused which may do damage to a victim. I declare an interest as a trustee of the NSPCC and chairman of a commission of inquiry into the prevention of child abuse.
If a small child is killed, sexually abused or raped, photographs come into existence. Furthermore, statements come into existence which go into a good deal of detail about family circumstances and often the circumstances of other children in the family group and of the children of neighbours in a small community. It is a significant poison in our system that defendants who by definition are perverted, if they are properly convicted, can lay their hands upon material such as photographs and statements. It is well known that they circulate them in prison, but the matter does not end there. In my professional experience, defendants claim as of right to be entitled to retain the documents and the photographs while claiming to appeal, sometimes legitimately and sometimes not. That process of appeal can go on for years.
The poisonous material, which is capable of doing great harm to the victims of such categories of crime, is often circulated in prison. When the offender leaves prison it is further circulated among rings of men, usually, who enjoy sado-masochistic photographs, statements and so forth. The amendment proposes that where the prosecutor has reasonable grounds for believing that that may happen he may apply to the court for an order of prohibition—I put it shortly—so that the legal representatives, solicitors or counsel are not to hand over the photographs or the statements to the defendant. They are, of course, to take instructions on them but they are not to allow the defendant to take copies and the material must be kept under lock and key.
I do not suggest that the wording of the amendment is necessarily perfect but there is a real vice and a real problem to be dealt with. It is wrong, cruel, unfeeling and unthinking for a woman who, for instance, has been subject to gross sexual assault to think that the photographs and statements in the case and the evidence of her wound is to be circulated at the whim of the person who has done her the original offence. Of course, sensible police officers will remove the address but that is of little solace to the woman. It is wrong that children growing up and hoping to escape the memories of the crime should live in fear of paedophile and pornographic rings gaining access to material generated by bad, harsh and cruel treatment.
I repeat that the amendment is not necessarily perfect in its wording, but I ask the Minister to recognise that the problem is serious. I hardly need to ask that and of course I did not put it offensively. But can the Minister say whether there is a mechanism available to this House or to another place to put it right. At the moment defendants have access to the material as of right, keep it for their own ignoble purposes and circulate it. I propose that they have no legitimate right or interest to retain the material, which is the fruit of their crime. I beg to move.
Baroness Mallalieu: My Lords, as a practising member of the criminal Bar, I support the amendment. It is a situation I have encountered in practice on a number of occasions. I am faced with material which the accused is entitled to see and I have no means of stopping him. Indeed, I represent him and I may well have to discuss the material with him. I am concerned about his having access to the material and keeping it because I anticipate that it may be used as suggested by my noble friend Lord Williams.
Apart from the most important aspect, which is the protection of the victims, I am anxious that as there is an opportunity to deal with disclosure this is a way in which one of the current difficulties can be dealt with. It is not unusual for material to be disclosed on a counsel to counsel basis. That can lead to great difficulties and embarrassment when a client requires to see material which his counsel has been given on that basis. However, the amendment provides not merely a degree of protection and comfort for victims but has the additional benefit of ensuring that the procedure in relation to occasions when such a difficulty arises is formalised by an application to the court and a court order.

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I hope that the Minister will feel that the reasoning behind the amendment is worthy of consideration and that it is a matter the Government can take up at a later stage.
Lord Carlisle of Bucklow: My Lords, I support what has been said by the noble Lord and the noble Baroness. One knows from one's own experience and practice that from time to time such horrible situations occur. Whether the amendment is the right way of dealing with it I am not sure but I hope that my noble friend will accept that there is a genuine problem. When it arises, which is not that often, it causes great anxiety and we should try to deal with it.
Baroness Blatch: My Lords, I say at the outset without reservation that in anyone's language this practice is evil and I agree that there is a very real issue to be addressed.
The amendment seeks to tackle a problem which raises fundamental issues about open justice, the rights of persons accused of serious crime to know the case against them, and the rights of victims that statements and photographs should not be used for pornographic or other improper purposes. We do not have any reliable data about the extent to which statements or photographs are misused in that way, but we know that it does happen. It is most likely to happen in sexual offence cases, as has been said, where the potential for misuse is obvious and the distress to victims is the greatest.
It is not a new problem. In 1991 the Home Office issued a consultation paper inviting views on a range of measures, statutory and non-statutory, for preventing misuse of witness statements in sexual offence cases. There was no agreement on how best to proceed. Some favoured adopting all the measures while others doubted that any effective and enforceable solution could be found which reconciled all the conflicting interests. The Royal Commission on Criminal Justice subsequently recommended that in sexual offence cases defendants should be required to return victims' statements to the instructing solicitor at the conclusion of the case. While this would go some way towards addressing the problem the Government believe we should continue to search for a more effective solution.
At a meeting with the Law Society last summer a number of options were discussed and it was agreed that further work was needed. There was another meeting only last week at which the Law Society indicated that it favoured legislation on the lines of this amendment, albeit restricted to sexual offence cases. I mention this background in order to highlight the great complexity of the mischief which is the target of this amendment.
The principle of open justice is fundamental to our system. We have international obligations to ensure that those accused of crimes receive of a fair trial. We must be satisfied that any restriction imposed on access by defendants to prosecution material would be compatible with those obligations and would not lead to miscarriages of justice. That is not a simple matter and requires further careful study
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We must also avoid imposing unnecessary burdens on the criminal justice system. Procedures which require the prosecution to apply in each case to the court for an order restricting access would be very cumbersome for both the prosecution and the court. What test is the prosecutor to use in deciding whether to apply to the court? More importantly, what test is the court to use in deciding whether to grant an order? The practicality of such a system needs careful consideration, together with any options which might simplify the procedures and avoid unnecessary bureaucracy.
The amendment also makes no provision for unrepresented defendants. That is an important aspect of this issue. If one accepted the principle, with which I have a good deal of sympathy, that access by defendants should be restricted in some circumstances, how are unrepresented defendants to gain access to material on terms which it is proposed should apply to defendants who are legally represented? What arrangements are to be made for access depending on whether the defendant is in custody or at liberty? These are important practical considerations if we are to ensure that any measures which are put in place operate effectively.
Finally, the amendment does not specify what penalty is to be imposed for breaching the requirements of an order. That is an important point on which we need to be clear. One possibility is that a breach could be dealt with as a contempt of court. The other would be to create a specific new penalty. We must also be clear about who would be caught. Would it be the legal representative alone, or could penalties be imposed on those proved to be misusing material which was the subject of an order?
The Government are sympathetic to the principle of this amendment. Indeed, they have been working on proposals to create a duty of confidentiality that would protect unused prosecution material disclosed to the defence under Part I of this Bill. As in this amendment, the issues are complex. Again, any such duty would have to be compatible with the general principles of open justice. It must not restrict the accused's ability to prepare his defence, or mount an appeal or apply for anything read out in open court. Yet it must also curtail the scope for abuse. The Government hope to be in a position to introduce in another place amendments to provide for such a duty of confidentiality. To a limited degree, they might assist in protecting from misuse the sort of material covered by this amendment: but only where it constitutes unused material disclosed under the provisions of the Bill.
Much further work would be needed to develop a scheme embracing other material, especially given that in some cases it may have entered the public domain, if it has been used in open court, and given the practical questions I have outlined. Nevertheless, we do intend to continue our work with the aim of producing a workable scheme as soon as possible. There is no difference whatever between us as regards the principle of the amendment nor about the very serious practice that it seeks to address. But more work needs to be done and, in the light of that, I hope that the amendment will not be pressed on this occasion.
5.45 p.m.
Lord Williams of Mostyn: My Lords, it is disappointing that the Government have no present alternative provision to put forward. The Royal Commission on Criminal Justice reported many, many years ago. The Minister referred to open justice. Subsection (4) of the proposed new clause provides:
"An order made by a court under this section shall not prevent the accused from inspecting all material which should be disclosed".
Therefore, the defendant has an opportunity to know exactly what is put against him.
There is no difficulty about punishment. Courts frequently make prohibition orders against the publication of material, either specifically or the statute prohibits them generally. The penalty is for contempt and may be an unlimited fine or imprisonment.
There is no difficulty about the unrepresented defendant. If he is in custody, he can see the material in a controlled environment, and if he is not he may view the material by appointment in a police station, which frequently happens at present. I give one example to demonstrate the vice. The late Frederick West killed himself before he was convicted. But had he not done so and had he retained access to photographs of people—often young children and women—that he had killed and retained the statements which were part of the prosecution case, would it be right that he could retain and feast on them and distribute them over the years to his friends and acquaintances with the same tastes? I cannot believe that to be right.
I am grateful that the Minister was able to say that the Government will produce something in another place. I am grateful for that mercy. That is not a mercy to me; it is a mercy to many others who suffer not the actuality but the fear and not knowing what has happened as regards such documents and photographs. But on that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Blatch Baroness Blatch moved Amendment No. 20:
After Clause 53, insert the following new clause—
INDEMNIFICATION OF JUSTICES AND JUSTICES' CLERKS
(".—(1) In section 53 of the Justices of the Peace Act 1979 (indemnification of justices and justices' clerks) the following subsection shall be inserted after subsection (1)—
"(1A) So far as the duty mentioned in subsection (1) above relates to criminal matters, that subsection shall have effect as if—

(a) for the word "may" there were substituted "shall", and

(b) for the words following paragraph (c) there were substituted "unless it is proved, in respect of the matters giving rise to the proceedings or claim, that he acted in bad faith".

(2) This section applies in relation to things done or omitted on or after the appointed day.
(3) The reference in subsection (2) to the appointed day is to such day as is appointed for the purposes of this section by the Secretary of State.").
On Question, amendment agreed to.
Clause 54 [Meaning of preliminary stage of criminal proceedings]:
Baroness Blatch Baroness Blatch moved Amendment No. 21:
Page 33, line 21, leave out ("below").
On Question, amendment agreed to.
Clause 59 [Extent]:
Baroness Blatch Baroness Blatch moved Amendments No. 22 and 23:
Page 35, leave out lines 20 and 21 and insert—
("(b) paragraphs 6 and 6A of Schedule 2, and paragraph 7 of that Schedule so far as it relates to paragraphs 6 and 6A;").
Page 35, line 24, leave out ("section") and insert ("sections (Indemnification of justices and justices' clerks) and").
On Question, amendments agreed to.
Schedule 2 [Fraud]:
Baroness Blatch Baroness Blatch moved Amendment No. 24:
Page 44, line 12, at end insert—
("6A. In the list in section 17(2) (provisions extending to Scotland) after the entry relating to section 11 there shall be inserted "section 11A;".").
On Question, amendment agreed to.
Schedule 3 [Modifications for Northern Ireland]:
Baroness Blatch Baroness Blatch moved Amendment No. 25:
Page 46, line 9, leave out ("and") and insert ("to").
On Question, amendment agreed to.
An amendment (privilege) made.
Baroness Blatch: My Lords, I beg to move that this Bill do now pass. It would not be an under-statement to record that this is a most complex and technical Bill. As such, it is only right that I should begin by paying tribute to the skill with which your Lordships have embraced its detail. This is all the more impressive given that we did not, I fear, get off to the smoothest of starts in our consideration of the Bill. As a lay person myself, I appreciate only too well that our task would have been lightened had the code of practice been available at Second Reading. Nevertheless, our collective effort has, I believe, served yet again to demonstrate the value of this House as a revising Chamber.
Although the Bill makes a number of improvements to criminal procedures, its main purpose is to reform the law on prosecution and defence disclosure. These reforms are underpinned by the need for our system of criminal justice to be fair, efficient and effective. Accordingly, noble Lords on all sides have given much thought to ensuring that the provisions are even handed. That is an aim which undoubtedly commands support throughout the Chamber. But that is not to say that we have not had our differences. In that respect, I wholly concur with the sentiments expressed at Report stage by the noble Lord, Lord McIntosh, that these are procedural and political, rather than personal.
I believe that the ground that now separates us is considerably narrower than it once was. Your Lordships' detailed deliberation of these important matters has thrown new light on a variety of issues. Much has been achieved in recent months through correspondence, meetings and, of course, constructive debate, for which I am most grateful.
The Bill has been amended to require the Secretary of State to publish a draft code of practice and to consider

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representations made to him about it, after which he may modify the draft accordingly. He may then bring it into operation by order, but only when the order has been approved by a resolution of both Houses. In that way, ultimate control over the code will rest with Parliament.
We have sought to ensure that the Bill achieves a proper balance by setting out the essential elements of the code of practice and leaving the detail to the code itself. That said, we have, wherever possible, given assurances to modify the draft of the code to take account of points made in debate. A further, revised draft of the code will be available before Second Reading when the Bill is considered in another place.
On Second Reading I signalled that it was our intention to table amendments while the Bill was before this House on three subjects: first, the arrangements for children to give evidence; secondly, improvements to the transfer for trial provisions contained in the Criminal Justice and Public Order Act 1984; and, finally, the difficult subject of the disclosure of material held by third parties.
In respect of the first of these, the House has made amendments to provide for binding rulings in respect of applications for children to given evidence by live television link or by means of a video recording. If such decisions can be taken at an early stage in the proceedings and if those decisions can be made to hold, there will be significant benefits for the children concerned. In addition, the Government are pursuing a range of further practical measures to improve the present arrangements for child witnesses to give evidence. Our debates have helped to identify the priorities and we shall be consulting widely with all interested groups in taking the work forward. I believe that that approach reflects the importance which this House and, in particular, my noble friend Lady Faithfull and the noble and learned Lord, Lord Ackner, attach to such issues.
Some amendments have been made to improve the transfer for trial provisions. We are currently engaged in renewed consultation with practitioners who have suggested some further technical refinements, which require careful consideration. I hope that noble Lords will agree that it is preferable for the Government to take the views of those practitioners fully into account so as to ensure that we have an effective and workable system. I am afraid that it means that some detailed, technical amendments will be needed when the Bill reaches another place.
We also had hoped to bring forward amendments on the disclosure of material held by third parties. We have consulted widely to establish what it would be possible and desirable to achieve in the Bill. But we have not yet been able to devise a scheme of third-party disclosure which covers all aspects of the problem, which ensures that the accused is afforded proper assistance to present his defence and which avoids adding to delay and complexity in the system. We have, however, identified some modest procedural changes that should have practical benefits for third parties.
Your Lordships will appreciate that this is a difficult and very complex area. Indeed, the Lord Chief Justice, having responded to our proposals for procedural
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change, has suggested that further consultation with the judiciary would be desirable. In practical terms, the need for further consultation will, I am afraid, mean that any necessary amendments cannot now be tabled until the Bill passes to another place.
Finally, I wish to thank all noble Lords who have contributed to our deliberations on the Bill, especially the noble Lord, Lord McIntosh. As ever, the noble Lord has been assiduous in prosecuting his case with, of course, the assistance at the Dispatch Box of his noble friends Lord Williams and Lady Mallalieu. I also wish to thank the noble Lord, Lord Rodgers of Quarry Bank, for representing his Front Bench; and, indeed, I thank my colleagues and noble friends on these Benches. I should like to express my particular thanks to my noble and learned friend the Lord Advocate who has found the time, in what I know to be an extremely busy schedule, to assist me on the Bill.
I am confident that this House, as is customary, has responded positively as a revising Chamber and, as a result, will despatch to another place what I believe is a much improved Bill.
Moved, That the Bill do now pass.—(Baroness Blatch.)
Lord McIntosh of Haringey: My Lords, this has been something of a roller-coaster of a Bill. It started in a very friendly sense in that I hope it was clear—indeed, we tried to make it so—that we support the principle behind the Bill. Our amendments and our deliberations were intended to make the legislation work better rather than to oppose it. I do not believe that the Minister or anyone else would say that our attitude towards the Bill has been what the Deputy Prime Minister called being on the side of the villains.
We then had a certain number of little local difficulties in the sense that, as the Minister rightly said, the code of practice was produced very close to the Committee stage rather than soon after Second Reading. In addition, the Government tabled virtually 100 amendments in Committee, a very considerable number of them on Report and, indeed, quite a few on Third Reading. The result is that the Bill which started out with 35 pages now has 55. Therefore, I believe it could be argued that we are not now dealing with entirely the same Bill as we were at an earlier stage of the proceedings.
The difficulty that we had in Committee was, first, the fact that the code of practice which is an integral part of the Bill—indeed, Part II of the Bill is wholly concerned with it—was not available in time. Secondly, we had not really worked out between us ways of debating that code of practice adequately; and, thirdly, there was no provision, despite the recommendations of the Delegated Powers Scrutiny Committee, for the code of practice to be subject to parliamentary approval.
I am not sure whether we have yet worked out a way to debate codes of practice which are not included in legislation. I have now tried two ways of doing so—first, by writing it into the Bill as a schedule and then amending it myself as, indeed, I did on this and earlier occasions; and, secondly, by attempting to put, on the

