Lords Sitting of 18 March 1996

Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Sheffield.

NHS Changes: Public Representations
Lord Molloy Lord Molloy asked Her Majesty's Government:
Whether a majority of any public representations they have received concerning recent changes to the National Health Service has supported those changes.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, we receive representations for and against all our policies. We are satisfied that the changes we have introduced into the NHS are improving performance.
Lord Molloy: My Lords, I am truly grateful to the Minister for that reply. However, there are views different from what she has said from responsible people such as the Institute of National Affairs, which says that there has been a decline of 10 per cent. in the way that people think of the NHS. They believe it is not as good as it was. British Social Attitudes claims that the NHS, which is reasonably well run, is slowly declining and that action should be taken to redress that. The Minister should address that problem, because it seems that a wonderful service could now be on a nasty decline.
Baroness Cumberlege: My Lords, we are improving the health of the nation. Coronary heart disease has fallen by nearly 11 per cent.; strokes by over 5 per cent.; some cancers by over 3 per cent.; and we have nearly eliminated measles, the first country in Europe to do so. For every 100 patients treated before the reforms, we now treat 125. A recent survey of GP fundholders shows real dividends in primary care. The Patient's Charter has halved the average waiting time for elective treatment. Your Lordships, through your report Medical Research and the NHS Reforms, have warmly endorsed the NHS Ramp;D strategy. That is a very, very good record.
Baroness Oppenheim-Barnes: My Lords, is my noble friend aware that I have no idea to whom the institute quoted might have spoken to come by that piece of information, because the general view of people, especially those not in large city conurbations, is that the service has improved greatly; that the scope and availability of treatment have greatly improved; and that when there are occasional, widely publicised things which are unacceptable, they form a small minority, not the majority, of what is happening in the health service.
Baroness Cumberlege: My Lords, I totally endorse my noble friend's view. A recent survey from the National Association of Health Authorities shows that the satisfaction rate is about 86 per cent. of the general population.
Lord Stoddart of Swindon: My Lords, can the Minister tell us about NHS dentistry? Are there more or fewer dentists in the NHS as a result of the recently negotiated contract? Are NHS dentists treating more people these days than they were a few years ago? Have the numbers in the NHS decreased or increased?
Baroness Cumberlege: My Lords, we have more dentists in the NHS at the moment. The noble Lord will be aware that they can treat private patients as well as NHS patients. That has been the situation for decades. We now have more registered patients in the NHS than we had five years ago.
Lord Geddes: My Lords, I declare an interest as a non-executive director of an NHS hospital trust. Is my noble friend aware that the reaction that this hospital receives from the vast majority of the public is greatly in favour of the changes in the NHS and the standard of care that is being given?
Baroness Cumberlege: My Lords, yes; and I believe that that is true of many hospitals up and down the land.
Baroness Jay of Paddington: My Lords, does the Minister agree with the reported remarks of the chief executive of the NHS, Mr. Alan Langlands, who said a month ago:
"The efficiency drive may have gone 'a bit far'… We may need to think about qualitative aspects of care and be less concerned about always increasing throughput"?
Is not the chief executive echoing the concerns expressed by my noble friend and many NHS workers and patients that what we need in the NHS is a return to public service values?
Baroness Cumberlege: My Lords, the noble Baroness will be aware of the Clinical Standards Advisory Group which ensures that clinical standards are maintained. The evidence-based practice and clinical audit ensures that clinical standards are not just maintained but are improved. There is an issue about efficiency. We have to be careful not to press the NHS too hard. However, patients are grateful that the average waiting time has been so reduced and that we are treating more patients than ever before.
Baroness Farrington of Ribbleton: My Lords, does the Minister accept that the reply she gave a few moments ago about the state of the dental service available to people under the NHS is not that experienced by a large and growing number of people? Will she give an assurance that an NHS dental service will be available to every member of the public within a reasonable distance of their homes? Does she agree that that availability has deteriorated over the past 15 years?
Baroness Cumberlege: My Lords, if any patient finds difficulty in gaining access to an NHS dentist he or she should approach the Family Health Services Authorities, which will ensure access.

Free Prescription Drugs for Men
2.43 p.m.
Lord Boyd-Carpenter Lord Boyd-Carpenter asked Her Majesty's Government:
Why they did not seek parliamentary approval of their decision to apply the decision of the European Court of Justice that the age of eligibility for free prescription drugs for men should be lowered to 60.
Baroness Cumberlege: My Lords, the Government's decision to lower the age of eligibility to 60 was implemented by means of a negative instrument which was laid before both Houses on 19th October last year.
Lord Boyd-Carpenter: My Lords, I thank my noble friend for that Answer. Should not a change which involves an additional expenditure of £40 million a year, as has now been admitted, have had positive parliamentary approval by way of legislation?
Baroness Cumberlege: My Lords, a Statement was made by my honourable friend the Minister for Health in another place when the decision was taken. The Statement was offered to this House through the usual channels but the decision was made not to repeat it. Furthermore, when the instrument was laid any Member of your Lordships' House could have tabled a Prayer amending the regulations within the 40 sitting days allowed.
Lord Renton: My Lords, is my noble friend aware that in recent years the European Court of Justice has taken upon itself to add to legislative provisions of the European Community instead of confining itself to interpreting them? Can a protest be made at the forthcoming Intergovernmental Conference in order to stop that practice?
Baroness Cumberlege: My Lords, it was a decision of the European Court of Justice. In this case, the court decided that the principle of equality between men and women in matters of social security should apply in the area of prescription charges. However, it was left to the United Kingdom to decide how to implement the principle. Although the European Court decided the principle, it was left to the United Kingdom to decide how to implement it. Indeed, we could have implemented the decision with savings; rather than equalising at 60 we could have equalised at 63 or 65.
Lord Stoddart of Swindon: My Lords, does the Minister agree that when the directive was discussed in the House of Commons and in your Lordships' House there was no mention of the fact that it would extend beyond equality in pensions? There was no discussion about it and Parliament was not involved. The noble Lord, Lord Boyd-Carpenter, is correct in saying that the
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European Court has now imposed upon Parliament, without its consent, £40 million-worth of expenditure which it did not expect.
Baroness Cumberlege: My Lords, I understand that the Labour Government of the day agreed to the directive when it was published in 1978. I had presumed that it covered social security matters. The European Court has decided that prescription charges should be aligned to social security whereas this Government had presumed the interpretation to be that it should be aligned to health matters.
Lord Boyd-Carpenter: My Lords, why, apart from failure to legislate, was there a failure to repeat in this House the Statement made in another place? Was it because the Opposition did not want it?
Baroness Cumberlege: My Lords, yes, that was the case.

Professor Muhammed al-Mas'ari
2.46 p.m.
Lord Avebury Lord Avebury asked Her Majesty's Government:
How they will respond to the decision of the adjudicator in the case of Professor Muhammed al-Mas'ari announced on 5th March.
The Minister of State, Home Office (Baroness Blatch): My Lords, my right honourable friend the Home Secretary is considering the case further.
Lord Avebury: My Lords, would it not be better if the Home Secretary were to admit defeat now, grant asylum to Professor al-Mas'ari and pay his costs? Or, as regards the safeguarding of arms contracts with countries in the Gulf, is it considered imperative that he should be seen to go down standing on the bridge with all his guns blazing and colours flying in the High Court?
Baroness Blatch: My Lords, no. No fault was found with the Home Secretary using the legal basis on which the decision was reached in paragraph 345 of the immigration rules. It provides that an asylum application may be refused without substantive consideration if there is clear evidence of admissibility to a safe third country. It was deemed that Dominica was not safe and my right honourable friend is considering how to respond to the recommendation made by the adjudicator.
Lord Wright of Richmond: My Lords, will the Minister confirm that whatever decision is taken in the case the Government will use their best endeavours within their powers to restrict the damage which Professor al-Mas'ari's political activities could cause to commercial, political and economic interests in Saudi Arabia?
Baroness Blatch: My Lords, I believe that that is a proper consideration for my right honourable friend. Saudi Arabia is a most important part of the Middle

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East. Indeed, it is very important to the stability of the Gulf. Many British companies employ thousands of workers who depend for their livelihood on legitimate trade with Saudi Arabia. Perhaps I may put that into context by pointing out that in 1994 there were £1.5 billion-worth of exports, of which only 20 per cent. were defence related. It is the third largest market outside the OECD and the single largest market within the Middle East.
Lord Mackie of Benshie: My Lords, do I understand that if Professor al-Mas'ari belonged to a country which was totally unimportant to trade the principle would be different?
Baroness Blatch: My Lords, no. Every single application is treated on its merits. If an application is made it is entirely legitimate for my right honourable friend to use paragraph 345 of the rules to consider different ways of responding and acting legally consistent with our obligations under international treaty. If a safe third country can be found, my right honourable friend's action would be entirely consistent with his obligations under international law.
Lord Marsh: My Lords, quite apart from the question of commerce, which I know is a very real problem—and I speak as someone involved in the "Death of a Princess" saga when that took place in Saudi Arabia—is not the purpose of asylum to grant people refuge from persecution and not to enable them consciously to set up a base for subverting other people's governments?
Baroness Blatch: My Lords, I agree with my right honourable friend the Prime Minister who said:
"For a very long time in our country, we have been willing to take … people who feared persecution abroad into the United Kingdom. That's a long-standing British tradition, and I don't believe anybody would wish to change that. But there is then a very delicate balance to keep. If people enter on that basis, and then use the United Kingdom as a base from which to conduct their own particular activities against another government elsewhere, perhaps particularly a friendly government, then that is a matter that we'd have to look at very carefully".
Lord Monkswell: My Lords, bearing in mind the experience of this country in relation to its trade relationships with Iran consequent on the change in regime in Iran after the fall of the Shah, what steps are the Government taking to ensure that they are not associated too closely with a particular regime and are establishing trade relationships with the country at large instead of with a particular regime?
Baroness Blatch: My Lords, an asylum application in this country is considered entirely on its merits. My right honourable friend has obligations under international treaty. There may be two ways of satisfying an application which is made under our international obligations. One method may be to find a third safe country. Therefore, it is entirely legitimate that my right honourable friend should consider that option, and in considering it, at the same time he should consider British interests.
Lord Avebury: My Lords, did not the conditional mood in which the Prime Minister expressed himself indicate that he was considering powers for the future and not as they affect asylum seekers in the United Kingdom as they are at present? Will the noble Baroness say whether Professor al-Mas'ari is accused of having broken any laws in the United Kingdom? If not, is he not entitled to be considered on the same basis as a native of this country?
The noble Baroness seems keen on quoting the law. In that case, perhaps she will tell me why the Secretary of State failed to comply with the direction of the previous adjudicator given on 7th March 1995 under paragraph 4(2)(b) of the second schedule to the Asylum and Immigration Appeals Act 1993 and Section 19(3) of the Immigration Act 1971 to consider the substantive and outstanding application of the applicant to asylum? Why was that not done under the direction of the adjudicator?
Baroness Blatch: My Lords, we know that as regards the judgment in that particular case—which is the subject of this Question—my right honourable friend, who had sought to seek a third safe country in Dominica, was overruled on that point. He is now considering how to respond to that. It was found also that my right honourable friend was not in breach of Article 3 of the convention that he acted in a discriminatory way against Professor al-Mas'ari.
I repeat that we wish to continue to offer asylum to people who genuinely need it; but we are bound to be concerned if that offer of a safe haven is then used to conduct activities against other friendly governments which may damage the British national interest. The British Government are bound to have to consider British employment and other matters relevant to the case. If my right honourable friend has two options which are both consistent with our obligations under international law, it is right—and I believe that he has a duty—to consider the British interest.

Organophosphate Pesticides
2.53 p.m.
The Countess of Mar The Countess of Mar asked Her Majesty's Government:
Whether the effects on human health of chronic, low level exposure to organophosphate pesticides and veterinary medicines are recognised by the Department of Health.
Baroness Cumberlege: My Lords, no human syndrome associated with long-term exposure to organophosphate pesticides or veterinary medicines at levels below those which can cause acute effects has been identified. However, the Government are funding research by the Institute of Occupational Health in Edinburgh into the possible long-term human health effects of organophosphorus sheep dips.
The Countess of Mar: My Lords, I thank the noble Baroness for her reply. Does she recall that on 24th January, in response to a Question from me, she said that the Chief Medical Officer had circulated GPs with a certain amount of information and added:
"I believe that some covered chronic illness also"?—[Official Report, 26/12/96; col. 1034.]
Is she aware that last week, on 12th March, when he was asked a question about OP poisoning, her honourable friend in another place said:
"My Department will shortly be publishing updated guidance for doctors on pesticide poisoning, which includes a reminder of the notification schemes"?—[Official Report, Commons, 12/3/96; col. 768.]
Will that information contain anything about the chronic effects of exposure to OPs? How soon is "shortly"? When the noble Baroness mentioned the matter on 24th January she used the words "very shortly" and when her right honourable friend spoke about it last week, he used the word "shortly".
Baroness Cumberlege: My Lords, it will include information on chronic health effects. It is a much more comprehensive booklet. It relies on new medical and scientific advances. It will be published by Easter and will be sent to general practitioners, accident and emergency departments and consultants in communicable diseases. It will be on sale by HMSO and I shall ensure that the noble Countess receives a free copy.
Baroness Jay of Paddington: My Lords, does the Minister's reply, which is welcome given that she has told us that that will happen very quickly, reflect that it is now supposed that GPs have not been as well briefed on the subject as has been suggested previously? The noble Baroness may remember that when the noble Countess has asked this Question before in a slightly different form we have always been assured that general practitioners were both well-informed and fully capable of dealing with the matter. Does the new guidance suggest that that may not be the case, which would be rather worrying in view of the large number of cases?
Baroness Cumberlege: My Lords, that is not the case. In fact, this booklet was first produced in 1986, and it has been updated. The purpose is to ensure that general practitioners are now more aware of the medical advances which have taken place. But the Chief Medical Officer wrote to all GPs—indeed all doctors—in 1991 and again in 1993 and published an article in the Chief Medical Officers' Update in October 1995. Therefore, we are trying to ensure that GPs in particular are aware of the situation.
Baroness Jay of Paddington: My Lords, I am sorry to come back to the Minister but it is important to clarify the matter. Is she saying that, although her honourable friend in another place said last week that this is to be new guidance to general practitioners, it is simply a revision of a previous booklet?
Baroness Cumberlege: My Lords, it is an updated version of a previous booklet. It is a new version. I do not see that there is a tremendous significance between
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updating existing guidance, taking into account medical advances and ensuring that it is much more comprehensive, and producing an entirely new booklet.
The Countess of Mar: My Lords, I am grateful to the Minister for the information which she has just given me, in particular about the booklet to be published soon. But will she use the NHS publicity machine to make sure that all GPs are aware of the effects of organophosphates? The Minister will be aware from a sample of the letters that I have sent her recently that patients are suffering terribly because their GPs and consultants do not understand their condition.
Baroness Cumberlege: My Lords, yes, we shall try to do all that we can to make doctors aware of this problem.
Lord Mackie of Benshie: My Lords, is it not time for the Government to consider whether the use of organophosphates is worth the threat to human health?
Baroness Cumberlege: My Lords, the noble Lord will be aware that organophosphates are used for many purposes. They are used not only for sheep dips but also for pesticides. That matter is under constant review by the advisory bodies from which the Government seek advice. They are keeping the matter under constant review. I am sure that sheep farmers will say that it is important to ensure that flocks are in good condition.

Business of the House: Consolidated Fund (No. 2) Bill
2.59 p.m.
The Lord Privy Seal (Viscount Cranborne): My Lords, I beg to move the Motion standing in my name on the Order Paper. In doing so, perhaps your Lordships will allow me to indulge in what I think will be something of a pre-emptive strike. For a reason that may not be altogether immediately apparent to your Lordships, I feel that it may be possible that some of my noble friends may be moved to oppose the Motion.
I wonder whether I could venture to suggest to your Lordships that wrangles surrounding the Motion have become a not altogether welcome feature of our debates over the past few months. Although I have the very greatest respect for a number of my noble friends who take a different view from me, I should like to point out that the matter has been discussed recently in the Procedure Committee, and that in my view—I hope not erroneously—your Lordships have expressed a pretty clear consensus on the matter.
If any of my noble friends still feel that the Motion should be disputed, I hope that they will have the confidence of their convictions and take the matter to its logical conclusion and test the view of the House.
Moved, That Standing Order 44 (No two stages of a Bill to be taken on one day) be dispensed with to enable the Consolidated Fund (No. 2) Bill to be taken through its remaining stages on Tuesday, 19th March.— (Viscount Cranborne.)
On Question, Motion agreed to.

Chemical Weapons Bill
3.1 p.m.
Report received.
Clause 33 [Annual reports by Secretary of State]:
Lord Peston Lord Peston moved the manuscript amendment:
Page 22, line 6, at end insert—
("( ) In preparing the report the Secretary of State shall take appropriate advice.
( ) The criteria by which the Secretary of State shall be guided in preparing the report shall include the need to—

(a) reassure Parliament and the public that the United Kingdom is fulfilling its responsibilities under the Convention,

(b) state the way in which the Secretary of State is discharging his responsibilities under this Act, and

(c) maintain an appropriate balance between the legitimate needs of transparency and commercial confidentiality in the provision of information in the report.")

The noble Lord said: My Lords, there is only one amendment down for today's proceedings and, therefore, we have a long day ahead of us! The amendment is tabled in my name and that of the noble Lord, Lord Redesdale. As noble Lords are aware, there is no basic dispute about the validity of the Chemical Weapons Bill or about,our great desire to see it on the statute book as soon as possible. The debates that we have had in your Lordships' House, both in Committee and today, concern detail and our hope to be able to improve it; or, as it has not been my desire in such matters to divide your Lordships' House, to get the Minister to place on record the Government's view on such matters which will then make the Bill more sensible without having to press amendments to a Division.
Frankly, the amendment arises out of a feeling of irritation as regards the Minister when we debated the matter earlier. That is most unusual for me in regard to my relationship with the noble and learned Lord. However, noble Lords will recall that the Government thought it important for there to be a report on how the Act, as it would then be, is working and whether it is achieving the ends that not only Her Majesty's Government but also the international community wish to see happen more generally in the area.
I agree that the noble Lord, Lord Redesdale, and I tabled a rather elaborate amendment on the matter on the last occasion. My feeling about the Minister's response at that time was that it was somewhat negative. I have tabled the current amendment in the hope that I shall be able to encourage the Minister to say something more positive in the area.
The report about which we are talking is meant to be useful. Indeed, the Government would not have agreed to having such a report if they did not think it would be useful. However, the word "useful" must certainly mean informative. As the amendment points out, there are at least two groups of people who need to be reassured about the chemical weapons convention and, therefore, the workings of the Chemical Weapons Bill. One is Parliament—that is, both the other place and indeed, more importantly, your Lordships' House; the second group is the public outside in all their different dimensions.
One aspect of the public interest was raised by the Daily Mail in its "Night and Day" section which seemed to find that it was altogether too easy to acquire chemicals which could be converted into lethal weapons. I shall not rehearse all the arguments regarding whether we should have a list which tells everyone what potentially dangerous chemicals are, so that they know what to go out and try to buy. We certainly agree that that would be going too far; but, on the other hand, one definitely needs a certain amount of transparency in the matter.
The noble Lord, Lord Redesdale, and I have rather changed tack here. Instead of putting down in detail exactly what ought to be in the annual report—largely we were right to do so, although not entirely—we have outlined the criteria by which the annual report would be judged. That is the exact purpose of the amendment. In particular, it refers to the point emphasised quite rightly by the Minister; namely, that in many of these cases we are dealing with matters of great commercial confidentiality. It certainly would not be my intention to undermine the economic viability of any business by revealing its legitimate commercial secrets. But, on the other hand, there is a public interest in transparency.
In that connection I am happy to say that the Royal Society of Chemistry which has advised me and the Chemical Industries Association, with which I have been in touch and which has sent me briefing material, both take my amendment to mean that the annual report should—and, implicitly, could—provide transparency while safeguarding commercial confidentiality. The Royal Society of Chemistry and the association recognise that the national authority is not expected to be the sole source of expert advice to the Secretary of State, which again confirms what the Minister said on the last occasion when we discussed the matter. Both the society and the association believe that there should be consultation with appropriate expertise, which should include trade associations and professional and learned bodies, together with individual industrial and academic expertise. The purpose of the amendment is to lead us to all those things.
In moving the amendment, what I most hope for is a more positive response on the part of the Minister, by which I mean more positive than he was able to be on the last occasion. That would certainly underline the importance which we all attach to the legislation and, as I said, it would reassure the relevant interested parties. I beg to move.
Lord Boyd-Carpenter: My Lords, we have before us an extraordinary amendment, especially as regards the first two lines, which read:
"In preparing the report the Secretary of State shall take appropriate advice".
Surely every Secretary of State in preparing every report takes what he believes to be appropriate advice. It is very odd indeed suddenly to put such a provision forward as an amendment to the legislation. I can hardly understand what the noble Lord, Lord Peston, is playing at, other than the fact that his desperate need to find something that he could propose to amend has, perhaps, led him to invent this amendment.
Lord Redesdale: My Lords, I have attached my name to the amendment. I should like to commend the noble Lord, Lord Peston. As regards the last point just made by the noble Lord, if he had been present at the last stage of the proceedings on the Bill he would know that that is one of the central issues. Indeed, the noble Lord, Lord Peston, has managed to table an amendment which has been sufficiently watered down so as to enable the Minister to give us an indication of the Government's support.
One of the problems that we on this side of the House have is that, during the last stage of the Bill, the Minister quite rightly pointed out many flaws in the amendments that we put forward. He pointed out that they would make the job of passing the Bill more difficult and that they also seemed to be quite negative. We pushed for the establishment of an advisory board to give advice on how the legislation could be implemented and, therefore, how the convention could be upheld. We are dealing with a very complex field in which a great many changes will take place as the years progress. We wanted to ensure that as many as possible of the changes that could take place would be given proper regard.
I have one point to make on the Bill. It relates to the confidentiality provision. On the last occasion the Minister stated that companies would have great difficulty in the fact that, if they put forward too much information, their commercial confidentiality would be at stake. I hope that the Minister can give us some indication that the provision will not be used as a smokescreen for companies which do not comply totally with the spirit of the Bill. I hope that the Minister will give us an assurance on that.
The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie): My Lords, I wish to respond immediately to my noble friend Lord Boyd-Carpenter. At an earlier stage in this Bill the anxiety I had was that the Government or the Secretary of State should not be confined to receiving advice from one source only because on a complicated matter such as this there may be many occasions and different circumstances where we would want to receive advice from a wide range of bodies. In some circumstances that would necessarily be confidential. I can confirm to my noble friend that we shall be seeking advice across a broad front. The only circumstance we wish to avoid is being restricted to taking advice from one particular source, as was suggested.
I do not think I shall surprise the noble Lord, Lord Peston, when I say that I do not intend to accept the amendment. That is not because I object to it in principle, but because I believe it is unnecessary. As I understood the noble Lord, his concern was that he should give me an opportunity to explain in more detail the Government's proposals in respect of the annual report. I am happy to attempt to respond to the opportunity that he has afforded me. I am pleased that both noble Lords who have tabled this amendment appear to have accepted the arguments I put forward against specifying the precise content of the annual report in statute.
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The national authority will require companies and academic bodies to provide information. If this information is to be given freely, those giving it must be confident that the information will be properly protected and that secrets will not be disclosed. Any list of contents in an annual report must not cast doubt on the protection that will be given to confidential information. However, the aim of the annual report is—as the noble Lord identified—to assure Parliament that the Secretary of State is undertaking his responsibilities under the Act effectively. There is a clear tension, which has been properly identified by the Royal Society of Chemistry in its useful briefing, between including enough information in the annual report to provide this necessary assurance, and properly protecting confidentiality. It would be too difficult, I believe, to specify the content of the report in statute in a way which would satisfy those competing demands.
The approach that we have included in the Bill is neither a comfortable one nor a soft option but will ensure that the report provides the right information to Parliament. The Secretary of State will have to pick through all the information at his disposal and decide, within the constraints of commercial confidentiality and national security, how best he can satisfy Parliament that he is undertaking his responsibilities effectively. The report could not hide behind a poorly targeted contents list laid down in statute.
I have said that this amendment is in my view unnecessary. I need not remind noble Lords that the annual report will be about the implementation of a significant arms control treaty. Any report prepared on the basis proposed in the Bill will be prepared in the knowledge that it will be subject to careful scrutiny by this House and by many expert people outside. There is no doubt that the annual report will have to contain sufficient information to provide assurance that the Secretary of State is doing his job effectively. I can assure noble Lords that the report will be as informative as it can reasonably be. I hope that assurance will be accepted.
I have announced in earlier debates our intention to establish an advisory committee. The views of the advisory committee will be sought on the draft report. If the committee believes the annual report does not present a complete picture of the activities of the national authority, it will be able to draw its anxieties to the attention of the Secretary of State directly. This will provide a further safeguard that officials are not being over-cautious when drawing up the report. The noble Lord, Lord Redesdale, was concerned about that.
I hope that with that expanded explanation on the way we wish to approach this matter, and recognising that clear tension which the noble Lord, Lord Peston, also recognised, he will appreciate that our desire is exactly the same as his; namely, to ensure that there is as comprehensive a report as possible. We do not wish to have this amendment on the face of the statute because we believe it is unnecessary rather than objecting in principle to trying to provide the type of report that he would wish.
Lord Peston: My Lords, I thank all three speakers who have contributed. I worry that no matter how gentle, restrained or uncontroversial I seek to be in

