Lords Sitting of 8 May 1996

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

Lord Cooke of Thorndon
The Right Honourable Sir Robin Brunskill Cooke, KBE, having been created Baron Cooke of Thorndon, of Wellington in New Zealand and of Cambridge in the County of Cambridgeshire, for life—Was, in his robes, introduced between the Lord Goff of Chieveley and the Lord Woolf.

Foreign and Trade Policy and the Commonwealth
2.49 p.m.
Viscount Waverley Viscount Waverley asked Her Majesty's Government:
Whether they intend to alter their level of commitment to foreign and trade policy towards the Commonwealth.
Lord Chesham: No, my Lords. On the contrary, the Government have demonstrated their firm support for Commonwealth action in foreign policy and other fields by inviting Heads of Government to meet in Edinburgh next year, by inviting Commonwealth senior officials to meet in London this year and by being actively involved in the Commonwealth Ministerial Action Group, established at the Auckland Commonwealth Heads of Government Meeting in November.
Viscount Waverley: My Lords, I have two questions. Does the Minister accept that in its recent report on the future role of the Commonwealth the Select Committee on Foreign Affairs was generally critical when it observed that,
"the importance of the Commonwealth dimension does not appear always to be reflected fully in government policy",
and when it recommended that a whole new strategy to reinforce bilateral ties be introduced? What positive steps will be taken by the Government?
Lord Chesham: My Lords, we welcome the Select Committee's decision to prepare a comprehensive report on the Commonwealth. We want to study the important observations and recommendations carefully and will reply formally on or before 26th June, which is the due date. It would not be right to anticipate those responses now. We have been given a great many thought-provoking and significant ideas to consider.
Lord Thomson of Monifieth: My Lords, can the noble Lord tell the House what action Her Majesty's Government and the Commonwealth are pursuing to restore democracy in Nigeria?
Lord Chesham: My Lords, at the meeting of the Commonwealth Ministerial Action Group in London on 23rd April it was recommended that the Commonwealth, with a month's delay for Nigeria to respond, should adopt a package of measures on Nigeria which mirrored those introduced by the EU at the end of last year. This is a significant move by the Commonwealth and is intended to be a strong message to the regime. At the same time, the Nigerians have been given one month to respond to the Commonwealth's offer of a dialogue. The clock is ticking. If the Nigerians continue to shun the Commonwealth, expulsion will he the only option.
Lord Stoddart of Swindon: My Lords, is the noble Lord aware that the opportunities for trade and co-operation throughout the Commonwealth are many times greater than in Europe? Would it not be better if Her Majesty's Government concentrated on their role of being at the heart of the Commonwealth rather than at the heart of Europe?
Lord Chesham: My Lords, I am well aware of the value of trade with the Commonwealth. Of the world's 20 leading economies, 13 are members of the Commonwealth. In 1995 our exports to the Commonwealth totalled £17.248 billion, which is 10.26 per cent. of our total exports. Encouragingly, they have been buoyant and rising in each of the last three years. This is a matter that we take very seriously.
Lord Beloff: My Lords, does my noble friend agree that a fundamental part of the links which join this country to other countries of the Commonwealth is the presence here of many students at various levels from those countries? Will Her Majesty's Government do their best to ensure that that flow continues unimpaired?
Lord Chesham: My Lords, we certainly will. At the moment we believe that there are approximately 100,000 overseas students in this country, which is the largest number ever. We would wish to continue this.
Lord Avebury: My Lords, is the Minister aware that his noble friend Lady Chalker recently told the Parliamentary Human Rights Group that the British Government were considering, in consultation with their partners in the Commonwealth, the European Union and the United States, what further measures could be taken following the refusal of General Abacha to receive the Commonwealth Ministerial Action Group? Therefore, is it not inadequate for the Minister to say merely that the Commonwealth will bring itself up to the standard that has already been adopted by the European Union? Does the case not demand further measures by the European Union itself?
Lord Chesham: My Lords, I am fully aware of what my noble friend has said, and I totally agree with it. However, we believe it is important that further pressures outside those that I have already mentioned should be exerted and considered in consultation with the rest of the world. If we were to take action unilaterally it would not assist in any way. The rest of