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face of the Bill, as it were, the amendments which we would seek to make to the code of practice. Perhaps a future solution would be for the Government to table a code of practice as a schedule, thereby making it open for debate and amendment, with a view to taking it out at the end so that it would be subject to parliamentary debate, although it would not be subject to the rigid procedure of primary legislation. I do not know the answer. Perhaps the Procedure Committee would like to consider the issue.
However, I do know that such Bills which rely on codes of practice—and many do—ought not to be introduced without the code of practice being available. Further, they ought not to be published without amendments—which, as in this case, were clearly in preparation before the Bill was printed—being included on the face of the Bill. Such amendments should not have to be made in Committee, on Report or even, as the Minister just acknowledged, later when the Bill goes to another place.
Nevertheless, there have been some improvements during the course of the debates, although not all of them appear on the face of the Bill. First, and most important, the recommendations of the Delegated Powers Scrutiny Committee about parliamentary approval and consultation were accepted. Secondly, there were considerable improvements promised in the draft code—such as, reconsideration of the role of disclosure and investigation officers, the retention of draft witness statements and the recording of information as soon as practicable. Thirdly, there were also improvements in the way that the retention of material, such as samples, should be legislated for, and, as the Minister just said, there will be further amendments on transfer for trial.
We still believe that there are great problems with the relatively clumsy and rigid procedures proposed in the Bill. The high level of disclosure, both from prosecution and defence, will cause difficulties and extra work, even though we acknowledge that it is intended to reduce the burden which is perceived by the Government. We still think—and this is extremely important—that the procedures involved in the Bill will provoke unnecessary "not guilty" pleas in order to get sight of primary disclosure. That, in turn, will clog up the magistrates' courts.
In our view, the application of the code of practice to other investigating authorities and to those assisting them is still unclear and inadequate. We are not satisfied with the power given to the prosecuting authorities to make adequate decisions about sensitive material. Indeed, we are certainly not satisfied that the Bill goes forward without the Government having achieved agreement between police forces as to the length of time for which material shall be retained.
However, that is life. That is what these Bills are like. Some of the measures we argued for have been accepted with relatively good grace; some of the measures we argued for have been rejected with a measure of understanding; some appear to me to have been rejected without any real understanding at all. Nevertheless it is a pleasure once again to see the noble Baroness, Lady
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Blatch, at the Dispatch Box as we did when she was the Minister in other departments in the past. After our initial difficulties, I pay tribute to her hard work, to her understanding of the issues although she is not a lawyer, and to her courtesy throughout in supplying us with information and explanations.
I welcome the noble and learned Lord the Lord Advocate to the Dispatch Box where he has proved himself a natural from the beginning. I am grateful to my noble friends Lord Williams of Mostyn and Lady Mallalieu for their assistance at all stages of the Bill. I am grateful, too, to our research assistant, Claire Cozens, to Roger Ede of the Law Society, to Anne Owers and Razia Karim of Justice, and to others who have taken the trouble to inform us of their anxieties with the Bill. We have had the pleasure of listening to many lawyers—too many to name—from all sides of the House, and also to the noble Viscount, Lord Runciman of Doxford, who chaired the Royal Commission. We are grateful for his incisive contributions at all stages of the Bill. There is still plenty of work for the House of Commons to do. I wish it well with the Bill and I hope that it will produce, in the end, a Bill which maintains the essential balance in our adversarial system between prosecution and defence so that the guilty are convicted and the innocent go free.
6 p.m.
Lord Rodgers of Quarry Bank: My Lords, the noble Baroness, Lady Blatch, said that we did not get off to the smoothest of starts. However, we got off to a good start at Second Reading. Noble Lords on all sides of the House made clear their wish to make progress with the Bill. However, as the noble Baroness later implied—and as the noble Lord, Lord McIntosh said—there were some rather fractious and unhappy events on 19th December. We were all relieved when we were able to put that behind us.
There are lessons to be drawn from the progress of the Bill. I still take the view—although I do not hold the noble Baroness responsible—that the Bill should never have been introduced into your Lordships' House given the early stage of preparation at which it proved to be. As the noble Lord, Lord McIntosh, said, there were over 100 Government amendments at Committee, and I believe there were over 60 at Report stage. The Bill goes forward not in its final form so far as the Government can make it so but in the clear knowledge that there will be a need for further amendments in another place.
The noble Lord, Lord McIntosh, referred to the code of practice. Our main argument on 19th December was whether the code then represented the policy of Her Majesty's Government or whether Her Majesty's Government were somehow neutral about it. The impression was then given—I think this gave rise to the problem which we sought to overcome—that Her Majesty's Government were indeed neutral about it at that stage. However, as the noble Baroness, Lady Blatch, later made clear, it was at that time the Government's best view of the proposal that should be included in the code of practice notwithstanding, as we all understood, that further consultation would have to

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take place. My own conclusion, both from the state the Bill was in when it started, and the state it is in now, is that your Lordships would have been able to scrutinise it much more completely and much more satisfactorily, and we would have avoided some of the fraught discussion which occurred, if the Bill had been delayed before presenting it to your Lordships until it had been more fully prepared.
I see no remedy for my next point within the immediate future. I conclude that although there were important differences of opinion on the Bill, and although it was the duty of the Opposition parties to seek to represent the views of those outside the Chamber 'with important points to make, it was never a Bill which divided both sides of the House strictly on narrow party lines. For that reason I wish we had a means by which a Bill of this kind, although controversial, could be dealt with in a less adversarial way. Unfortunately, circumstances oblige us to deal with it in that way. It would have been far better if we had been able to prepare ourselves on a different timescale for some of the problems with which we were confronted at a later stage.
However, that having been said, I am most grateful for the considerable efforts made by the Minister, and all those who advised her, to try to meet the needs of the House on many extremely detailed matters. In a slip of the tongue she attributed to me a learning which I do not possess. However, there were times when I thought that the noble Lord, Lord McIntosh, might indeed have been referred to as a noble and learned Lord. I pay tribute to the skill with which he, as a non-lawyer, dealt with many of the detailed matters which came before the House. It is a better Bill than it would have been and that is reassuring.
Lord Campbell of Alloway: My Lords, may I briefly say this—
Noble Lords: Good heavens!
Lord Campbell of Alloway: Yes, my Lords, good heavens! I have been involved with this Bill at certain times and I wish to say a few words about it. It is an important Bill and an interesting Bill because we did not really discuss it on party lines. That is interesting. However, the greater importance of the Bill is that it has established temporarily a form of procedure which we never had before; that is, how we are to deal with codes of practice in this House. This is of general application. The importance of the Bill is that across party lines an agreement was reached that we had to do something. We have done something and now someone has to devise an accepted way of dealing with such matters on all future Bills.
Lord Ackner: My Lords, I wish to pay tribute to the painstaking care with which the noble Baroness has approached this complex Bill, and for the understanding which she showed to the difficult problem raised by the noble Baroness, Lady Faithful], about the evidence of children on which there is a not totally consistent judicial view. I also wish to add my congratulations in regard to the noble and learned Lord the Lord Advocate
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in two matters: first of all, his confession that he has a cardiac region and, secondly, that in regard to an irresistible but microscopic amendment of mine, it was operating in my favour.
Lord Renton: My Lords, I should like to endorse the tributes paid to my noble friend Lady Blatch and, indeed, to the noble Lord, Lord McIntosh, and the noble Lord, Lord Rodgers. It is interesting that the Bill in a sense is a lawyers' paradise but the three leading Front Bench spokesmen are not lawyers, although hearing the discussion one would never have realised that. This is about the twelfth Bill in the past 50 years dealing with the procedures of our criminal courts and of those who have to work in them. All those Bills have really been experimental and necessarily so. I am using hindsight when I say that because it was not generally acknowledged at the time. I think it realistic to say that this Bill is, to some extent, experimental too.
These Bills have to be judged, I think, by a number of criteria. I shall quickly mention them and say to what extent this Bill meets them. Does it enhance the public interest? Yes, this Bill does, and it clarifies the rather delicate question of the public interest immunity certificates. It does that well. Does it make it more likely that guilty people will be convicted? Yes, it does. Does it make it more likely that innocent people will be acquitted? Yes. Will it reduce the length of court proceedings? That is very doubtful. Will it reduce their cost? We have to wait and see.
On Question, Bill passed and sent to the Commons.

Education (Student Loans) Bill
6.10 p.m.
The Minister of State, Department for Education and Employment (Lord Henley): My Lords, I beg to move that this Bill be now read a second time.
Before addressing the Bill itself it may be helpful to the House if I say a few words about a Statement that was made in another place this afternoon by my right honourable friend the Secretary of State for Education and Employment. It is not strictly speaking relevant to the Bill itself, but it may put into context some of the comments that I imagine we may hear from noble Lords this afternoon which may not relate directly to the contents of the Bill.
This afternoon my right honourable friend spoke about the Robbins Committee, which set out a vision for expanding higher education in the United Kingdom. Since then, as we all know, higher education has been transformed beyond the expectations even of Robbins. It no longer caters only for a privileged elite but provides opportunities for a significant proportion of our young people. In Robbins' day just one young person in 17 went on to higher education; now the number is approaching one in three. The number of newly qualified graduates gaining first degrees in Britain each year has doubled since 1979. Over one-third of those are science, maths and engineering graduates. Our graduation rate is now one of the highest in Europe, second only to Denmark in the European Union, and

913
the United Kingdom produces more science graduates relative to the young workforce than any other OECD country. By the year 2001 the number of graduates in the workforce is likely to be well over 3 million—twice as high as in 1981.
Impressive though those achievements are, future success requires universities and colleges to continue to develop while preserving their best traditions. After such fast growth it is time to take stock and consider the future of higher education. The Robbins Report provided a landmark for higher education policy which has stood the test of time well, but it is time to take a fresh and comprehensive look at the challenges facing higher education in the United Kingdom as we approach the 21st century.
Therefore, with the agreement of the Prime Minister, my right honourable friend the Secretary of State for Education and Employment and the appropriate territorial Ministers, we intend to appoint a committee of inquiry into higher education. We are delighted that Sir Ron Dearing has agreed to chair it.
We propose to invite the committee to make recommendations on how the shape, structure, size and funding of higher education should develop to meet the needs of the United Kingdom over the next 20 years. We shall supply the committee with the preparatory work that has already been undertaken in the education departments as part of the Secretary of State's review. We shall consult widely on the committee's precise terms of reference and composition. In due course my right honourable friend will make a further announcement on the committee's remit and membership in the light of those consultations. We hope that the committee of inquiry will be able to start work some time after Easter and will be able to report by the summer of 1997.
With those remarks I now turn to the Bill itself.
Lord Boyd-Carpenter: My Lords, perhaps I may intervene before my noble friend moves on to the Bill. I understand that he quoted from a Statement made in another place. Can he explain why that Statement was not repeated in this House in view of its obvious importance? It appears that this House was excluded.
Lord Henley: My Lords, I did not quote the Statement but paraphrased it. In the usual way, we offered the Statement to the opposition parties. As I understand it, it is a matter for them as to whether a Statement is repeated in this House. I followed the normal convention, and as they did not wish the Statement to be repeated I did not insist on it, because I thought that there would be a suitable opportunity to give some idea of what was in the Statement when we debated the Bill.
Lord Boyd-Carpenter: My Lords, I am sure that the House is obliged to my noble friend for referring to the Statement. However, I was a little disturbed to hear him indicate that because the Opposition did not ask for the Statement to be repeated in this House it was not to be repeated here. There are parties other than the
914
Opposition. The matter is very important and it is a great pity if a Statement which is sufficiently important to be made in another place is to be excluded from this House simply because the Opposition do not want it.
Lord Graham of Edmonton: My Lords, perhaps I may try to help the House and, in the light of his last remark, the noble Lord, Lord Boyd-Carpenter. It has been the convention for as long as I can remember—although that may not be as long as the noble Lord, Lord Boyd-Carpenter—that a Statement which is made in the other place is offered to the opposition party. It is in the Opposition's gift as to whether the Statement is taken in this House.
If the noble Lord wishes to raise this matter with the Procedure Committee or the Government Chief Whip or to have it discussed, that is perfectly fair.
We decided not to take the Statement in this House today because we knew that there was to be the Third Reading of a major Bill and that some 20 Peers were to speak in this Second Reading debate. There was not only this Statement on education but also another Statement. With due regard to the fact that there would be the opportunity to touch upon the contents of the Statement in this debate, as the Minister has done, we thought that on balance we did not wish to ask for the Statement to be repeated. I see nothing wrong with that. You make a judgment and a choice. Noble Lords can rest assured that if we had decided to take the Statement there would have been grumbles about this debate starting perhaps an hour later. You cannot win them all.
Lord Boyd-Carpenter: My Lords, with great respect, this is an important Statement. I am very disturbed to know that this House, including all the remaining parties other than the Opposition, is to be denied the opportunity to have Statements made in another place repeated here simply because the Opposition, for reasons good or bad—and I make no comment on the reasons that we have been given—do not want it.
I wish to register a protest. I also ask my noble friend the Minister to make sure that the leadership and appropriate committees of this House are informed that some of us want this House to be treated properly when Statements are important enough to be made in another place.
Lord Henley: My Lords, I note my noble friend's protest, and I shall certainly make sure that it is brought to the attention of my noble friend the Chief Whip as well as the usual channels. However, I have to say to my noble friend that what the noble Lord the Opposition Chief Whip said accords exactly with my own understanding of the convention. That is that these matters are offered to the Opposition, and if the Opposition do not wish to take it, that is a matter for them.
I thought that it was worth making some reference to the Statement at the beginning of my speech, partly because we have approximately 25 speakers in the debate, which is on a pretty narrow point, and I had a sneaking suspicion that some of them might want to

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expand their speeches to the more general aspects of higher education. Therefore, I felt that making some reference to that Statement and the fact that most of these matters will be a matter for that committee of inquiry might just possibly—I am an optimist—concentrate the minds of noble Lords and they might confine their remarks to the Bill itself. I certainly intend to confine my remarks to the Bill. I also intend to confine my winding up remarks to the Bill, and do not intend to have a general debate on higher education.
Baroness White: My Lords, some of us have been properly informed of the general tone and range of the Statement made in another place. We have not been left in complete ignorance, and I suppose that the Government have made arrangements for their own members.
Lord Henley: My Lords, I am sure that many noble Lords will have taken the opportunity to go down to another place and listen to the Statement made there. Certainly they will be able to obtain copies of that Statement. I can assure noble Lords that copies of the terms of reference, which are out for consultation, will be made available in the Library. We shall be more than willing to consider comments made by noble Lords.
After that rather delayed start, I intend to confine my remarks to the Bill itself. I trust that other noble Lords will do the same.
The Bill is short and straightforward with a clear and simple objective. That objective is to build further on the current student loan scheme by improving the deal for the student consumer and for the taxpayer. The Bill will do so by enabling students for the first time to take out a subsidised loan from a bank or building society. In place of the Student Loans Company monopoly there will be choice, diversity and competition. Not only that, but the student consumers will also have the benefit of private sector skills and expertise.
For the taxpayer, the private sector will be lending and risking its own rather than public money.
We have consistently given priority to extending choice at all levels of the education system. This was once thought controversial. I suspect that it is even accepted by some noble Lords opposite now. It is easy to see why. It works.
Only choice supported by competition and diversity can raise and maintain standards effectively. This Bill will mean in the short term a better, quicker, convenient, more varied and comprehensive service for student borrowers. In the longer term, as the market develops, it will mean a better loan product tailored to individual needs.
The involvement of the private sector is important for reasons other than choice and competition. The capital investment required in student loans is immense. We estimate that it will be £5 billion by the end of the decade. We want the private sector to be responsible for raising and lending much of that and for bearing most of the risk.
This is sensible in its own right. But it has another advantage. Reducing the size of the public sector and building up the private encourages individual freedom
916
while also boosting the economy. Further, personal lending at this level is not a natural activity of Government. We do not have the experience or the expertise. The banks and building societies do. It is their business. It makes sense to make student loans their business as well.
We shall shortly invite those banks and building societies which have expressed an interest to bid for the right to offer subsidised loans. This will be for a period of five years. We envisage selecting up to four private lenders in each of England, Wales, Scotland and Northern Ireland. Students would then be able to choose between the successful bidders for a private loan; or—and I must stress this—they could still choose a public loan from the Student Loans Company.
This is a short Bill. Despite criticism in another place there is nothing sinister in this. The Bill will give us a power to pay subsidy to the private lenders. That subsidy is largely needed so that they can continue to offer loans at preferential terms.
The detailed arrangements will be set out in commercial contracts. We shall ensure that they protect the taxpayers' interest and the normal audit arrangements will apply. The invitation to tender documents will be placed in the Library.
It is striking how closely debate on the Bill in another place—and outside comment—has paralleled debate on the 1990 Act which introduced student loans. Then, as now, opponents focused on the same arguments: the Bill lacked detail; participation would be affected; hardship would be created; and other loans schemes would be better. But paradoxically underpinning all was a complete rejection of the principle of loans.
No doubt some of those arguments will shortly be put forward. Let me make two points now. First, those arguments were misplaced then. There is no hard evidence to support them. They are misplaced now. Secondly, we were right then about the principle of student loans. We are right now about the principle of this Bill. Opponents, I hope, will again come round to see that we are right.
This should not be a controversial Bill. It has no downsides for anyone—student or taxpayer. It enables us to test the market for a realistic development of our successful loans scheme. There are valuable opportunities here for the private sector and for students. I trust that they will take them up.
I commend the Bill to your Lordships' House.
Moved, That the Bill be now read a second time.—(Lord Henley.)
6.26 p.m.
Lord Morris of Castle Morris: My Lords, the House should be grateful to the Minister for introducing the Bill. I wish to congratulate him on the very professional way in which he has done what seemed to me a rather tricky job.
We have heard with a sense of enormous relief and release, (as my honourable friend emphasised in another place) from the Secretary of State this afternoon of the setting up of a committee under Sir Ron Dearing to