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anything I say, I still seem to raise someone's hackles at some point. I assure the noble Lord, Lord Boyd-Carpenter, that he knows me well enough to realise that if I were looking for trouble I could have found a dozen or two dozen amendments to keep your Lordships going for several hours. We are somewhat at the fag end of our dealings on this matter. The intention of the amendment was as the Minister recognised; namely, to elicit from him precisely the remarks he has made. I think that the noble Lord, Lord Redesdale, would agree with me that the Minister has done that; namely, he has guaranteed that we shall obtain the kind of serious report that we would wish to have.
I have no doubt at all that Her Majesty's Government will pursue this weapons question vigorously. One of the reasons we have been anxious to get the Bill on the statute book is precisely to enable us to get going with that matter. I thank the Minister for his reply and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Arbitration Bill [H.L.]
3.16 p.m.
Report received.
Clause 2 [Scope of application of provisions]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 1:
Leave out Clause 2 and insert the following new Clause—
SCOPE OF APPLICATION OF PROVISIONS
(".—(1) The provisions of this Part apply where the seat of the arbitration is in England and Wales or Northern Ireland.
(2) The following sections apply even if the seat of the arbitration is outside England and Wales or Northern Ireland or no seat has been designated or determined—

(a) sections 9 to 1l (stay of legal proceedings, &c.), and

(b) section 66 (enforcement of arbitral awards).

(3) The powers conferred by the following sections apply even if the seat of the arbitration is outside England and Wales or Northern Ireland or no seat has been designated or determined—

(a) section 43 (securing the attendance of witnesses), and

(b) section 44 (court powers exercisable in support of arbitral proceedings);

but the court may refuse to exercise any such power if, in the opinion of the court, the fact that the seat of the arbitration is outside England and Wales or Northern Ireland, or that when designated or determined the seat is likely to be outside England and Wales or Northern Ireland, makes it inappropriate to do so.
(4) The court may exercise a power conferred by any provision of this Part not mentioned in subsection (2) or (3) for the purpose of supporting the arbitral process where—

(a) no seat of the arbitration has been designated or determined, and

(b) by reason of a connection with England and Wales or Northern Ireland the court is satisfied that it is appropriate to do so.

(5) Section 7 (separability of arbitration agreement) and section 8 (death of a party) apply where the law applicable to the arbitration agreement is the law of England and Wales or Northern Ireland even if the seat of the arbitration is outside England and Wales or Northern Ireland or has not been designated or determined.").
The noble and learned Lord said: My Lords, this amendment will replace the existing text of Clause 2 in its entirety. Although the revision appears at first sight to be extensive, I hope that I can assure the House that what is intended is no more than a clarification of the original text. No essential change of policy or direction is either intended or achieved. The broad purpose of that clause is to define the circumstances in which Part I of the Bill has application so as to enable parties to international arbitrations readily to ascertain when they will and when they will not be affected by our law of arbitration and the jurisdiction of our courts. The clause as originally introduced was to have and, I think, substantially had that effect. However, it was perceived by some international jurists as purporting to have some extra-territorial effect, and therefore to confer jurisdiction on our courts which might in the case of an international arbitrate on cause conflict with the jurisdiction of foreign courts. This was never our intention and therefore we have redrafted the clause to clarify its meaning and to remove these unexpected doubts about its scope.
We have achieved this clarification largely by changing the basic principle in subsection (1), which was formerly expressed in terms of where our law applied, so that it will now be expressed in terms of the seat of the arbitration. Where the seat of the arbitration, which is defined in Clause 3, is here the whole of Part I will apply without exception. The remainder of the clause is concerned with cases where either the seat is not here or no seat has or has yet been designated or determined. The new subsection (2), which corresponds to the former subsections (3)(a) and (3)(c), ensures that our obligations under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, will always be fulfilled.
The new subsection (3), which corresponds to the former subsections (3)(b) and (4), ensures that our courts will have power to make orders in support of an arbitration with no seat here except where to do so would be inappropriate. Subsection (4) is new. It is necessary because the focus of the clause has now changed from what is the applicable law to where is the seat of the arbitration. It gives our courts all the powers they have over an arbitration with a seat here in a case where the court is satisfied, as a matter of English law, that there is no seat elsewhere. If there is no seat elsewhere, there could be no possible conflict with other jurisdictions. In addition, these powers are only exercisable where there is a domestic connection and where it is appropriate to exercise them. A good example would be a case where an extension of time is needed, under Clause 12, to commence arbitration proceedings which, when commenced, would be likely to have a seat in this country.
Subsection (5) is new and is also necessary because of this change in focus. Even if there is no seat here, the question whether the arbitration clause is separable from the contract containing it and the question of the consequences of the death of a party are both to be determined under the relevant clauses of the Bill where our law is applicable to the arbitration agreement.
I trust that this explanation will relieve any possible anxiety that anything more is intended by the amendment than a change in presentation and

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clarification of what, I am sure noble Lords will agree from that explanation, is necessarily a complex subject. I beg to move.
On Question, amendment agreed to.
Clause 38 [General powers exercisable by the tribunal]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 2:
Page 14, line 17, leave out ("party") and insert ("claimant").
The noble and learned Lord said: My Lords, noble Lords will recall that Clause 38(3), which deals with security for costs, was amended in Committee. In amending the subsection the term "party" was used to describe those against whom an order for security of costs could be made. It would be unjust to enable a tribunal to order security for costs against a respondent as the price for being allowed to defend himself. A defendant in litigation cannot be required to do so. Therefore we need to limit the subsection to the ordering of costs against a claimant which by virtue of Clause 82 includes a counterclaimant. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 3:
Page 14, line 19, leave out ("party") and insert ("claimant").
On Question, amendment agreed to.
Clause 57 [Correction of award or additional award]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 4:
Page 22, line 1, leave out from ("any") to second ("the") in line 2 and insert ("claim (including a claim for interest or costs) which was presented to the tribunal but was not dealt with in").
The noble and learned Lord said: My Lords, this is a small drafting change. Unless any noble Lord wishes me to elaborate on it, I beg to move.
On Question, amendment agreed to.
Clause 61 [Award of costs]:
Lord Hacking Lord Hacking moved Amendment No. 5:
Leave out Clause 61 and insert the following new Clause—
AWARD OF COSTS
(".—(1) The parties are free to agree on the power of the tribunal as regards the award of costs.
(2) Subject to the agreement of the parties, the tribunal shall determine the costs of the arbitration and decide which of the parties should bear the costs and in which proportion between the parties the costs should be borne.").
The noble Lord said: My Lords, I spoke to a similar amendment in Committee, but in a divided army. As the Minister will recall, another solicitor of the Supreme Court—I cannot detect his presence in your Lordships' Chamber—the noble Lord, Lord Byron, argued to the contrary. I beg to move the amendment again on Report because I believe it to be an important matter.
I submit that the process of arbitration in which the parties consensually agree how to resolve their dispute should be different from the process of adjudication in the law courts. In the law courts the rule is that costs follow the event. As I argued at Second Reading and in Committee, that does not always produce a fair result.
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One can see that it produces a fair result in a simple dispute, perhaps as regards a road accident, when the issue is whether or not a defendant is at fault. If the defendant is at fault, the order of costs should clearly be against him. If he is not at fault, and therefore in the judgment of the court the plaintiff should not have brought proceedings, it is clear that the plaintiff should bear the costs of those proceedings.
However, the commercial world is much more complicated. As has been shown in a number of cases, in the more complex cases brought before the courts, the issues can be narrowly decided in favour of one party rather than another. It is not a world of black and white but of shades of grey. In those circumstances, the rule that costs follow the event operates in an unfair way.
Having identified that the rule of costs can produce an unfair result in the court process—I produced more detailed argument at Second Reading—it is of paramount importance that the arbitrator should be free to decide costs according to his best judgment. That is the law at present. That was the proposal in the draft Bill in July produced for consultation by the committee chaired by Lord Justice Saville. Only since then has the measure been introduced into the draft Bill that the arbitrator should start on the basis of applying the rule that costs follow the event.
I submit that the arbitrator should be left free. He should not be restricted in his order for costs but should do what is fair between the parties. It may well be fair, for example, for him to make no order for costs, or to make an order for costs in certain circumstances against the winning party. He should not be tied down by the principle that costs follow the event.
It is because I feel strongly for the reasons I have advanced to your Lordships that I ask noble Lords to accept the amendment. In so doing it gives freedom to the arbitrator to award costs as he thinks fair and right.
Lord Ackner: My Lords, I resist the amendment. I do not see any provision in Clause 61 which ties the arbitrator down. Subsection (2) provides from the very outset that it is,
"Unless the parties otherwise agree".
Therefore before embarking upon considering the discretion of the arbitrator, the parties can themselves agree how they wish the matter to occur. If they do not agree, the arbitrator is in a position to avoid an unfair result because of the exception in subsection (2). I should have thought it an advantage for parties to know at the outset what is the usual provision, unless they agree to the contrary, in regard to costs. I see no restriction which can operate unfairly, or at all, in the clause as it now stands.
Lord Fraser of Carmyllie: My Lords, I have little to add to what I said on the point in Committee. Although my noble friend Lord Byron is not present, I have no reason to believe that he has departed from the strong approach he took.
In debate a number of other noble Lords pointed out that the principle that costs follow the event is well established and has stood the test of time well.

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The principle is followed in litigation. While in some procedural matters there is merit in making a distinction between litigation and arbitration, in this case I see no valid reason for arbitration to diverge from the courts. It seems to me entirely fair as a general principle, and that it should be stated as a general principle, that costs should follow the event.
However, as the noble and learned Lord, Lord Ackner, pointed out, the tribunal has the discretion to disapply the principle where it considers that it would be inappropriate to do so. That is spelt out expressly in subsection (2). Even more importantly possibly, if the parties really do not like the principle set out in Clause 61, they are entirely at liberty to devise some other arrangement. It would seem to me that the clause as presently drafted should be maintained within the Bill.
Lord Hacking: My Lords, at least I do not speak from a divided camp, although I do not have supporters. I shall withdraw the amendment, but I must make two comments.
First, the noble and learned Lord, Lord Ackner, referred to Clause 61(2) which states,
"Unless the parties otherwise agree".
The reality is that parties do not start to agree on issues of costs before the proceedings have begun. In the practical world, I suggest that while there is that power of the parties otherwise to agree, they do not address that matter or come to any other agreement on costs.
Secondly, as the noble and learned Lord said, it is quite right that discretion is available to the arbitrator not to apply the general rule that costs follow the event. However, the central point I seek to make is that the process of arbitration should be different and should be seen to be different from the court process. I tabled the amendment for that reason and I still believe that I was right in tabling it. Lord Justice Saville's committee was right in the first place; the provision was not in the committee's draft which was produced last July. I was seeking to persuade your Lordships to agree with the original decision of that committee, which I suggest was right. Alas, however, I regret that I do not have support and in those circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.30 p.m.
Clause 66 [Enforcement of the award]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 6:
Page 24, line 14, leave out subsection (3).
The noble and learned Lord said: My Lords, the clause as drafted gives a non-exhaustive list of grounds on which leave to enforce an award in the same manner as a judgment shall not be given by the court. The list is non-exhaustive, but we see a danger in specifying only some of the relevant matters. Parties may be led astray by thinking that matters which are not mentioned are not covered. That is not the case.
We have given some thought to constructing an exhaustive list, but it would be difficult to be absolutely sure that all matters had been covered. On balance now we think it would be preferable to exclude the list altogether from the Bill. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 7:
Page 24, line 26, at end insert("or by an action on the award").
The noble and learned Lord said: My Lords, the clause deals with the enforcement by the court of the tribunal's award. Clause 66(5) saves the position of the recognition and enforcement of an award under other enactments or rules of law. The Geneva and New York Conventions are mentioned particularly, and we think that there is merit in making it clear that parties have a right also to recognition and enforcement by means of an action on the award. I beg to move.
On Question, amendment agreed to.
Clause 74 [Immunity of arbitral institutions, &c.]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 8:
Page 29, line 6, after ("liable") insert(", by reason of having appointed or nominated him,").
The noble and learned Lord said: My Lords, noble Lords will be aware that Clause 74 introduces limited immunity for arbitral institutions. The purpose of subsection (2) is to prevent litigious parties who are prevented from suing an abitrator by virtue of the immunity conferred by Clause 29 from turning to the institution which appointed or nominated him.
As drafted, the clause could be interpreted to have a rather wider effect than we envisaged. The effect of the amendment is to limit the scope of the clause. We had in mind that the institution should be protected from the consequences of anything done or not done by the arbitrator simply because it had appointed or nominated him. The clause is not intended to protect the institution in a range of other circumstances. I beg to move.
On Question, amendment agreed to.
Clause 80 [Notice and other requirements in connection with legal proceedings]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 9:
Page 31, line 23, after("periods,")insert("the extending or abridging of periods,").
The noble and learned Lord said: My Lords, the purpose of this clause is to tie together the rules of court and those provisions of the Bill which refer to legal proceedings. Certain provisions of the Bill require an application or appeal to be made to the court within a specified time. Subsection (5) makes it clear that the rules of court in relation to the reckoning of periods and the consequences of not taking a step within the period prescribed by the rules apply in such cases. The subsection also needs to cover rules of court on the extension and abridgement of periods of time. I beg to move.
On Question, amendment agreed to.
Clause 81 [Saving for certain matters governed by common law]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 10:
Page 31, line 38, at end insert (", in particular, any rule of law as to—

(a) matters which are not capable of settlement by arbitration;

(b) the effect of an oral arbitration agreement; or

(c) the refusal of recognition or enforcement of an arbitral award on grounds of public policy.").

The noble and learned Lord said: My Lords, in speaking to Amendment No. 10, I wish to speak also to Amendment No. 11. These are simple amendments which are designed to change the particular rules of law which it has been decided are worthy of mention. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 11:
Page 31, line 39, leave out subsection (2).
On Question, amendment agreed to.
Clause 85 [Modification of Part I in relation to domestic arbitration agreement]:
Lord Hacking Lord Hacking moved Amendment No. 12:
Leave out Clause 85.
The noble Lord said: My Lords, in addressing your Lordships on Amendment No. 12, I wish also to address Amendments Nos. 13, 14 and 15. As will be recalled from Committee, all four amendments concern the same issue. It can be simply stated: should there be a single arbitration law which is equally applicable to domestic and international arbitrations or, as now, should there be a domestic arbitration law and a separate international arbitration law? It arises in three respects: first upon the court's power to stay proceedings; secondly upon the parties' rights to go to the Court on a preliminary point of law; and thirdly upon the parties' rights to go to the Court on a question of law.
The Minister will remember the arguments that I have been advancing while the Bill has been in the House and the words which I addressed to your Lordships at Second Reading, and in Committee. The starting position is that there is no logic in having two different forms of arbitration law. I cited to my noble and learned friend the situation where an international English-based construction company is in an arbitral dispute with another English-based international construction company. In that situation the two companies in arbitration would be covered by domestic arbitration law. But the English construction industry is successful and is involved in many contracts throughout Europe and the world. Therefore, the scenario can easily arise with an arbitration clause between an English-based construction company and an overseas-based construction company. That complexity can be furthered when there are two English-based international construction companies and one foreign one. There is no logic why there should be two forms of arbitration law in such disputes.
I am sorry that the noble Lord, Lord Lester, is not here since there is also the difficulty that in the Bill we may be contravening European law. We are not giving
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the same rights to nationals of other member states as we give to nationals of our own member state in the European Union. As noble Lords will recall, I previously advanced the argument that the matter should be addressed while the Bill is passing through the Houses of Parliament. Indeed it should be addressed while the Bill is before your Lordships.
The use of statutory instruments does not have a happy history in arbitration matters or other statutes. In reality, what happens is that, when a matter is left for a statutory instrument to be placed before Parliament at a later stage, it goes to the bottom drawer of the arbitration reform desk or the commercial consumers desk in one of the departments of state and is laid aside. I remind noble Lords of what happened last time in an arbitration matter where a right of statutory instrument was vested in the Minister to abolish the special category cases. After a few years it became plain that there was no justification for keeping the special category disputes. There was an intention to introduce a statutory instrument under the 1979 Act, but nothing was done. Seventeen years have gone by without the statutory instrument ever being introduced. I remember the Bill being in your Lordships' House in 1979, when the specific intention was to review the position within three years. But nothing was done for 17 years. That is why I say that the use of the statutory instrument is not satisfactory. In any event, it is a matter of primary law and should be dealt with by your Lordships, who should decide whether there should be a separate regime for domestic and international arbitrations.
I wish to go further and issue a specific invitation to my noble and learned friend. Will he be kind enough to agree to enter into a consultation period between now and Third Reading? I am very sorry that the noble and learned Lord, Lord Mustill, is not in his place and cannot speak on the results of his inquiries. It so happens that on the very night of the Committee stage the noble and learned Lord, Lord Mustill, in his much more revered position as President of the Chartered Institute of Arbitrators (an organisation about which I believe the noble Lord, Lord Peston, now knows) and I went as guests to a dinner there. Both of us made inquiries as to whether there was any opposition to having our arbitration law applying equally between domestic and international arbitrations. Certainly my inquiries, and I understand his also, produced the result that there was no opposition.
As my noble and learned friend will recall, this particular issue did not go out to consultation under Lord Justice Saville's committee. However, the committee applied its mind to the matter in Chapter 3 of its report in February this year. The committee found no justification. It examined the particular arguments advanced in favour of keeping the distinction and found them not to be well founded. I ask my noble and learned friend to take that matter also into account.
My noble and learned friend may be concerned about the impact of my amendment on current law, in so far as it might deprive parties of rights that they now have, and will not have if the Bill becomes law with the abolition of the distinction between domestic and arbitration law. Perhaps he will be kind enough to

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examine the facts. The facts concerning domestic arbitration are that, currently, under our law it is not possible to contract out of the three procedures I identified to the House. There is no valid domestic arbitration agreement that has the contracting out provisions. Under current law those involved in domestic arbitration are not entitled to contract out. As for depriving parties in the future, the same logic applies. The process in which the power of the courts is removed (and I shall deal in a moment with the stay of arbitration) under preliminary points of law and questions of law is a positive process in which the parties have to agree to contract out. Therefore, if that right does not already exist in agreements, no rights are being taken away from anybody.
I therefore ask the Minister to look at the logic of the position, and at the logic of my proposal that he should carry out a consultation process between now and Third Reading. I suggest that that allows plenty of time. No large group of persons would be at a disadvantage if this measure were to be brought forward. For all the reasons advanced, I venture to think that he would find no substantive opposition to this proposal. He would therefore be able at Third Reading to advise the House, following a consultation period, that the distinction is no longer sensible. In doing so, he would give 'our arbitration law the appearance of good sense, and make it marketable to the international community. That is of great importance. I beg to move.
3.45 p.m.
Lord Fraser of Carmyllie: My Lords, some noble Lords may recollect that I gave an undertaking in Committee to reflect further on the question as to whether we should remove the special provisions on domestic arbitrations from the Bill now, or wait until we are able to consult those who would be affected.
I accept that my noble friend's arguments are finely balanced. However, taking all factors into account, I am still of the view that caution is necessary and we should wait to carry out a consultation exercise. Both noble and learned Lords, Lord Mustill and Lord Donaldson, urged caution when we last debated the issue. Notwithstanding what my noble friend said about informal consultation at a dinner which I did not attend, I believe that they are right to urge such caution.
I am concerned particularly about the impact that a move to exclude the special provisions for domestic arbitration might have on small firms. I believe it right that we should give them an opportunity to put forward their views. My noble friend should be aware that if we move now, without warning, we should deprive domestic parties of the protection they now enjoy whenever a dispute arises following the enactment of this Bill regardless of when the arbitration agreement was made. That is the effect of Clause 84. I have reservations about doing that as we could well lay ourselves open to criticism from the users of arbitration.
I note also the comments that my noble friend made in Committee and repeated this afternoon about the length of time it has taken to remove the special provisions for arbitration agreements in the insurance
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and other industries. I assure him that we do not intend to follow this model for the special provisions for domestic arbitration agreements.
We intend to act swiftly to consult those with an interest once the order-making power in Clause 88 is available. I regret to say that I cannot properly agree to my noble friend's suggestion that the consultation period should be limited to the period that will elapse between this Report stage and Third Reading, which may be as little as 10 days. We have to allow for a greater period than that.
Although I am unable to agree with the proposal that he put forward, my noble friend may find it helpful to know that I intend to remove the distinction so far as consumer arbitration agreements are concerned. Noble Lords will be aware that the definition of "domestic" set out in Clause 85 is common to both consumer and other arbitration agreements. The House will know that, unlike small businesses, consumers already enjoy a measure of protection when they enter into arbitration agreements. For that reason I am able to act now to remove the distinction. In doing so, we shall not reduce the measure of protection that consumers enjoy at the moment.
What I have in mind is to amend the provisions of Clauses 89 to 93, both to decouple them from the definition of "domestic" in Clause 85 and to make them more user friendly. In particular, my aim is to remove the overlap between the clauses as drafted and the unfair terms in consumer contracts regulations. I regret that I have not been able to bring forward those amendments for this stage. However, I will be bringing forward an amendment within this rather narrower ambit at Third Reading. With that explanation, I hope my noble friend will feel he can withdraw his amendment.
Lord Hacking: My Lords, I confess I am not entirely happy with the response of my noble and learned friend, and I express some disappointment in it. I tried to address precisely what was the problem so far as existing arbitrations are concerned. I believe I fairly clearly identified that we were taking nothing away from anybody. On that basis it is very difficult to see why there should be any concern on the part of the Government about accepting a provision that does not take anything away from anybody under existing rights. It continues to be the right of any party, whether from overseas or from this country, not to enter into the contracting out provisions. Therefore, any party anywhere who wants to keep out those provisions is entitled to keep them out.
Turning to the stay of court proceedings, if parties have entered into a valid arbitration agreement, it is to steer everything right off course for those parties then to be entitled to go to the court, and for the court to be entitled to have a discretion. When there is an arbitration agreement which is valid, and parties entered into it on an entirely consensual basis, the court should not have a discretion as to whether to stay the proceedings. If it does exercise that discretion, the court will be intervening in an arbitration consensually agreed by the parties. That is a very unsatisfactory state of affairs and should be properly and immediately addressed.