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the world, or certainly the EU, the US and other members of the international community, must also be involved.
Lord Bruce of Donington: My Lords, can the noble Lord not muster up a little more enthusiasm for the whole issue of our trade with the Commonwealth and other parts of the world? Is he aware that regrettably during recent months exports to our partners in Europe have declined by some 5 per cent., whereas exports to the rest of the world have gone up by 6 per cent.? Would it not be best to give some priority to those other nations in the Commonwealth who, with us, succeeded in establishing the liberties that our partners in Europe still retain?
Lord Chesham: My Lords, I am sorry if the noble Lord believes that I am not supportive as far as concerns trade with the Commonwealth. It is a very important trade. It is growing and buoyant, and an increase in trade with the Commonwealth is very much on the agenda of our export Ministers.
Lord Taylor of Blackburn: My Lords, in view of what the Minister said earlier about the encouragement of overseas students, does he not find it embarrassing that this year the cut in funds to the British Council is greater than it has ever been?
Lord Chesham: My Lords, from behind I hear the question, "What about child benefits?" I do not find it embarrassing. On many occasions the situation of the British Council has been discussed by your Lordships. We support overseas students coming to this country and assist them as best we can. My last point is that this is rather outside the scope of the original Question.
Lord Mackie of Benshie: My Lords, for the benefit of the noble Lords, Lord Stoddart of Swindon and Lord Bruce of Donington, can the Minister give the percentage of our trade with the European Union?
Lord Chesham: My Lords, trade anywhere is of great value to this country.
Lord Clinton-Davis: My Lords, although we welcome the expansion of trade with the Commonwealth and other regions of the world, can the Minister provide evidence that any single member of the Commonwealth wishes this country to detach itself from the European Union?
As far as concerns Nigeria, what reasons for optimism are there that this detestable military regime will pursue a different course when so far it has ignored every pressure that has been put upon it by other members of the Commonwealth? Are the Government considering with their colleagues in the Commonwealth additional measures that can be brought to bear upon the military junta?
Lord Chesham: My Lords, to deal with the latter point first, we are having international discussions as to whether additional pressures can be brought to bear. Nigeria has been given a strict time limit within which
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to respond to the latest moves. If it falls outside that time limit, further efforts will be made to put pressure on the government.
I have no knowledge of any Commonwealth country that has tried to pressurise the United Kingdom to leave the EU.

Electricity Industry: Vertical Integration
2.57 p.m.
Lord Ezra Lord Ezra asked Her Majesty's Government:
What is their policy on vertical integration in the electricity sector in England and Wales.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, the Government have said that they do not regard vertical integration as inherently objectionable, whether in the electricity industry or elsewhere. However, my right honourable friend the President of the Board of Trade is required to consider each case on its merits.
Lord Ezra: My Lords, while I thank the noble Lord for his reply, does he accept that there is a degree of confusion in people's minds as to the Government's policy in this matter? Does he recall that in the 1988 White Paper, which predated the privatisation of electricity, the Government came out very strongly against vertical integration in that sector in England and Wales, even though it existed in Scotland? Does he further recall that in 1995 when the golden share was removed from the regional electricity companies a number of takeovers took place, some against the recommendation of the OFT, and this suggested that the Government had totally changed their policy? More recently, against the advice of the Monopolies and Mergers Commission, the Government have prevented the vertical integration of two major generating companies with regional electricity companies. The Secretary of State has emphasised that the Government will retain their golden share, thus preventing the two generating companies from being taken over by anyone else. Is it not rather confusing? Is it not about time that the Government came out with a clear statement of policy?
Lord Mackay of Ardbrecknish: My Lords, I do not agree with the noble Lord, Lord Ezra, that it is confusing. I believe it is perfectly clear. As my right honourable friend the President of the Board of Trade has made clear on a number of occasions, each case has to be considered on its merits. As his announcement on 24th April made clear—and as I did in my original Answer—he does not believe that vertical integration is inherently objectionable. However, he believes that in the current state of the market there would be significant detriments to competition if these mergers proceeded at this time.
Lord Clark of Kempston: My Lords, does my noble friend agree that, whether it is vertical or horizontal integration, the privatisation of previously nationalised industries, including electricity, has been a great boon to