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examine the whole of higher education, and all our thinking on this Bill—to which I shall confine myself—has been transmogrified by the new gleam of hope that it may quite possibly never reach the statute book. But even when asked by my honourable friend the Member for Sheffield Brightside, the Secretary of State did not offer to withdraw the Bill, or give any prognostications of its future. So we must perforce proceed to consider it, even though the debate now, and perhaps later, will resemble nothing more than the morbid anatomy of a dead duck.
There are three questions that we must ask. Where did the Bill come from? Do we need it? Will it work? To begin at the beginning: where does it come from? Did students call for this Bill? No. Did vice-chancellors rise up and demand this Bill? No. Did the banks and building societies cry out for it? Certainly not. Did even the gurus, spin doctors and think-tank warriors of the Conservative Party recommend it? Quite the contrary, as I shall demonstrate. Whence came it, then, and where was it conceived? It was begotten by the Chancellor of the Exchequer, upon the Treasury, and it was brought forth in panic.
This Bill was inspired by the Chancellor's pre-Budget scurrying to find room for tax cuts. Ministers were attracted to the proposal because they believed it would remove some £.1.8 billion from the PSBR, including £100 million in the first year of the scheme's operation. Those sums have already gone out of the window. The Government's eagerness to have the scheme in place for the autumn, and therefore to rush this Bill through Parliament, was based on a false premise: they naively believed that the banks would jump at it. Will they never learn? When the banks were consulted before the Student Loans Bill 1990, the noble Earl, Lord Caithness said:
"We saw some advantage in making the expertise and the branch network of banks available to help with administration of the scheme, but the banks decided that there was no commercial benefit for them".
They said it in 1990; and they have said it again. The chief executive of the Midland Bank, in a letter to the President of the NUS made it absolutely clear. He said:
"We were unable to resolve a number of concerns on such issues as administrative complexity, risk identification, profitability and customer reaction. We therefore advised the government that we did not wish to be invited to join the current formal bidding process".
He spoke for many others when he said that. I hope that Sir Ron Dearing will not be impenetrable to the trumpet blast of truth from the banks and building societies. And yet the Bill ground its way through the procedures of the House of Commons until on 14th December the Minister of State had to announce, only two days after rejecting an amendment to delay implementation by a year, that it would be best all round if he delayed implementation by 12 months—and after today, probably by another 12 months. He told the Standing Committee that that was because the financial institutions needed time to adjust their information technology and because there was merger activity in the building society sector. My Lords, if you will believe that, you will believe anything.
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Since then it has all gone horribly quiet. When he announced the delay, the Minister promised a new timetable for the tendering process "probably in the next few weeks". On 9th January, he said:
"We expect expressions of interest by the end of January and bids by Easter".
At Report stage, on 17th January, he told the Commons:
"I believe it proper that we should now aim at the period of tendering, invitation and finalisation of contracts ending at the mid-point of 1996".—[Official Report, Commons, 17/1/96; col. 811.]
Yet there is still no sign of a revised tender document. This does not suggest that the Minister's life is being made a misery by the constant interruptions of bankers knocking on his door.
However, the Government must have felt that Pelion was being piled upon Ossa when, earlier this very month, the Conservative Political Centre published the report of the CPC National Policy Group on Higher Education, entitled The Future of Britain's Universities. It is a serious and deeply researched report. It takes a wide view and it proposes many sensible developments in matters like diversity and easier access, and university funding. We in the Labour Party have read it carefully, with interest and profit. I commend it to any of your Lordships who may not have secured a copy as a powerful contribution to the debate, from the Conservative side.
We were particularly interested in its proposals for funding students which are to be found on pages 15 to 19. We read:
"Increased student hardship, combined with the current loan scheme, is proving a deterrent to entering university".
Not my words, but the words of the Conservative report.
"The Policy Group believes that the present loan scheme should be replaced, as soon as possible, by a more effective system".
The report offers what it regards as a superior model to the "mortgage repayment system":
"an income contingent loan repayment scheme—is not based on fixed equal payments, but on varying amounts, based on a given percentage of income above an agreed minimum level. Repayments can, therefore, be spread over a much longer period of time, say 20 years, requiring smaller repayments in the early years, thus lessening any deterrent to going on to higher education. Such schemes are best 'piggy-backed' on national income tax or national insurance schemes, as this minimises both the cost of administration, and the default rates. It is relevant to note that both the US and Canada are beginning to use income tax in attempts to recover defaulted loans".
Not my words, but the words of a Conservative Party think-tank report. It bears remarkable similarities to the scheme preferred by the CVCP, approved by the NUS and proved to be successful in the schemes introduced in New Zealand and Australia so long ago as 1989. It is precisely the sort of scheme we in the Labour Party have been urging the Government to adopt. The letter attacking the ICL system from the Department for Education and Employment to the CVCP, dated 15th February, came my way. I read it and it is, at the very best, a feeble attempt at a miserable rejoinder and I believe that it has left the vice-chancellors profoundly unimpressed by the case it tries to make. At all events, it is clear that the Bill comes from nowhere but the Treasury and that all responsible bodies, right across the

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political spectrum, regard it as unnecessary because a better alternative, tested in the Antipodes, is staring us in the face.
My second question—"Do we need this Bill?"—is answered by the same evidence. We do not need it because we can do better. But we do need to be clear about the principles on which any fair scheme for student funding should be judged. I hope that the Dearing committee will be encouraged to think long and hard about the principles underlying student funding so as to avoid the specious seduction of a Treasury-inspired scheme.
The Labour Party has been engaged for some time on a consultative exercise on the subject and I commend the four clear principles on which we have worked to the Government, to Sir Ron and to your Lordships' House. They are these. First, the student funding system should encourage access to higher education for people from all social backgrounds. Secondly, it should protect and enhance the quality of higher education. Thirdly, it should not discriminate between different types of student. Those studying part-time and students over the age of 50 have needs as great as and sometimes greater than younger or full-time students—to say nothing of students in further education. Fourthly, it must be fair both to students and to the taxpayer. It must therefore be an efficient and progressive system and one which eliminates the present blight of student hardship.
On that fourth principle, may I point out that subsidising private lenders to the tune of £1,500 per loan—an estimate which Ministers have pointedly failed to deny—is clearly neither fair to taxpayers, nor efficient. The noble Lord, Lord Beloff, made the point during a debate in 1989 in words that have rung down the decade. He said:
"A fishmonger sells fish; that is his business. A banker lends money, that is his business. One does not have to bribe a fishmonger to sell fish but apparently the government have to bribe the banks to lend money. Could we get further into absurdity?"
His words are as true now as they were then.
The Bill, as we have it before us, unimproved by any of the amendments so clearly put and so cogently argued at the Standing Committee of another place, is unnecessary and irrelevant to the needs of students. It has been so overtaken by the flood of events consequent upon the Budget as to make it outdated and bypassed by this afternoon's events and the Statement by the Secretary of State which makes it quite clear that responsibility for the present crisis in higher education rests firmly with the Government.
My third question was: "Will it work?" The answer is equally clear and I shall list only a few of its deficiencies and leave the expounding of others to my noble friends. First, the Bill, Ministers tell us, is designed to increase the choice available to students. It will not suddenly provide them with more money for food or books and it will not relieve the problems caused by the student loans system's repayment mechanism. But it will provide students with a choice between having the logo of the Student Loans Company or the logo of a bank or building society on their loan
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application forms. It is nothing more. Ministers will have to forgive students if they receive news of that liberation with only modified rapture.
The real choice the Bill would provide is the right of financial institutions to choose those students who seem most likely to be profitable customers later in life, leaving those rejected to be dealt with by the Student Loans Company. The SLC would have no choice but to see its unit costs pushed up and its ability to forecast demand—already identified as a problem by the National Audit Office—diminished even further.
The Bill will not work unless it offers students a higher degree of security. Students taking out private loans would fall outside the protection of the independent loans assessor. The Minster of State tried to assure the Standing Committee in another place that they could turn to the banking ombudsman for help. Unfortunately, he had failed to read the ombudsman's terms of reference, which preclude him from such involvement. This House will therefore need to examine further the need for a proper appeals mechanism, and how we might give some protection to the privacy of loan applicants.
Vice-chancellors have also pointed out that the Bill perpetuates the anomaly which means that their institutions are paid less for certifying students' eligibility for loans than the system costs them to administer. They have been unhappy enough about subsidising the Student Loans Company: they will be even more unhappy if, while being forced to charge new students £300 each, they are made to subsidise profit-making concerns. Without their co-operation the Bill might prove difficult to administer. But, above all, it will not work without the willing co-operation of the banks. And, despite all inducements, there is no sign of this yet.
It will be difficult, at Committee stage, for us to put forward amendments to improve this Bill to any great extent. It is ideologically and implacably based on the wrong premise. The income contingent loan repayment scheme is simply better than this mortage repayment model. Every serious commentator agrees about that. The Government should have realised, after rushing the 1990 Bill through and watching the disastrous start of the Student Loans Company, which Sir Eric Ash had to rescue, that they were backing the wrong horse. But no. In the panic to reduce the PSBR they forced this miserable measure on us. If it goes through, it will be a failure. My advice to the Government, in the light of the announcement by the Secretary of State this afternoon, is, even at this late stage, withdraw it. Scrap it. Take the advice of the good old English proverb: if at first you don't succeed—give up!
6.40 p.m.
Lord Tope: My Lords, it is always a daunting prospect to follow the noble Lord, Lord Morris of Castle Morris. On this occasion it is even more so, since the noble Lord made, so much more eloquently than I could, many of the points that I intended to make. Like the noble Lord, I congratulate the Minister on his deft handling of the opening reference to the Statement in

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another place this afternoon. He had anticipated that much of our debate would perhaps be based around that Statement. Noble Lords may see it as some incentive if, by putting 20 or more names on the list of speakers, we can provoke the Government into setting up a long overdue committee of inquiry. The Opposition at least may wish to consider that tactic further. I do not intend to fall too far into that trap.
We welcome the committee of inquiry, not least because it is at last a recognition by the Government that something needs to be done about higher education and the funding crisis that it faces. Our concern is that the proposed committee of inquiry is not due to report until the summer of 1997 when there is a crisis that needs urgent and immediate action. Frankly, it cannot wait until the summer of 1997 (or in reality some time after that) when the inquiry report has been properly considered. For all those reasons, while welcoming the inquiry and the light that is now to be shone onto this major and important area, we regret that it may well mean the cancellation or postponement of much-needed action.
I agree with the CVCP that the Bill is "an irrelevant distraction". The comment was made on the basis that the measure does nothing to address the funding crisis in higher education or the problems of student poverty. The committee pointed out that with increasing numbers of students and a reducing amount of funding in real terms there has been an actual reduction of 28 per cent. per student in recent years. That problem needs addressing urgently; the Bill does nothing whatever to address it.
There is already a one-year postponement, for reasons mentioned by the noble Lord, Lord Morris, in the implementation of these proposals should the Bill be enacted. And the committee of inquiry will take a further 15 months to report. If the Bill was an irrelevant distraction before today, it is even more so now.
I had a faint hope that this afternoon, given the announcement in another place, the Minister might stand up and withdraw the Bill. I certainly believe that he should have done so. There is still time for that to be done in the closing speech after what I still believe will be a very useful and interesting debate. I hope that in that speech the Minister will address the much wider and extremely important issues of the funding crisis in higher education and student poverty.
Student poverty is well documented. Many Members present will be able to speak of it with greater knowledge and experience than I. Certainly, the increasing stresses on students are well known, as is the drop-out rate among students. Sadly, even the suicide rate among students is increasing. When they are asked about the reasons for stress, financial concerns are overwhelmingly the most quoted single reason. It is not the only reason but overwhelmingly the most quoted. Those reasons are greatest among mature students, yet the Bill does nothing to address the difficulty. Students increasingly have to spend time earning, not learning. The Bill will do nothing to help prevent that.
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The noble Lord, Lord Morris, asked who wanted this Bill. Certainly there was no prior consultation before the announcement of the Bill—a point made by the CVCP. As the noble Lord, Lord Morris, said, it is not wanted by the universities; it is certainly not wanted by students; and, it appears, it is not even wanted by the financial institutions. I am forced to the conclusion that the only people who may have wanted the Bill are those better-off parents who can afford to invest a low-interest student loan to attract a much higher rate of interest. That is not the business we should be in.
If the measure is to go ahead, a number of important questions need to be answered. The noble Lord, Lord Morris, raised many of them. I echo those points and look forward to hearing the answers later this evening. The Minister said that a number of financial institutions had expressed interest in these measures, and that four will eventually be chosen. Will he tell us which are the institutions that have expressed interest? We have certainly heard quite a lot from all the institutions that have not expressed interest, and they have been very clear as to why. I should like to hear about those that are allegedly interested. I want to know whether arrangements to be reached with them will be subject to parliamentary scrutiny. It appears from debates in another place that that is not to be the case. But, surely, any arrangements to be made for dealing with public money should be subject to parliamentary scrutiny. Perhaps the Minister will respond to that point.
Is there to be a publicly stated limit to the subsidy that will be paid to the institutions? Or, as the National Union of Students suggested, will they receive a blank cheque? Reference was made to the fact that postponement of the implementation of the scheme has left a deficit of 100 million in the education budget for this year. How is that deficit to be funded? There is understandable concern in the education sector that it will be funded still within the education budget by making further cuts somewhere else. Will the Minister tell us how the apparent £100 million gap is to be funded? Will he confirm that it will not be funded by cuts elsewhere in the education budget?
Will the Minister tell the House what measures, if any, are to be taken to help with the very real, recognised problems that part-time students, graduate students and the over-50s have in funding? These are all important issues. Yet they are not addressed at all in the Bill and the scheme before us. I hope that in replying the Minister will comment.
I accept, as does my party, that it is reasonable for government at least to consider transferring some debt, and the associated risk, from the PSBR to commercial lending organisations. But it is important that any such a scheme must be equitable for students, and reasonably secure for lenders to be able to offer funding on that basis. The scheme before us today is neither. The present loans system is flawed. Its flaws are well known and well described. It is ludicrous to be transferring that flawed scheme to the private sector. For those reasons, we oppose the Bill.
The criticisms of the Bill are well known. I referred to its limited eligibility. Postgraduates, over-50s and part-time students, who now comprise 28 per cent. of

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the student body, are ignored in the proposals. The arbitrary time limits proposed for repayments will undoubtedly cause hardship. There are inadequate arrangements for repayment.
The scheme is not an equitable or efficient basis for funding student living. It is more costly and less efficient than if done through national insurance or the tax system. There has been mention of experience in New Zealand and Australia. We should certainly examine that scheme. I hope that Sir Ron Dearing's inquiry will do just that. This sort of partial privatisation does nothing to address all the serious shortcomings. As the noble Lord, Lord Morris, said, it simply represents a dogmatic approach and will do nothing to solve the problem.
The Liberal Democrats will tomorrow be announcing the party's proposals for further and higher education. I could not possibly anticipate tonight what is embargoed for 10 o'clock tomorrow morning.
Lord Graham of Edmonton: Go on!
Lord Tope: I simply offer a few personal views. Far be it from me to break an embargo. There are some principles to be mentioned. We need to see a system developed that addresses the current problems of student poverty and the inadequacy of support for part-time and mature students. We need such a scheme. The scheme should meet the criteria suggested by the CVCP, which say that,
"it must be simple; it must provide students with adequate support while they study; students must be able to be certain of receiving this support and the scheme must satisfy the requirements of social justice".
The Bill before us fails on all those counts. We need a new learning investment partnership where the key stakeholders (we are not afraid to use the expression; indeed, we think we thought of it first) in education—the Government, the employers and the individual learners—contribute fairly and equitably to the cost. The Bill achieves none of those objectives. In view of the Statement made in another place today the Bill should be withdrawn tonight and certainly does not deserve a Second Reading.
6.50 p.m.
Lord Dainton: My Lords, when I put down my name for this Second Reading debate, I did so on the basis that it would be an opportunity—possibly the only opportunity in the near future—to draw attention to the crisis in the state funding of higher education in this country. That is something which your Lordships' House, with its abundance of Members well qualified to speak with knowledge and authority, should debate.
We now know that there is to be a committee of inquiry to begin at Easter and finish by the Summer of 1997. I understand also that there is to be a debate, on the suggestion of the noble Lord, Lord Annan, on 6th March. If that is a possibility, it should go ahead for the simple reason that it would be to the advantage of the committee's deliberations to have some of the views of this House and some of the points emphasised as they have been this evening, not only about the student loans
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Bill, but about the wider issues. No committee can afford to neglect any opinion at its beginning, as it should not during its proceedings.
In those circumstances, I shall confine myself narrowly to the student loans Bill in front of us today. If enacted, it would empower the Secretary of State to make financial grants to private sector financial institutions which, in turn, would make loans to students and presumably recover them.
I am in no way opposed to student loans; indeed, if I had not received one 62 years ago from my local authority to augment my college awards I would have had to withdraw from Oxford. Moreover, I have always taken the view that higher education confers a "private good" on the individual who enjoys it no less than a public good on the society to which he or she belongs. The private good comes in the form of the enhanced life chances which a graduate has compared with contemporaries who miss a university education. It is also a "public good" because well-educated citizens make greater contributions to the common weal.
When I was chairman of the University Grants Committee, I foresaw that the legislation introduced as a result of the recommendations of the Anderson Committee—now nearly 40 years ago and which most people in this House have probably forgotten—which provided that all students accepted by UK universities who had a residence qualification in this country, not less than two A-levels and who had been accepted by a university would be entitled to a means tested maintenance grant, while being a tolerable arrangement when the age participation rate was small, could well prove to be financially insupportable when the age participation rate reached 20 per cent. or more, as it is now. Therefore some form of loan scheme would be inevitable. For that reason I raised no objection at the passage of the original arrangements for making loans to students, but I was disappointed—as were other noble Lords—with the performance of the body initially set up. As we heard, Eric Ash had to rescue it from its poor if not maladministration.
The noble Lords, Lord Morris and Lord Tope, made many of the points I intended to make and I shall therefore restrict myself solely to practical matters on whether or not the Bill is passed. Whatever is the case, it will merely mean either that there is one body, the Government, or two bodies—the group of financial institutions who enter into the scheme—administering it. For both of them it is essential that the loan scheme should be inexpensive to administer and should encourage, not deter, good but poor students from entering universities. The Bill before us sheds no light on those matters, though I hope that the Minister will do so in his reply.
We all know that the major disincentives to students entering higher education relate, first, to the combined level of grant plus loan which is set, and the terms of repayment of the loan. We know the terms of repayment of the existing scheme; but we know nothing at all about the new one. Therefore, what the financial houses will arrange and agree with government as to their terms is something of a pig in a poke; unless it is the intention