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It is addressed so far as international arbitrations are concerned, since once the court has been satisfied that there is a valid arbitration agreement, there is no right on the part of any of the parties involved in the dispute to sabotage the arbitration by entering into the court proceedings.
I shall withdraw the amendment and will not move my other amendments, but I do so in a state of some disappointment. I ask my noble and learned friend to note that the Government, some 17 years ago, were proposing to provide for a remedy in three years. Perhaps he could put a timetable to his consultations, so that in three or six months' time, I shall be able to ask him how the consultation process is progressing and whether he is able to reach a decision. If we do not have a timetable, this matter will slip to the bottom of the drawer.
I want my noble and learned friend to remain in office for many years as a Minister of State but it may be that he will not do so. What will happen then? I see indications from the other side of the Chamber that noble Lords do not think that my noble friend will stay long in his present position. I do not agree with that, but it is possible. As I say, this matter may then go to the bottom of some drawer.
Can my noble and learned friend at least give a timetable or say at least that there will be a three or six months' consultation period? I shall then be able to bring the matter back to your Lordships and we could feel that Parliament is properly involved. This is a matter for primary legislation. Too many measures are left to secondary legislation and statutory instrument. That system causes a great deal of concern and resentment, rightly in my submission, on the part of Members of all parties in both Houses.
Lord Fraser of Carmyllie: My Lords, with the leave of the House, I shall respond briefly to my noble friend. In my earlier remarks, I indicated that we intended to act swiftly. I pointed out that there is the order-making power under Clause 88. It might be said that the sooner we get on with the Bill and the sooner it is enacted, the greater is the prospect of having the amendment wished for by my noble friend.
I cannot give him a precise timetable. The Bill may be enacted swiftly, and given the co-operation that we have received in your Lordships' House, I see no reason why we should not pass it through both Houses in a relatively short space of time. I must stress that, as I said earlier, we do not look simply to professional arbitrators to offer an opinion on this matter. I indicated that I was concerned about the possible impact on small businesses. In the very nature of small businesses, as my noble friend will appreciate, it is not always easy to ensure that all their views are obtained in a tightly defined timetable. In any event, certainly I hope that we shall be able to complete all consultation on this matter in the course of this year.
Lord Hacking: My Lords, I withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 86 [Staying of legal proceedings]:
[Amendment No. 13 not moved.]
Clause 87 [Effectiveness of agreement to exclude court's jurisdiction]:
[Amendment No. 14 not moved.]
Clause 88 [Power to repeal or amend ss. 85 to 87]:
[Amendment No. 15 not moved.]
Clause 103 [New York Convention awards]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 16:
Page 39, line 20, leave out subsection (2) and insert—
("(2) For the purposes of subsection (1) and of the provisions of this Part relating to such awards—

(a) "arbitration agreement" means an arbitration agreement in writing, and

(b) an award shall be treated as made at the seat of the arbitration, regardless of where it was signed, despatched or delivered to any of the parties.

In this subsection "agreement in writing" and "seat of the arbitration" have the same meaning as in Part I.").
The noble and learned Lord said: My Lords, the effect of the amendment is to apply for the purposes of Part III of the Bill, which gives effect to the New York Convention, the definition of "in writing" and the concept of the award being treated as made at the seat of the arbitration, which are in Part I of the Bill. This will introduce a measure of consistency between Parts I and III of the Bill. I beg to move.
On Question, amendment agreed to.
Clause 105 [Evidence to be produced by party seeking recognition or enforcements]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 17:
Page 40, leave out lines 3 to 7 and insert—

("(a) the duly authenticated original award or a duly certified copy of it, and

(b) the original arbitration agreement or a duly certified copy of it.").

The noble and learned Lord said: My Lords, this particular clause specifies what evidence a party must produce when seeking recognition or enforcement of a New York Convention award. We tried to be helpful by, for example, defining the term "duly authenticated". That is not part of the New York Convention. On reflection, we feel that it is best to stick with the convention wording. The amendment achieves that. I beg to move.
On Question, amendment agreed to.
Schedule 3 [Consequential amendments]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 18:
Page 51, line 30, leave out from ("judge)") to ("County") in line 32 and insert ("—
(a) for paragraph (2) substitute—
"(2) Any order, decision or determination made by a district judge under this Article (other than one made in dealing with a claim by way of arbitration under paragraph (3)) shall be embodied in a decree which for all purposes (including the right of appeal under Part VI) shall have the like effect as a decree pronounced by a county court judge.";

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(b) for paragraphs (4) and (5) substitute—
"(4) Where in any action to which paragraph (1) applies the claim is dealt with by way of arbitration under paragraph (3)—

(a) any award made by the district judge in dealing with the claim shall be embodied in a decree which for all purposes (except the right of appeal under Part VI) shall have the like effect as a decree pronounced by a county court judge;

(b) the district judge may, and shall if so required by the High Court, state for the determination of the High Court any question of law arising out of an award so made;

(c) except as provided by sub-paragraph (b), any award so made shall be final; and

(d) except as otherwise provided by county court rules, no costs shall be awarded in connection with the action.

(5) Subject to paragraph (4),").
The noble and learned Lord said: My Lords, this is a consequential amendment which applies only to Northern Ireland. I beg to move.
On Question, amendment agreed to.

Fresh Fruit and Vegetable Regime: ECC Report
3.55 p.m.
Lord Middleton Lord Middleton rose to move, That this House takes note of the Report of the European Communities Committee on the Reform of the EC Fresh Fruit and Vegetable Regime (First Report, HL Paper 18).
The noble Lord said: My Lords, Sub-Committee D had a very short time in which to receive evidence and produce its report on the European Commission's proposal for reform of the fresh fruit and vegetable regime. We were told that the Spanish presidency intended to have the scheme put to the Agriculture Council for a vote on 18th December last. The sub-committee had to work on a draft text received at the end of October. We did not see an official text until the end of November. However, we were able to send a draft copy of our report to the Minister on 14th December.
That kind of delay in supplying documents from Brussels does not make it easy for the European committees of this House to perform their duty of parliamentary scrutiny. I am grateful to the Minister for taking up the matter with the Agriculture Commissioner, who has apologised. As it turned out, the proposed reforms were not considered in December. They are likely to come before the Agriculture Council for a vote next month. If, despite having been produced under pressure, our report has any merit, it is due to the help that we received from our witnesses—not least from MAFF—at short notice. I am grateful, too, for the work and support of my colleagues on the sub-committee and for the assistance of its specialist adviser, Mr. David Green.
The Agriculture Committee of another place carried out a most useful investigation into the fruit and vegetable sector last summer. That was before the reform proposals were adopted by the Commission in October. So our report starts where that one left off.
I have had the privilege of serving on Sub-Committee D for more than 10 years now. I do not believe that in that time it has produced a report for this House on a European common agriculture regime in terms so sharply critical as this one; nor one so unenthusiastic about reform proposals.
I turn to the regime as it is now. The Community is the world's biggest producer of fruit. The regime covers all fruit and vegetables grown in the Community except potatoes, bananas, wine grapes and peas and beans grown for fodder. The regime was introduced in 1966. It was not reformed with the other regimes in 1992.
As regimes go, it is not the most expensive in budget terms. However, in 1994, it cost 1.5 billion ecus, 92 per cent. of all that expenditure being paid to Greece, Spain, France and Italy. That came to 1.4 billion ecus. I do not have to remind noble Lords that an ecu is worth between 80p and 85p. The external mechanisms provide protection of EU growers, first, by means of minimum import prices and, secondly, by export refunds. Internally, there are common quality standards and there is intervention in the form of payments for withdrawal of sound produce from the market. It is that withdrawal system and the way in which it is operated that attract our strongest criticism.
In the past two years, withdrawals have become the most expensive support measure. In 1993, 46 per cent. of the cost of the regime was spent on paying growers to take surplus produce off the market, chiefly citrus, peaches, apples and nectarines.
Withdrawal payments were originally intended to be a safety net in times of glut; but, lately, producers have seen it as a lucrative alternative market. As an example, which we quote, in 1993, 77 per cent. of all Greek nectarines and 62 per cent. of their peaches went for destruction—and were paid for.
The withdrawal system is condemned in the 1994 Court of Auditors' report in these words:
"the present costly system of withdrawals and destruction of surpluses, relieving the market of excess production and ensuring a minimum income for producers, encourages over-production, pollutes the environment and has a negative effect on public opinion".
Under the current regime it is the producer organisations who operate the system. They may withdraw their members' produce from the market and receive financial compensation from the Community at a price which is fixed as a percentage of the basic price. The quality and packaging of the produce withdrawn are also taken into account. Produce withdrawn may be disposed of to charities, hospitals, schools and in other ways. In practice most is destroyed.
The Commission's reform proposals are largely concerned with the structure and role of producer organisations and, to that end, they propose a complicated web of regulations and rules. The proposed reforms are described in paragraphs 9 to 13 of our report. Perhaps I may summarise them briefly: producer organisations would be given a much more prominent role in the organisation of the fresh fruit and vegetable market. Intervention payments would remain contingent upon membership of a producer

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organisation but the rules for membership are tightened. A producer must commit 90 per cent. of his whole produce to a producer organisation. Non-members could be compelled to market their produce through producer organisations. Each producer organisation would be required to contribute to and to set up an operational fund to finance an operational programme. Such a fund could even be used to extend the scope of withdrawal. Compensation payments are to be subject to a price reduction of 15 per cent. over five years. The quantity of produce that may be withdrawn would also be reduced over five years from 50 per cent. of a producer organisation's total production to 10 per cent. in year five.
The intention behind the Commission's proposal is no doubt admirable and, in an ideal world, the reforms might work. However, the suggested reforms are brought forward in the full knowledge on the part of the Commission that the current regime is not working satisfactorily in a far from ideal world.
Our view as to their likely effectiveness was coloured by two reports. First, by the Commission's own 1994 report on supervising the application of the Community rules in the fruit and vegetable sector, which was highly critical of the way in which the withdrawal system was monitored. That report describes the controls on withdrawal of produce, particularly in the southern Mediterranean member states, as excessively tolerant and negligent. To quote from its report:
"It can be said that the essential role of many of the Producer Organisations in certain Community regions (particularly Greece and Italy) is not that ascribed to them by Community rules".
We were influenced, secondly, by the 1994 Court of Auditors' report, which confirmed a picture of mismanagement and fraud.
We give our opinion on the detailed matters proposed in Part 4 of the report. In particular, and regretfully, we cannot see how a proposed corps of inspectors is going to perform satisfactorily in the current climate of muddle and dishonesty. We say that the regime can best be reformed by ending a withdrawal system which pays farmers to grow surplus produce for destruction. The sooner fruit and vegetable growing becomes progressively exposed to market forces, as it is in the UK, the better. That would take care of quality standards and consumers would benefit.
We have to conclude that if the current system is not workable, we cannot see how a more complicated one, as proposed, can work any better. There would simply be more regulations to be misunderstood and probably disregarded. That opinion of the Commission's proposals for reform of the fruit and vegetable regime is summarised in the last two paragraphs of the report under the heading "Fraud". As one of the members of the sub-committee said during our deliberations: "No doubt the farmers in the poorer Mediterranean countries need support; but, if they do, this is not the way to do it." I beg to move.
Moved, That this House takes note of the Report of the European Communities Committee on the Reform of the EC Fresh Fruit and Vegetable Regime [First Report, HL Paper 18].—(Lord Middleton.)
4.6 p.m.
Lord Barber of Tewkesbury: My Lords, as a member of Sub-Committee D I should like, first, to pay tribute to the noble Lord, Lord Middleton, for the skilful way in which he manages our sessions and brings us all, like horses to the trough, to produce totally unambiguous and agreed reports. It is appropriate too on this occasion to thank our Clerk, who has the most extraordinary skill for disciplining enormous quantities of paper so that we have easier reading.
As, I hope, an objective observer of the European scene and as an occasional player in the past, I view the reforms of the EC fresh fruit and vegetable regime with a sense of despair; and, belonging to a country which is the second highest net contributor to EC funding, my despair is compounded by a profound feeling of irritation, if not anger. How can it be otherwise when, included in our report at paragraph 33, we record—I shall produce additional quotes to those given by the noble Lord, Lord Middleton, which are even more damning—
"These proposals will merely penalise the efficient producer, act against the interest of the consumer and continue to serve the interests of those who already produce the largest surpluses".
I must mention the topic of fraud again, in addition to what has already been said. Under the "Fraud" heading in our report, in reference to previous reports we say:
"Together, these two reports reveal a depressing catalogue of failure to carry out quality controls and of fraudulent application of coefficients, so that producers are wrongly paid to withdraw produce at the expense of the Community".
That was in the past, yet currently our committee has this to say:
"The Committee has no confidence that any fruit and vegetable regime of the nature proposed can be monitored effectively".
It all adds up to suggesting that it would surely be difficult to find a harsher indictment—one which was clearly shared by many of the witnesses who attended to give evidence to us. The only faint praise of the damning kind was confined to suggestions that the proposals were a step in the right direction, akin, one might say, to Nero approving the design of a new fire engine as the city went on burning.
As with similar CAP reform proposals, there is often a strange strand of naivety running through, as though somehow the realities of life had escaped the policy makers. The producer organisations are to be instruments for co-operative sharing of expertise in production and marketing. But nowhere is there acknowledgement that the reality is that, in northern member states at least, large and successful entrepreneurs in the highly competitive cut-throat vegetable production field would as soon share their tax returns as the technical and marketing expertise which are their secret weapons for achieving market gain. No amount of bludgeoning or carrot dangling will force them to market 90 per cent. of their produce through the producer organisations. And what an extraordinary proposal it is that those producer organisations will be allowed to use the operational fund to withdraw produce

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not presently covered by the intervention arrangements; and what a deafening silence on the subject of the destruction of withdrawn produce.
One of the areas which the committee found shrouded in mystery was the reasons why such a minuscule amount of the millions of tonnes of produce withdrawn for destruction found its way into the worthy hands of charities, schools and the deserving. Whether the main reason was lack of purposive interest, lack of resources or the logistics of moving high volume perishable produce was impossible to determine. It was quite extraordinary that the amount came to only 1 or 2 per cent. of this enormous quantity of material.
But it is on the wider view that I wish to make a contribution to the debate because there seem to be so many core issues which need bringing out and hammering home. I recall being taken to task by a senior Brussels official on an occasion when I had expressed concern about what I regarded as a deliberate distortion of the regulations to allow preferential treatment to certain member states. I was told very briskly that I had failed to understand the delicate nuances of the Brussels policy machinery which, apart from its primary overt purposes, had additional uses as discrete channels down which funding could travel to those who were deemed less prosperous than others: a kind of Robin Hood philosophy which, he told me, led to stability, balance, cohesion, more comfortable relationships between rich and poor, north and south, and so on. The CAP was one of a number of vehicles which enabled the local rural economies to be shored up and a raft put under the more struggling communities and individuals. And not just in agriculture; bankrupt national airlines and inefficient steel mills somehow had to be kept going as long as possible to avoid domestic difficulties.
So in the CAP field all those crops of tomatoes, peaches and nectarines grown specifically to be withdrawn from the market and interred to rot in a trench in the ground to the detriment of the local drainage system had a use far beyond my unenlightened comprehension. It is worth pointing out in that respect that 90 per cent. of the expenditure on the regime goes to Greece, Spain, Italy and France. It was the same official, too, who introduced me to the term "politically undeliverable" to describe sensible food policies which could not be adopted because the effect would inescapably be unacceptable tyre burning on the roads around Paris or Palermo.
So there surely is the crux of the matter of which these proposals are a small part: a failure to take adequate steps soon enough to ready the broad spectrum of European food production for the freer, and perhaps savage, trading world of the post-GATT era to come. The eventual price to be paid for muddling social and rural economy objectives with farm policy for too long may indeed be a heavy one.
It is all too easy to criticise, and many political constraints are formidable. I readily accept that. But it can he argued that the proposals do represent a first step to a more market-oriented economy. Further steps in due course, it might be assumed, will take us closer still to market realities. But somehow there is an absence of
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rigorous purpose, particularly in the failure to signal that the withdrawal system has a limited finite life. It all seems a bit late in the day for gentle pottering with an outdated system associated with the EC's leisurely attitude to fraud, corruption and other financial irregularities which have been such an integral blemish on so much of CAP history.
These fresh fruit and vegetable regime proposals to many of us add up as another example of a tacit acceptance of the deeply embedded culture of untidy, slack housekeeping and general profligacy which has become the hallmark of so much European policy making, with seemingly little acknowledgement that real change is needed as the outside world goes on changing extremely rapidly.
Too much of the CAP gravy train trundles along in its cosy old way, its instincts still inward looking and still protectionist. Lamentably, pussyfooting goes on and on and on as the chosen order of march, as these proposals so amply demonstrate.
4.14 p.m.
Lord Stanley of Alderley: My Lords, I suppose I have to declare an interest in that I am, with my son, a fruit and vegetable grower, and wearing that hat I should like to thank Sub-Committee D for its report and say that I consider this EC regime to be unrealistic, impractical and, as my noble friend Lord Middleton said, impossible to police. Apart from that, I suppose it must have some merit, but I have yet to find it.
I rise to speak for probably the same reason as the noble Lord, Lord Barber. I fear that the regime is an example of the path that the CAP is taking which will lead to real chaos in the 21st century. I am prepared to accept that at the moment most farmers. are not doing too badly out of the CAP due to relatively high commodity prices and inflated subsidies. For instance, my subsidies on the Welsh farm exceed my total surplus, which worries me greatly. The reason for my concern is that the CAP and this regime rely on protectionism of one kind or another—intervention, quotas, set asides and export and import manipulation—and that cannot—indeed, should not—go on forever. The European Union and the UK in particular cannot isolate themselves from world prices and competition which is what this fruit and vegetable regime tries, in my opinion hopelessly, to do.
I realise that my philosophy poses considerable social and political problems for it will encourage the efficient producer, which means that many inefficient producers will go to the wall. The noble Lord, Lord Barber, called it the Robin Hood approach. Mine is the opposite of the Robin Hood approach, so I suppose that I am the Sheriff of Nottingham. But I do not mind wearing that hat on this occasion. I accept that to alter the regime along those lines would cause problems in the Mediterranean countries which, as has been said, are the main beneficiaries under the scheme. Surely the essential requirement is to get European agriculture in a fit state to meet international pressure in the next century, producing, as my noble friend said, for the market and not, as this regime does, for subsidised withdrawal from

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the market, relying on its outdated producer organisation which failed to realise, among other things, that producers are specialists—we certainly are—in particular crops.
Surely, as the report states, this money would be better directed to product development and marketing. I believe that if the scheme could be restructured along market oriented lines, giving the necessary protection against dumped or subsidised produce, it might be possible to include such crops as potatoes to prevent distortions in that crop by national governments, in line with the concerns expressed by your Lordships—the noble Lord, Lord Carter, will remember this—during the passage of the Agriculture Bill.
Your Lordships' sub-committee has rightly pointed out the deficiencies—if one can use such a kind word—in the regime and I hope the Government will support the sub-committee. What worries me is that time and again—I look at the noble Lord, Lord Mackie—Sub-Committee D has warned of forthcoming dangers. When I was a member in the early 1980s I remember the sub-committee's views on surpluses. However, despite repeated warnings and often government support, the CAP does not seem to take any notice, let alone action. I suggest that unless the EU takes action, the whole CAP, and perhaps the European Union, will collapse in an unholy muddle. That is not in anyone's best interests.
4.19 p.m.
Lord Brain: My Lords, as a Member of Sub-Committee D, I can endorse all that the noble Lord, Lord Barber, has already said about the chairmanship of the noble Lord, Lord Middleton; our Clerk's excellent support of the committee at a very difficult time of changeover when he was moving from one occupation to another, and when he got us through the work remarkably efficiently; and our professional adviser.
The noble Lord, Lord Middleton, brought out a broad part of this report. The noble Lord, Lord Barber, has said much of what I had planned to say and I shall not be repeating all his remarks. I was going to be just as critical as he has been about the basic ideas of producer organisations, their operation and management. I am going to produce a few straws where, because the Government are going to have to negotiate on this regime, one might say that there are some words deep down in the draft document that might be rescued.
I turn initially to Article 11.1 (a) which states that the producer organisations are required,
"to promote the use of cultivation practices, production techniques, waste-management practices that are environmentally sound, in particular to protect the quality of water, soil and landscape and … biodiversity".
A little later on the same article states that the producer organisations are required to,
"provide their producer members with technical assistance in using environmentally sound cultivation practices",
and so forth.
In his reply, the Minister, Mr. Hogg, was a little hurt that we had suggested that destruction was a means of disposal of surpluses and particularly our concern about
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disposing of them in an environmentally friendly manner. I have two points to make about that. At the moment all the evidence is that the producer organisations have no idea how to develop the markets for surplus produce. The transition period starts with 50 per cent. withdrawal. Over five years it drops down to 10 per cent., but there is going to be a great deal destroyed.
I also take up a point a little further down in Article 11(b) which states that the producers must market all their produce—I repeat, all their produce—through a producer organisation. Only quality products can receive subsidy. They must meet certain standards and quite correctly. What happens to the amount of material when 60 per cent. of the produce does not meet the standards? I believe that we have evidence from the audit report, which accepted 75 per cent. of the produce offered on one day before the audit people visited the operation, and only 15 per cent. when they were there. Is that returned to the producer for him to put on the market in some subversive manner or—and I believe that this is the way it should be done—withdrawn totally and destroyed? That is where I believe the committee may be at odds with the Government in their reply to our report.
I now move to Article 15 and another matter of some anxiety. I believe that the financial operation of these funds is reasonably sensible in that just about the majority; namely, 50 per cent. is funded by the EU; 40 per cent. by the government of the country and 10 per cent. by the producers themselves, so they have an interest in achieving efficiency. The levies on the member producers are directly proportionate to the quantity of fruit and vegetables actually marketed by them. Do the words "actually marketed" mean submitted to the producer organisation or do they really mean what the producer organisation sells of its products and the withdrawal part—which is 65 per cent. in Greece—is ignored?
I now come to Article 15.2(a) and (b) Strangely enough, the operational funds shall be used first to finance market withdrawals; and, secondly, to finance an operational programme to be submitted to competent authorities and approved by them. Surely, in the way of this country, if someone says that A and B have to be done, one does A first and B is less important. I believe that the situation here is wrong. The operational programme, marketing, disposal and the organisation of good cultivation and matters of that kind, should come under A and B is the withdrawal of what they have not managed to persuade the producers not to produce.
We certainly had a great deal of evidence on the point next touched on by the noble Lord, Lord Barber; namely, that all the production from one holding goes out through one producer organisation. The method of marketing raspberries is different from marketing apples and pears and is certainly different from marketing cauliflowers. In this country some goes to a place such as Covent Garden; but a great deal goes to specialist buyers in supermarket chains or specialist canning factories. Again, there is a need to look at the producer organisations, if they are going to be used, to see if they can be matched more closely to the problems of the UK.