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the British taxpayer in that the taxpayer was previously paying a subsidy of many millions of pounds to the nationalised industries, whereas now, the Chancellor of the Exchequer, to the advantage of the British taxpayer, is receiving revenue from the previously nationalised industries?
Lord Mackay of Ardbrecknish: My Lords, my noble friend is of course absolutely right. Over the past 17 years, privatisation policies have been hugely successful in a vast number of industries which have moved out of the public sector into the private sector. The proof of the pudding is that the party opposite in all its promises and pledges, although few in number when it comes to counting them, has made no promise or pledge to renationalise the privatised industries. I could not help but notice a recent article in the Economist which stated:
"In state hands Britain's electricity industry was grossly inefficient and so a costly burden for the rest of the economy. The Conservatives were right to privatise it".
Lord Borrie: My Lords, in the light of his answer to the supplementary question asked by the noble Lord, Lord Ezra, will the Minister tell us why, if there is no confusion in government policy, they have banned the mergers proposed by PowerGen and National Power, but have permitted the merger between Scottish Power and ManWeb?
Lord Mackay of Ardbrecknish: My Lords, the issues and the cases in front of my right honourable friend the President of the Board of Trade were different. I am sorry that some noble Lords opposite laugh. It seems to me that there is a considerable difference between Scottish Power and PowerGen and National Power. Even someone with only a passing knowledge of the electricity industry would know that there is a considerable difference. So far as concerns PowerGen and National Power, my right honourable friend the President of the Board of Trade, as he said in his Statement, did not accept the MMC's view that the adverse effects of the mergers that it identified could be met adequately by the remedies it proposed, and he therefore came down against the proposal that the merger be allowed to go ahead. The position with regard to Scottish Power is that it may be a large generator in Scotland but its generating capacity into England and Wales is severely limited by the power of carriage of the interconnector, as I am sure the noble Lord, Lord Borrie, knows full well.
Lord Campbell of Croy: My Lords, as the two electricity companies in Scotland have for many years each been both a generator and a distributor, are any problems arising with them, since after privatisation they appear increasingly to be undertaking projects in England?
Lord Mackay of Ardbrecknish: My Lords, as my noble friend will be well aware, the situation in Scotland is as always a bit different from that in the South. The two authorities in Scotland, which were privatised, form in some ways competing companies. However, in England and Wales if one had had vertical integration
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on privatisation there would have been little or no competition. We were determined to introduce competition, which is why we took the course we did on privatisation. As those noble Lords who are interested in electricity will know, competition is increasing; generation is being spread beyond PowerGen and National Power; and the position on competition is therefore likely to evolve and change into the future.
Lord Dubs: My Lords, how does the Minister reconcile the Statement of the President of the Board of Trade when he banned the two mergers in April with the fact that the DTI itself gave evidence to the MMC in which it said that it was for the MMC to consider the balance of advantage? Is that not another instance of the Government not having a policy, even on those two mergers?
Lord Mackay of Ardbrecknish: My Lords, of course it is for the MMC to consider the balance of advantage and disadvantage, but it is also for the Government to decide upon the recommendations made by the MMC. The MMC does not make recommendations which the Government are obliged to follow. The Government then has to make a decision based upon what the MMC says, and, in this case, upon what the Director General of Electricity Supply says. In the two cases at which we are looking, my right honourable friend Ian Lang decided, as I have already said, that he should not approve the two proposed take-overs.