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of government—we do not know this—not to scrutinise those terms in any degree but to give a blank cheque to the financial houses regardless of how they administer it. I hope that that is not the case.
If the grant plus loan is not big enough, the student will be discouraged and give less time to his studies by seeking and engaging in part-time work. That is a new development in our universities to which I do not entirely object. However, I fear that it may have excessive and deleterious effects on the progress of students. If the terms under which the loan is granted include a requirement to repay shortly after graduation, as does the existing scheme or the one that I had to endure did, similarly, good students will be deterred.
As was mentioned, it is ominous that, though the size of the 18 year-old group was larger in 1995 than the year before, applications to the universities in that year decreased by 1.5 per cent. I do not know whether that is the beginning of a trend or just a blip. I suspect that it may affect the older students entering our universities who have had their older student allowance withdrawn and therefore find themselves even more strapped for money.
I am very much in agreement with the Committee of Vice-Chancellors and Principals that some applicants will be deterred by the prospect of an additional financial responsibility which they would have to face early in the first years of employment. I expect that that will remain the situation even with private financing. That is a situation which is particularly acute with doctors who are dealt a "double whammy". Their much longer courses—five-and-a-half years, sometimes six—and their inability to earn in the last three of those years means that they find themselves entering the medical profession with a debt in the order of £5,000 plus. That is a considerable amount.
It has already been mentioned that the income contingent debt collection through tax or the national insurance scheme avoids many difficulties for the students. Because it removes the disincentive it ought to be seriously considered. If that can be accommodated with a private scheme, so be it. However, it seems to me that it has not been given the consideration that it deserves. I urge the Government to think again at least to see whether it can be incorporated into what one may call the residual scheme, which is a continuation of the exiting scheme.
I promised to be brief and I shall be. I turn now to the students' point of view. Students will not be particularly concerned where the money comes from—the source is of little importance to them—but they will be intensely interested in the conditions of the loan and how the debt is to be repaid. I can find nothing in the Bill or indeed in the previous Act, apart from the condition of beginning to repay as soon as one has graduated, apart from certain exceptions which relate to the practicalities of the loan and recovery.
I shall be interested to know whether the Minister can at the end of the debate—I apologise to him publicly as I have done privately for the fact that for illness reasons in my family I have to leave early and will certainly not
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be able to hear his response—assure us that, although the financial houses will of course be seeking a profit from any scheme—otherwise they would not go in for it—the administrative costs of private sector student loans will be no higher than public sector student loans are at present.
I heard the Minister say that the arrangements will be audited. I hope that he can give us the assurance I have asked for and say in particular that for every £1 million which the Government spend in this way at least as many, and preferably more, students will benefit from financial house arrangements than is the case at present. Otherwise, I cannot see any possible justification for this new system.
I also ask for consideration to be given to the burdensome and expensive nature of the work which the universities have to do now in responding to the existing scheme, which I do not see will be diminished in any way by going into the private sector. Can he assure the House that the Government's mind is not closed to income contingent schemes—that is of vital importance to students—and that some special consideration will be given to the plight of medical students.
Finally, can a place be found in the Bill or in the schedule relating to the administration of the scheme which meets this point and makes sure that this House fully understands what it is the Government intend to do in practical terms? The lack of information within the Bill makes it very difficult indeed to make an assessment as to its desirability or otherwise, though I have indicated what my own preference is. I hope that the Minister will be able to give us some assurance on these points.
I conclude as I began by simply saying that I found some of the points made by the noble Lords, Lord Morris and Lord Tope, very moving and very convincing indeed.
7.2 p.m.
Lord Williams of Mostyn: My Lords, I declare an interest. I am pro-chancellor of the University of Wales. My immediate predecessor was my noble friend Lord Cledwyn of Penrhos and until quite recently the president of the university council of the University College of Wales, Swansea, was my noble friend Lord Callaghan of Cardiff. My noble friend Lord Cledwyn authorises me to say that I speak for both of them as well as for a much larger constituency in the University of Wales.
It is a peculiar institution in the life of Wales since it was Prifysgol y Werin, the People's University, started on small donations of modest people, colliers, slate workers, school teachers and ministers of religion. It has a strange focus of affection therefore within the land of our country. I have never known morale to be so low among the vice-chancellors, those who teach, those who research, and those who study in the university. There is a deep, bitter, corrosive sense of anger. They are weary of no consultation. They are tired of delay and dissembling.
The Minister urged us to attend only to the Bill. Well, it would it not take long, would it? What was it that Senator Mondale said? Where's the beef? I cannot even

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see the crust in this Bill, let alone the beef. All it says is that the Secretary of State may make financial arrangements about student loans. What arrangements? On what basis of public scrutiny? To what effective policy or practical purpose? What are the four institutions in Wales that are thrusting themselves forward to offer these loans? What is the sensible purpose, in the conduct of academic life, to have this dual occasion—a consultation paper put out this afternoon elsewhere and in effect a two-and-a-half line Bill here? Is it simply coincidence that when the Government have no leg to stand on they look for a crutch called "consultation paper"? It seems to happen rather often now, does it not? Would any proprietor of a self-respecting though small chip shop run his affairs in this way?
These are too important matters to be dealt with in this cavalier fashion. If the funding of further and higher education is to be dealt with on a rational basis, by all means have a committee of inquiry but let it be a committee that is to report and whose findings and conclusions will be attended to as part of an overall project, and a committee which takes an overall philosophical view of how we pay for further and higher education, what it is for, and what we hope to offer those who work and study in it.
I said, accurately I believe, that I had never known morale so poor. I have never known such bitterness of feeling among people who are normally very slow to express bitterness. The vice-chancellors and others have borne a very heavy load in the heat of the day for a long time. In the end, if you treat people with no consideration, no consultation and no decency of respect, what you end up with is resentment. Resentment is no useful basis upon which to run a university system.
Baroness Carnegy of Lour: My Lords, before the noble Lord sits down, he referred to a Statement in another place. Does he appreciate that his own party refused to take the Statement here? That is why we did not discuss it. He wanted the Statement to be on a big enough subject. Does he appreciate that the Statement says:
"We propose to invite the committee to make recommendations on how the shape, structure, size and funding of higher education, including support for students, should develop".
Does that not meet his requirements?
Lord Williams of Mostyn: My Lords, I am happy to deal with both of those points. I was present when my noble friend Lord Graham of Edmonton indicated to the noble Lord, Lord Boyd-Carpenter, precisely what had occurred this afternoon. If the noble Baroness was not then present, I regret it.
Baroness Carnegy of Lour: I was.
Lord Williams of Mostyn: The question therefore answers itself. In response to the second question, of course it ultimately meets my suggestion. What I complain of on behalf of many people in university life is that there is no coherent strategy and that one has a penny packet here and a half crown packet there. I repeat, without hyperbole or exaggeration, that there is deep resentment at the present time in university circles.
7.8 p.m.
Lord Renfrew of Kaimsthorn: My Lords, your Lordships may remember that it is almost exactly three years since this House, on 17th February 1993 to be exact, debated a Motion set down by the noble Lord, Lord Addington, to call attention to the financial difficulties of students, and the matter of student loans was then extensively debated. I made the observation then that the matter needed to be reviewed. More than five years ago, at the Second Reading of the Further and Higher Education Bill in November 1991, when supporting the Government's plans for expansion in the higher education sector, I went so far as to invite Ministers,
"to be wary of the several pitfalls which lie ahead",
and referred to the need to ensure
"that the existing universities are not suffering: that this is a case of levelling up rather than levelling down".—[Official Report, 21/11/91; col. 1068.]
Today they are suffering, and it should have been obvious to anyone that they would suffer if student numbers were increased without a commensurate increase in funding. The per capita funding has been reduced very significantly in real terms over the past four or five years by something of the order of 28 per cent.
The present crisis in the universities is in fact a double crisis which may soon become a catastrophe, perhaps even before the summer 1997. The first horn of the dilemma is the unsatisfactory nature of the student loan scheme itself, aspects of which we are debating today—that is to say, the manner in which student maintenance is funded. The second horn of the dilemma is the funding of the universities, in particular the failure of the tuition fees, which are payable at a level in effect set by the Government, to keep pace with inflation. As your Lordships may well know, that means that several universities are now reported to be on the brink of bankruptcy and the CVCP is contemplating the imposition of a £300 so-called "entry fee" on new students. That is unwelcome and undesirable, but it is difficult to see what alternative the Government have left the universities with. But from the student point of view it is potentially catastrophic. The issue of maintenance—that is to say, student loans and all that—now collides with university funding; namely, tuition, through the whole issue of top-up fees. That is why the issue of university funding is very pertinent to the discussion of student loans today.
The present Bill regrettably does nothing to address these problems. It simply seeks a means to transfer the administration of debt and debt recovery from the public to the private sector. One is reminded of the dictum of President Calvin Coolidge on war loans, "They hired the money didn't they?" We shall now be able to say of my right honourable friend the Secretary of State for Education and Employment, when she transfers these dubious assets to the private sector, "She rented the debts, didn't she?"
Underlying it is a very serious problem; that we risk denying access to higher education to whole sections of the population who do not have ready access to private

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means, and that is the nub of my remarks this evening. At present many students who are in receipt of maximum maintenance grant from their local authority must make up their finances in a number of ways; first, by the student loan; secondly, by access funds to the extent that these are available to them; thirdly, by a grant from hardship funds in college, if they are lucky enough to be in a college with hardship funds; fourthly, by a bank loan—it is estimated that already a high proportion of students take out a bank loan in addition to the official student loan before they leave university—and finally, by whatever they may be able to pick up from their parents. All this is in addition to vacation work and increasingly to work undertaken during term, generally to the detriment of their studies.
Some of these anxieties are felt in Cambridge as elsewhere. Perhaps I may speak for a moment about student difficulties in my own college and university. Here I should declare an interest as a professor of that university. Cambridge colleges are under just the same pressures as the universities since college fees have failed to keep up with inflation in just the same way, and once again there is talk of top-up fees.
Those of us who believe with commitment in what has hitherto been an excellent system of higher education, believe also that it must be open to all those with the relevant ability. We are trying hard in Cambridge to increase the number of applications from the maintained sector. There is an admirable scheme entitled "Target Schools" organised by the Cambridge University Students' Union, to encourage applications from those groups of school leavers under-represented at Cambridge University. Many students go out from many colleges to schools to try to persuade students in those schools that they would do well to apply to Oxford or Cambridge—in this case to Cambridge—because they will have a good chance of entry. We all feel that it is important to the future of the University of Cambridge that there should be wide access.
We are trying hard also to increase the number of applications from members of ethnic minorities. The GEEMA scheme, that is, the Group to Encourage Ethnic Minority Applicants, is trying very hard to encourage more applications because it is perfectly clear that if we do not have more applications we shall not have more admissions.
It is clear to us that the current student loan scheme is having a deterrent effect upon many potential applicants, especially from the maintained sector, and unfortunately from those of lower income backgrounds. It is not really surprising that the prospect of a loan, which for entrants in October 1996, by the time they graduate, will be of the order of £4,200; of the order of £5,600 for scientists; of the order of £7,000 for medics and of the order of £8,400 for architects and vets, without allowing for further inflationary increase, may have a deterrent effect.
For more than three years, and probably much more than that, Members of your Lordships' House have been urging that the alternative income contingent graduate tax approach should be explored. I believe that is what we have heard from every speaker this evening so far.
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It has worked well in a number of ways in Australia and other places. It pains me to quote this observation, but I am afraid that I have to do so. It was said in today's Guardian that the Government are reluctant to contemplate any kind of new tax before the next election. Perhaps that unworthy assertion was belied somewhat by the Government's evident reluctance to consider it either before or after the previous election. But there is something wrong somewhere in the Department for Education if it takes more than three years for a proposal of that kind even to be considered seriously when it has been urged on it from all sides of your Lordships' House. Moreover, there is something wrong when successive Secretaries of State have failed to address the problems of higher education or to take seriously the problems of students in higher education in the manner which I have been describing. I am not saying that the student loan scheme lacks merit. It has many merits, but the noble Lord, Lord Dainton, has already indicated some of the constraints. Many of these difficulties would be alleviated if there were an appropriate income contingent scheme.
Three years ago, in the debate initiated by the noble Lord, Lord Addington, I agreed, as most would agree, that self-financing is here to stay, and I called then for a government review. I said:
"However it must be a self-financing system that does not introduce the deterrent element, for I fear that there is a real danger that our fine record in developing and maintaining a higher education system open in practice to all—that is, to all students suitably qualified—may not be sustained. It would be a sad day if university education in this country were felt to be available once again only to those with the means to afford it".—[Official Report. 17/2/93; col. 1156.]
That was three years ago. For the Secretary of State to announce today a review is in my view simply not good enough. To have allowed these problems to build up when they were as plain as a pikestaff three years ago to anyone who has any experience of higher education, cannot be described as far-sighted government.
I am sorry that it falls to my noble friend Lord Henley to answer these observations this evening, although he has already been good enough to say that he does not intend to answer them. It is true that I have gone a little beyond the mechanisms of funding, but since he was good enough to introduce the matter of the ministerial statement in another place, I hope that he will not object to my alluding to it even if I am not certain that I shall hear more of it in his winding-up remarks.
He is relatively new to his present ministerial position and I do not wish to be in any way critical of him. But changes of government minister or indeed changes of Secretary of State, cannot mask a deep-seated and enduring failure in the Department for Education to think coherently about problems which were as obvious three years ago as they are now. Inactivity and, I have to say, failure to see the obvious, does not become any less reprehensible with a change of Minister.
I wrote these remarks this morning before today's announcement. Nonetheless I shall read them because I fear that they have a bearing underlined by the Statement made in another place. To announce an inquiry after years of neglect is simply to compound the

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problem. To tinker about with the financial infrastructure of the student loan scheme, as the present Bill does, is simply fiddling while Rome burns.
I have to say to your Lordships and in particular to my noble friend on the Front Bench—I prepared these remarks this morning—that to announce an inquiry that will defer any solution to the problems until after the next election will be an abdication of responsibilities. It is clear to us that the student loan scheme is having serious deterrent effects. Although we welcome the thorough-going review which will be conducted by Sir Ron Dearing, we are told that the report will not be published until the summer of 1997. So what happens meanwhile? Eighteen more months of what one might describe as "planning blight"? In my view, that is not good enough. Damage is being done now to the higher education system and the Bill does nothing to rectify it.
7.20 p.m.
Lord Sewel: My Lords, I start by declaring an interest as Vice-Principal of the University of Aberdeen. The debate this evening must be coloured by the Statement made today in another place. That Statement allows me to be somewhat kinder in my remarks than would otherwise have been the case. It is right that the Government, if somewhat late in the day, have recognised the case for a thorough review of higher education. However, I am inclined to observe that the only consistent theme of government education policy that I can detect is first to create a mess and then to send for Sir Ron Dearing to clear it up.
The question that remains is: why do we need the Bill at this stage? If it goes through and the Government implement it, it will set up arrangements, contracts will be put in place, and very likely they will be put aside virtually as soon as they have been entered into. What a mess. What penalties will fall on the public purse if those contracts are put to one side? Why tinker with a loans system when the Government acknowledge that something far more comprehensive and far more systematic is needed? The Bill has been overtaken by events, and the Government should recognise that.
It is difficult sometimes to realise how radically higher education has changed in recent years. Since I was an undergraduate 30 years ago, higher education has been transformed from basically an elite system (where about 7 per cent. of the age group attended university) to a mass system, with about 30 per cent. now benefiting from higher education. But it has been done on the cheap. Many noble Lords have already referred to the way in which the unit of resource for teaching has been cut by 27 per cent. since 1988. That is the fundamental problem. It stems from the fact that a system of funding which could support an elite system is incapable of supporting a mass system of higher education. We have to confront that problem, and I hope that the Government will confront it via the review.
We have reached a stage where British higher education, which for so long has enjoyed a reputation for academic excellence, is in danger of falling apart—not of fraying at the edges, but of actually falling apart. Perhaps I may illustrate that point by reference to my
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own university. A recent survey of students at Aberdeen reported that 17 per cent. of all students, including those who have just come through the door, had debts in excess of £4,000; that 19 per cent. had considered withdrawing from their courses for financial reasons—what a waste of public investment that would have been—and that 39 per cent. had part-time term-time employment. That reliance on part-time employment has seriously degraded the student experience. All too often, late-night employment in pubs and clubs—those are often the only places in which such employment is available—leads to lack of concentration in class, and work suffers.
However, it is more than that. I am perhaps old-fashioned enough to think that many of the advantages of a university education are gained through participation in activities beyond the formal teaching experience. We are now getting to a position where many students find it impossible to become members of clubs and student societies. It is often difficult to get an audience of undergraduates for distinguished visiting speakers because they are packing shelves in supermarkets late at night. I do not think that that is the way forward.
At my university one of my responsibilities is in the area of staff recruitment. It is becoming more evident by the day that we are simply not paying our staff enough to recruit the best. Since 1988 academic staff salaries have fallen in real terms. I think that that is the only professional group for which that is the case. Given that, it is becoming increasingly difficult to attract and retain high quality staff, especially in areas such as accountancy, the law and economics where we are in direct competition with the professional salaries in the private sector.
Like other universities, Aberdeen responded to the Government's call to expand student numbers. Since 1988 we have expanded from 5,966 to 9,300 (full-time-equivalent) students. In 1988 we received £5,887 per student for teaching. If that had kept pace in real terms, it would now be £8,595; but it is in fact £5,127—an actual cash reduction. For my university the total funding gap that has opened up as a result of those policies since 1988 is that we now receive £11.5 million less per year.
Of course, with the expansion of student numbers, economies of scale are available. Nobody would deny that. It is also reasonable to look for efficiency savings. However, the scale of the reduction in funding has gone way beyond anything that could be considered reasonable. It is directly impinging on the way we teach our students—and impinging adversely. At Aberdeen, the staff:student ratio, excluding medicine, has moved from 13:1 in 1988 to 17:1 today. In my own faculty many of the departments for which I am responsible are facing staff:student ratios of 20:1. That is taking place at a time when teaching quality assessments are urging upon us the advantages of, the need for, and the benefits of small group teaching. How can we do that? How can we square that circle?
If we are to maintain a higher education system of which we can be proud, and if we are to avoid short-changing our staff, our students and ultimately the