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I too believe that there is a lot to be done before a sensible fruit and vegetable regime can come forth and be approved by this Government. I wish them well in all the behind-the-scenes work they have to do in Brussels.
4.27 p.m.
Lord Wade of Chorlton: My Lords, I too speak as a member of Sub-Committee D. It was my good fortune to be a new member on that committee. I am most grateful to the Lord Chairman who led us, as the noble Lord, Lord Barber, said, through an intricate period of evidence to bringing together what was the unanimous view of the committee. I was enormously impressed by the fact that all the people who gave evidence believed that this suggested regime was going to be detrimental, most particularly to our own producers and consumers. The evidence that we took from the consumer associations I expected to at least mellow their views with the thought that the intervention and withdrawal systems would encourage more fruit into the market place and probably give the consumer a wider variety of fruits. But in fact they thought just the opposite and were strongly of the view, as were the members of the committee, that this regime is against the interests of the UK consumer. It will probably upset many consumers who will want other products.
There was a concern that there would not be a local attitude towards consumers and that products produced for local consumers might not fit in with the regime. There was also telling evidence and concern over the concept of setting up producer organisations as not one likely to be used by many UK producers and therefore we shall miss out on those issues to which the noble Lord, Lord Brain, just referred; namely, the benefits of having a large producer organisation which can put money into the system and then create all the environmental and other benefits, including research into new varieties. That will apply to those who have producer organisations, but not to those areas which prefer to work with individual producers and marketing organisations; namely, "the independents" if one may so describe them. The view of our industry was that most produce in this country would be likely to come from independents rather than producer organisations.
I endorse all of the comments that have been made by the members of the committee who have spoken so far. There is little that I can add to their condemnation of this principle. The complicated way in which it has been put together will encourage fraud rather than provide the opportunity to do away with it, as can so easily be done. We are to have a corps of inspectors. It is not quite clear how they will operate or how many there will be. However, if we take as an example the inspectors that are already in operation, they can easily be seduced by the needs of poorer producers in the southern states of Europe so that they look at the matter in their terms rather than those of the European taxpayer as a whole. I do not believe that the complications of the system are appreciated by those who are putting it together.
Of more concern in the short term is the fact that the Commission has not seized the opportunity to create a new regime for fruit and vegetables, to see it in the light of the changing global market and the need to review
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the running of the CAP and other systems. In view of the discussions that are now taking place in the European Commission about possible changes in the CAP, I would have thought that at least it would have taken this opportunity to say that, if there is a need to he more market oriented and that the system of support is a matter of moving wealth from the north to the south of Europe, this would be a way of changing the system to make it fairer, with less coupling of support on the one hand and the needs of producers on the other.
When one looks at the long-term implications, this system bodes ill for a proper revision of the CAP which is so badly needed. Clearly, the demand for and supply of food will be dominated not by what we want to do in Europe, but by world demand. That will happen much more rapidly than the Commission and many others appear to appreciate. If Britain is to take advantage of that there is a greater need for a market-oriented system, which allows the consumer and supplier to understand each other's needs a little more, and a lesser need for the CAP system in the middle.
I hope that the comments of the committee chaired by the noble Lord, Lord Middleton, with which the Government agree apart from the one exception mentioned by the noble Lord, Lord Brain, will be considered very carefully. I hope that they will gain the support of this House, and that the Commission will realise that, if it looks to the future, it must use them as an example of a much more market oriented system and move away from continual interference, which is the most inefficient way to deal with what the producer and consumer really want.
4.33 p.m.
The Duke of Somerset: My Lords, I am also a member of Sub-Committee D which produced this report back in December of last year. I am also a farm owner, though neither I nor my tenant farmers is in fruit and vegetable production. The overall impression given by the report is one of unanimity among the witnesses. That is shared largely by the sub-committee and also the Government, judging from the Minister's written response of a few days ago.
The target of the criticism is the Commission itself. It is the same message as ever from the sub-committee to the EU: disappointment at weak attempts to reform all or a part of the CAP. In this case, the aim is to end withdrawal, fraud and waste. Under this regime alone the budget for 1994 was 1,500 million ecu. It was not one of the sectors subject to reform in 1992. However, the sector is typical of what needs to be done with the CAP, and sooner rather than later; otherwise, members will find themselves pressurised into hurried changes. Late in the decade pressures of the World Trade Organisation, enlargement of the Union and the budget will all combine to force a hurried change.
As members of the EU, how can we contemplate the continuation of a policy that will allow over 2 million kilos of fresh fruit and vegetables to he withdrawn and destroyed per annum, as happened in 1994–95? The answer is that the political will to change is not present in many other member countries. It is not a coincidence

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that the greatest producers of fruit are—and thus the greatest withdrawals take place in—Greece, Spain, Italy and France. The United Kingdom also made use of this. We destroyed some apples, cauliflowers and 17 tonnes of pears. That is small fry in comparison with other countries. Greece withdrew over 597,000 tonnes of peaches in 1992–93. One can imagine what that represents in five-tonne farm trailer loads.
The folly is that the new proposals will not end the abuse. They may reduce the volume taken into intervention over a five-year transition period but it is not enough, and it is not fast enough either. One concern relates to the rules which allow destruction. My other concern is the resultant widespread fraud. The report details flagrant examples, discovered by both the Court of Auditors and the Commission itself, of large quantities of unworthy fruit for which fraudulent claims have been made. It makes for amazing reading. Yet this system is set to perpetuate, with producer organisations continuing as the primary checkers of quality and quantity. A corps of inspectors is proposed, but neither I nor the witnesses—or other noble Lords who have spoken—expect the flawed system to be changed by a few men who will be working under extreme pressure as they physically check the loads in front of the producer organisers. One of our witnesses, the NFU, sensibly suggested the phased end of the intervention system. That must be the short-term aim to end this madness. Combined with it is the immediate imposition of security deposits to be put up by producer organisations against discovered misappropriations of public funds.
In my view, the whole regime is flawed, but some of the details are wrong, too. I am particularly concerned that the steamroller approach will obliterate regional varieties and local products. These proposals allow for derogations from quality standards in some circumstances. However, one of our witnesses, the Consumers in Europe Group, was not satisfied that this exemption would preserve the vitality of local markets. I also worry about this. I would welcome reassurance from the Minister that the precise meaning of the derogation was clear and that the rapidly disappearing local apple or potato varieties would be allowed to continue. They seem to taste so much better than the bland volume produce that clogs supermarket shelves. I would like to see them actively encouraged.
Much of my native Devon landscape has been changed by the grubbing of apple orchards. I am told that there is an EU grant to grub these out, but that a grant can also be obtained to plant fresh orchards. I do not know whether the Minister can confirm that this odd contradiction exists. Another of my concerns is the environmental consequence of the dumping of fruit. Such vast tonnages tipped in localised areas must create severe pollution. There appears to be no control. I share the desire to eradicate dumping, but while it is permitted it must surely be controlled. Rather like the noble Lord, Lord Brain, I do not quite understand the Minister's written reply. He seems to be advocating a "no-win" recommendation. He does not want controls on the
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environmental aspects of dumping, but he must still permit it. I wonder whether the Minister feels that that issue should be addressed a little further.
Linked to that issue is the question of other means of disposal. It does not seem that those other means have been sufficiently used. They include distribution to charities and schools, or perhaps use as animal feed. I should like to see a greater emphasis on that type of disposal in the regulations.
I believe that we are all agreed that the CAP needs reforming. Indeed, the Commission talks about it. Therefore I, too, am profoundly disappointed that these recent proposals for change in an important sector show such little desire to effect that change. I am amazed that popular opinion is not more vociferous in demanding it. Perhaps the report will encourage clamour, if it receives any publicity. I trust, and I am sure, that the Government will continue to press hard for real movement, and will take the forthcoming opportunity when these proposals come before the Council to press hard for change.
4.41 p.m.
Lord Pearson of Rannoch: My Lords, perhaps I may start by joining other noble Lords in congratulating my noble friend Lord Middleton and other members of Sub-Committee D on producing such a lucid and hard-hitting report. I have to confess that I think it is the best report from your Lordships' Select Committee on European Communities that I have ever had the privilege to read.
I fear that those congratulations may be particularly deserved because, as my noble friend Lord Middleton mentioned in his opening remarks and as the committee reveals in its introduction, the scope of its inquiry was restricted by the late receipt from Brussels of both the provisional and the final text of the proposed reform. That left little parliamentary time to examine the detailed reforms.
Late receipt of Community documents was a growing problem during the four years which I had the honour to serve on your Lordships' Select Committee on the European Communities. It was pretty clear to me that as the Commission grows in arrogance and disdain towards national parliaments, so its deposition of documents grows more dilatory. As paragraph 4 of your Lordships' committee's introduction to the report puts it so well:
"This is by no means the first time that the Committee has faced this problem…which must be addressed if scrutiny of European legislation is to continue to be carried out effectively".
I know that the Government are keen to achieve a minimum period for national parliaments to scrutinise Community documents and legislation—I learn that from page 15 of their recent White Paper entitled A Partnership of Nations—and of course one wishes them luck in their endeavours to achieve this at the forthcoming IGC; but can my noble friend the Minister give any indication of the likely support for that initiative from other member countries? In other words, with what confidence can we hope that the Commission may be required to obey even the existing rules in this regard? I fear not much.

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Other noble Lords have dealt with the detail of this report with depressing accuracy. So the briefest of summaries from me will suffice. The fruit and vegetable regime, like the common agricultural policy itself and the common fisheries policy, is hopelessly bureaucratic. It also wastes huge quantities of food; it costs the taxpayer and the consumer vast sums of money; it excludes eastern Europe and the third world; it is damaging to the environment; and it is riddled with fraud and corruption.
The trouble is that many of those accusations can be safely levelled against most, if not all, of the policies which owe their existence to the Treaty of Rome, as it now stands. But this is perhaps not the moment to debate that.
However, there are one or two wider questions raised by this report, which I should like to put to my noble friend the Minister. Before raising those, could I ask him whether any calculation has been made as to how much of the more than £1,000 million which appears to be wasted annually on the Community's fruit and vegetable regime is contributed by British taxpayers? Bearing in mind that we receive only 0.3 per cent. of Community expenditure on this absurd nonsense, how much did we contribute?
Coming then to the wider questions, can my noble friend give us any idea of the level of confidence which the Government may have that we should be able radically to change this policy?
Even if we have only Greece, Spain, Italy and France (which the report mentions are the grateful recipients of more than 90 per cent. of this munificence), presumably against us, and as they have 33 qualified majority votes among them, surely that is comfortably more than the 26 votes required to constitute a blocking minority. If Portugal were to join them, that would raise their blocking minority to 38, which is more than adequate.
I raise this question on the fruit and vegetable regime, which is a manifest absurdity, but the same problem applies to reform of the CFP which is even more crazy, and which requires unanimity in the Council of Ministers before it can be changed.
I do not know whether noble Lords noticed that the UK was honoured yesterday by a visit from Signora Bonino, the European Fisheries Commissioner. As she so succinctly put it yesterday in Newlyn:
"there is the possibility of improving the common fisheries policy. The problem is how, within the EU framework".
Last night on the BBC's "The Money Programme" she went on to make the point that I am putting to my noble friend the Minister even more forcefully. She said:
"We are taking account of local interests"—
that is us, the UK, if you please—
"as far as possible, but I am in charge of EU fisheries in an EU framework. That is what the UK agreed to when it came into the European Union".
Quite so, but it is that sort of comment—supported, alas, as it undoubtedly is by the text of the treaty we have unfortunately signed—which makes some of us wonder whether we want to stay there.
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So I return to the fruit and vegetable regime and to the CAP itself, where we find ourselves in much the same trap. I think that my noble friend the Minister will agree that the Government, and also the opposition parties in this country, and indeed most conventional wisdom in Europe, say that widening of the Community is an absolute priority. But the same conventional wisdom rightly points out that, first, the CAP will have to be reformed. So can I ask my noble friend the Minister how much confidence the Government have that such reform is possible? If it is not possible, is widening possible?
I understand that the Foreign Office believes that the necessary reform to the CAP could be carried through on a qualified majority vote rather than on unanimity. That is a complex matter; but can my noble friend tell us what confidence the Government have that the necessary qualified majority could ever be achieved, if that were to be sufficient? What possibility is there that the recipient countries under the CAP would agree to share such largesse with our eastern European neighbours? Not much, I submit; but I shall be interested to hear my noble friend's reply.
Certainly, signs of the necessary generosity are few and far between. Let us take, for instance, the earnest pleading from Bulgaria that it might be allowed to increase its exports of jam to the Community among other things. I understand that the Commission looked long and hard at that request, and that it has decided that Bulgaria may now import three lorry loads of jam into the Community, whereas before it was allowed only two.
Coming on top of the questions I have posed, it is that kind of attitude which makes some of us fear that the problems of the fruit and vegetable regime, or of any other similar policy stemming from the Treaty of Rome, are too deep-seated to be changed just because the British Government think that they ought to be. And, in turn, it is that situation which makes some of us wonder whether we should not start lo take a much harder and deeper look at the advantages we are supposed to derive from our adherence to the Treaty of Rome itself.
4.50 p.m.
Lord Reay: My Lords, first, I declare an interest as an owner of apple and pear orchards in the Netherlands, which are rented to fruit growers. Secondly, I wish to add my name to those who have thanked my noble friend Lord Middleton for his outstanding chairmanship of our sub-committee.
It is perhaps easier to wax indignant about outrageous subsidies and disgraceful frauds when the beneficiaries and perpetrators are the inhabitants of distant countries. However, that is no reason to refrain altogether from doing so. It must also be said that the sub-committee received no direct evidence about the workings of producer organisations in other member states, although it is among those that the heart of the problem is to be found. The evidence which reveals the nature, if not definitively the scale, of the problem is to be found in the publications of the Commission and the Court of Auditors, from which noble Lords have quoted.

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According to the Commission's figures, in the 1994–95 marketing year the total produce withdrawn amounted to 2.2 million tonnes, of which 46 per cent. was withdrawn in Greece, 29 per cent. in France and 10 per cent. in Spain and Italy. The proportion of each crop withdrawn and then destroyed—35 per cent. of apples in France, 59 per cent. of peaches and 77 per cent. of nectarines in Greece and so forth—was described by even so sober a witness as our man from MAFF as staggering.
Commission checks in 1992 led the Commission to conclude that the essential role of many producer organisations in certain regions was simply to help place products into intervention. The Court of Auditors described producer organisations in Greece as acting mainly as a conduit for claiming European Community funds. Moreover, the Commission's spot checks revealed that such produce is regularly accepted for withdrawal even though it fails to come up to the minimum standards required for intervention. In Campania, for example:
"at least one producer organisation was shamelessly exploiting intervention as a means of obtaining funds by selling rejects and leaves".
In that case, it was the leaves of cauliflowers. In Germany, by contrast, according to the Commission the organisation of withdrawals seems free from irregularity. It was stated:
"the low tonnages commonly presented for intervention support this theory".
In other words, high tonnages presented for withdrawal create a presumption of irregularity.
The Commission considered that the producer organisations enjoy too much room for manoeuvre in carrying out withdrawals; are unduly pressured by their members; and are inadequately controlled by their national authorities. The Commission's proposals on intervention were generally represented to us as a small step in the right direction. The compensation price would be reduced by 15 per cent. over five years and the proportion of a producer organisation's output which could be withdrawn would be reduced to 10 per cent., although not to zero. That could still leave large quantities to be compensated. Whether the price reduction would have an effect on quantities offered for withdrawal would depend on the cost of production, on the grower's alternatives and, of course, on eliminating the abuse practised by producer organisations.
Yet, under these proposals the powers of the producer organisations are to be enhanced. In future, members will have to market 90 per cent. of their produce through their producer organisations. The producer organisations will receive funds which will enable them to supplement withdrawal either by extending it to other products or by raising the compensation for existing products. It seems to me that that largely negates what the Commission is doing to reduce withdrawals and accords the producer organisations an additional power and discretion which they have in no way demonstrated they are fit to receive.
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Quality standards, which effectively remain unchanged under the proposals, were much disliked by several of our witnesses. Without intervention, which we would like to see phased out altogether, there would be no need for them. Surely, quality is something to be decided between consumer and competing producers in the market place, as with any other product in which there is free trade.
One disadvantage of the current regime which was brought to our attention was the way in which small apples are now unobtainable, only large, so-called top quality, fruit being allowed on the market. Until standards can be abolished I, like the noble Duke, hope that the Government will at least be able to insist that a substantial percentage of production is excluded from quality controls for the purpose of local sales in local shops and markets.
The consumer and the taxpayers are also harmed by trade restrictions. Imports of fruit and vegetables are discouraged by import levies. For instance, it appears to be the case that fresh apples from the southern hemisphere are effectively kept out for many months in order to preserve the market for cold stored EC produce, although that falls off in quality as time progresses. In addition, some 220 million ecu a year are spent on export refunds.
Trying to achieve a greater measure of reform than that proposed by the Commission would undoubtedly produce resistance from southern European member states. Fruit is one of their products and in their eyes it deserves subsidies and protection in the same way as cereals, sugar, dairy products and beef receive them to the benefit of farmers in northern Europe. So I certainly do not imagine that serious reform, still less abolition, of the fruit and vegetable regime will occur while we have the common agriculture policy in its present form.
Nevertheless, the proposals perpetuate much too much of the existing regime, which is palpably mismanaged apart from being wasteful, expensive and in restraint of trade. I sincerely hope that in the negotiations ahead the Government will set out pugnaciously to secure a better deal for Europe's consumers and taxpayers.
4.57 p.m.
Lord Mackie of Benshie: My Lords, I have greatly enjoyed the discussion. I too admired the chairmanship of the noble Lord, Lord Middleton, under whom I have sat (if that is the correct expression) in the past. We heard some glorious figures about the destruction of millions of tonnes of produce. I believe that the noble Duke was wrong in giving the figure of 2 million kilos. I believe that 2 million tonnes of fruit was destroyed in Europe. There is no question but that those are scandalous figures. It is a waste of money and time. It is not an entire waste of money because it goes to poor farmers—perhaps they are not so poor—or to some farmers, which I applaud. One of the worst aspects is that such figures give ammunition to opponents of the concept of a prosperous agriculture. I even enjoyed the speech of the noble Lord, Lord Pearson. He gave a few indications that he did not approve of European policy