Gulf War: Health of Servicemen
3.5 p.m.
The Countess of Mar: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In so doing, I declare an interest as patron of the Gulf Veterans Association.
The Question was as follows:
To ask Her Majesty's Government what is their response to the results of research conducted at the Southern General Hospital, Glasgow, and by scientists in the United States, into the effects of the combination of drugs and vaccines administered to members of British and United States' armed forces, and the pesticides to which they were exposed at the time of the Gulf War.
The Parliamentary Under-Secretary of State, Ministry of Defence (Earl Howe): My Lords, we were aware of the research being undertaken in Glasgow and were interested to read the team's report of its findings. So far as research in America is concerned, the work at Duke University, North Carolina, has recently been widely publicised in the media, but the research team has yet to publish its own report. Until we see that report, we cannot comment on the team's findings.
The Countess of Mar: My Lords, I thank the Minister for that reply. Before I ask my questions let me make it absolutely clear that I am satisfied that the Government should do everything that they can to

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protect their troops in the theatre of war against any chemical and biological weapons. However I am also concerned that when the drugs, vaccines and other protective agents cause problems they should be investigated adequately. Therefore, in view of the fact that it was in July last year that Dr. Jamal sent his paper to the Ministry of Defence, and was visited by Wing Commander Coker at the end of July, why has no contact whatever been made with Glasgow Southern General Hospital, yet the USA Department of Defense, as soon as Dr. Jamal's paper was published, asked for copies of the paper, which it is following up? Why has our Ministry of Defence done nothing?
Earl Howe: My Lords, it is not true that there has been no contact between my department and the Glasgow research team. The consultant in charge of the Gulf veterans' medical assessment programme visited Dr. Jamal in August last year after a copy of his research findings had been passed to us. Later, we had to reject a request from Dr. Jamal for assistance with further research because we had not at that stage decided what areas of research to pursue. We provided him with a copy of the guidelines in which we envisaged collaboration with outside researchers.
Lord Williams of Elvel: My Lords, does not the Minister find this an odd story: each time Gulf War Syndrome is raised, the Government say, "Well we do not have the evidence. There is nothing in it"? The next time it is raised they say, "We do not have the evidence, and there is nothing in it". The next time it is raised with further evidence they say, "Well, perhaps there is something in it". When will they sit down and say, "Look, there may well be something in it", and admit that they have not yet taken it as seriously as it should be taken? This is an important matter, for, admittedly, a minority, but a significant minority, of people who served honourably in the Gulf War.
Earl Howe: My Lords, there has been no inconsistency in what we have said. We retain an open mind, as we always have done, on the so-called Gulf War Syndrome. There has been no evidence to date that such a syndrome exists, but it is only responsible of us to pursue such matters and to get to the bottom of them. That is why we have proposed the research that we have, which will be proceeding shortly.
Lord Napier and Ettrick: My Lords, is it true that doctors treating these patients have been denied full knowledge of the cocktails with which these people were injected, in particular to do with nerve gas?
Earl Howe: My Lords, I do not believe that there has been any secrecy about these matters, although clearly in some cases the precise compounds remain a classified matter. The vaccinations against endemic infectious diseases and the assessed biological warfare threat were offered to Gulf personnel on the basis of voluntary, informed consent. Those products were licensed, fully tested, and cleared by the National Institute of Biological Standards Control before their use. All the
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vaccines have recognised civilian uses. I am surprised to hear what the noble Lord said. If he would like me to follow it up I shall gladly do so.
Lord Ashley of Stoke: My Lords, can the Minister assure the House that when they have the evidence they will not do what they always do in cases in which troops may have been damaged; that is, to demand absolute proof? Often absolute proof cannot be brought forward in such cases. Therefore, will the Government make a decision on the balance of probability?
Earl Howe: My Lords, we have absolutely no interest in concealing anything. The results of the research will be published and assessed by peer groups. The Government will consider the conclusions impartially and will be as open as possible about them. I cannot pre-empt the results of that research but I can tell the noble Lord that we have absolutely no interest in denying to our veterans of the Gulf War any redress or compensation to which they may be entitled by virtue of negligence from the Ministry of Defence.
Baroness Park of Monmouth: My Lords, is my noble friend satisfied that the serious cuts in medical services in the forces have not created a difficulty in that there may be insufficient people to give the necessary time to such research?
Earl Howe: My Lords, I do not believe that my noble friend's anxiety is well placed. We asked the Medical Research Council to supervise the research that has been commissioned. We have every confidence that it will be able to do so in an effective and impartial manner and that suitable persons and bodies around the country are able to undertake that work.
Lord Campbell of Alloway: My Lords, does my noble friend appreciate that if the chemistry of the injections or tablets administered—for example, in the case of nerve gas—is withheld as classified information, a barrier is raised to proper treatment by doctors?
Earl Howe: My Lords, the constituent ingredient of the nerve agent pre-treatment sets is no secret; it is pyridostigmine bromide. It has long been administered for neuro-muscular disorders when it is taken in doses larger than was the case in the Gulf War and over longer periods than was the case with NAPS. Therefore, its safety has been long established. I do not believe that those features of the treatment administered to our veterans which are classified—and they are few—represent a barrier to proper diagnosis by doctors.
The Countess of Mar: My Lords, is it not the case that the nerve agent pre-treatment sets were not licensed until 11th August 1992, which was two years after the Gulf War, and that many doubts surround that particular medication because it is being used on healthy people. When it is used in cases of myasthaenia gravis the patients already have nerve damage. Can the Minister say whether a neuroscientist is a member of the group which is investigating Gulf War syndrome and if not, why not?
Earl Howe: My Lords, the constituent ingredient of NAPS is pyridostigmine bromide which has been administered for a long time in the treatment of various conditions. It has not been known to react with any vaccine to produce harmful side effects or anything such as that. As regards the second part of the noble Countess's question, I shall write to her.