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employers of our graduates, we need a thorough review of the funding of higher education. Unfortunately, when measured against that task, the present Bill is a distraction and an irrelevance.
7.29 p.m.
Lord Flowers: My Lords, I should first declare that I am Chancellor of the University of Manchester, that I am still closely connected with higher education in London, and that I am President of the Association for (Further Education) Colleges. Although I do not speak for any of them this evening, no doubt that experience will colour what I have to say. I was deeply moved by the speech of the noble Lord, Lord Sewel, but I shall not follow him.
The Bill is intended to provide alternative sources of funds for hard-pressed students in higher education. To that extent I support it. Like the noble Lord, Lord Dainton, I do not object to loans in principle. Whether the Bill can succeed where the Government's previous attempt failed remains to be seen. More to the point, however, it provides a partial privatisation of a scheme of student loans which has already been seen to be seriously flawed, and it does so in the context of financial arrangements for higher education as a whole that have become dangerously inadequate.
The present loans scheme is deficient because it does not provide an adequate basis for funding realistic living costs. It is deficient because it is limited to students under the age of 50 who meet the standard residence rules, so that, for example, part-time students (almost 30 per cent. of those nowadays attending higher education courses) are excluded. The lack of attention to part-time students, in further as well as higher education, is increasingly difficult to understand, and I would like to invite the Minister to ask his department specifically to re-examine the funding of part-time students.
The present scheme is deficient because it requires repayment from students over a short five-year period at the beginning of their careers (if they are lucky enough to find jobs), which means they have to bear a disproportionate burden early in their working lives. Indeed, the prospect of a persistent debt of many thousands of pounds, we have heard more exact figures than that, is already beginning to deter students from entering courses of higher education. And the scheme is costly for universities to administer, because they are not fully reimbursed for processing loan certificates.
The universities have pointed out many times that those deficiencies could be overcome if the Government would only adopt an income-contingent loan scheme which would link repayments directly to an individual's ability to pay. The noble Lord, Lord Morris of Castle Morris, referred to that, and I am happy to be able to leave the details to him. As the Australians have shown, it could be done through income tax or national insurance. That would avoid a predetermined repayment period, it would provide the borrower with a good measure of protection, and unlike the present scheme it would not act as a barrier to wider participation in higher education, something we all want to see happen.
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And it could apply to further as well as to higher education. I simply cannot understand why the Government refuse to adopt such a scheme.
Moreover, such a scheme would in itself be a fair and inconspicuous way of handling student hardship, something which cannot be said of the present access funds which help only the small proportion of students who are in the most acute difficulty, and leave unassisted the majority of those who nowadays suffer genuine hardship, who can be helped only to the extent that universities can afford to help them out of increasingly meagre central resources.
The chief importance of the Bill is that it has brought to a head the dissatisfaction of universities with the manner of their funding. As the noble Lord, Lord Renfrew, has said clearly, it has become impossible to discuss the funding of students separately from the funding of the institutions they attend. It is high time that the matter is looked at independently. I am of course delighted by this afternoon's belated announcement in another place that that is to be done by Sir Ron Dearing, a man whom we can all trust. It need not be another Robbins Report. The extent of higher education is no longer the burning issue; it is the manner of its funding. However I hope that Sir Ron will be able to examine the consequences for further education of his proposals for higher education.
I hope noble Lords will forgive me if I say just a few relevant words about the present funding system. Most people in universities nowadays accept that it is impossible for the taxpayer to shoulder the whole cost of higher education; but they also say that it is impossible for universities to cater for the present load of students, and provide education of the standard quite rightly expected of them under the present system of funding. It is true that relatively large additional sums are raised by a small number of universities for outstanding research, most of it involving postgraduate students, but that does not pay for undergraduate education.
The private finance initiative can and is being used for new buildings wherever possible, but the Government have made a gross mistake in thinking that the capital grants provided to universities are only for new buildings. On the contrary, they have to be used for equipment such as computers, and for minor adaptations to buildings, none of which could possibly attract private finance. Cutting those grants so savagely this year has merely increased the strain on the recurrent budgets intolerably, and by implication on undergraduate education.
The only other source of funding is the student himself, or herself or the student's hapless parents. There will have to be a system of student fees in addition to student maintenance grants. Despite today's announcement, I believe that if there were not an election pending the Government in power, of whatever party, would be trying to introduce them. That is why it is impossible to separate student support from support of the university itself. To a student, money is simply money, whether it is grant or fees.

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Of course, nobody would wish to discriminate against those students or their parents unable to pay. The admission system would have to be blind to such considerations. If the normal annual fee were £1,000, say—I take a figure out of the air—probably half would have to go towards bursaries for those who could not pay. Some universities would charge higher fees, some perhaps lower. Some would charge higher fees because the research-intensive universities are simply more expensive to run, not least in terms of the cost of their teaching staff, who are the backbone of their research.
All that would be greatly facilitated, and cheaper to run, if there were already in place an income-contingent loan scheme, because loans could be made available for fees as well as for maintenance. Money is just money. The pressure on university budgets is now so great that universities are considering introducing some form of fee as a matter of urgency. It is in the interests of the taxpayers that they should. It is, of course, possible that the Government will claw back any earnings from such an independent move by the universities by way of retribution in order to show the electorate that this was not their wish so close to an election. Even if they did, I would still advise the universities to go ahead; at any rate, the research-intensive universities. The point must be forcefully made that the present system of funding has broken down.
I said at the beginning that I support this Bill as far as it goes. The trouble is that it goes nowhere near far enough. I hope that Sir Ron Dearing can still make good the deficiency.
7.40 p.m.
Lord Borrie: My Lords, having listened to the debate for the past hour-and-a-half I am beginning to feel sorry for Members on the Government Benches, at least on the Front Bench. After all, this appears to be a useful Bill. As the Minister said, it opens up competition, diversity and choice. Those are concepts which I spent many years promoting in one way or another. Who would object to them? But, as my noble friend Lord Morris indicated, the choice and the competition does not amount to anything very real, except the choice of a logo on an application form for a grant.
The modesty of the Bill has subjected the Government to criticism during the course of the debate because it does not deal with the real problem. It does not change the student loan scheme which has been so widely condemned and criticised not only in this House but elsewhere. The Bill proposes no substantial change and many statements have been made in the House as to why that is so unsatisfactory. Recently the Director of the London School of Economics said that the present loan scheme is:
"about the worst that could be devised".
I feel sorry for the Government on another count. The Bill appears to be unlucky and unfortunate for them because it has provided the occasion and the opportunity to students and to vice-chancellors to level real and substantial criticisms against the Government as a result of the Bill's irrelevance to their problems. I should have thought that that was most foreseeable to the
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Government because they know that many students are suffering difficulties in surviving their courses and many have dropped out, as my noble friend Lord Sewel indicated.
Moreover, the vice-chancellors have naturally seized the opportunity of the Bill to make the point that they are concerned about cuts, in particular the 30 per cent. capital cuts next year. Those cuts are being made despite the fact that the vice-chancellors have done everything that the Government could have wanted as regards delivering a mass higher education system. Having done everything that the Government have asked them to do, that is what they get in return.
Since I took an interest in these matters in the 1950s as a member of the executive of the National Union of Students and through my days as a professor at the University of Birmingham, I have believed that higher education should be available to all who are capable of benefiting from it. Like many others on these Benches and elsewhere, I believe in equality of opportunity, fairness and social justice. It also makes economic good sense for this country and its competitiveness in the world if all the talents of all our people are developed to the very best.
However, whereas I used to believe that the way to achieve that was only through a generous system of non-returnable grants, I now believe for a number of reasons that I will mention that we need to be more sophisticated. If in order to obtain a more sophisticated system of supporting students and financing the universities we need a committee of inquiry such as has been announced by the Government today, that is certainly welcome. I would have preferred it some years ago, but it is better now than not at all.
The factors that I mention are well known. First, 30 per cent. of our young people go to universities compared with only 5 per cent. 35 years ago. If we are to have a proportion of our young people in higher education as compared with such countries as France and Japan, where the number is in excess of ours, we shall need a considerable expansion involving a great deal of money in terms of extra places arid vast improvements in facilities.
Of course, there are many other demands on the public purse, including demands in the world of education. Others have their own choices but I would pick out nursery education. In view of that, one needs to take into account other factors. My second consideration is that graduates can—I suppose that they always have but it is more appreciated now—expect to earn a good deal more than a non-graduate during the years that they work in the general community. The whole nation benefits from that but the whole nation—that is, all taxpayers—should not pay such a high proportion when only a particular group of taxpayers especially benefits from the education.
Thirdly, the public attitude towards having the benefits of goods and services today—and I stress this point as compared with 30 or 40 years ago—and paying for them over a period has vastly changed. If people are prepared, as most of us are, to borrow against a depreciating asset, such as a motor car, surely there is

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nothing strange in having the benefit of an education at a university and paying for it over a period when one is earning rather more than others. Whatever financing system we adopt, we must ensure that there are no disincentives to those coming from poorer families. Therefore, there must be a removal of the fear that exists in respect of the present system of student loans; that in the years of low earning on becoming a graduate the burden is so great that some people do not wish to embark on the journey at all.
I suggest that we need a more sensitive loan scheme and I hope that Sir Ron Dearing will look into that. We need a scheme that will involve both maintenance and a proportion of fees, that will give an adequate income to the student during his years at university, and no repayment until the contingency of income is adequate, sufficient, and earnings are above average.
I also agree with noble Lords who suggested that any new scheme that is to last for a period of time should be available to young students, mature students, full-time students and part-time students. There are various schemes in operation at present. Australia has been mentioned. I merely make the point that I believe that over the years that the scheme in Australia has been operating—an income contingent repayment scheme—the socio-economic mix of students has improved; that is, there has been a 30 per cent. rise in the number of students from poor backgrounds in the past five years.
I am not the only one who has, in effect, said that this Bill is not really worthy of a full debate. I am glad that there has been a full debate and, with the information that Sir Ron Dearing's committee of inquiry is being formed, it may well be a worthwhile debate. As this is my second speech in this House, I suppose that I am entitled to be controversial. I do not wish to be rude but I do not believe that the Bill as it stands justifies the full attention of the House or a Second Reading.
7.50 p.m.
Baroness Carnegy of Lour: My Lords, my particular interest in the Bill arises from involvement in two higher education institutions. I am a member of the Court of St. Andrews University and I am vice-chairman of the Council of the Open University.
I could follow other noble Lords and make a heart-felt speech about the current problems of those two institutions. At St. Andrews, which, although not a very large university, is extremely popular with students, there are undoubtedly pressures which could in time damage its unique tradition. At the Open University, despite the Government's request that part-time places should be supported, the funding council for England has done precisely the opposite and planning is being made extremely difficult at present. I am sure that both institutions will welcome the committee of inquiry announced in another place this afternoon and will have plenty of ideas for Sir Ron Dearing when the time comes.
Listening to the noble Lord, Lord Morris of Castle Morris, who, as one would expect, made an able, indeed brilliant, speech and hearing what one or two other
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noble Lords on the Labour Benches had to say, I wonder whether Mr. Tony Blair means what he says about his desire, should he come to power, not only to avoid increasing the tax burden on individuals but also to create partnerships between the public and private sectors. After all, this Bill would meet both those stated objectives. It would enable the introduction of just such a partnership in higher education funding, an area crying out for more private sector involvement. And we all know that if a growing proportion of our young people are to have the benefit of higher education, the cost will not be supportable by the taxpayer of the future.
At present, with some 30 per cent. of young people studying, the cost is £4.7 billion per year with a further £1.5 billion available for student support. Those are the figures I have. However, this afternoon in another place, I heard the Secretary of State say that the cost of higher education is now £7 billion, 21 per cent. of the total education budget. I am not sure how those two figures fit together.
As they struggle to contain their costs, the universities, we know, are deeply worried about maintaining quality. In the future, as social security and health service provision eats further into our national budget because more of us are living longer, and as international competitiveness demands more, new ways for funding higher education simply have to be found. Others have said that, and it is patently true. That being the case, what is wrong with making it possible for a private sector firm, bank or building society to offer subsidised loans to students to pay for some of their costs alongside the existing agency? What is wrong with beginning where we are, with the sort of pay-back system that we have now, and seeing what the private sector makes of it? That is all that the Bill makes possible. It seems to me not only a realistic and sensible move but one which is five years overdue.
It is still early days but having got over the agency's initial problems the current loan and pay-back scheme, contrary to what a number of noble Lords have indicated, seems to be working reasonably well. The value of the main grant and loan together is worth 50 per cent. more in cash terms than was the loan in 1989. That means that students may be less dependent on their families. Since the system was introduced, overall numbers of students entering higher education have not fallen but have increased. What is more, results of the department's survey have shown a rise in the proportion of younger students from social grades C1, C2, D and E. Indeed, by 1992–93, I understand that they formed the majority.
The Government's figures show also that the number of students taking out an agency loan has grown extremely quickly. In 1994–95 it had reached 55 per cent. of all eligible students. The forecast is that it will have reached 80 per cent. by 1997–98. The average pay-back—my noble friend Lord Renfrew quoted much higher figures but I am referring to an average—is currently running at £18 per month; that is, £216 per year. That is not an unreasonable figure when one remembers that payment may be deferred if one is earning less than £15,204 per year. I understand that

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over 92 per cent. of those due to make their repayments have been doing so, with defaulters amounting to no more than 7.7 per cent.
The vice-chancellors and principals have told us that they do not mind who owns the debt but they consider the pay-back system to be fundamentally flawed. In their view, and in the view, I think, of some noble Lords, who have put it somewhat differently, pay-back should be spread over as long as it takes. I am not sure whether the vice-chancellors are referring to the Australian scheme but from Australian friends I understand that the scheme has many problems. I do not believe that it is ideal although it looks very good on paper. I suspect that any government in power would find it difficult to have repayment lasting as long as it takes. That has considerable implications whether it is public money or private money.
Whatever the outcome of the committee of inquiry, the enabling of the private sector to play a part in the present system of subsidised student loans seems merely a small step but very much a step in the right direction. I had hoped that this House, unlike the other place, would see that and would give the Bill unanimously a fair wind. I hope perhaps that that may still be the case.
7.59 p.m.
Baroness David: My Lords, I think the noble Baroness is going to be very disappointed. It is very interesting that at long last, after some 10 speakers, we have heard the first attempt to justify the Bill at all. Of course, knowing the noble Baroness's stance, I am not altogether surprised; I rather expected it from her. But I would like to say that, although I have not consulted Tony Blair, I would be fairly certain that he would not, in fact, go along with this Bill.
It is really a very pointless Bill causing a ridiculous waste of parliamentary time, even more so now, I think, that we have had the Statement which was made in another place this afternoon. It will do nothing to help students who, sadly, nearly all leave their universities in debt. It will not make repayment of their debt any easier. Many of them—9,000 at the end of July last year—were in arrears and 35,000, 8 per cent., were in default; that is, over two months late in repaying. Why did the Government not take the opportunity, as they were legislating, to make repayment less difficult and off-putting to the student?
Students face a heavier burden in the earlier years of their careers, as the scheme now is, because they have to make fixed payments over a relatively short period of five years. As loan amounts increase under present government plans, the level of repayments will rise significantly. These are likely to rise to an unsustainable level and may well act as a disincentive to potential students. We do not want to discourage young people from entering higher education. At least, I do not think that the Government do, though one sometimes wonders.
Would it not be easier to encourage repayment if the graduate is earning at least the average full-time wage before he starts to pay, and that the level of repayment should not exceed a certain proportion of the excess of
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his income over the average wage? That would avoid the poverty trap. I believe that that point was made by my noble friend Lord Borrie. The numbers of graduates in arrears and in default suggest that the present rules are unnecessarily stringent
It would be encouraging to think that the repayments would go into a special fund for the support of higher education, but it is difficult to imagine the Treasury agreeing to such a proposition. But that is what happens in Australia. I am sure that we can all agree that the funding of higher education and of students needs a complete overhaul. I wrote that yesterday; today, apparently, we are going to have it. We all know that this is a very difficult problem, but it has to be faced by everyone. Now at last we are apparently going to have the matter inquired into. But, of course, we shall not have the results until after the next election. Therefore, the whole problem, which, as has been said by a number of speakers, is urgent, is really being postponed. That simply is not good enough.
I think it is inevitable that the students will have to pay more towards the cost of their higher education than they did in the happy and very different days of 15 or 20 years ago. The choice would seem to be between a pay-up-front scheme and a pay-back-once-you-are-earning scheme. The CVCP scheme, with its proposal to get each student to pay £300 towards the fees at the beginning of their course, was a pay-up-front scheme, because that is the only kind it could implement. But the committee would certainly prefer a pay-back-once-one-is-earning scheme. The example of Australia which is quoted so often shows that a scheme of that kind, a graduate tax, can be put into practice and that it does not discourage potential students. The CVCP was forced to take its vigorous action because of the massive cut that was made to its capital grant.
Whatever the terms of reference of the new committee, I trust that the plight of part-time students will be carefully considered. That is something that I have often said before; and, indeed, what a number of other speakers have already said this afternoon. In 1994–95, 28 per cent. of higher education students were part-time. It is grossly unfair that they should have no help. I also think that the position of postgraduates should be looked at, as should the cut-off point of 50 years of age for mature students. I understand that overall applications of mature students show a decrease of 1.6 per cent over the numbers received in 1994 for entry in 1995. The fall is due to a drop in the number of applications from mature students. Of course, last year the Government abolished the older students' allowance. No doubt that accounts for a good many mature students deciding that they cannot afford to proceed. The quite recent CVCP survey of January 1996 also showed that the number of mature students leaving their courses prematurely for non-academic reasons is rising.
I should like to say a few words about disabled students. I know that a number of people would like some reassurance from the Minister that disabled students will be treated in a generous way. I hope that the Minister will, perhaps, respond to that in his reply.