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in any shape or form. He certainly seized on the opportunity to expand into issues not entirely connected with fruit and vegetables.
We are talking about the mess that we have made in southern Europe. We have all made it because it has been going on for 30 years. Italy and Greece have a different concept of the common agriculture policy because they regard it as something to be milked. They milk it successfully and it is extraordinarily stupid of us in the rest of Europe to allow that to continue without any real benefit to the farming community as a whole or without social benefit to the countryside. That must be wrong. It is wrong. We all know it is wrong. Everyone has quoted the figures.
I was delighted by the restraint shown by the committee at paragraph 39 of the report:
"We conclude that the only satisfactory solution is a clear signal from the Commission that, over a defined period, the withdrawal system will end".
That is absolutely clear and right. The whole history shows how wrong that system is, and that applies also in relation to other aspects.
Some years ago I chaired Sub-Committee D when it looked at the production of olive oil. We had a glorious example of corruption in Italy. It was advantageous for a larger figure to be put on home consumption, and we found that when home consumption for Italy was calculated, it would entail the producers drinking about one quart of olive oil per day in order to justify the figure that had been given. That was very funny but it cannot be allowed to continue.
I do not propose to give more figures or to comment very much on the proposals. However, paragraph 43, which the committee endorses, refers to the entry price system. I must declare an interest in this regard. As regards the raspberry crop, long before any entry price formula could be produced the damage was done.
Marketing has changed completely. We must look at that. We must look at the practical examples of marketing in this country. Just after the war the raspberry producers of Angus had a lovely time. During the war the price of pulp rose to a very profitable figure and, therefore, the producers stopped altogether marketing fresh fruit. They simply sold to the jam makers and neglected the market. After the war the price started to drop and the jam makers and so on took advantage of that. We then started a co-operative to market the fruit. In no time at all the price rose. We made a great mistake in our co-operative because we did not make it compulsory to market the fruit through the co-operative. A new co-operative in north Angus has been enormously successful because the Grampian Growers, as they are called, insist that members market their produce through the co-operative. The producers are not allowed to sell wherever they can get an extra bob. So successful has that co-operative been that it sells daffodil bulbs to Holland. I believe that that is an excellent indication of what can be done.
We must recognise that marketing has changed completely. The fruit markets in Glasgow, Birmingham, London and elsewhere are not the main avenues. You can now have contracts with the supermarkets to supply
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fruit, and supply it over a period. That gives a background of constant marketing and fall-back for producers. We should pursue that system.
Producer organisations in Europe ate not marketing but are receiving government money for destroying fruit. Those organisations are not suitable subjects for marketing and proper organisation. They have been set up purely to take advantage of intervention. A great deal needs to be done to make them genuine, dynamic organisations which can market in a modern manner. That is where the future should lie. The Government should be pressing that intervention as we know it now should cease as quickly as possible. They should back proper co-operatives and/or companies which will market the fruit and vegetables in a modern manner. They should urge that intervention is no longer necessary in such a situation.
In growing fruit and/or vegetables there always comes a time when you may have to plough down your cabbages or something like that. But if you have a background of good marketing for the rest of the year, you can bear that. Certainly intervention and the buying and destroying of produce are not answers to the problem. I hope that the Government will assure us that they will pursue with all vigour the proper encouragement of marketing in agriculture and do away as quickly as possible with the present withdrawal system.
5.6 p.m.
Lord Carter: My Lords, I join other noble Lords in congratulating the noble Lord, Lord Middleton, and his committee on producing a first-class report. I agree immediately with the noble Lord in the remark that he made at the beginning of his speech about the late receipt of documents from the Commission. I remember from my own time on Sub-Committee D that that was a continuous complaint. I seem to remember that some time in the past 18 months, there was a proposal that member governments would refuse to comment in any way on documents, draft regulations, proposals or whatever unless they were received in sufficient time. If that is possible, it should certainly be followed.
The EC fresh fruit and vegetable regime and the current proposals for its reform sum up all that is wrong with the CAP: it is wasteful; it is detached from the market; and it is riddled with fraud and mismanagement. From what has been said in the debate this afternoon, I believe that we all agree that the Commission's proposals for reform do not go nearly far enough. I thought that the committee was remarkably restrained in its conclusions, although anyone reading between the lines and reading Hansard of today's debate would have little doubt about the committee's opinions.
The conclusion was summed up in paragraph 33 when commenting on the Commission's aim of the proposal; namely, to:
"consolidate the positive aspects of the existing organisation, simplify it and correct the perceived weaknesses".
That is real Eurocrat-speak. The committee says that,
"it finds little in the proposals for the fresh fruit and vegetable sector to suggest that that aim has been achieved".

1105
Those proposals will merely penalise the efficient producer, act against the interests of the consumer and continue to serve the interests of those who already produce the largest surpluses.
Most of the points of detail have been well aired in this short debate so I shall try not to repeat those which have already been made extremely well. I turn first to the role of producer organisations. I should declare an interest immediately as chairman of the United Kingdom Co-operative Council which is the single representative body for all sectors of the co-operative movement in the United Kingdom and includes in its membership the Federation of Agricultural Co-operatives. I am also the director of a farmers' co-operative but not, I hasten to add, in the horticultural sector. Therefore, I am well aware of the strengths and weaknesses of producer organisations, whether they are structured as co-operatives or otherwise.
The proposals for the enhanced role of the producer organisations and the control over the percentage of the members' produce reminds me that for many years there has been a rule in certain areas of France whereby once a co-operative has—I think it is—75 per cent. of the relevant produce under its control, all producers in its area have to join. I seem to remember that cauliflowers from Brittany are one example of such a scheme and I believe that there are others. In French, that is called extension des règles, or extension of the rules.
I can well remember that such ideas were mooted in the early 1970s to improve the marketing of British agricultural products, thus avoiding the rigidities of the marketing board approach but providing a degree of discipline in marketing procedures. I am not suggesting that I support the proposal, but I am just reflecting on the fact that, if one is concerned with the making or the consideration of agricultural policy and one stands in the same place, the proposals seem to come round again every 10 or 15 years.
There is one point that the committee does not address—although it may be that I have misunderstood the proposals—and that relates to the 10 per cent. funding of producer organisations required from member governments. Is that mandatory? I am afraid that the Government have something of a record in not always providing the matching funds required to generate EC funding. Are the Government bound to provide the 10 per cent. funding for the producer organisations? If they are not, and they do not, what happens? The decommissioning of the fishing fleet is a good example where insufficient funds have been provided by the home government as regards matching funds from the EC.
I would argue that there is nothing wrong in principle in levying producers through their organisations to provide funds for development and market management. The fragmented nature of the agricultural and horticultural industries means that there must be some means of levying all producers on the basis that all should pay for the benefits which derive from joint action. Indeed, I have long been a supporter of the development council approach in both agriculture and
1106
horticulture. It would be interesting to know if a combination of the development council approach through the use of the Industrial Organisation and Development Act 1947 and the Commission's reform proposals would perhaps best suit the situation in the UK which, as we have heard during the debate, is rather different from that in other member states. I am not sure from the report or the evidence that such an approach was considered by the committee.
The size of the problem was graphically summarised in yesterday's edition of the Sunday Times. Incidentally, it is not often that one of our debates is trailed in the Sunday newspapers. I cannot believe that even our own Select Committee on the European Communities is now in the hands of the spin-doctors. However, the article in the Sunday Times gave a very graphic example of the size of the problem. As we know, the figures make startling reading. Indeed, we have heard about the destruction of 2.5 million tonnes of fresh fruit and vegetables to keep prices high; the payment of some £500 million to farmers for that ridiculous process with 75 per cent. of the money going to only two member states—that is, Greece and France; and the pollution of the water table in certain areas as a result of excessive dumping. It really is perversity beyond imagination that such costly waste is encouraged while low income families and other suitable beneficiaries are denied access to perfectly good produce. A policy that requires the deliberate destruction of good food can only be described as a disgraceful failure.
The NFU has made a good point in emphasising that there must be flexibility in adapting the proposals for producer organisations to suit the legal forms and the capital base in the different member states. I refer back to the remarks that I made about the use of the development council approach in that respect. We all believe that it is essential that the discredited intervention system is not strengthened or widened by adding crops and increasing the maximum level of intervention as proposed by the Agriculture Committee of the European Parliament. It would be interesting to know what part the southern European countries played in the deliberations of that particular committee.
The remark by the Consumers in Europe Group that the Commission's proposals involve an increase in market rigging is quite true. It is interesting to speculate what effect the Commission's proposals will have on the remarkable figures for fruit consumption which have been quoted by that group. It points out that families in the upper income Band A with four children eat 98.51 ounces of fruit per person per week, compared with only 7.54 ounces per person in a four-child family in the lower income Bands D/E2. Moreover, in families with only one child, the respective intakes for high and low income are 40.52 ounces compared with 14.85 ounces. That is just an example of the direct effect of the deliberately high price for fruit which results from the regime and the effect that it has on families in different income brackets.
An area where I believe the committee is perhaps a little too optimistic is where it assumes that the larger and more sophisticated producers in the UK will necessarily he attracted to membership of a producers'

1107
organisation to get access to the proposed operational funding. Withdrawal via intervention is not nearly as significant in the UK as in some other member states. I do wonder how the larger and more efficient UK producers will react to the proposed increase in the role of producer organisations.
As always, the committee has done an excellent job in collecting evidence, sifting it and, as I said, producing a first-class report. Indeed, there is little to quarrel with in its conclusions. If producer organisations are to have the increased role that the Commission recommends, then there must be the sort of changes in their operation, especially regarding the commitment of the eligible crops that the committee recommends. Intervention must be phased out as quickly as possible and much quicker than the Commission proposes and the destruction of good food is unacceptable. Moreover, as we have heard, it could be environmentally damaging. It is disgraceful that the Commission is silent on that scandal.
Finally, the committee is correct in all that it says about fraud. I had the honour of serving on the ad hoc committee of this House which looked at fraud in the European Community under the chairmanship of the noble Baroness, Lady Robson of Kiddington, some five years ago. That experience was an eye opener. Nothing that has happened since has changed the view that fraud and mismanagement are endemic in large sections of the CAP. Nowhere is that more apparent than in the fruit and vegetable regime.
The noble Lord, Lord Mackie, said that he supposed that such money went to poor farmers. I should like to know whether there is any evidence to show that that money ever gets to them. I remember—and this is a serious point—that in the committee on fraud, on which I served and to which I referred, we were told that a proportion of the money which resulted from fraud in the CAP ended up in the hands of the Mafia and in the laundering of money from drugs. It is a serious problem. When the Minister replies, I hope that he will be able to assure the House that the Government intend to take a thoroughly robust stance on the matter. If they do, they certainly have a first-class report with practical and sensible conclusions to assist them. Indeed, we on these Benches are in total solidarity with the Government and I therefore conclude by repeating the last phrase of the Minister's letter in response to the Committee's report:
"I am happy to accept the Committee's report and recommendations, which have provided a most welcome and constructive contribution to the debate on this important subject".
5.18 p.m.
Lord Lucas: My Lords, I, too, should like to congratulate my noble friend Lord Middleton and his committee on the thoroughness of their examination of the proposals of the European Commission for the reform of the fresh fruit and vegetable regime which was achieved despite the unacceptable delay in producing the proposals. My noble friend Lord Pearson of Rannoch said it was the hest ever report that he had read. I suspect that he means the rudest. To follow his alliterative example, I believe that, a rampant Rannoch revels in rude report reviling wretched regime, would summarise what he said.
1108
Many noble Lords drew our attention to the deficiencies in the common agricultural policy both in this regime and in the Commission's proposals for reforming it in general. As I am sure the House knows, we share many of those concerns, if hot all of them. In particular, I was most concerned by the remarks made by the noble Lord, Lord Barber of Tewkesbury, about the Commission justifying the fraud on the basis that it was transferring money from wealthy to needy countries. A more inefficient and more corrupt way of doing so would be hard to devise. Indeed it would be possible to justify the whole trade in drugs on the same basis. I think it is a totally unacceptable and disreputable justification, and I hope that it is not one the Commission will ever try publicly to use. My noble friend Lord Wade of Chorlton and the noble Lord, Lord Carter, mentioned the effect on consumers. This is a regime which has a deleterious effect on them, as it does on farming. But although the proposals produced are ones of insufficient change, at least we think that they may prove to be—if we are able successfully to conclude the negotiations—ones which are worthwhile.
My noble friend Lord Middleton and I have had the pleasure of discussing one of Sub-Committee D's reports before, and I hope we may discuss many more. I thought it might interest him to know that looking last week through my grandmother's scrapbook I discovered that Lord Lucas and Lord Middleton had been at it before. On 19th July 1912 Lord Middleton, as President of the Royal Agricultural Society, and Lord Lucas, representing the Ministry of Agriculture, were present at the inaugural meeting of the International Association of Poultry Instructors and Investigators. The mind boggles at trying to think of what they did, but whatever it was I am sure it was more worthwhile than the common agricultural policy fruit and vegetable regime. I can also perhaps give some comfort to the noble Lord, Lord Carter, when I say that my noble forebear was also involved in financing a co-operative bacon factory in Hitchin. Therefore the cross-party agreement that we find today was present then.
Lord Carter: My Lords, I am not sure, but I think it went broke.
Lord Lucas: My Lords, judging from the family's finances, I can believe it!
The Government welcome this wide-ranging report, and particularly its strong endorsement of the line which the Government have already been taking in the discussions in Brussels on the reform of the regime. My right honourable friend the Minister of Agriculture is even now discussing these very proposals with his fellow European Ministers at the Agriculture Council. There is a general consensus between industry and the Government that this regime is overdue for reform, and on the direction that that reform should take. The committee's report can only serve to strengthen my right honourable friend's hand in negotiations on the reform proposals, especially given the high regard in which such reports are held by our European colleagues. I do not intend to go into detail on the Commission's proposals. Instead, I would prefer to focus on those areas to which the committee addressed its comments in the report.

1109
On the subject of producer organisations, the Government fully accept the committee's conclusions concerning producer organisations. It is imperative that any proposals must not disadvantage UK producers. I am pleased to say that discussions in Brussels have indicated that producer groupings in the UK should, if they so wish, be able to satisfy the detailed eligibility criteria for the operating fund, and therefore have access to the money for market development.
We are pleased that under the current proposals producer organisations should have to raise 50 per cent. of their funds themselves, and that national governments should also have to contribute. I can tell the noble Lord, Lord Carter, that they will have to contribute. That could prove to be an effective brake on abuse. However, as many noble Lords—in particular the noble Lords, Lord Brain and Lord Reay—have pointed out, it will require the detail to be right for that to happen. The instinct of those producer organisations who have been misbehaving to date will be to find ways of continuing to do so. As the noble Lord, Lord Carter, pointed out, some producer organisations are not well set up at present to become marketing development organisations. There is a lot to be looked at in terms of the detail.
Our key concern, however, in respect of producer organisations is the Commission's insistence that virtually all output from a producer must be channelled through just one producer organisation. This is patently nonsense. The noble Lord, Lord Mackie of Benshie, said that the discipline produced by having to sell one's produce through a single producer organisation was well worthwhile. We agree with that. But the structure of our industry is not such that we can use a single producer organisation for all the output of one farm. We are pressing hard with support from other member states such as France, Germany and the Netherlands—I am pleased to say—to allow producer organisations to specialise in those areas where their expertise lies and to permit growers to choose their own marketing requirements for each product.
The noble Lord, Lord Brain, raised the subject of growers selling direct to supermarkets. Indeed that would apply to those running large pick-your-own operations and at the same time producing for the market as a whole. We see no good reason why such growers should have to change their present practices or miss out on the benefits of market development support. We shall be pressing to make sure that they do not.
On the question of the withdrawal system, the Government also agree with the conclusions that the committee has drawn concerning this. The Commission has stated that a key objective of the reform is to make the horticultural sector far more market-orientated. Yet this laudable objective cannot be fully achieved while the spectre of intervention remains to encourage over-production of goods for which there is no market. This helps no one, least of all the growers. It is expensive and wasteful and leads to the unacceptable destruction of food. In the discussions on the reform we have suggested that the proposed phased reductions in the maximum permitted volumes and values of
1110
withdrawals are but a step in the right direction. However, the proposed reforms are not to be sneezed at. The intervention limit of 10 per cent. of production for each product for each producer organisation will bite hard on the major areas of abuse. Greek nectarines have been mentioned several times. Over 70 per cent. are going into intervention. A reduction of that to 10 per cent. should have some salutary effect. That was mentioned by my noble friend Lord Middleton and indeed by the noble Duke, the Duke of Somerset, who asked what that amount of nectarines would look like loaded into five tonne trailers. My mathematics may be shaky, but I reckon that one could probably park the trailers at 20 yard intervals round the entire coastline of Great Britain and not have any gaps.
The proposed price reductions, however inadequate, are welcome too, but the Commission should go further and signal a complete end to this iniquitous system. In this context it is bizarre therefore that the Commission is also suggesting extending intervention to new products via the operating fund. I have to accept the suggestion from my noble friend Lord Stanley of Alderley that it should be extended to potatoes. We fully concur with the committee that this is not the most appropriate use of funding which would be better used to improve the market responsiveness of the industry. We are thankful, though, that its effects should be limited to 10 per cent. of the producer organisation's funds.
Many member states are opposed to the scale of the proposed reductions in intervention, although most understand the need for substantial reform. We want to see an end to intervention, but we recognise that this may not be realistically negotiable, at least in the short term. We may instead need to focus our efforts on ensuring that there is no dilution of the Commission's current proposals.
Lord Mackie of Benshie: My Lords, does the Minister mean that he will accept the ridiculously small reduction of 15 per cent. over five years? That will do no good at all. Will the Government press for a reduction of 15 per cent. a year, which would be much more effective?
Lord Lucas: My Lords, I do not disagree at all with the noble Lord, Lord Mackie of Benshie, in saying that 15 per cent. is far too little, but at least it is something. I think we have to recognise that we shall have to settle for the best that we can get. At the moment we are not optimistic that we shall be able to do better than the 15 per cent. that is currently on the table.
On the destruction of produce, this is an inevitable consequence of the present system. As we attack the root causes of the malaise, this unpleasant system will reduce. The committee has recommended that the Commission's proposals should be redrafted to address the environmental consequences of destruction but we are uneasy about pressing for such a provision to be included. Our position—one shared by the committee—is that the destruction of intervened produce with compensation from public funds should be avoided, and that, should the intervention system remain in place, it should be limited to levels which can be disposed of

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in more acceptable ways. Therefore, the Government are reluctant to propose anything which might weaken our stance on this fundamental point, particularly as the draft regulation already provides that the disposal of produce withdrawn from the market should respect the environment. Listening to the statistics quoted today, it immediately occurs to one that there ought to be a market for peach-fed pork. However, I suspect the problem is that the peaches which are being destroyed are not of a quality which pigs would deign to eat.
I turn to quality standards. The Government share the view expressed by the committee that quality standards are worthy of continued support as a means of ensuring freedom of trade provided that they are simple, reflect the needs of the marketplace and permit innovation. It is, therefore, essential for a degree of flexibility to be built into the standards. We believe that the proposed adoption of the UNECE standards by the European Union will be a worthwhile change in this regard.
The committee has suggested that in the context of whether or not there should be derogations from the need to observe quality standards, the reference to,
"products traditionally consumed locally"
should be clarified with a view to establishing that this should simply mean any product which is locally produced for consumption in a specified area. That is something we have been attempting to clarify further in discussions and it appears that the view of the Commission is very similar to that of your Lordships. I hope that that gives some comfort to the noble Lord, Lord Wade, the noble Duke, the Duke of Somerset, and my noble friend Lord Reay who mentioned that problem. The saving grace in this part of the Commission's proposals is, I believe, the inclusion of a provision for all such derogations to be approved by management committee procedure.
I turn to the question of trade which exercised the noble Lord, Lord Mackie of Benshie. The Commission's reform proposals do little more than consolidate the existing GATT/Third Country Trade agreements into the draft framework regulation. One particular aspect of these agreements is the entry price system, which progressively succeeded the old reference price system from 1st January last year.
The committee has recommended that imports of soft Fruit from Eastern European countries should also be subject to an entry price system since this would provide more flexible control on imports than a system of reference prices. The Government have previously said that they would support such an approach, although this is something to be pursued in the context of the current negotiations between the Community and the countries concerned, rather than as part of the reform of the fruit and vegetables regime. The committee has also recommended that the reductions in volume and value of export refunds under the GATT should signal the phasing out of this form of subsidy. This is something with which the Government wholeheartedly concur. But I must say that this is a view shared by very few other member states.
Lastly, I turn to the question of fraud. I think that. "fraud" is rather an inadequate word for what is going on; I think that "pillage" might be a better description.
1112
Clearly, where the disbursement of public funds is concerned it is essential that there are adequate controls in place to reduce the potential for abuse and to ensure proper compliance with rules.
The recent European Court of Auditors report highlighted, to put it mildly, serious shortcomings in the financial controls operated within the Community under the existing regime. It is for these reason that we share the committee's support for the appointment of a corps of inspectors, and welcome its endorsement of our proposal that producer organisations should be required to pay a security in respect of any advance funding they receive via the operational fund, and that they should be required to contribute to that fund. This will help guarantee rather more stringent financial controls across the whole Community—something which has, I regret to say, not always been a feature of the regime in the past.
I am grateful to the noble Lord, Lord Middleton, and to those other noble Lords who have spoken during the debate. These contributions, together with your Lordships' committee's effective and thorough analysis of the regime, will assist us greatly in discussions on the reform of the regime, and serve as a point of reference during the subsequent discussions on the precise implementing regulations.
If, in the 15 minutes that I have allowed myself, I have not answered all the questions raised today, I shall read Hansard and write to noble Lords concerned.
5.34 p.m.
Lord Middleton: My Lords, I, too, am grateful to noble Lords who have taken part in the debate, a debate which has been notable for a high degree of unanimity on all sides of the House. I very much appreciate the remarks of my noble friend Lord Lucas in giving the Government's response to our report, and the way in which the report has been received by the Government.
I, too, was fascinated by the picture painted by the noble Duke, the Duke of Somerset, of the magnitude of the fruit surplus in Greece. I remember in my extreme youth having to learn about the piling of Mount Pelion on Mount Ossa; and now we have to contemplate the piling of a peach mountain on top of that: heap.
It is not appropriate at this stage of the debate to introduce fresh material. However, I noted that no speakers, except, briefly, the noble Lord, Lord Carter, referred to last month's report of the European Parliament on the proposed reform of the fruit and vegetables sector. I merely add as a footnote to the debate that among the recommendations of the European Parliament, so far from phasing out the intervention system, were that additional crops should be eligible, that the maximum level of intervention that a producer organisation is allowed should, be raised, and that the European Community should pick up a larger share of the bill. Like other noble Lords who have spoken, I fear that the way to the reform of the common agricultural policy will not be a smooth one.
On Question, Motion agreed to.