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I should also like to say a word about further education students as the noble Lord, Lord Flowers, mentioned them. I am sorry to say that the noble Lord has gone, but I know that he has an interest in the matter. I know that the proposed committee of inquiry is to look into higher education, but it has been hard for some time for further education students, perhaps of the same age as those in higher education, who receive very little help. Indeed, the discretionary grants which some of them used to receive have now pretty well vanished from the scene.
When he replies to the debate, I hope that the Minister will tell us rather more than he did in his opening speech about the present financial expectations. In 1988, the Government estimated that the scheme would break even by the year 2000, provided that savings in maintenance grant and social security benefits were included in the cost calculations. But there are no published figures showing the effect of the accelerated switch from grants to loans that happened as a result of the 1993 Budget. Is the student debt, which has been mounting annually—in 1994–95 it was £31.279 million—and which now has administrative costs of £19.7 million, expected to go on rising steadily? Are the universities to go on bearing the administrative costs as they now do?
I hope that the Minister will have something to say as a result of the very strong feelings which have been expressed here today on all sides of the House. The Bill is a very poor thing and, as many other speakers have said, I hope the Government will have the sense to withdraw it and not waste more parliamentary time.
8.6 p.m.
Lord Kirkwood: My Lords, the Government claim—and the Minister reiterated it—that the need for the Bill is to provide choice, diversity and competition for student loans by introducing the private sector into the situation and, simultaneously, to allow for reduction in public borrowing. As that was the original intention of the previous student loan scheme which had to be abandoned because the banks withdrew at the last moment, I, like the noble Lord, Lord Morris, am not clear as to what has now changed for the Government to believe that the private sector should be any keener this time round.
That having been said, there is almost unanimous agreement between different political parties and the educational institutions involved that student maintenance funding must be put on a more secure and permanent basis, in order that students should know in advance exactly what financial commitments they have entered into before they start their university course.
It is accepted by most people that, with the growth of the student population which is a desirable state of affairs that we all wish to see continued, the old grant system funded by the public purse is proving inadequate and unfair—unfair in the sense that the immediate tax burden falls on the present taxpayers, and the benefits in part accrue to the graduate whose future earning power has been increased by a subsidised education. I
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fully believe that if more public money is to be put into education—and, like the noble Lord, Lord Borrie, I think that it should be—it should be put into primary and secondary education where the benefits are obtained by all our children, rather than into higher education for the more privileged minority.
The main problem with the present loan system as I understand it, is with the collection of debt. That will not be lessened by being shared with the private sector; it may, in fact, be a further factor in discouraging them from joining such a scheme. In spite of the claims of the Student Loan Company, the facts are that in 1994–95 only 48 per cent. of borrowers were up to date with their payments or had fully repaid their debt. Most had been granted deferment and some 10 per cent. were in default. This situation is almost certain to be exacerbated with increasing numbers of students, and as more funds come from loans rather than from grants. Are we to expect, then, that graduates who are finding it more and more difficult to pay off the debt at the beginning of their careers will find themselves in court? Surely not even the present Home Secretary would relish the prospect of establishing debtors' prisons, filled to overflowing with unfortunate university graduates!
The simple, straightforward way of avoiding that scenario—this has been mentioned by a number of noble Lords and I make no apology for mentioning it once again, but it is something upon which I know the Government do not look favourably—is through the introduction of a graduate tax, or to provide repayment through national insurance contributions. Almost every Member of your Lordships' House has supported such a scheme in principle. The administrative system is already set up. As we have heard, the arrangement has been proved to work well in Australia. It is an efficient means of collecting, and it is difficult to avoid. Most importantly, it permits the debt to be repaid at a rate that the graduate can afford—for instance, over a period of 10 years or perhaps longer. That means that repayment would not impinge unfairly on those entering the less well paid public services, such as the teaching professions; otherwise, I fear that a loan system as envisaged in this Bill will further encourage graduates away from the relatively poorly paid professions such as in manufacturing industry into the City and service industries.
Why is it that the Government are so unwilling to consider such an obviously sensible scheme? I am aware that the Treasury dislikes hypothecated taxes: they remove from the Exchequer its power to negotiate spending as between different departments. However, the national insurance contribution is in fact an hypothecated tax to provide future pensions in exactly the same way as this proposal seeks to provide for future higher education. The provision of funding for universities on a long-term, stable basis is an urgent problem requiring bold solutions, not tinkering with loan schemes as envisaged in this Bill.
I make a further proposal to the Minister. A possible extension to such a scheme might be to establish a private loans company which would be jointly owned by the banks and the universities, and perhaps also by the building societies, but where the collection of debt

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is carried out through the agency of the taxation system. That would reduce the risk of bad debts and the banks and building societies might then be encouraged to get involved with such a scheme. This Bill, as it stands, will not solve the increasingly difficult problem of student maintenance funding. Much more drastic measures are needed.
8.13 p.m.
Baroness White: My Lords, during the past couple of decades my two noble friends who are not able to he here tonight, the noble Lords, Lord Cledwyn of Penrhos and Lord Callaghan of Cardiff, together with myself and the noble Lord, Lord Crickhowell, who is not in the Chamber at the moment, have been closely concerned with the affairs of the Federal University of Wales. We are delighted that my noble friend Lord Williams of Mostyn has joined us and—as far as I am concerned, at any rate—he will take a much more up-to-date interest in that university.
I would not have ventured to intervene in this debate at all had I not received a personal letter from the Vice-Chancellor of the University of Wales urging me in the strongest terms to oppose the line on student loans being taken by the present Government. He emphasised the general agreement reached by himself and his fellow academic colleagues in England and Wales that they would emphatically wish to accept change on the basis of something similar to the scheme which has been adopted in Australia and which has been discussed in a detailed manner by the previous speaker. It seems that Australia can provide us with good advice in matters other than the Olympic Games!
I am much indebted to the CVCP—old friends of mine—and to the Dean of Students in Cardiff and his staff for spelling out for me the official proposals and the disadvantages that they foresaw if they were adopted. As the matter has been dealt with in another place, I embarked on an exercise which I trust has been followed by at least some of the previous speakers in this debate. I have read every word of the debates held in the House of Commons, both in full House and in Standing Committee B. It was not quite a Scott Report, but it was not far from it! At the fourth sitting of Standing Committee B, Members in another place seemed to me to become rather long-winded in their speeches and I skipped a little of the debate. The result of that study is that I can see no merit whatever in our spending any more time in discussing this Bill which, as we have all said, is not due to come into force until, I believe, the autumn of 1997. Normally I do not have a suspicious mind but one cannot resist asking oneself what other legislation is being prepared which is not to come into effect until after the next general election, whenever that may be.
I must emphasise that I do not nowadays often indulge in reading the full proceedings of another place on a Bill which comes to this House. It is also quite a while since I was a Minister myself. However, I was startled to find that any Minister could present a Bill which is so inadequately prepared and expect it to be accepted by this House. I have been watching the clock. I believe there are still eight speakers in this debate. I
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shall not continue with what I might have said as it has been better said by others who have even greater experience than myself.
8.17 p.m.
Lord Soulsby of Swaffham Prior: My Lords, it is clearly considered by many, both in this House and in the universities, and by administrators, faculty and students that the problems of student loans and the student loans Bill are merely symptomatic of a wider and deeper malaise regarding the funding of higher education in this country and what should be done about it. Being an emeritus academic administrator in the University of Cambridge, I can assure your Lordships that I am familiar with that malaise.
We should therefore welcome the committee of inquiry that has been announced by the Minister. That committee will have to take many matters into consideration, and I am sure there will be much input from those representing all aspects of the university system. The inexorable decline in central funding to universities brings into focus the questions of who pays and who benefits from university education. Of course both society and the individual benefit. It is logical and equitable that the costs should also be shared, but the manner of this should also be logical and equitable.
However, unlike the situation of a decade ago, the majority of students now graduate in a state of indebtedness. Sometimes those who follow professional courses are indebted to the order of teens of thousands of pounds. My noble friend Lord Renfrew mentioned a scale of indebtedness. He mentioned graduates entering my profession—the veterinary profession—who had on average an indebtedness of £8,500.
More individuals now go on to higher education: the present figure is 30 per cent. of school leavers. There is now much more demand for loans, the repayment of which to the Exchequer in the present scheme is slow. It will be well into the 21st century before repayments make any significant financial impact on the present scheme. That must be a major worry to the general public and the payer of income tax.
Nevertheless, there are some major problems with the present student loan scheme. One hopes that, when we have the answers to some of the points that have been raised in this debate by other noble Lords, they will be alleviated.
One of the problems is that the present scheme does not provide an adequate maximum for some students. That is particularly so for professional students, as the noble Lord, Lord Dainton, mentioned; examples are medical students, veterinary students, dentists and those in other professions where the length of the course is five years, or even six years in some cases.
In the case of both veterinary and medical students, the final year is one of 46 weeks, so there is little time left. It is necessary for those students to undertake studies during their vacations to gain extra-mural experience. In my own profession that is 26 weeks, plus another 12 weeks of farm experience. In other words, 38 weeks have to be spent in a mandated manner as part of the course. That greatly reduces the ability of students

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to undertake work to assist with their fees and living costs. It also greatly reduces the ability of the students to finance themselves with respect to expensive equipment, protective clothing, travel and accommodation while they are undertaking those extra-mural assignments. Even though there are grants to cover such costs partially, they are not adequate to cover the whole cost.
The fixed payback scheme of five years also causes great hardship to young graduates, who frequently must capitalise to set up in their professions in terms of equipment, premises and so on. These matters cause great concern to students at present.
In the present Bill Her Majesty's Government propose to promote private sector loans as an alternative to, but alongside, the student loan scheme. The Minister said that that will give a better-tailored product and will allow greater choice. However, a number of questions need to be raised on this issue.
For example, will the same conditions of repayment apply to the loans from the private sector? Will the same ceiling on loans apply? Will it be possible to take loans from more than one company, or will it be restricted to one lending organisation? If the answer to those questions is that matters will remain the same except that a student can go to a private sector lender rather than the present scheme, all the Bill will do is decant the failings of the present scheme into the private sector.
Considerable attention has been paid to the possibility of income-contingent repayment. It has been said that we could glean much from the schemes that operate in Australia and New Zealand. I suggest that we could also glean a great deal from the scheme that has been operating for 25 years in the United States, where, it is well known, student loans have been used very effectively to increase the population of students in the higher education system. That is now running at 65 per cent. of high-school leavers.
I am grateful to Dr. Finney of New York University and Dr. Hart, who is director of scholarships and finances for the universities in Indiana, for details of some of the schemes they run at present. It is probably well known to some Members of this House that the present federal loans are provided by the banks but secured by the federal government in terms of interest during the time of study. The federal government may also cover the default of loans in certain circumstances. It is a standard loan, but for professional courses it is possible greatly to increase the loan to cover the extra costs of professional education. Repayment is on an income-contingent basis, usually at one point below the standard interest rate. Supplementary loans to the parents of students who find themselves in financial difficulties are also under consideration. Those will be secured against the capital of the parent. A parent will pay interest at the normal rate. The third area of interest is a direct loan to universities, administered by the colleges or universities, with payback being on an income-contingent basis up to a period of almost 20 years.
To my mind, the major source of loans must be the private sector, either the high street banks or some other similar institution, although I am aware that hitherto the
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high street banks have not been enthusiastic about that approach. The ideal would be for Her Majesty's Government to secure the loan and the interest payable during the period of study and for repayment, carrying interest, to be made on an income-contingent basis, as mentioned by a number of other speakers in the debate.
Students do not fear loans. There is every indication that they would wish to have greater access to them. There is every evidence that an equitable loan system will encourage a wider social span of students to undertake higher education in this country, as it does in Australia and New Zealand and most certainly in the United States.
In the formula of who benefits from and who pays for higher education, students do indeed wish to play a role. However, they see that role being played within an equitable system. I hope that that will be forthcoming by means of this Bill or as a result of the committee of inquiry.
8.28 p.m.
Lord Ponsonby of Shulbrede: My Lords, one of the advantages of speaking towards the end of the list of speakers is that many of the points that I wished to raised have been made far more ably than I could have made them. I am most pleased by the fact that my old Alma Mater, the University of Wales, has been better represented than any other university.
This morning I wrote the following:
"I regret that we are not having a fundamental debate about the levels of funding, we as a country should invest in our student population and the benefits we all get, graduates and non-graduates alike, through that investment".
It now seems that to some extent we have had that fundamental debate tonight. Indeed, in this afternoon's Statement the Government have recognised the need for a far more wide-ranging review of the fundamental flaws within our university and student loan structures.
The Bill itself is very narrowly drawn. It is solely concerned with the administration and ownership of debt. We have heard that it does nothing for the students; it does nothing for the universities; and, if one believes what one reads in the newspapers, the banks do not believe that it will do anything for them either.
My noble friend Lord Morris of Castle Morris quoted from a recently published document on higher education by the Conservative Political Centre. I, too, wish briefly to quote from it. It states:
"With [the loan scheme's] high early repayments over a short period of 5 years, [the loan scheme] is a deterrent to entering university, particularly to potential students from less affluent families. As the maintenance grant is reduced and the loan increases, the levels of default are likely to rise to the high rates common in the US, and the cost of administration will escalate. It is widely felt that the present scheme will be inadequate to cope with the future demand".
The Bill meets the CPC's concern about that so-called burden on the public sector. It simply privatises the debt. That is straightforward. But it goes nowhere near addressing the issue of linking repayments to the ability to pay. That is the issue that we have heard raised time and again by speakers tonight.

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Many employment sectors are traditionally poor payers. I think in particular of the voluntary and charitable sectors where graduates are offered good and flexible careers. Such careers are popular and in my experience attract the highest quality graduates. However, such graduates have to think long and hard about embarking on such careers when they have the additional burden of student loan repayments, particularly when those repayments are not linked to their level of earnings. All of us, in particular the Government, rely on these low paid sectors attracting high quality graduates. I suggest that one practical method of helping those sectors is to link loan repayments to earnings.
In addressing the provisions of the Bill, I am somewhat at a loss. Surely it should be possible to quantify in cash terms the benefit of this measure to the public purse. I am not talking just about the transfer of figures from one column in the PSBR into the private sector. The Government constantly talk about efficiency savings through privatisation. Surely it would be possible to quantify those savings in such a limited area as debt administration.
I may be told that such figures are commercially sensitive, particularly when the Government are embarking on negotiations with the banks. If that be the case, it should be possible to produce indicative figures. To be asked to decide on the principle without knowing the cash benefit is a strange way to proceed. Deciding on the principle in advance of the Government's negotiations can hardly help the Government's negotiating position. Just imagine a young executive going to the main board of a high street bank and saying that it should accept student loans without any quantification of the likely benefit to the bank. The idea is laughable; and that young executive would soon find new career paths opening up to him such as a secondment to the DFEE.
Clearly the Bill has been overtaken by events. It seems to me that the criteria set out by the CVCP, and already quoted by the noble Lord, Lord Tope, are as good as any in judging a system of student support. I briefly restate them. The system should be simple, adequate, certain and just. Those criteria would, I believe, be a good guide to the committee of inquiry. They should provide the final nail in the coffin of this Bill.
8.36 p.m.
Lord Prys-Davies: My Lords, I find it quite remarkable that the CVCP was not consulted upon this short, narrow Bill. Does that omission reveal the disregard of this Government for the CVCP? I hope that the department will reflect upon what has been said by my noble friend Lord Williams of Mostyn, the noble Lord, Lord Renfrew, and the noble Lord, Lord Flowers.
Given the widespread opposition to the Bill, I am surprised that it has got as far as this—a Second Reading debate in your Lordships' House. The Bill—if we are to have this Bill—makes no effort to fill in some of the areas of need which urgently need filling and cannot wait for two or three years. At this late hour I shall
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obviously abstain from repeating at any length the arguments powerfully developed by so many distinguished speakers this evening. I shall merely focus on two or three of the omissions already mentioned.
It seems to me that concern over those omissions has run through almost all the speeches this evening, and, if I may say so, many of the speeches in another place. I am not sure that the Minister acknowledged that those concerns are wider in a sense and are narrower in a sense than those addressed in the 1990 Act. Can the Minister explain why the Bill does not bring part-time students of higher education within the scope of the existing loan scheme? That question has been repeatedly asked. I believe that we are entitled to an answer. It strikes many of us that to exclude part-time students from the scheme cannot be the proper basis for a modern approach to higher education.
I recall that last year I was involved in trying to find financial help to enable a part-time Welsh student of high merit to pay the university fee. Although the case seemed extremely strong, I found it difficult, and embarrassing, to shop around for help from charity to charity. Eventually we obtained help but there seems something wrong with a system of part-time education which compels the student to rely on charity for part of her fees. When the Minister replies, will he please give the department's estimate of the cost of extending the scheme to cover part-time students?
I turn briefly to another important issue which is not addressed by the Bill—the repayment formula. The existing scheme has the merit of simplicity. It may work quite well for some students. But plainly it does not achieve fairness to expect every student to repay the loan within the same period of time irrespective of his or her circumstances. Indeed, many students would be exposed to considerable difficulties if they had to repay the loan by fixed instalments over a period of five years as soon as their salary equated to 85 per cent. of the average salary. After all, students would be faced with other substantial expenditure: rent, mortgage instalments, car and furniture, and hire purchase instalments. There could be such items as house and car insurance, car and TV licences. Those are not exceptional items but common features of a young person's budget.
There are genuine concerns among students and potential students that they will be unable to see their way clear to repay the loan within five years, as required under the scheme. They are therefore reluctant to borrow. The result, as we have heard from many speakers, is that some potential students are not entering higher education. It seems a curious anomaly that that should be the case at a time when the Government claim in the current consultation document that lifetime learning is crucial to the community.
Sadly, we hear that a substantial number of students do not complete their course of higher education. The Government state that the drop-out rate is 17 per cent. or 18 per cent. and that it has been around that figure for many years. Can the Minister tell the House what is the drop-out rate for reasons of poverty? The CVCP has advised that the inordinate amount of paid work

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undertaken by students in order to supplement their income is disadvantageous to them. Does the department accept that conclusion? Is it examining the evidence? Alternatively, is the extent of the problem of drop-outs or failures which can be related to poverty not an issue of great concern to the Government? I plead that the issue needs to be absolutely clarified.
8.42 p.m.
Baroness Park of Monmouth: My Lords, I welcome the review which the Minister has announced. For the past five years, other impending reviews have been regularly cited to me as a reason for doing nothing about whatever I happen to be urging on the Secretary of State of the day. However, I look forward to a different outcome on this occasion since the present Secretary of State is a mover and a shaker in whom I have considerable faith.
We cannot discuss the Bill—opaque and slight as it is—without considering the background. First, there is the well-documented poverty and stress which can no longer be fobbed off as anecdotal. They have increasingly manifested themselves among poor students; that is, among at least 20 per cent. of the student body. I wish to emphasise yet again that I speak about the poor students, not all students.
Secondly, there is the disastrous impact of that poverty on the quality of academic life, and therefore students' ultimate achievement and contribution to the country as graduates, and of the underfunding of universities which, as so many have said, hits libraries, scientific equipment, funding for field work and, above all, the ratio of teacher to student. The Government's pride—and it is justified—in increasing student numbers over the past decade must be tempered by the fact that funding for students has declined by 28 per cent. over the past six years, with the prospect of further reductions. Those are deeply alarming figures.
Let me say at once that the principle of requiring students to make some, and even a substantial contribution to their university education is now widely accepted by most students as well as by many in this House. The Student Loans Company, after a disastrous performance in 1994–95, is now functioning effectively, thanks to Sir Eric Ash. That is not least because there is now regular consultation with both institutions and students which was signally lacking before.
The trouble is, first, that the maintenance grant and the maximum loan together, even with the safety net of the Access funds for a few, is not enough. Secondly, the debt incurred is now 10 times the original maximum loan (£333 in 1991, £3,201 in 1996). By the year 2000 it will be 17 times as great (£5,788). The prospect of a debt of that magnitude can only act as a deterrent to poor prospective students so long as the present mandatory system of repayment over five years remains the policy of the Government. They must consider urgently the merits of a fee contribution scheme, to recover the loan on an income-contingent basis, whether through the Inland Revenue or national insurance. Incidentally, there would be considerable advantages for
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the Government, as well as the students, especially if the present initiative for seeking private funding fails, as it seems not unlikely to do. A scheme which was rejected by the banks in the original consortium in 1989 because they decided, despite being offered £12 per student loan transaction, that there was no commercial benefit for them, seems utterly unlikely to attract them now. We do not know what the arrangements mentioned in the Bill are to be. Indeed, it presumably has not attracted them, since the whole exercise is now to be deferred for a year.
The Government are naturally concerned—and if they are not, they should be—at the prospect of heavy continuing investment which is not recovered. We know from the National Audit Office report on the Student Loans Company that despite a good rate of repayment (94 per cent.) so far, as at March 1995, 7.7 per cent. of repayers were in default, owing arrears of £1.8 million with a further £8.2 million due in future. The Student Loans Company estimates that by March 1998 there will be 27,800 accounts in default. Moreover, as at 31st March 1995, 45 per cent. of accounts in repayment status had had deferment of repayment approved.
Thus far, we are talking about relatively small sums because at this stage the Government are still dealing with those students who borrowed in 1990–94. The maintenance grant was far larger then and the loan far smaller. It is not surprising that the Government can speak of an average loan outstanding at present of £1,400 and an average loan repayment of £18 per month. Those are the students for whom the first loan in 1991 was £333. The total debt after three years was, in 1994, £2,015. But the Government should be thinking—students, certainly are (and it is and will be a powerful deterrent to entering higher education under the present arrangements)—about the students going down in 1998. Their debt will be £4,943, and those going down in the year 2000 will be repaying £5,788. That is an increase of over 100 per cent. in the debt which students going down this year will incur. They will incur £2,503.
All those figures relate only to three-year courses. For the four-year course, which is becoming more frequent, the debt to be repaid in the year 2000 (only five years away) will be £7,811. The CVCP calculation is that those going down in 1999–2000 will be paying over £96 per month.
I have spent so much time on the issue of the great increase in the size of the repayment, not only because of the increasing deterrent that it represents to poor students who fear debts of nearly £6,000, or nearly £8,000 for four-year courses, to be repaid so early and so fast, but also because I strongly believe that under the present system the Government will have to wait a long time for their money and may never recover much of it. It would, I submit, be a far more certain method of recovery, quite apart from removing student fears, to move to some form of income-contingent repayment scheme on the lines of the fee contribution scheme. In that way, the money would come in, as students would regard the system as fair and not frightening.