Central Manchester Development Corporation (Area and Constitution) Order 1996
5.35 p.m.
The Minister of State, Department of the Environment (Earl Ferrers)The Minister of State, Department of the Environment (Earl Ferrers) rose to move, That the draft order laid before the House on 13th February be approved [10th Report from the Joint Committee].
The noble Earl said: My Lords, this is the third order of this nature to come before your Lordships. We have previously considered those relating to the Leeds and the Bristol development corporations.
This order is now required to wind up the Central Manchester Development Corporation. It revokes the 1988 order which designated the urban development area and which established the development corporation.
The order will take effect in two stages. The first is that that part of the order which designated the urban development area is to be revoked on 1st April 1996. The second is that that part of the order which established the corporation is to be revoked on 1st July 1996.
The reason for having two stages is that on 1st April the corporation will cease to exercise any operational functions. It is, therefore, proper that the urban development area status should be removed on that date. The corporation will then have three months in which to produce its annual report and accounts and to wind up its affairs. On 1st July the corporation will finally he dissolved.
All development corporations were intended from the outset to be bodies with a limited life. They were set up with the particular aim of helping the regeneration of certain run-down urban areas in order to give those areas a much needed boost after years of neglect. We are winding up the Central Manchester Development Corporation, therefore, precisely because it has successfully revived the fortunes of its designated area and because it has established a solid base from which regeneration can continue.
The corporation was set up in 1988. Its remit was to revitalise, and to bring private investment back, to an area of 187 hectares—an area which is immediately south of the city centre. This area was once the powerhouse of Manchester. But it had become run-down and neglected, with many under-used buildings and derelict sites.
This was a depressing and sad state of affairs for the centre of what was, and is, a magnificent and proud city. There was, therefore, a pressing need to tackle environmental decay, to promote jobs and tourism and to bring housing back to the city centre.
Anyone who has visited this area, as I have been privileged to do recently, cannot fail to be enormously impressed by the way in which the corporation has tackled these problems. It has transformed a once neglected area into a thriving, vibrant part of the city centre where developers are now keen to invest. It is wonderful not only to see what has been done but also
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to sense the enthusiasm, determination and pride of all those who have been involved and of all those who have been affected by what has been done.
An important part of the corporation's work has been to bring people and vitality back to the city centre. In 1988 the population of the urban development area was just 250. Now, eight years later, nearly 4,000 people live there. That is an astonishing change. Those people live in lively new communities with decent services and popular bars, pubs and restaurants.
The corporation has spent some £17 million on environmental improvements. These include such things as clearing canals, restoring towpaths and putting in new landscaping. Much of this work has been done in the Castlefield area, which is now a major leisure and tourist attraction and which is based around the historic canal network. These environmental improvement works have been vital ingredients in inspiring the confidence of investors and in creating an overall image of which local people can be proud.
The corporation has also succeeded in attracting new jobs and new businesses. Many under-used and neglected buildings have been converted into quality offices and hotels of varying sizes. New offices have also been built. Since the corporation started its work, over 98,000 square metres of offices have opened or are under way. That is a significant contribution.
In all, the corporation has attracted into its area private sector investment of £376 million. For every £1 of public money which has been invested by the corporation, nearly £4 will have been invested by the private sector. Noble Lords will agree that that is a remarkable achievement.
The corporation, though, has not achieved all this on its own. Underlying all its achievements have been the close and successful partnerships which it formed with the city council, with other public sector agencies and with the private sector. A splendid example of this spirit of co-operation can be seen in the new international concert hall, the Bridgewater Hall, which is due to open in the autumn. This was conceived and financed in partnership with the city council, with substantial backing from the European Regional Development Fund. It will be the centrepiece for the regeneration of an entire sector of the city.
There are many aspects of the achievements of the Central Manchester Development Corporation which deserve just recognition, but I fear that, were Ito mention them, I might weary your Lordships greatly, which would be distressing. The Central Manchester Development Corporation has, without doubt, been a great success story. Parts of central Manchester which were decaying are now no longer decaying but thriving due to the corporation's splendid efforts. It has restored the confidence of private sector investors. It has stimulated new jobs and homes. It has created a cleaner, safer environment. In partnership with the city council, it has laid a solid basis for continued regeneration in the future.
Now that that has been done, it is right to wind up the corporation. It is now for others, such as the council, to carry on the work and to build upon the corporation's achievements. The order is necessary to wind up the

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corporation, and I hope that I have managed to persuade your Lordships of the quite outstanding work which has been done by it. I commend the order to your Lordships. I beg to move.
Moved, That the draft order laid before the House on 13th February be approved [10th Report from the Joint Committee].—(Earl Ferrers.)
Lord Dubs: My Lords, perhaps I may say a few words about the order. When development corporations were first established, there was a sense that the Government had set them up because they lacked complete confidence in the ability of local authorities to achieve the necessary regeneration in their areas. There was concern that by setting up the development corporations the Government were lessening the status of local authorities in their areas by taking away large chunks of responsibility from elected councillors and giving them to an unelected body. Those were the concerns, and many of us felt an element of unhappiness about it.
The Central Manchester Development Corporation has, by all accounts, done an outstandingly good job. Someone in Manchester said that it was in danger of giving development corporations a good name. All that I know of the work of the Central Manchester Development Corporation is that it has achieved everything that the Minister described in detail. It has done a good job in regenerating a part of Manchester which badly needed a shot in the arm. That was good news for Manchester, and I pay tribute to all those involved with the development corporation for a successful period.
We now enter a new phase. Manchester will have to do without the corporation and, above all, it will have to do without the money which the corporation spent in regenerating the area. I hope that the Government will be able to find other means, through other budgets, of helping to achieve continuity for the City of Manchester so that some of the good ideas started by the development corporation are not brought to a dead halt on 1st April or 1st July.
The Minister was so enthusiastic, as I listened to him, about the work of the development corporation that he went close to suggesting that Manchester had no problems left at all; it was almost Utopia there. Manchester is a great city. I spent some years of my childhood there and have an enormous affection for it. However, I cannot believe that every problem has now been solved. I hope that what the Minister said will be tempered by the realisation that Manchester still has pockets of poverty; it still has a need for more industry and more employment for its many people.
We now go back to the local authority, the city council. After all, local government in Manchester had a good record before the development corporation was established. I understand that it was the local authority that set up Manchester Airport, which is outstanding and a sign of what local government can do.
Looking to the future, I hope that the Government will be helpful in stimulating and assisting the local authority to go on stimulating those parts of the city that need further regeneration. I see the future very much as
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co-operation among the local authority, the private sector and the voluntary sector. I see a partnership that will build on the good work done by the development corporation which will help to continue the achievements of Manchester and give it prosperity in the future.
Earl Ferrers: My Lords, I am grateful to the noble Lord, Lord Dubs, for what he said. He is always honest, and he was particularly frank when he said that when the development corporations were set up they were pretty unpopular. People were doubtful and sceptical; they felt that the corporations were taking away powers from the local authorities. I can understand that. However, the Government had in mind that various places throughout the country were derelict, run-down and needed a shot in the arm. The only way to do that was to set up the development corporations. As the noble Lord was courteous enough to say, they have done a great job, and I am grateful to him for acknowledging it.
If I gave the impression that no more problems existed in Manchester, I assure the noble Lord that it was the wrong impression. I meant that over the area, just that one small part of Manchester for which the development corporation was responsible, it has done an exceedingly good job. There will be much more to do within the whole of Manchester.
The noble Lord was worried in case government funds would not be available. I am sure that he will realise that that phase of life has come to an end but new phases will go on and the city council will take over the responsibilities. The Government will make further money available where needed. For example, there is the Hulme City Challenge for which the Government are making available £37.5 million over five years. There is Estate Action where £54 million is being spent over this year and the next three years. There is the Challenge Fund, Round 1, which will receive £14 million over the next six years. In the second round of the Challenge Fund £28 million is being made available over the next seven years. And of course the Government contributed no less a sum than £75 million towards the Olympic bids. That was done over five years, from 1991 to 1996. Unfortunately, Manchester was not successful in getting the Olympic bid but because of that it got the Commonwealth Games bid, and therefore that has been a success.
The noble Lord should not worry too much that the Government will not be thinking of Manchester any more. Of course we shall; but it has to take its place in all the other priorities throughout the country. The main point is that this particular facet of life, the Central Manchester Development Corporation, which was set up for a term has been a success. The term has come to an end, and now it is for others to pick up the baton and run with it.
The corporation can be very proud of its achievements. I congratulate the chairman, Dr. James Grigor, and his fellow board members and the corporation's dedicated officers on the splendid work they have achieved over the past eight years. It is something of which they can be proud, and something of which Greater Manchester will also be proud. I commend the order to the House.
On Question, Motion agreed to.

Audit (Miscellaneous Provisions) Bill
5.51 p.m.
Earl Ferrers: My Lords, I beg to move that the Bill be now read a second time.
Your Lordships will have perceived that the Bill has one great virtue. It has, in fact, many, but one is outstanding. It is short.
The Bill relates to the functions of the Audit Commission for England and Wales. Two of the provisions also relate to the functions of the Accounts Commission, which is the equivalent body in Scotland.
The Bill will give the Audit Commission powers to work with the Department of Health's Social Services Inspectorate on studying the performance of the social services departments of local authorities. This will apply just to England and to Wales.
It will change the financial years of the Audit Commission in England and Wales and the Accounts Commission in Scotland so that, instead of a financial year which runs from 1st April each year, the financial year will run from 1st November. This will coincide with what may be described as its operational year.
It will enable local authorities to publish annual information about their performance indicators in a free newspaper. This gives the local authorities an additional option. At the moment, they have to publish in newspapers which are sold and which circulate in their areas. This change will apply in England, Scotland and Wales.
There is also one technical provision in the Bill, and it is one which I fancy most of your Lordships will find agreeable. The Bill removes the need to have Treasury approval when the Secretary of State wishes to change the pay and conditions for Audit Commission members. This reflects the Government's policy on delegation of responsibility for pay and related matters.
The Audit Commission's main function is to arrange an external audit for all local authorities and health service bodies in England and Wales—a task which it carries out very well. It has established a reputation for professionalism and of independence.
The Audit Commission was set up in 1982 and, at the time, it was given a specific remit to carry out studies to promote value for money in the provision of local authority services. Much of the commission's work is of great interest to the Department of Health. The Department of Health at present carries out, through the Social Services Inspectorate, inspections of particular social services provided by a local authority which look in detail at the quality of service. But the inspectorate is not qualified to examine services from the point of view of value for money.
What the Department of Health wishes to see is for the inspectorate, jointly with the Audit Commission, to carry out a programme of studies of social services departments, which will look both at quality and at value for money. At present the legislation does not permit this.
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The Audit Commission also has no power at present to charge the Secretary of State for its work in this particular field. As the House will appreciate, if the Audit Commission cannot be paid for the work, the work is not readily done. The first provision in this Bill would, therefore, enable the Audit Commission to do this work and to be paid by the Secretary of State for it.
It is obviously of interest to local people and to local authorities to have an independent assessment of the performance of the whole of the social services department—both from the point of view of how it functions and how it manages its finance and other resources. We think that the best way in which to achieve this is to bring together the skills of the Audit Commission and the Department of Health's Social Services Inspectorate.
There will be a rolling programme of studies which will cover local authorities in England and Wales. Every local authority should be inspected once in five years. This programme will be supported with what is known as a review guide. This will guide both what is to be reviewed and how a review is to be conducted. A draft of the guide is currently being tested in four volunteer local authorities. The next version will be available shortly. Copies will be deposited in the Libraries of both Houses.
The second provision in the Bill—to change the financial years of the Audit Commission and the Accounts Commission—is about good management. Both these bodies organise their work programmes to run from November to October. That is because they have to audit the local authorities' and health services' accounts which end on 30th March. The bulk of audit work takes place, therefore, from April to November, and it would make sense if the financial year of the Audit Commission were made to coincide with their operational year. It will make it easier for them to budget, and to plan their work. The Audit Commission would make this change during 1997. The Accounts Commission would follow later, once it has dealt with the upheaval resulting from local government reorganisation in Scotland.
The third provision in the Bill relates to a major government initiative which was made under the Citizen's Charter; namely, the publication of local authority performance indicators. Performance indicators tell people the basic facts about their local authority's performance. Equally importantly, they encourage local authorities—both members and officers—to think about the standards which they are setting themselves, and about how they are meeting those standards.
The Audit Commission determines which performance indicators should be reported, and it oversees the way in which local authorities report them. It then draws all the local information together in the form of a national publication of performance indicators.
In fact, the commission is, this Thursday, publishing the second of those national publications, which will highlight the performance of local authorities against some 20 or so indicators. This national publication is an

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important part of our effort to try to increase the accountability and the effectiveness of local government. Public information must be readily available, and it has to be easy to understand if it is to be of any use.
If I might inject a personal observation, it is that I am almost paranoid about the need for simplicity of presentation—in anything. If the presentation is complicated or unattractively produced, it falls at the first fence; and nobody will be bothered to read it, however meritorious may be the contents.
Some local authorities have produced their indicators in a good and understandable way, and I congratulate them on that. We want to encourage this. We have therefore looked carefully at the comments of the Audit Commission and local government, which have told us that we should broaden the methods of publication which are available.
The Local Government Act 1992 requires publication of performance indicator information in a paid for newspaper which circulates in an authority's area. These provisions are no more than minimum requirements. The underlying principle is that the information should be available throughout the authority's area in a publication which is wholly independent of the authority.
We now believe, in the light of the representations we have received from the Audit Commission and from local government, that this principle can also be satisfied in certain cases by publishing the indicators in free newspapers which are delivered to houses in the locality.
Local authorities can use this option only where the free newspapers are wholly independent of the authority concerned, and where the free newspapers are distributed throughout the authority's area. It is immaterial, of course, whether the information is provided by one, or more than one, free newspaper in the area, provided that the criteria to which I have referred are observed.
The established way of publishing this material remains that of paying for it in local newspapers. Where the use of free newspapers would be consistent with the general principles which I have described, we would like that option to be available. In Clause 5, therefore, all we seek is a modest increase in flexibility as to how the minimum publication requirements can be fulfilled.
I like to think that none of the measures can be regarded in any way as controversial. They are really improvements in what is already sound management. I am sure that in all cases they will be welcomed by those who are most closely concerned. I hope that they will be equally welcomed by your Lordships. I beg to move.
Moved, That the Bill be now read a second time.—(Earl Ferrers.)
6 p.m.
Lord Dubs: My Lords, in giving the Bill a broad welcome, I reserve the right to make a few comments and ask a few questions of the Minister about the way in which he sees it operating. The Bill represents a step forward and is useful in that sense.
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I turn first to the level of co-operation that is to take place between the Government, the Social Services Inspectorate and the Audit Commission. I always believed that the Audit Commission's strength lay in it being a body totally independent of government and local government. I have some concern in that, by having to co-operate in the way suggested with the Social Services Inspectorate, which is not an independent body, there may be some difficulty in the Audit Commission retaining the impeccable independence from government that it has so far demonstrated. That concern underlies an important part of the Bill.
I understand that the Audit Commission can be involved at the request of the Secretary of State. I wonder whether it might be possible in certain circumstances for local council taxpayers also to call in the Audit Commission in their own right rather than relying on the Government to do it for them. I wonder too what might happen if, at some point in the future, the local authority were unhappy about the arrangements and indeed were not too keen on co-operating with the Audit Commission and the Social Services Inspectorate. But perhaps I am unduly suspicious about that. Certainly, I welcome the links between quality and value for money and the fact that once every five years there will be a rolling programme covering local government. My concern essentially is about the independence of the Audit Commission and how it can be maintained.
I note what the Minister said about changing the date of the financial year, which makes good sense. I was inclined first to be somewhat sceptical. We have now so many different dates for the financial Year—1st April, 1st December and the calendar year used by Brussels—that they are becoming rather confusing. I suppose that in management terms, it makes good sense to change the date, so that it covers the relevant period when most of the audit work is done; namely, from 1st April onwards.
I have spent some time thinking about the effect of performance indicators in terms of local people having more information about their local authorities. I understand and welcome the feeling that paid-for newspapers should not be the only way for local authorities to make performance indicators available in their area. After all, quite often paid-for newspapers do not have the breadth of circulation achieved by free newspapers.
The Minister said that the free paper could be used, provided that it was totally independent of the local authority. I think I understand why he said that. On the other hand, some local authorities have a widespread distribution of their own newspaper, which gives local people information about the work of the local authority. I wonder whether it is absolutely true that local authorities' own papers would not be an adequate vehicle for publicising performance indicators and why that has to be left to a paper which is independent of the local authority. It may well be that in some areas there is not a free sheet which covers the area sufficiently well and therefore the council's own paper, where one exists, may well be appropriate. I put that point as a question because the Minister emphasised that the condition had to be in the Bill that any free sheet was totally independent of the local authority.

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In passing, let me hope that performance indicators can be set out in ways which are meaningful to people in local areas. Over the years, I have seen performance indicators that might be worthy for the experts but were somewhat mystifying to ordinary people because of the way in which they were presented or because of the need to summarise how the information was put over.
Over the years there have been a number of significant "scandals" in some local authorities. Clearly, we want to reach a situation whereby the Audit Commission can be helpful in assessing what local authorities can do in order to put back on the straight and narrow path those which have been beset by practices less than desirable. I do not want to list those local authorities which have been beset by such difficulties. I merely say that some of those difficulties continue. We all know about Westminster City Council. I hope that nothing in the arrangements in the Bill will in any way lessen the power of the Audit Commission to carry out the most thorough and widespread investigations where necessary into all aspects of local authority work.
Finally, one other issue tends to come out of any examination of how the Audit Commission and indeed the Social Services Inspectorate might operate. I have the privilege to serve on a Select Committee of this House which deals with relations between central and local government. It is far too early even to pre-judge the outcome of our report, but it has certainly been very informative in adding to my understanding of some of the issues. We do have a difficulty, and I am here putting forward my own views; they are not the views of the Select Committee, but they have come to me through my membership of that committee and the valuable evidence that it received from a wide range of local authorities and other bodies.
As a country, we have not fully decided whether we demand of local authorities that they achieve uniform standards of provision across the country in whatever service they provide, so that one local authority provides the same level of service as every other local authority; or whether in fact we welcome what we sometimes profess to welcome, namely, a healthy diversity in the way in which local authorities provide services. We have not resolved that difficulty. The thrust of the Bill suggests that we look to uniform levels of service across the country rather than wish to encourage diversity.
I appreciate that, if one local authority provides what I subjectively call a better quality of service than another, people in a less favoured local authority will complain that they do not receive as good a level of service in that area—services for children, for example, and so on. On the other hand, if we are to achieve the same level of service, we are simply using all the resources of central government to bring pressure to bear on local authorities to be uniform, thereby denying them the chance to be different from each other. I understand that in other European countries and in North America there is more diversity from one local authority to another.
I do not take a position as to what ought to be the case. I simply mention in my concluding remarks on the Bill that it seems to me that the underlying idea is that
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we are looking to uniform standards of service provision by local authorities, certainly in the area covered by the earlier part of the Bill as regards co-operation between the Audit Commission and the Social Services Inspectorate. Therefore, I ask the Minister the question: what is the philosophical basis for that approach?
6.10 p.m.
Baroness Thomas of Walliswood: My Lords, I am today's maid of all work on these Benches. I hope I may be found to give satisfaction. We generally welcome the Bill. Nevertheless, it raises certain concerns, which my honourable friend Mr. Rendel has expressed in another place on a number of occasions. I should say straightaway that we have no worries whatever in regard to the change of financial year for the Audit Commission.
First, we are concerned that, as a result of the Audit Commission's increased powers as laid out in the Bill, local authorities may be criticised for non-performance of their duties where that non-performance is the result more of insufficient funding than of any other cause. For example, there is an increasing consensus among professionals, carers and managers that some of the problems of occupation of hospital beds by social services clients and the catastrophic effect that that can have on bed availability within hospitals, is largely caused by lack of funding. I should perhaps declare that not only am I a member of a local authority, but also I am a member of a hospital trust board. I may therefore be said to have an interest on both sides of that argument.
Secondly, there is continuing anxiety within local government at the increasing burden of work imposed on local authority managers by continuous increases in the level and frequency of inspections. That is in direct contrast with the decrease in regulations supposed to be for the benefit of business. Of course, the funding of local government comes from a special source which requires special safeguarding. But the rights of the customer should be the same in both cases. The noble Earl referred to the guidance sent out to local authorities. That guidance is extremely dense and very long. I mention that as an example of the many pieces of paper to which everybody involved in local government has to respond these days on an almost daily basis.
Thirdly, there are anxieties in relation to where and by whom the local authority shall publish its performance indicators—the last section of the present Bill. I agree with the Minister that it is desirable that the public are informed in the clearest possible and most easily accessible terms as to the performance of their local authorities against the determined criteria. I am therefore a little concerned that there seems to be a good deal of limitation in relation to the enablement of local authorities to use free newspapers.
The Bill says that, if local authorities use free newspapers, they must,
"take all reasonable steps to secure that a copy of a publication containing the information is distributed to each dwelling in their area".