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Many noble Lords have referred to the poverty which is having such a serious effect on the academic work and thus the future prospects of students. That is due directly to the fact, many times emphasised in earlier debates, that the maintenance grant and maximum loan together do not equal the former value of the maintenance grant and housing benefit. In Edinburgh rents have increased by 44.7 per cent. over the past five years. Rent alone now frequently exceeds the full maintenance grant and that obtains all over the country.
How much does that leave, even on a full loan, for books (the libraries have been cut back heavily), and field work, during which no work to earn money can be done—let alone the simple business of eating, keeping warm, travelling and staying alive. It is deeply disturbing that of 2,000 students who replied to a questionnaire in Edinburgh in 1995, 26 per cent. worked to earn money during term and 44 per cent. worked through the whole 30 weeks of the academic year for an average of 12 hours a week, but in some cases for much more. Since the work they do is often in bars or stocking shelves, the pay is very poor; 55.4 per cent. of the students had an average debt of £743 at the end of the academic year in addition to their student loan. Few could clear that non-student-loan debt by working during the summer—either because no work was available or because it was, again, very poorly paid. As one student wrote, "This year I shall have to work double my hours in paid employment to pay off my debt and, to be honest, my course is no longer my first concern". I find that a very frightening statement.
Other noble Lords referred to the growing evidence of drop-outs, especially among mature students, because of poverty rather than for academic reasons. The Minister will refer such students to the Access Funds. But we all know that they, frozen this year at £22 million, are wholly unable to meet the present level of student needs.
It is a tragedy that the Government, who have done so much to bring more students into higher education and have effectively changed the culture of complete state subsidy to one of enabling graduates to repay to the public purse a substantial part of the cost of their higher education, still fail to recognise that roughly one-fifth of the student body is insufficiently funded, so that poverty is, in its turn, impoverishing the quality of the academic experience.
It will be a culpable waste of money and human investment to create a generation of graduates who have simply not had the time or the tools to learn. They will go out into the world inadequately taught and imperfectly prepared for the intellectual challenges they ought to be fitted to meet.
It is not the least of our general regrets that this Bill still provides only for undergraduates. Nothing is available for postgraduates, nor for the large numbers in part-time education. I hope very much, with the noble Lord, Lord Flowers, and many others, that my noble friend the Minister will tell us that some account might be taken of the possibility of extending the availability of loans to them. The extra cost could well be compensated for by greater certainty of recovery of the
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money if the Government were to consider the income-contingent formula of repayment. I hope that they will.
8.52 p.m.
Lord Desai: My Lords, first, I congratulate the Minister. He introduced a Bill on a constitutional innovation. He managed to make a Statement to this House without having to mention it as such. He gave a very deft summary of the Statement made by his right honourable friend in another place. I admired the way in which he managed to take it in his stride. Having made the Statement before introducing the Bill, he then gave us an injunction to stick to the Bill itself. If only he had done so himself, we should have followed. However, since he did not, we do not have to do so either. We, too, can speak on other matters, and not confine our remarks to the Bill. Being the last-but-one speaker, I use that ruse in order to be able to mention the matter.
I never fail to be astonished that, in the 17th year of a Government who say they believe in the free market, again and again they push legislation before us which shows either that they are ignorant of the market or that they do not have the guts to follow their own philosophy.
When I first arrived, 31 years ago, I was astonished that one could borrow three or perhaps four times one's income to buy a house, but not to buy a race-horse. That is an imperfection in the capital market that should have been removed. What difference does it make whether I buy a house or a race-horse. A race-horse might be the better winner. It was always thought that it was good to borrow money for certain things but not for others. Therefore governments of many hues have established distortions in the capital market and have even given them support in legislation. That idea still exists. This Bill perpetuates the notion that only full-time undergraduate education is such a great good that the Government will provide precious taxpayers' money to support it under an inefficient scheme, while a variety of other demands for higher education are not thought good enough.
We do not trust the consumer to know his or her own interests, to go to the bank and ask for a loan. There is obviously a case of market failure here. Banks have no incentive to provide this money. The Government, recognising market failure, have now decided that they will perpetuate the distortion by giving support to one part of the market but not to other parts. That is anomalous, to say the least.
As this Bill stands, it perpetuates certain restrictions. For example, in the schedule (lines 23 to 26) if a loan is taken out with a private company, another cannot be taken out with a public company. I do not see why not. If someone wants to take out two loans let him take out two loans. Provided he is not cheating, what does it matter to anybody how many loans are taken out? Why should the Government say how many loans I should take out? Do they believe in the free market, or not?
Secondly, and somewhat more seriously, as the noble Lord said, quite rightly there has been an expansion in higher education. That is a very good thing. There has

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been practically a revolution in the context in this country. But the erosion of resources has done quite a bit of damage. I declare an interest. I have two children at university now. I teach at university and have students who tell me about their problems, and so on. The higher education system of this country, which is extraordinarily efficient and one of the most competitive on a global scale, is losing its advantage because it is under-financed. It is under-financed because, once we moved away from the system of the full grant and full fee support, the Government did not have the courage to bite the bullet and move to a fully loan-financed higher education system. Because we have been cut by bits and pieces, it has been, almost literally, death by a thousand cuts. The unit resource of education has gone down. I have 35 tutees today, when I used to have 15. I hardly know their names. In a sense, the British higher education system, which had a very small drop-out rate that was negligible in relation to the continental system, was for a time elitist. When it expanded, either the resources should have been provided publicly to maintain that efficiency or, if not provided publicly—I grant that, politically, that is a difficult task—the Government should have had the courage of their convictions to implement a shift to a fully loan-based system. Having shifted to a fully loan-based system, they should have had the courage to introduce a rational system of loans. If the housing market had been based on a five-year mortgage, it would have died before it was born.
In having a degree, I buy a piece of human capital and enhance my lifetime earnings. As anybody knows, my life-time earnings do not grow immediately because I am a graduate, but they grow over my life-time. All my life I can pay for the very precious asset I have bought. To have to repay it over five years is folly. I should be in negative equity throughout the five years, and nobody can convince me otherwise.
From any point of view a five-year loan system is irrational. I do not need to tell the Minister what Gordon Brown called the "neo-classical indigenous growth model". It shows that acquiring an education is the best guarantee of economic growth for a country. By encouraging people to acquire higher education we are improving the competitiveness of the economy in the future, and it is perfectly valid to help that along.
The subsidy need not be as large as the one the Government are about to give. That is another problem. As many noble Lords have said, an income contingent loan scheme would overcome the hump of extra payments within a short period of time. The only question is how to get the Treasury to come up with an imaginative idea in order to shift that burden in such a way that it does not appear in the PSBR to be awkward.
I suspect that there is a mole in the Government who makes them choose the electorally most unpopular loan system that could possibly be devised by a human being. By helping the Government I may be hurting my own party. I may be helping them to win the next election and so I hesitate to say anything about it.
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In a sense, over a lifetime students are not poor. They will be better off than many of those who do not obtain a higher education. The kind of debt burden about which the noble Baroness, Lady Park, spoke, should be negligible within a lifetime's income, but it weighs heavily because the scheme devised makes no economic sense. We are burdening a potentially high income earning group early in life with sums of £3,000 to £5,000 which, over a lifetime, would be negligible.
Not all that long ago, 18 year-olds used to leave school and buy houses costing more than that and paid for them over their lifetime. Now we have people who cannot afford loans of that size. That is due to the term of the repayment of the loan. Having arranged an uneconomic five-year repayment term, we than have to give an uneconomic subsidy to the private sector to arrange the loan. The existing subsidy is not enough to persuade lenders to lend, so we have to increase the subsidy. It would be cheaper to give the students the money directly.
We must be clear that a student impoverishment problem is a self-created problem. It arises because of the restrictions on students borrowing against future income. It is a kind of market failure. We do not have specialised institutions to provide educational loans in the same way that we have specialised institutions to provide loans for property. It is a shortsightedness of the economy that we value bricks and mortar more than we value knowledge. Anybody can show that buying an education is a much better investment than buying bricks and mortar. Bricks and mortar are consumption goods and education is an investment. We should therefore be encouraging the buying of an education.
I see little hope that the Bill will be improved, even if we try to amend it. The Government have already scuttled it by announcing the inquiry. I see that as another sign of a lack of will to tackle the problems which could be tackled overnight if the Government wanted to do that. The income contingent loan solution has been known since 1988 when my colleagues, Dr. Nicholas Barr and John Barnes, published a paper on that topic. We have shown it to every successive Minister in the Department of Education and the Treasury. We have explained its logic. It was invented here before the Australians took it. But we have had to wait eight years while the Government continue to reject it.
It is astonishing that a low-cost, efficient solution will be rejected in favour of the present solution. "Choice" I am afraid, it is not, unless it is a choice between being hanged or being drawn and quartered. The borrower is no better off. The lender may be better off, but the borrower is not and the borrower does not have much choice. All we are doing is offering the cherry pickers an extra bonus for cherry picking. I hate to say this, but the noble Lord, Lord Renfrew, with his desire to study archaeology, would have had no chance whatever of studying that subject; he would have been rejected out of hand by the cherry pickers because clearly archaeology is not a commercial proposition. As an economist, I would have had all the cream. Perhaps lawyers would be better off, followed by the

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accountants, then perhaps the scientists, then the economists and last of all the humanists. There is no fun in that.
I urge the Minister to say that it is all a mistake; to say that we would be better following my suggestion. I urge him to say, "We want to win the election after all. We will try our best, despite what happens on the Back Benches in another place." Good sense may then prevail, after 17 years, and we may yet see a proper free market solution to the financing of higher education. I live in hope. But I am an optimist.
9.7 p.m.
Lord Berkeley: My Lords, I shall not detain the House for long tonight as it has been a long debate with a virtual unanimity of views on the Bill. I declare an interest as a member of the council of the University of Canterbury. I am probably one of the few speakers tonight appointed as an amateur in the academic world. I am appointed from the business community to help the university meet the needs of the community; to support its management, its efficiency and quality.
I asked my vice-chancellor for his views and he urged me strongly to speak. I have seen at first hand the frustration at all levels in the university; the lack of policy coming from the Government; the stop-go on growth—enormous growth when it levels out—and the changes and reductions in funding. We cannot separate student funding from university funding; they are inextricably linked.
While universities have been rightly introducing efficiency gains, they are lumbered with more and more government paperwork which uses up thousands of hours of staff time—assessments, benchmarking, auditing, grant applications (we all have to do that) and reporting. There is more and more of it. This is not work that clerical assistants can do. It is paperwork which requires careful judgment and non-routine responses. It is academic staff time that is absorbed in completing it; academic staff time filling in forms and not teaching or researching. Now we have further form filling exercises in the shape of the new student loan proposal.
We are told that the universities will have to certify that students are eligible for private sector loans. Who will do that? We await details with great interest but, on the basis of past experience, very considerable foreboding. There will be yet more administrative work for universities. Will the noble Lord the Minister commit the Government to reimbursing all the costs involved? Perhaps we should be told. We have heard that most students are struggling financially or are just plain broke. Perhaps the Government will say "Tough, get on your bike and look for a job", and earn £1 an hour at a burger restaurant or work 16 to 20 hours a week doing something else. We have heard all that. Now that students have one more financial juggling exercise to contend with, it is almost as if they will need financial advisers as well as the university.
To what end are the Government proposing these changes? Are they really committed to free higher education? They say that they are, but by their actions to date they make it virtually impossible for those with
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no outside support to receive the best quality education they can. I sometimes wonder whether the Government understand further education. Have Ministers experienced it? I hope we will hear that they have, that they enjoyed it and that they learnt from it. And now, coincidence of coincidence, on the day 20 noble Lords speak largely against the Bill, we have a new committee of inquiry. If in doubt, set up an inquiry, which will mean that nothing can happen for three years, and put off the day when a decision has to be made. In the meantime, muddle through. And, of course, there is an election coming.
Am I the only person in this Chamber to suspect that the objective of the Bill is to make next year's budget look more favourable, with no thought about what will happen thereafter? I do not know. In the meantime, I hope the Minister will be able to tell us how the Government expect the universities to fund themselves in the next three years. Do they expect the principals of universities to start charging students? Is that what they want, or do they not care?
Lastly, given all the problems now facing further education over all, as an amateur among some of the most eminent professionals in the business, I join others in calling for the Minister to withdraw the Bill.
9.10 p.m.
Lord Addington: My Lords, when discussing the student loans regulations I feel roughly the same way as I do about an old rugby injury. It comes back and it hurts, no matter how long ago it was first acquired. I cut my teeth or was blooded parliamentary-wise on the Education (Student Loans) Bill in 1990. I said then that as I was in the position of having graduated two years previously I knew more about the financial system. In a debate on a Motion which I tabled two or three years ago—the noble Lord, Lord Renfrew, mentioned it—I said that I no longer knew anything about the system because it had changed a great deal.
I caught the end of what was a golden era for students when there was a guaranteed level of income. Initially that was done by the grants system. By the time I was finishing at university it was done by the grant plus social security benefits covering up the cracks. The present scheme was first brought in by top-up loans. In the first year students received £300 or so. The system of a top-up loan plus a few hundred pounds was acceptable. It papered over the cracks. It does not work with £5,000 of debt, which is what we are getting now.
The noble Lord, Lord Desai, ran through his favourite flower patch and pulled out some of the choicest buds for us all to admire. The scheme just does not work in logical terms. The Bill itself is a small thing. It says that we should transfer some level of debt from the public sector to the private sector. The banks may be interested because the scheme may attract students to them. When a student opens a bank account he tends to stay with that bank until he becomes an economic asset. That was tried with the initial scheme but the banks said that they did not want to know. What will happen next time round, if it happens next time round—we have heard