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That is a good deal more demanding than the gloss which the Minister put on it in introducing the Bill. It would be difficult for local authorities, particularly in any but the most urban areas, to ensure that any newspaper, except possibly one produced by themselves, reached every dwelling. Along with the noble Lord, Lord Dubs, I shall be interested to hear the Minister's comments on that matter. I do not see how local authorities can be sure that any newspaper, free or paid for, is circulated to each dwelling in its area unless it is in control of the circulation process. That is another area of doubt.
The last matter I wish to mention—to some extent the noble Lord, Lord Dubs, dwelt on this also—is our concern that the main provisions of the Bill tend to extend the powers of central Government over local authorities and shift the balance of scrutiny away from local people. That matter was referred to in another place at some length and I shall not go into all the arguments. However, our view is that the best way of increasing the accountability of local authorities is to enable local people to express their views through the ballot box by a fair and proportionate voting system.
The noble Lord, Lord Dubs, referred to anxieties about poorly administered authorities, but he did not indicate whether the amendments tabled in another place were to be brought here. We shall see when the time comes. No doubt, whatever amendments are tabled, there will be some co-operation and we shall see whether or not we are able to support any of them.
6.15 p.m.
Earl Ferrers: My Lords, I am grateful to the noble Lord, Lord Dubs, and to the noble Baroness, Lady Thomas of Walliswood. The noble Lord, Lord Dubs, approved the principle of the Bill but had one or two anxieties, particularly in relation to the Audit Commission and whether it will remain wholly independent. It will remain independent; after all, it is an independent organisation. The Social Services Inspectorate may not be independent of central Government. The studies will be done by organisations which are independent of local authorities, not central Government. The task needs the expertise of both the Audit Commission and the Social Services Inspectorate. That inspectorate is part of the Department of Health and wholly independent of local authorities. From the point of view of inspection therefore the noble Lord, Lord Dubs, need not worry too much; they are totally independent.
The noble Lord was concerned also about whether the Audit Commission could refuse to work if it so wished. It could so refuse if it so wished. He was concerned also with what would happen if the local authority did not want to co-operate. In that case the local authority would be refusing to co-operate with both the Audit Commission and the Secretary of State and that refusal could be challenged in the courts by way of judicial review whereby an order of mandamus would be issued which would require the local authority to comply or to co-operate. The scenario proposed by the noble Lord, Lord Dubs, would be a fairly radical and unusual one. I hope that most local authorities will be prepared to
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co-operate; after all, they are providing the services and it is only right that they should report on them and be inspected as Parliament wishes.
The noble Lord, Lord Dubs, said that the Audit Commission could be asked by the Secretary of State to investigate a matter; can council tax payers do that? The short answer is that council tax payers do not have the same prerogative as the Secretary of State. However, the studies will include meeting local people.
The noble Lord was concerned also, as was the noble Baroness, Lady Thomas, about the performance indicators and the publishing of them in newspapers. There is nothing to prevent a local authority from publishing its performance indicators in its in-house publication, to which the noble Lord, Lord Dubs, referred. However, it must satisfy the statutory requirement to publish in a paid-for newspaper or, if the Bill is passed, in a free newspaper as well. The reasons are fairly obvious. An in-house newspaper is not independent, whereas a paid newspaper or a free one is.
The noble Baroness, Lady Thomas, was concerned about the distribution having to be to every dwelling. It is important to get the principle right. Local authorities must disseminate their information more widely than simply through paid-for newspapers. Without the requirement in the Bill, free newspapers may go, for example, to only 60 per cent. of the population, which would leave 40 per cent. without anything. The publication requirements in the Bill are the minimum requirements necessary. I am sure that the noble Baroness will understand that. It is possible for free newspapers of any kind to be pushed through doors, but if they are not pushed through virtually every door, the criteria will not be met.
The noble Baroness touched a tender nerve with me when she said that the guidance is large and dense. I am always complaining about the density of publications and am always told that everyone has to know all the details. I then say, "Yes, but some poor blighter will have to read it all". The noble Baroness will he glad to know that the next version will be shorter and much easier for the layman to read. I do not know whether it is the noble Baroness's influence in advance which has secured that or whether it has been mine in retrospect. I rather fancy that it is the noble Baroness's influence in advance.
I am grateful for your Lordships' observations on the Bill. I hope that it will prove to be uncontroversial. The noble Baroness, Lady Thomas, was worried that the Bill might be a little controversial. After what I have said I hope she will find that it is not quite as controversial as she thought.
The noble Baroness referred to the lack of availability of hospital beds and said that it was due to lack of funding. With the greatest of respect, I do not think that would be a natural part of this kind of inspection. What the hospitals have to do is show what money they have, what they have done with it and how they have done it. If it turns out that they have done the best they can with the facilities that they have, that will be reported.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Health Service Commissioners (Amendment) Bill
6.21 p.m.
Read a third time.
Clause 6 [Exercise of clinical judgment]:
Baroness Jay of Paddington Baroness Jay of Paddington moved Amendment No. 1:
Page 4, line 44, at end insert—
("(8) The Commissioners shall issue guidance for the purposes of clarifying—

(a) how to make a claim and the evidence required to be provided by the person who made the complaint; and

(b) the circumstances in which assistance is available to progress the investigation to the person who makes a complaint to enable them to provide the evidence required in paragraph (a) above.

(9) In preparing the guidance under section (8) above, the Commissioners shall consult with bodies appearing to them to represent the interests of patients, health service professionals and the bodies subject to investigation by the Commissioner."").
The noble Baroness said: My Lords, this amendment enables your Lordships to return to the vexed question of complaints about clinical judgment. At Second Reading and in Committee the Minister acknowledged—indeed, I think all of your Lordships who took part in the debates agreed with her—that it was extremely difficult to develop a precise definition of a clinical complaint, a precise definition which, if it were possible, would allow a positive description to be placed on the face of the Bill and would allow those practising the complaints procedure to distinguish a complaint about clinical care from one about maladministration.
We on these Benches were aware that the attempts we have made to suggest definitions by amendments, which have taken place both in your Lordships' House and in another place, have been inadequate. Amendment No. 1 therefore throws the responsibility on to the commissioner and would ensure that he makes national guidance available so that this very important additional category of complaint does not become discredited by misunderstandings and perhaps by local variations in practice.
Subsection (8) of Amendment No. 1 requires the commissioner to produce guidance about how to make such a complaint—a clinical judgment complaint—and to assist anyone who wishes to do so in assembling appropriate evidence to make his case. The clarity and accessibility which would be achieved would be of benefit both to the complainant and to those complained against. In the new and complicated area of clinical complaints to be considered by the ombudsman it seems to us particularly important that the scales of justice are seen to be clearly balanced and not weighed against a patient, a lay person, who may be questioning the professional judgment—indeed the competence—of doctors and other health service professionals.
For example, it has been suggested that professional representative bodies may press the commissioner to set exacting and high standards of evidence from the
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complainant in a case of clinical judgment. It is very important that high standards are maintained. But in clinical judgment cases it seems that the type of evidence required may mean a level of scientific knowledge or perhaps technical expertise well beyond the capacity of the average complainant. That is the purpose of subsection (8)(b), to ensure that the commissioner's office takes the responsibility for ensuring that complainants understand how to find help so that the burden of assembling evidence will not fall inappropriately on them as individuals. Subsection (9) requires the commissioner to consult with appropriate outside bodies in creating the guidance. It is worth recording that the national consumer organisations and patients' representative bodies are anxious that the safeguards embodied in the amendment are included in the Bill.
The health commissioner himself has already emphasised in his useful background paper, which we have mentioned on several occasions in our deliberations on the Bill, that in his new responsibilities he will rely heavily on professional advice in the area of clinical judgment. That is what should be balanced by the requirements in the amendment. The Minister said in reply to my probing amendment on this subject in Committee that clinical judgment must be a developing concept. I agree with that. She also said:
"It will be for the commissioner to decide, with advice from his professional advisers, whether and which aspects of any given complaint concern clinical judgment".—[Official Report, 29/2/96; col. 1680.]
I agree with that also but I do not think it is fair, either to the health professionals concerned or to patients, to accept that each and every instance of clinical complaint will be decided ab initio by the health commissioner with his professional advisers.
That is why Amendment No. 1 asks the health commissioner to issue guidance which will be available to everyone. Obviously that would be appropriately circulated once he has had the opportunity to develop his thinking about this complicated area with both the appropriate professional and, importantly, the consumer representative bodies. I beg to move.
Baroness Cumberlege: My Lords, as the noble Baroness has said, this amendment would require the commissioner to issue guidance to complainants on how to go about providing evidence in support of their complaint and to consult with various interest groups on the preparation of such guidance. The noble Baroness will know that I have a considerable amount of sympathy for the concerns which lie behind the amendment but I would argue that the amendment would be using a sledgehammer to crack a nut and therefore is unnecessary.
We have had a number of debates about amendments which would affect the way the commissioner goes about his work. We remain of the view that, since the commissioner is independent of government, it would be totally inappropriate to set down in primary legislation detailed operational requirements on his working practices. The commissioner's work is overseen by the Select Committee for the Parliamentary

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Commissioner for Administration. That committee is free to make recommendations for changes in the way he operates. I have no doubt also that Mr. Reid is taking careful note of all the views expressed in the debates in your Lordships' House and also in another place.
It is important that the commissioner should satisfy himself that there are good grounds for his intervention before committing the resources needed to conduct an investigation. It is right that complainants should tell him clearly what their grievance is and why they feel it has not been adequately dealt with by the new NHS procedures. The commissioner has made this clear in his paper. But he has also said that no complaint will be rejected simply because the initial request does not clearly establish the grounds of the complaint. He has further promised that a member of his staff will contact the complainant where appropriate to clarify the grounds of the complaint.
I believe that this should provide sufficient reassurance for your Lordships that complainants will not be prevented from bringing their concerns to the commissioner because of lack of support or guidance. I also know that the commissioner is planning to issue a revised leaflet for the public explaining how to make a complaint to him under his widened jurisdiction. It will refer to sources of help locally for people wishing to complain to him, including community health councils.
Your Lordships will be aware of the excellent work CHCs do in providing help and support to people wishing to make complaints about NHS services. There are also other sources of help available to the public; for instance, citizens advice bureaux and voluntary organisations. Some trusts employ patients' advocates or patients' representatives to support complainants and we encourage the further development of this kind of help to complainants at each stage of the new complaints procedure.
In conclusion, I do not believe that the amendment is necessary and I hope the noble Baroness, despite her closely argued case, will agree to withdraw it.
6.30 p.m.
Baroness Jay of Paddington: My Lords, I am grateful to the Minister for that reply. I take entirely the arguments that she has made that this is a sledgehammer to crack a nut. But I suspect that our concern on these Benches is that perhaps it is worth considering the methods by which these new procedures will be monitored and evaluated, which is in fact the subject of a later amendment in this evening's proceedings. It is important both for the confidence and understanding of the public that it is made very clear what these procedures are and how they will have their rights maintained. I am delighted to hear from the Minister that a revised leaflet will be issued. I hope that every effort will be made through the normal health service channels to ensure that members of the public are not intimidated by the new procedures and that they feel confident to make their complaints, if necessary as far up the system as the ombudsman. However, in view of the Minister's reply, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10 [Reports]:
Baroness Jay of Paddington Baroness Jay of Paddington moved Amendment No. 2:
Page 5, line 44, at end insert—
("( ) After subsection (1) there shall be inserted—
"(1A) Before making the report of the results of an investigation the Commissioner shall—

(a) send a draft factual summary of the matters investigated, excluding his findings and recommendations, to the person and body referred to in subsection (1)(a) to (c) above, and shall give them an opportunity to indicate any factual inaccuracies or omissions; and

(b) send a draft factual summary of the matters investigated, excluding his findings and recommendations, to the complainant, and shall give him an opportunity to indicate any factual inaccuracies or omissions.".").

The noble Baroness said: My Lords, this amendment and Amendment No. 3, are also intended to improve what one might call "the balance of power" under the new complaints system—that is to say, to increase public confidence that individual patients will have the same rights as individuals appearing before the ombudsman, as will health care professionals, who may be supported by the formidable resources both of their own professional organisations and perhaps from the NHS itself.
The purpose of Amendment No. 2 is obviously straightforward. It is to enable complainants to see the factual summary of the commissioner's draft report after the investigation is complete, so that they can comment on factual errors or omissions. At present the body or person complained about does have access to the draft report, but the complainant does not. Surely this practice is against the spirit of fairness and openness which is supposed to inform the new NHS complaints system right the way through, and particularly the work of the ombudsman.
After all, at the risk of opening old disputes, noble Lords will vividly remember the advantages that were supposed recently to accrue to those Ministers who had foresight of the recent report by Lord Justice Scott. On that occasion an enormous and, in my view, justified, public row ensued, about the rights of the Opposition to be able to see the report on an equivalent basis. No one is suggesting that the reports of the ombudsman in relation to health service complaints will be subject to that degree of partisan approval or disapproval. It is certainly unlikely that the clamour would occur about complainants within the health service. But it makes it even more important that the rights of the individual should be equated with the rights of the mighty machine of the ombudsman and the complaints committee—indeed, they must be ensured by statute.
This matter, as well as the previous one raised by Amendment No. I, have been mentioned at every stage of the passage of this Bill through another place and your Lordships' House. In another place amendments rather similar to Amendment No. 2 received wide, all-party support. At Report stage, the Minister, Mr. Horam, said in a positive reply to my honourable friend Mr. McLeish,

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"I will ask the commissioner to consider further his practice and invite the Select Committee on the Parliamentary Commissioner for Administration to look into, not only the question of the health commissioner, but that of the parliamentary commissioner—perhaps as a larger part of the total framework—and decide whether it is fully satisfied that the procedures that the commissioner has outlined are totally correct, and whether it should seriously consider moving towards the hon. Gentleman's suggestions and those made in Committee".—[Official Report, Commons, 25/1/96; cols. 546–7.]
Those made in Committee, as I have indicated, were supported by honourable Members on the Government side.
Since then the chairman on the Select Committee on the Parliamentary Commissioner for Administration, Mr. James Pawsey, MP, has written to the National Consumer Council which has been championing amendments about complainants' access to draft reports. Mr. Pawsey agrees in the letter that this is a matter worthy of further investigation, which he intends to take forward in the forthcoming inquiry into the Parliamentary Commissioner's annual report for 1995. Given this favourable climate on all sides, it seems entirely appropriate to try to ensure that this generally acceptable purpose is included and now placed on the face of the Bill. I beg to move.
Lord Harmsworth: My Lords, when I first read this amendment I had some difficulty with it. It is possibly owing to the wording. In what she has just said the noble Baroness, Lady Jay, has clarified it to a certain extent. I had difficulty with the words "factual summary". It seemed to me that the commissioner's job had only two stages. The first was to agree with both parties what the facts of the complaint were (and hence my difficulty with the words "factual summary": that is to say, that both understood exactly what the grounds of the complaint were and agreed them.) The commissioner's second and last stage was to, as it were, produce his report. I suspect that that is his business, and his alone.
My own view is that he is assiduous in not only agreeing with Section 11(1) of the Health Service Commissioners Act 1993 which requires him to afford the health service body complained of an opportunity to comment on the allegations. But he is also very careful by his procedures to agree with the complainant and with the body being complained about, that the facts are right. He will go back and forth, as it were, until those facts are agreed.
He has set out his procedure in a letter of 16th January to my honourable friend the Parliamentary Under-Secretary of State, John Horam, in another place. I believe that that letter has been made available to the House of Commons Standing Committee on the Bill. I wonder whether the Minister would like to make it available in the Library because it is a valuable document.
In the end there is a final safeguard, in that the body being complained about may have to account to the Select Committee on the Parliamentary Commissioner for Administration. If the facts of the case are not right then there is clearly a difficulty there. As a consequence,
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my view of all this is that the amendment is perhaps unnecessary. I would rather that it were not on the face of the Bill.
Baroness Cumberlege: My Lords, I have listened very carefully to the points made by the noble Baroness, Lady Jay, and I understand the strength of feeling behind them. As she has said, there is support for this amendment from the Benches opposite and it has been very consistent. However, we are of the view that it would be wrong to legislate on such a detailed operational matter, and this is precisely the kind of issue we feel is best left to the ombudsman's discretion, as is the view shared by my noble friend Lord Harmsworth.
I understand that the ombudsman's purpose in sending the full draft report to the body complained against, including the draft findings and recommendations, is, first, to ensure that the facts as reported are not disputed. This is particularly important as it is the body complained against which may face public criticism for its actions. Secondly, it is in order to seek appropriate redress if the complaint is justified and calls for redress. Thirdly, it is to ensure that any necessary procedural changes are agreed to reduce the possibility of the same mistake being repeated.
My honourable friend the Parliamentary Under-Secretary of State for Health, Mr. Horam, has discussed this matter with Mr. Reid, who has explained that he has strong reservations about showing a draft of the report to the complainant. Mr. Reid has stressed that the investigatory, as opposed to the adversarial, procedure is one of the tenets underlying the concept of the ombudsman. He or she should not act in the same way as the courts. He has little doubt that if he were required to show a draft of the report to the complainant in every case, the time taken to conclude the investigation would be lengthened.
Your Lordships may be aware that the commissioner's present practice has been judicially reviewed in a Parliamentary Commissioner case and was not held to contravene the requirements of natural justice. The issue raised by the noble Baroness has implications for the ombudsman in his parliamentary as well as his health service role. In this Bill we are not seeking to change the ombudsman's method of procedure and we do not wish to bring the health service side out of line with the parliamentary side.
My honourable friend has written both to Mr. Reid and the chairman of the ombudsman's Select Committee, as my noble friend has said, on 16th January, inviting them to consider this issue further in the light of the points made in another place. The Select Committee chairman has replied undertaking to do this. I will place the letter in the Library if my noble friend feels that that is helpful. This matter is being dealt with by honourable members in another place. I hope that the noble Baroness will agree to await the outcome of that and in the meantime withdraw her amendment.
Baroness Jay of Paddington: My Lords, I am grateful to the Minister for her reply. I still believe that there is a slight peculiarity about a position in which we are asked to await the outcome of the Select

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Committee's report. As I described in quoting indirectly from the letter of the chairman of the Select Committee, Mr. Pawsey, that will be part of the forthcoming review for 1995. It is not clear how the Government will react in the context of the reply of the noble Baroness's her honourable friend Mr. Horam. If the context is that it will be looked at more broadly than simply in relation to the Health Service Commissioner, and it is agreed by the Select Committee on the Parliamentary Commissioner for Administration that this is a 'worthwhile reform, why, when the Bill will already have passed through your Lordships' House, does it have to wait until the report is forthcoming, which may be a matter of weeks after we finish our deliberations on the Bill?
The Minister has referred to the lack of necessity to legislate on what she describes as detailed operational matters. That is a matter to which we may return when we look at Amendment No. 3 That raises the issue of the detailed evaluation of the processes suggested in the Bill. I do not accept the point raised by either the Minister or Mr. Reid about the time of the complaints procedures being extended by sending a draft report to the complainant. Surely the thing to do is to send the report both to the complainant and to the body or person complained against at the same time. Some kind of time limit can be set for them to consider the report concurrently.
But, on the basis that the Minister has encouraged me to believe that the Select Committee on the Parliamentary Commissioner for Administration will consider this issue in detail and will be prepared to take a different view—which obviously will be operationally relevant to the work of Mr. Reid and any successors—I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Jay of Paddington Baroness Jay of Paddington moved Amendment No. 3:
Page 6, line 14, at end insert—
("(6) After subsection (4) there shall be inserted—
"(4A) During the three years from the date on which section 10 of the Health Service Commissioners (Amendment) Act 1996 is brought into force, each of the Commissioners—

(a) shall conduct at least one survey of a representative sample of people who have made a complaint under section 3 of this Act to assess the level of satisfaction of complainants with the investigation of their complaints;

(b) shall at least once a year hold meetings to discuss the effectiveness of the investigation of the complaints made under section 3 of this Act with people and organisations who appear to the Commissioner to represent the interests of patients, health service professionals and the bodies subject to investigation by the Commissioner; and

(c) shall include in his or her report made under subsection (4) a summary of the results of any survey conducted under paragraph (a) above, the discussions held under paragraph (b) above and any recommendations by the Commissioner to amend the system for making complaints under section 3 of this Act.".").

The noble Baroness said: My Lords, Amendment No. 3 is important in the context of previous discussion about not seeking to put some of my concerns into primary legislation. Amendment No. 3 is an attempt to increase the transparency and accessibility of the ombudsman's work and to establish an effective system for monitoring and evaluating his new activities in the early years of their operation. Those will include the details that we have discussed in earlier amendments.
The amendment is the result of discussions among my honourable friends in another place, myself and the National Consumers' Council. We all believe that the enlarged responsibilities of the Health Commissioner for NHS complaints are sufficiently radical to merit a special process of evaluation so that the famous level playing field is achieved. I believe that to be particularly important in view of the Minister's response to the two earlier amendments that we have discussed this evening, which she feels are inappropriate for primary legislation. I believe that the process of evaluation and monitoring becomes even more crucial.
Too often we are aware that there is little evaluation in the health service. In this Bill we have the opportunity to achieve it at an initial stage and avoid subsequent contrary assertions about the success or failure of any particular change within the NHS. Amendment No. 3 proposes three specific initiatives: first, that in each of the first three years of operation the ombudsman should conduct at least one complainant satisfaction survey. Secondly, he should arrange a meeting in each of the first three years of the new system for relevant interests such as patient organisations, professional bodies, advisers and managers to evaluate and discuss developments and emerging issues. Thirdly, he should publish a report of these meetings, including the complainant surveys and resulting recommendations for amending the system. The Bill already requires the commissioner to place formal reports before Parliament. I believe that such monitoring would make it possible to make a proper assessment of how the process was working in practice. It would be very easy to include the two concerns which were the subject of my two earlier amendments this evening.
Too often one is told anecdotally that the complaints system is working satisfactorily, but on further investigation one finds that a patient or complainant has just given up rather than been satisfactorily dealt with. The whole object of the new NHS complaints system is to make the system much more user-friendly at every level. A more obviously open way of judging and evaluating it will enable one to be sure that patients are satisfied and not just exhausted. In addition, this system of evaluating and monitoring will give patients the confidence that the system is fair and open. It will extend their knowledge of the system, which appears to be complex, although it has been revised and made more user-friendly. It will increase access to information, including the new leaflet that the Minister has described this evening.
In another place the Minister, Mr. Horam, said that he would raise the issue with the commissioner. Before the Bill leaves your Lordships' House it is important that we know the outcome of those discussions and

1133
whether the process of monitoring is acceptable to the commissioner and will be included in his new arrangements. I beg to move.
Lord Harmsworth: My Lords, I have sympathy with the amendment moved by the noble Baroness, Lady Jay, or at least sympathy with the possibility of mounting a complainant-satisfaction survey. However, I have doubts about paragraph (b). It seems to me to be too rigid in its wording. Formal meetings once a year in what may easily turn out to be a very fast-moving and changing game may be inappropriate. Such a formal structure may place the commissioner in a straightjacket which would better be avoided. The commissioner already consults widely and regularly. Under Section 11(3) of the 1993 Act he has discretion in the procedure in conducting investigations into complaints.
Last week the Parliamentary Commissioner for Administration published his Third Report (Session 1995–96) on the Child Support Agency. Perhaps I may quote from that report to illustrate how fast he may have to move. In paragraph 1 of the introduction to that report he says:
"In August 1994 I decided with regret that given the number of individual complaints against CSA I was already investigating it was not the best use of my resources or of benefit to complainants for me to investigate additional individual complaints unless they involved aspects of CSA's work which had not previously been brought to my attention, or unless the complainant had been caused actually financial loss. I took the view that investigation of a number of representative cases should identify the administrative shortcomings needing to be remedied and that resulting improvements to the system should bring general benefits in which other complainants would share".
If one were to read the whole of that report, one would receive the clear impression that flexibility on the part of the commissioner is desirable and that he may have to move fast and in possibly unexpected directions. As I say, in my view the amendment is too rigid in its present form.
I hope that my noble friend the Minister may be able to provide us with some helpful news about a complainants' satisfaction survey. On 11th January in Committee in another place, my honourable friend the Parliamentary Under-Secretary of State, John Horam, said that the health commissioner was examining the results of a similar survey done by the local government commissioner. Is such a survey on the health side a possibility within the next three years? Can my noble friend assure us that funds are available?
Baroness Thomas of Walliswood: My Lords, I add my interest from these Benches in the topic under consideration and hope that the Minister may be able to reply in an informative, useful and helpful way.
Baroness Cumberlege: My Lords, I shall try to be informative and helpful, but I am not sure that I shall meet the wishes of the amendment's proposer. I am grateful to noble Lords for the contributions made this evening on this issue.
The aim of the amendment is to encourage the commissioner to be pro-active in seeking the views of both complainants and people subject to his investigations. I know that the commissioner is very
1134
sympathetic to the need for such openness. However, to make such detailed statutory requirements on the commissioner is not, we feel, compatible with his independent status.
I am very happy to give my noble friend and both noble Baronesses the assurance that the commissioner intends in the next financial year to carry out a survey of satisfaction of complainants with the investigation of their complaints. He fully expects to be able to do that within the resources voted for his office. That fulfils an undertaking he gave in response to a recommendation by the Select Committee on the Parliamentary Commissioner for Administration. It is his established practice to draw attention in his annual reports to any matters of significance. I have no doubt that Mr. Reid's successor would be likely to continue that practice and to include reference to the results of a consumer satisfaction survey in an appropriate annual report, because of course Mr. Reid will soon be retiring.
My honourable friend the Parliamentary Under-Secretary of State took up concerns expressed in another place about the need for regular meetings with interested parties with the ombudsman. Mr. Reid said that he had every intention of continuing his meetings with professional and consumer bodies. That will enable him to gather useful information about how his own role is perceived and the effectiveness of the new NHS complaints procedures, which will in turn need to be taken account of in future policy making. But he also pointed out that giving him formal responsibility for evaluating the new NHS procedures through such meetings would be a long way beyond his present remit and also not the most effective way of undertaking such an evaluation.
I can also assure your Lordships that the Department of Health is committed to continuing constructive dialogue with professional, NHS and consumer bodies and to evaluating the implementation of the complaints reforms in the NHS. I hope that what I have said will provide sufficient reassurance on the issues which have been raised in the debate by the noble Baroness, the Lady Jay, and other noble Lords. I would urge the noble Baroness in the light of that to withdraw her amendment.
Baroness Jay of Paddington: My Lords, I am grateful to those who have taken part in this short debate on the matter which will have given the Minister the knowledge that there is strength of feeling about these issues. I was delighted to hear what she said about the ombudsman's intention to conduct a satisfaction survey during the next year of complaints and that he intends to continue to have wide-ranging professional and consumer body gatherings and meetings to discuss the issues which were mentioned in my amendment.
I take the point made by the Minister—indeed she was repeating the arguments made by the commissioner himself—that to extend his monitoring role beyond that may be beyond his general remit. I hope that the Department of Health will fulfil the obligation to undertake clear and positive evaluation of the new procedure and will be able to bring the results of that monitoring to your Lordships' House.
There were two major issues which I sought to achieve through the amendment; namely, the

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complainants' satisfaction survey and the principle of maintaining full and open meetings with external bodies. In view of the fact that the Minister has greatly reassured me about the underlying concerns which lay behind the amendment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.55 p.m.
Baroness Cumberlege: My Lords, I beg to move that the Bill do now pass.
We are at one in wishing to improve the arrangements by which NHS complaints are handled. I have been grateful to noble Lords on all sides of the House for their positive contributions on this Bill and for their support for their principles behind it.
A number of points have been raised during our debates which have served to air some important issues. The noble Baroness, Lady Jay, described the challenges presented by the extension of the commissioner's jurisdiction to cover clinical judgment. She stressed the need to ensure that the actions of professionals are properly and fairly judged. She also sought assurance that all complaints about the NHS, including complaints about purchasing decisions, will come within the ombudsman's remit. I was very glad to be able to give her that assurance.
The noble Baroness also raised concerns about the ombudsman's procedures for checking draft reports with the body complained against but not the complainant. As I hope I made clear, that is not a matter on which we would wish to fetter the ombudsman with primary legislation, but the ombudsman's Select Committee has agreed to a proposal made by my honourable friend the Parliamentary Under-Secretary of State for Health that it should review with the ombudsman his procedures for dealing with draft investigation reports.
The noble Baroness and my noble friend Lord Harmsworth raised the issue of whether the ombudsman would carry out a survey into the satisfaction of complainants with investigations. As noble Lords have heard, I was very happy to give the assurance that the ombudsman does intend to carry out such a survey in the coming financial year.
The noble Baroness, Lady Robson, was concerned about the provisions in the existing legislation which prevent the ombudsman from investigating cases which are subject to legal action. I hope that the Bill will reduce the need for complainants to seek a remedy in the courts. We could not, however, contemplate making such a radical change in the ombudsman's relationship with the courts as the noble Baroness suggested.
My noble friend Lady Cox highlighted the need for good training to make sure staff are equipped to deal with complaints. We entirely concur with that view, and a great deal is being done to ensure that staff are well trained.
I am sure that your Lordships will wish to join with me in paying tribute to the ombudsman, Mr. Reid, for his work not just in preparing for the changes resulting from the Bill but for his integrity, thoroughness and sensitivity in ensuring that complainants receive a fair hearing and a just result.
1136
Mr. Reid and his team have done much to improve the quality of administration within the NHS and we look forward to him achieving similar progress with regard to professional standards.
Finally, I am also very grateful for the constructive approach of the health care professions. The professional representative organisations have been fully involved in developing the new NHS complaints system and in discussing with the ombudsman the practicalities of operating his new jurisdiction. We wish him and them well in the future.
Moved, That the Bill do now pass.—(Baroness Cumberlege.)
Baroness Jay of Paddington: My Lords, I reiterate again that we on these Benches welcome in principle the Bill which extends the powers of the ombudsman and agree very much with the Minister about the extremely effective work that has been done by the present Health Service Commissioner and his office. We hope that his successor, and the helpers who will work with him in their greatly extended new responsibilities, will have as much success as Mr. Reid has had.
We have welcomed in particular the ex tension of the ombudsman's authority into the areas of primary and community health care and the vexed and complicated arena of clinical judgment. I suspect that we will know how well the prospects for complaints about clinical judgment go forward only once the provisions of the Bill have come under some scrutiny under the ensuing legislation.
It is important that we have an effective monitoring and evaluation system, in particular as the provisions of the Bill come underway in the first period of time. We welcome the Minister's response to our Amendment No. 3 which seems to guarantee that effective evaluation will take place, although it may be more informal than we hoped.
On Second Reading, I said that the present NHS complaints system reminded many people, including myself, of an unfriendly maze. The Bill does much to make that maze at least more user friendly if not completely straightforward, and we on these Benches wish the legislation well.
7 p.m.
Baroness Thomas of Walliswood: My Lords, I rise in place of my noble friend Lady Robson of Kiddington, who is unable to be present tonight. We welcome the Bill, which enhances the operation of the health service for both patients and professionals. We are generally very supportive of the aims of the Bill. As was said by the noble Baroness, Lady Jay, we particularly welcome the extension of its remit to cover clinical judgment as well as maladministration. We also welcome the fact that the scope of investigation into maladministration is extended to those providing family health services and the independent-sector providers where they are providing services for the NHS.
We regret that our amendment was not accepted. The Minister referred to that. It would have allowed a patient to take legal action in order to pursue damages at the

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same time as the commissioner was investigating his or her case. The commissioner can ensure that wrongdoing is not repeated but he cannot give any recompense. The courts can give a recompense but they cannot ensure that wrongdoing is not repeated. If our amendment had been accepted patients would have been provided with a possibility of achieving two separate but equally important aims. The reason for rejecting the amendment is understood but there may remain the need to achieve both those aims. We shall need to be alert to see what happens in practice.
My noble friend has asked me to thank the Minister for the clear and capable way in which she has dealt with the Bill and that I most gladly do.
On Question, Bill passed.

Rating (Caravans and Boats) Bill
7.2 p.m.
Lord Lucas: My Lords, I beg to move that this Bill be now read a second time.
The Rating (Caravans and Boats) Bill is a short but important measure. It returns the law on the local taxation treatment of pitches occupied by caravans, and moorings occupied by boats, to which we intended and thought it was.
It is necessary because a recent Lands Tribunal decision held that pitches occupied by holiday caravans were domestic property and subject to council tax rather than non-domestic property and so subject to non-domestic rates. As the provisions for moorings for boats are similar to those for pitches occupied by caravans, the Lands Tribunal decision would also make such moorings subject to council tax. This is the opposite to what we thought was the case and would mean that all holiday caravans, which hitherto have received non-domestic rates bills, would have become liable for community charge or council tax going back to 1990.
Clause 1 therefore substitutes a new definition of domestic property in Section 66 of the Local Government Finance Act 1988 for pitches occupied by caravans and moorings occupied by boats. It is our intention that if, and only if, the caravan or the boat is someone's sole or main residence will it be domestic. In other cases, for holiday caravans and boats, for example, it will be non-domestic. For the majority of caravan and boat owners that will mean a lower local tax bill than would have been the case had we let the Lands Tribunal decision stand.
The Bill's provisions are to have retrospective effect back to the beginning of the new rating system in 1990 to ensure that owners of holiday caravans and boats are not re-billed for higher amounts as a consequence of the Lands Tribunal decision. There is an exception to this for those ratepayers who made an appeal and argued that their pitch plus caravan or mooring with boat was domestic property by virtue of Section 66(1) of the 1988 Act. That is those people who put forward the same arguments as the Lands Tribunal decision last year. They will be able to enjoy the fruits of their litigation.
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Clause 2 gives regulation making powers in order to ensure equity of treatment for all ratepayers.
The Bill applies only to England and Wales as Lands Tribunal decisions have no effect on Scottish law. There is a potential time constraint on the Bill as it applies to Wales as new rating lists are to be introduced there on 1st April next. The Bill as drafted does not refer to those new lists and we are considering whether the time constraint should be removed. I commend the Bill to the House.
Moved, That the Bill be now read a second time— (Lord Lucas.)
7.5 p.m.
Lord Dubs: My Lords, I welcome the Bill. In years gone by I had a connection with boats on the River Thames. As a Member of the other place I was approached by houseboat owners moored in the Battersea area and in larger numbers by houseboat owners moored at Chelsea. Their concern was the lack of security as regards their moorings. The owner of the mooring could ask them to leave and they would then have a boat which could find no other mooring. That was the main issue at that time.
A different matter is before us today and I welcome the Bill. However, I am not totally clear about one issue and I hope that the Minister will be able to help. I understand that there is uncertainty about a mooring used by a boat which is not residential but on which the owner may go for a week or two along the canal. It is not clear whether the mooring would attract council tax or non-domestic rates. Clearly, in such a situation the boat would not be rated at all because it is used simply for leisure purposes, but there is a problem about the mooring. I understand that to some extent it depends on whether the mooring is adjacent to an individual's house or elsewhere.
Subject to that uncertainty, I welcome the Bill and believe that in a small way it will improve the situation for many caravan and houseboat owners. It is therefore a step forward.
7.7 p.m.
Baroness Thomas of Walliswood: My Lords, the Bill has received a general welcome and I do not propose to add to the length of today's business by artificially extending my comments. My honourable friend Mr. Rendel in his speech on Second Reading in another place, drew attention to some of the anomalies of the council tax banding system as they affect caravans, which are usually allocated to Band A. From that point of view, it is a rather broad band. No doubt many people have doubts about the banding of properties for council tax purposes. Perhaps in future it will be possible to tackle such anomalies, but I doubt that now is the correct time to attempt to do so.
I look forward with interest to the Minister's response to the question asked by the noble Lord, Lord Dubs. I wish to raise another minor matter because I believe that there are doubts as to the way in which owners of moorings—in many cases, British Waterways, which I understand does not pay business rates—will pay the non-domestic rate levied on their moorings. Perhaps the

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Minister could also enlighten us on that point. The Bill comes to us unamended from another place. It will perform a useful function and in general we welcome it.
7.9 p.m.
Lord Cochrane of Cults: My Lords, I must first declare an interest in that I am the only speaker in the debate who is engaged in the caravan industry. But equally, outwith the scope of the Bill, that is wholly in Scotland. Having got that off my chest, I believe that the only point is that it illustrates how declarations of interest can be more misleading than helpful.
I welcome the Bill because, as my noble friend said, it brings things back to where we thought they were. I shall confine my comments entirely to dry land because I am aware of no problems as regards moorings except those mentioned tonight. Perhaps one should be glad—and I am glad—that the Department of the Environment has seized upon the anomaly created by the Lands Tribunal and has acted quickly to repair the damage which could have been done. It is to be very much congratulated on that. Its speed of action compares favourably with what one sometimes thinks about the benign neglect of the Department of National Heritage in relation to the caravan industry, which is very large. Were I not on my noble friend's side, I should not have used the word "benign".
My only other minor complaint is that the drafting of the Bill follows the usual horrible practice of putting bits in and taking bits out. How much better it would have been to have repealed the whole of Section 66 and reinstated it with the words added, and so on. Again, because I am on my noble friend's side, I promise that I shall not table an amendment to that effect but I am sorely tempted to do so in terms of the long-term clarity of local government legislation.
Perhaps we shall get through this Second Reading in record time. I have not yet reached minute three on the Clock which, in itself, is a record. I commend the Bill and thank my noble friend for the clarity of his introduction.
7.11 p.m.
Lord Skelmersdale: My Lords, I should like to turn your Lordships' attention briefly from land to water. When I was performing the same role as my noble friend Lord Lucas, there was an amendment to a local government finance Bill to include swinging moorings among rateable hereditaments—I believe that is the correct term. Having looked at Section 1(3) of the Bill, it is quite clear that it refers to the mooring and the boat together where the boat is the sole or main residence of an individual. One assumes that that normally means fixed moorings. But there are rare occasions when they could be swinging moorings, and I wonder what is the position in regard to them.
7.12 p.m.
Lord Lucas: My Lords, I deal first with the question raised by my noble friend Lord Skelmersdale because the simple answer to that is that I do not yet know but I may soon!
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The general principle is that all the world shall be taxed and one way or another, property is either domestic or non-domestic and gets caught. The occupiers of moorings have generally been liable for rates since the middle of the last century provided they satisfy the basic criteria which determine liability. Those are permanent occupation, exclusive occupation and occupation of benefit to the occupier. suppose that swinging moorings are not likely to be sufficiently permanent to meet those criteria; but for the avoidance of doubt, the Rates Act 1984 introduced a specific exemption for swinging moorings which has been carried through into the new system.
The noble Lord, Lord Dubs, asked a question about boats to which I must confess I do not know the answer, either, but for a better reason; namely, that we are generally uncertain as to what is the answer. We believe that moorings which form part of a domestic property, are attached in some way or located next to a domestic property or are to do with a houseboat will be part of that domestic property for rating purposes, and moorings which do not will be commercial property and will be subject to commercial rates. But we are not quite certain whether the legislation as it is and will be with this Bill makes that the case and we are reviewing the matter. I shall happily write to the noble Lord about it. As I have indicated, we may well have a Committee stage and if an amendment is necessary, we shall certainly bring it forward at that stage.
I am grateful to the noble Baroness, Lady Thomas of Walliswood, for not attempting to use this Bill to re-write the whole of the rating system. I was not aware of any particular difficulty in relation to owners of moorings. The general principle is that owners of moorings pay commercial rates and that applies to British Waterways and its canals and to any moorings which a bankside owner may operate. Whether or not a particular stretch of bank is rated depends on whether the rating authorities know about it, but it should be rated if it is used as a mooring.
I was extremely grateful for the support from north of the Border from my noble friend Lord Cochrane of Cults. It is nice to know that looking at us from his eminence up there as he does, he approves of what we are doing, even though it brings no benefit to himself. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Non-Domestic Rating (Chargeable Amounts) (Amendment) Regulations 1996
7.15 p.m.
Lord Lucas Lord Lucas rose to move, That the draft regulations laid before the House on 1st March be approved [13th Report from the Joint Committee].
The noble Lord said: My Lords, in moving these regulations, I shall speak also to the Electricity Supply Industry and Water Undertakers (Rateable Values) Amendment Order 1996.
I deal first with the electricity and water order. Rateable values of large public utilities are set by order by the Secretary of State. Nuclear Electric plc is to split on 31st March. The order before the House today takes the rateable value in England of Nuclear Electric plc and splits it. Only the value in England is being split by this order. That is because property occupied by Nuclear Electric plc in Wales is to remain with that company under its new name of Magnox Electric plc. The new values and the changes to the order have been fully discussed with the companies concerned, which agree with the changes that we are proposing.
The order also changes the rateable value of Bournemouth and West Hampshire Water. The change is the result of the company convincing us that we did not give it equity of treatment with other water companies in 1994. We failed to take full account of property that it had vacated. Again, the change has been agreed with the company.
I turn now to the second order. The chargeable amounts regulations do not make provision for splits of property which appear in the central rating lists and have values prescribed by the Secretary of State. The split of Nuclear Electric means that these regulations also need to be amended. The regulations before the House today make such provision. They also make further changes to the transitional arrangements applying to local list property; that is, property which is valued by the valuation officer rather than by the Secretary of State. Those changes rectify anomalies in the original regulations which, if uncorrected, would unfairly increase the future rates bills of some ratepayers.
These anomalies have yet to affect any ratepayer. The changes that we propose are entirely and unambiguously in ratepayers' favour. If pressed, I have with me a long and involved explanation of them all that I still find hard to understand having read it slowly several times over. I am of course prepared to read this explanation into the record, but I hope that any noble Lord whose curiosity is purely personal will have mercy on other noble Lords and on the servants of this House and will content himself with asking me to write him a letter. I beg to move.
Moved, That the draft regulations laid before the House on 1st March be approved [13th Report from the Joint Committee].—(Lord Lucas.)
On Question, Motion agreed to.

Electricity Supply Industry and Water Undertakers (Rateable Values) Amendment Order 1996
7.18 p.m.
Lord Lucas: My Lords, I beg to move.
Moved, That the draft order laid before the House on 1st March be approved [13th Report from the Joint Committee].—(Lord Lucas.)
On Question, Motion agreed to.

Deregulation (Length of the School Day) Order 1996
7.19 p.m.
The Minister of State, Department for Education and Employment (Lord Henley)The Minister of State, Department for Education and Employment (Lord Henley) rose to move, That the draft order laid before the House on 15th January be approved [8th Report from the Delegated Powers Scrutiny Committee].
The noble Lord said: My Lords, the draft order is designed to help schools change the length of the school day far more quickly than the statutory arrangements allow. The Government's proposals for change have already been scrutinised closely by the Deregulation Scrutiny Committee of this House and by the corresponding committee in another place. Both committees have given the proposals their approval without requiring any amendment. The Government's proposal has also been widely welcomed by schools and local education authorities.
This is a clear example of the Government's commitment to cut bureaucracy and red tape wherever they can. It is a modest but practical measure which will help schools to respond to requests for changes to the length of the school day. By using the provisions in the Deregulation and Contracting Out Act 1994, we are able to amend the primary legislation—that is, Section 21 of the Education (No. 2) Act 1986—which has proved most cumbersome for schools when changing school session times. In some cases schools have been taking 18 months to make even a small change to a school day.
The effect of the department's proposal will be to allow governing bodies to call a meeting with parents at any time in order to discuss changes to the school day. That will be subject to at least two weeks' notice. No longer will they have to wait for the annual parents' meeting to raise the subject. It is our intention that the new procedures should be available to help those schools which wish to change their school day in time from this September; for example, those schools which wish to provide more lesson time in response to an Ofsted inspection report or which feel that they are out of line with the practice of neighbouring schools.
I wish to assure the House that all other statutory protection associated with the legislation will remain in force. That includes consulting with parents and the LEA, giving three months' notice prior to any change and changing school times only at the start of an academic year. The order does not affect voluntary aided or grant-maintained schools. Those schools are not bound by the same statutory requirements but normally observe the principle of consultation and the giving of adequate notice before making changes.
Our proposed change to the current procedures of changing school session times is simple and will, I believe, be welcomed by schools. Once the order is made, my department will arrange for the decision to be widely publicised. That will include all those involved in the original consultation. The order has been agreed by another place. I beg to move.
Moved, That the draft order laid before the House on 15th January be approved [8th Report from the Delegated Powers Scrutiny Committee].—(Lord Henley.)
Baroness Farrington of Ribbleton: My Lords, I am most grateful to the Minister for introducing the order and for explaining it in such a clear and admirably concise way. I can say from these Benches that we have no objection in principle to what he said. Nevertheless, I should be grateful if the Minister would respond to just two points of possible concern. First, are the Government satisfied that due regard will be given by governors to the interests of parents regarding any large scale changes which could affect them if, for example, they have other children to collect, or if they have other responsibilities through work or, indeed, through caring for other relatives? Secondly, is the Minister satisfied that proper consideration will be given to the problems of coordinating school transport? That is particularly important in rural areas where such co-ordination is necessary.
Lord Henley: My Lords, perhaps I may say, first, how grateful I am to the noble Baroness for what I take to be her welcome for the order. I can assure her that, as this is merely a matter of changing procedures, I very much hope that governors will, as they have to at present, take due regard of parents' views. That applies especially, in view of what the noble Baroness said, to the views of parents in relation to any potential difficulties which may arise over the collection of children where parents may have a number of children of different ages who therefore attend different schools.
As regards the question concerning the co-ordination of school transport, that is something which I believe is close to the heart of the noble Baroness and myself. Both of us come from rural parts of the world—from the north west, which is probably the best part of the world to come from—
Lord Graham of Edmonton: What about the north east?
Lord Henley: My Lords, I pause here because I know that some people have views about the north east. But the noble Baroness and myself have much stronger views about the north west.
However, returning to the question, I can assure the noble Baroness that co-ordination of transport would be a matter that governors would take on board when considering the requirements of such orders. The point behind the order is that appropriate notice should be given to parents. The parents can then attend the meeting and thereby express their views. Because governors represent parents, I am sure that they will be more than happy to take into account parents' views when considering such matters and making decisions. After all, parents are involved in the school. Having said that and having dealt with the questions put by the noble Baroness, I commend the order to the House.
Baroness Farrington of Ribbleton: My Lords, before the Minister sits down I should like to thank him for that reply. Of course we support the order from these Benches. I commend the noble Lord for not entering into the argument about the north east and the north west. He may have noticed that even pipistrelles are unable to communicate between the Lancashire and Yorkshire versions.
Lord Henley: My Lords, as a fellow northerner I recognise, like the noble Baroness, that there are sometimes tensions between different sides of the north. However, I believe that the noble Baroness and I are probably for once at one as to which side of the Pennines is the better side to come from.
On Question, Motion agreed to.
House adjourned at twenty-six minutes past seven o'clock.