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that it will not happen quickly—should the banks say no again? Will we just shrug our shoulders and bring the matter back in a few years?
There is very little one can say about the Bill except to refer to a quote from the late, great Peter Sellers, that it is interesting but stupid. It does not really make sense. We are simply shifting around the level of debt. It would look better on a balance sheet. There is no real benefit to anyone.
If the Bill addresses anything it is individual student finance. As the noble Lord, Lord Desai, and almost every other noble Lord who has spoken this evening said, it should be sufficient to allow them to graduate. We have a degree structure system, particularly in England and Wales, of intensive preparation for three years. That means that students get through the course quickly. I am a graduate of a Scottish university, and it was nice to hear one other speaker who has a more recent connection with that university. I am slightly prejudiced. There should perhaps be a more flexible road into the course with students able to decide later what subject to take on at a higher level of education.
In England and Wales the period of study is intensified. It ensures that the student goes through the system quickly. In this kind of funding one is not allowing students to subsidise their income without working. We have a system where one is borrowing and paying back over a very short period of time and at the same time we are consistently leaving students, if they cannot find work during the long vacation, worse off than they would be on social security. On numerous occasions this Chamber has pointed that out to the Government. Talk of extra funding being available was rubbish. When the system was brought in many people lost in cash terms in the first year. There has never been any real argument or dispute about that.
I feel somewhat guilty because one should not shoot the messenger. However, the noble Lord is the only one in range tonight. If the Government intend to bring in this scheme—and there are many "ifs" and "buts" about it—will the Minister consider expanding the level of funding available to students because they need extra money? Will he consider ensuring that the private sector has the opportunity of providing a longer term for repayment? If the Minister gave us that assurance there would be some point to this debate; if not, we have really wasted our time.
9.17 p.m.
Baroness Farrington of Ribbleton: My Lords, at the beginning of this Second Reading debate my noble friend Lord Morris of Castle Morris raised and identified the crucial issues underlying this Bill and the flaws in the scheme, the lack of parliamentary accountability in the detail, the failing loans policy, the F&HE funding crisis and the Government's mishandling and mistiming of the matter. All these points have been amply justified during the debate.
I for one was grateful to the Minister, the noble Lord, Lord Henley, for giving us a précis of the Statement read in the other place. I listened carefully and I shall read Hansard carefully. In his précis he read:
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"We propose to invite the Committee to make recommendations on [how] the shape, structure and size and funding of higher education",
and then left out, "including support for students" before continuing with the rest of the sentence,
"should develop to meet the needs of the UK over the next 20 years".
The background to this debate is that the Government have accepted that a committee of inquiry is needed to look at all aspects of higher education, including student support. What is the sense in asking the taxpayer to fund costly proposals—the degree of subsidy in these proposals must be so severe that the Government will not even lay them before Parliament at this stage—for a scheme which is not intended by the Government now, as a result in the changes in timing, to be implemented until after the committee of inquiry has reported?
In presenting the proposals at this Second Reading, the Minister said that the taxpayer, private sector lending and risking its own money, were the issues before Parliament. The Government's favourite slogan is "choice, competition and diversity" and they believe that personal lending is not a natural activity for government. However, since Burke, governments have accepted that education provision is a function of government.
The Bill before us lacks details. The Minister asserted that it has no downside for anyone. How can we know when we know not the cost? The private sector, the banks and the building societies, have not come forward with bids. The Government tell us that they are considering how to bring them in.
My noble friend Lord Morris of Castle Morris referred to the important issues which the Dearing Committee will have to consider. Speaker after speaker referred to the need to protect and enhance the quality of further and higher education and to encourage access from students of all backgrounds while not discriminating between full-time and part-time students or against students on the grounds of age. Will the Minister assure us that the figure of £1,500 per student subsidy is not one that the Government intend to match by way of subsidy to the private sector to encourage it to take part?
The Minister concluded by referring to providing choice. The Bill does not provide choice for students. We are talking about a choice of students by banks, not about students choosing the system or company with which they would like to deal.
Many noble Lords have referred to unit costs per student and to the problems facing students. The noble Lord, Lord Flowers, referred to a "seriously flawed scheme of student loans to be partially privatised". He said that he could not understand why the Government were proceeding with it. Noble Lords have raised a number of anxieties which the Government have so far failed to address. The Committee of Vice-Chancellors and Principals says that the Bill does nothing to address the problems of HE funding.
My noble friend Lord Sewel asked a crucial question: why do we need the Bill at this stage? As he said, it is evident that the Bill has been overtaken by events. He

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said that 17 per cent. of students have debts of more than £4,000 and that 19 per cent. of students consider withdrawing from their course. I echo his words, "What a waste". This is the European "Year of Life-Long Learning". Why should we extend and develop a scheme which has been proved to discourage students from learning and from taking a degree course?
My noble friend Lord Borne referred to the fact that the Government could have foreseen the problems. Universities and students knew about the problems. My noble friend also referred to the fact that getting this right is an economic necessity for the country. No scheme should be a disincentive to students, especially those from the least well-off backgrounds. As the noble Lord, Lord Tope, said, the scheme will not solve the problems facing the sector.
Every noble Lord bar none has welcomed the committee of inquiry. What is the sense in throwing away that degree of partnership proposal and that degree of unanimity by wasting time on a Bill that has been overtaken by events?
There has been a drop in the number of student applications although there has been an increase in the age cohort. That bodes ill for the future. Mature students are dropping out of higher education.
The noble Lord, Lord Dainton, referred to private good and public good. The loans scheme does not encourage students from all backgrounds. Also, why are there no practical details on the subject of recovery?
My noble friend Lord Williams of Mostyn, one of many noble Lords who spoke with a knowledge of education in Wales, referred to the low morale in universities. Why can we not have adequate consultation on proposals as important as those contained in the Bill, albeit in only minimal form? Cavalier treatment of those with detailed knowledge—universities and students—will do little to improve that low morale.
My noble friend Lord Morris of Castle Morris referred to the fact that it is important that we work together, through consultation, to get this right. It is my understanding that my honourable friend the shadow Secretary of State has welcomed in another place the proposed bipartisan approach of the Secretary of State for Education and Employment. That is the time to give detailed evidence and to have it evaluated carefully and properly, rather than proceeding by assertion in a Bill lacking detail that flies in the face of the knowledge of all those who have spoken in the debate, bar one and the Minister.
My noble friend Lord Prys-Davies, asked why the CVCP was not consulted. He referred to poverty as a cause of drop-out. We are entitled to answers to all the detailed questions that have been asked in the debate. To offer less would be not to recognise the almost uniform failure to see any merit in the proposals before us.
The noble Baroness, Lady Park of Monmouth, and the noble Lord, Lord Addington, gave graphic illustrations of the problems facing less well-off students, the impact on their desire to go into higher
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education and the quality of their academic life if they do. Their serious concerns must be addressed. The Bill will not do that.
Recently I spoke to a 17 year-old student who was embarking on the first year of sixth form. He is Welsh. He had three A*s in sciences, three As, two Bs and a C. He is seriously considering not going to university, because he comes from a single-parent household and he is terrified of debt. We need to find a scheme which will recognise the problems facing the Government but which will also ensure that such young people are not put off.
Student hardship is personally and nationally important. Parliament has a right to know what subsidies are proposed to underpin the legislation. The financial implications of any system need to be spelled out. The noble Lord, Lord Renfrew of Kaimsthorn, referred to the problems facing those students undertaking courses to become vets. A serious problem exists.
The Minister must take back to government the message that, if the Government are right, that will be confirmed by the committee of inquiry. The Government must surely have faith in the policies they are putting forward in the Bill. If that is the case, the Government should take pride in taking back the Bill, putting their views to their own committee of inquiry, and having them stand the test of detailed scrutiny rather than considering them at this stage.
As my noble friend Lady David said, student support needs a complete overhaul, She referred to the issue of students with disabilities. The noble Baroness, Lady Carnegy of Lour, hoped for support for the Bill. I am sorry, but there is no support for the Bill in this House; there is no support for the Bill in the university sector; there is no support for the Bill from the students who are experiencing hardship. Yet speaker after speaker has talked realistically about the need to face the problems. The problem facing us in this House with the Bill is that the Government solution provides too little, at the wrong time, of the wrong thing.
Knowledgable comments have been made by those with an interest in high-quality education about the importance of good access. Only one in 20 speakers has spoken in support of the Government's proposals. From my noble friend Lady White to my noble friend Lord Prys-Davies, speakers from Wales have referred to the anxiety that exists there.
For once the Government are proposing a proper evaluation of public policy. We have the opportunity for consultation and evaluation followed by good legislation with a consensual approach underpinning a good policy reached through the right processes. The Bill should be withdrawn until the committee of inquiry has reported. Many problems face this country and our system. I hope that the Minister will take away all the serious worries that have been raised and answer them in writing if he is not able to do so tonight. I hope that he will take away the message from all the speakers in the debate that the Government have come up with a good proposal with the committee of inquiry and that we can have co-operation. The answer lies with the Government.
9.30 p.m.
Lord Henley: My Lords, of course I can assure the noble Baroness, Lady Farrington, that I shall write in answer to the more detailed points as appropriate in order to keep my speech within suitable limits at this hour of the night. I welcome the noble Baroness to what I understand is the first Second Reading debate that she has wound up from the Front Bench. She will appreciate that I did not agree with absolutely everything she said, but it was a welcome relief to hear a lay voice in this House. On occasions tonight I felt that I had strayed into a branch meeting of the House of Lords chapter of the CVCP. I believe that mere mortals should be allowed to speak from time to time.
As I said in opening, I intend to focus my remarks on the Bill. I accept that certain noble Lords tried to focus on the Bill to a greater extent than my initial pessimism seemed to imply. Obviously, there will be other opportunities to debate the committee of inquiry and the future of higher education. I do not know whether a debate is being initiated by noble Lords on the Cross-Benches on 6th March, as was suggested, but I am sure that noble Lords will find ways and means of ensuring that these important matters are debated in due course. I am sure, that, as always, the usual channels will consider these matters. I noted all the comments made about the committee of inquiry and I am sure that they are matters which Sir Ron Dearing will want to examine in due course.
The noble Lord, Lord Morris, in his theatrical speech, if I can put it that way, quoted from the Conservative Political Centre. I am pleased that he found such good reading emanating from such a source. However, it is not a government body and it is not producing government policy. It is important that the noble Lord should remember that. Perhaps in order to make the point that two can play the same tune I invite the noble Lord to look at the words of his colleague, Mr. Frank Field. Only last week at what I understand was called the "Attlee Lecture for '96", he said:
"It will also be necessary to link in one further reform. Student grants should be converted into universal loans run by the private sector".
I hope that the noble Lord will accept that there is support on his side of the House. Admittedly not in this House but among the more radical thinkers in another place.
I do not intend to focus on the wider issues that are being put before me, but I believe that two points are worth addressing before I turn to some of the detailed issues of the Bill. We have seen a massive expansion in higher education over the years. I was grateful for the welcome for that from Peers such as the noble Lord, Lord Sewel, who pointed out that it has grown since my day, 20 years ago, from approximately one in 12 to one in three. That is a record of which we can be proud because the number doubled, and doubled again since 1979.
From the doom and gloom that we heard from noble Lords, one would think that there were no students left and that it was impossible for any to survive. There were allegations that since 1990 the
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student loan system had deterred students, and particularly students from less well-off backgrounds, from entering university. I assure noble Lords that students from less well-off backgrounds, classified as the occupational groups Cl and C2, D and E, are not being deterred in any way from entering higher education.
The latest figures that we have are from the 1992 student income and expenditure survey. I assure the House that we are not complacent on these matters and a new survey will be starting some time in the autumn which may paint a new picture. However, that survey found that while those students were in a minority in 1988, by 1992 they were in a majority. As my noble friend Lady Carnegy made absolutely clear, the number of students from social classes 4 and 5 accepted for undergraduate courses rose by over 50 per cent. between 1991 and 1994. Those figures are just as good as the figures quoted by the noble Lord, Lord Borrie, when he talked about the Australian scheme.
Further, there has been much concern—and I appreciate that it is something about which one should be concerned—about drop-out rates. Departmental data for 1992–93 shows the overall drop-out rate to be 17 per cent. That was the same as that for the previous year. Noble Lords should remember that where students abandon their courses there is no reason to believe that finance is the primary cause. I ask noble Lords to bear in mind what happens in that regard for our partners in Europe. There we see much higher drop-out rates. Indeed, the noble Lord, Lord Borrie, mentioned the much higher numbers in higher education in France. But he failed to mention that we have a much higher graduate rate. The implication of that is that many more students in France are dropping out and many more here are completing their courses. We should be proud of that. The noble Lord, Lord Addington, may not like our student support system, but in terms of that support system, which is a mixture of grants and the loan, we probably still have one of the most generous schemes in the world available for undergraduate students.
I now move on to some of the specific points that have been put to me in relation to the Bill. The first and most important point was the allegation made by the noble Lord, Lord Morris of Castle Morris, and other noble Lords that the banks simply do not want the scheme. I assure the noble Lord that at present we are encouraged by the amount of interest shown by the banks and building societies and the numbers which have asked to receive the invitation to tender documents. I assure the House that copies of those documents will be made available in the Library.
This is a market test. We should wait to see how those establishments respond to the opportunities offered to them. All noble Lords would have to accept that at this

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stage I cannot begin to say which banks are interested because such matters must be conducted in confidence and they will remain in confidence until a later stage.
Lord Morris of Castle Morris: My Lords, obviously we should not expect the Minister to name names, but could he give a number?
Lord Henley: My Lords, at this stage all I say is that there are a reasonable number, but I am not prepared to give that number. I am referring to establishments which have expressed an interest in receiving the invitation to tender. I am glad that the noble Lord does not expect me to name names, but at this stage I believe it would be unwise of me to give numbers.
The noble Lord referred to the role of the banking ombudsman and the fact that he is not able to look at rejections of loan applications because such decisions are based on commercial judgments. We have discussed that with the banking ombudsman after the noble Lord's colleague, Mr. Boyes, made those allegations in another place. It is quite clear that he may look into a complaint as regards rejection if there is evidence that the decision was based on maladministration. He said also that the latter would cover apparent discrimination against an applicant on broad grounds including a rejection on the basis simply of the student's background or the course that he was following. All students would fall within the ombudsman's scheme and could complain on the grounds of unfair treatment by a bank.
A number of points were made, I believe by the noble Lord, Lord Tope, and the noble Lord, Lord Williams, about how we would set out our negotiating position and the cost to the Government. Noble Lords will have to accept that it is quite wrong at this stage for me to say what the subsidy will be, although I certainly reject the figure being bandied about by the Opposition of some £1,500. I am not prepared to speculate. Similarly, I am sure that everyone accepts that it would be naive and unbusinesslike to set out in public our negotiating position. However, I can assure noble Lords that we shall look at what steps will be necessary in the light of all the spending plans for 1996–97. We shall certainly examine most carefully just how far we can go. The same will apply to the deficit to which the noble Lord, Lord Tope, referred when he complained about the loss as a result of the delay in the Bill.
I turn now to the question of the exclusions of post-graduates, part-timers, mature students and so on. Again, that point was addressed by many speakers. I believe that the noble Lord, Lord Tope, was the first speaker to raise it, but my noble friend Lady Park and, indeed, the noble Baroness, Lady David, also mentioned it. The Bill itself is not about extending eligibility. There are powers already available under the 1990 Act to extend eligibility should we wish so to do. But those pressing the case for other constituencies—for example, for including part-timers, mature students and post-graduates—need to explain most carefully where the money is to be found to pay for such an extension. In the case of the party of the noble Lord, Lord Tope, we may hear an answer at 10 o'clock tomorrow when its fascinating document will be released. I look forward
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to reading it. The same applies to those who would seek longer repayment periods. Again there is power within the Act to extend that by five or seven years in the case, I believe, of medical students or those who receive—
Lord Prys-Davies: My Lords, can the Minister say whether the Government intend to exercise the powers in the 1990 Act?
Lord Henley: My Lords, as I said, the powers are there; but, in answer to the noble Lord, we have no immediate plans so to do. However, I can tell the noble Lord that, obviously, considerable concern has been expressed by a number of speakers that at present the debt burden is not an excessive one. I believe that that was the general gist of the comments. But that debt burden will increase in due course as the full take-up builds in. That might be an occasion when the Government would have to consider extending those powers. But merely to criticise the Government because there is no such provision in the Bill when we already have it in the 1990 Act is slightly unfair. Such powers could be exercised. As I said, we also have to address the question of where the money is to come from and who is to pay for it.
Perhaps I may take the matter referred to by the noble Lord, Lord Prys-Davies; namely, the extension to part-timers. We calculate that if all part-timers took out part-loans the cost would be something in the region of £200 million to £220 million. If they all took out full loans the cost, according to the figure I have, would be £637 million. Those are very considerable sums of money in the light of our total educational spend within the United Kingdom of some £35 billion of which £7 billion to £7.5 billion goes on higher education. If the noble Lord is looking to leave that much extra money in, he really should address the point as to where it will come from.
The noble Baroness, Lady David, asked what we were doing about disabled students. That was a very fair point to make and it is one which I, with my responsibilities within the department for disability matters—responsibilities which come both from the old employment side and the old DFE side—take most seriously. I shall consider it with great care. I can assure the noble Baroness that with private loans, as with the current scheme, the disabled students allowance will still provide financial help for equipment and expenses. Disabled borrowers will still be able to defer payment for longer and repay over a longer period, and disability related benefits will not be taken into account in calculating income for deferment purposes.
I come now to the question as to whether the conditions that apply will be the same. That point was put by my noble friend Lord Soulsby. I can assure him that the same loan ceiling will apply. The key elements, that is the nominal RPI interest rate and deferment, will stay, although obviously if banks wish to bring it below that they would be so entitled to do and students would be at least as well off. I stress for all those who seek the income contingency plan—no doubt this can be looked at in due course and no doubt it can be looked at by Sir Ron Dearing and his committee—that there is a degree

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of income contingency within the scheme as it is at the moment. I think the noble Lord, Lord Prys-Davies, ought to remember that, as it is, the repayment only starts when income reaches a certain level—85 per cent. of average earnings—and that is an income contingency element. I do not think that the noble Lord, Lord Prys-Davies, seemed to grasp that particular fact. The debt is deferred when one's income is below, currently, £15,204 a year. It only starts to bite above that figure.
Finally, I should like to address the crucially important question as to whether there is a case for delay whilst the inquiry proceeds, which I do not think to be the case. The Bill will enable us to establish arrangements characterised—as I put it—by choice, competition and diversity. It will enable us to bring in private sector capital and expertise and I believe, as I said in my opening remarks, there are real, tangible benefits here for student borrowers and for the taxpayer. We remain determined to get them as soon as possible. If we wait for the committee of inquiry to finish its work, private loans would not be available until 1998, 1999 or even later. I do not think that that delay could be justified given the benefits to be had. I do not see any difficulties in implementing our proposals while the committee does its work. We have made clear that it will need to take account of our intention to enable private financial institutions to make loans to students. This, and the extent to which the introduction of private capital for loans will reduce the burden on public spending, will be issues that the inquiry will no doubt want to consider, but that is obviously entirely a matter for the inquiry itself. The fact that we have made clear
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that private loans will go ahead does not mean that we have made up our minds in advance of the inquiry's recommendations. All we have said is that the inquiry does not start with a blank piece of paper; it starts from where we are, but the ground to be covered is a matter for the committee itself.
Baroness Farrington of Ribbleton: My Lords, will the Minister explain to the House what happens if the committee of inquiry suggests a completely different or a very modified scheme immediately after the Government have signed an agreement with a particular range of private banks and building societies committing everyone for five years?
Lord Henley: My Lords, we already have a scheme in operation; it is called the student loans Act of 1990. As I said, we do not start with a blank piece of paper, and that is the point I am making. It will be a matter for the Government then to consider the recommendations as appropriate. I do not think that the announcement of the inquiry will affect the responses of the banks and the building societies to our proposals. We are testing the market for a sensible and realistic development of our existing and successful loans scheme—a scheme that has been in existence since 1990 and a scheme that is now working very well. I hope and believe that the banks and building societies will take advantage of those opportunities, but obviously that is a matter for their judgment. Let us see how they respond.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
House adjourned at eleven minutes before ten o'clock.