Marine Nature Reserves
3.13 p.m.
Baroness Nicol Baroness Nicol asked Her Majesty's Government:
What progress has been made in discussions on the designation of the third marine nature reserve at Menai and the remaining four sites identified in 1981.
Lord Lucas: My Lords, the draft order for the designation of the Menai marine nature reserve will be published as soon as possible. No further designations are expected. Of the other sites identified in 1981, three are now protected in other ways. Strong local objection has resulted in the withdrawal of Loch Sween, the fourth site, but one additional site at Strangford Lough was designated in July 1995. Protection of internationally important marine sites will take place under the habitats directive. We have to date proposed 35 marine special areas of conservation of which 10 have already been submitted to the European Commission.
Baroness Nicol: My Lords, I thank the Minister for his Answer, but I find that relating to Menai particularly disappointing. Your Lordships will recall that in May last year we had two debates in this House in which almost exactly the same answer was given; that designation was more or less imminent. Do the Government not recognise that in this case, and in the case of the other four sites, there is a special need for the designation of a statutory marine nature reserve? Do the Government not understand that for scientific and teaching reasons the protection given by a statutory marine nature reserve is necessary and that without it there is a real danger that valuable resources will be lost?
Lord Lucas: My Lords, I can say without doubt that the designation is now closer than it was six months ago. As regards the other questions which the noble Baroness asked, I am afraid that at this moment I must keep my mouth firmly shut because my right honourable friend the Secretary of State for Wales will, following a public inquiry which may take place, be the person charged with taking the ultimate decision. Therefore, as regards the Menai Straits there is little I can say at this moment.
Lord Cledwyn of Penrhos: My Lords, will the Minister consider opening his mouth, because the people of Anglesey are deeply frustrated by the delay? The discussions to which he and my noble friend referred appear to have been going on since Edward I sent his ships up the Menai Straits in 1281. Will the Minister say whether the discussions, which are awaited with hope, are to continue for a further 700 years?
Lord Lucas: My Lords, I very much hope that it will be faster than that.
Lord Dean of Beswick: My Lords, does the Minister agree that the present designated areas and the future programme could be destroyed by an accident similar to the tanker disaster which occurred off the coast of South Wales? In view of the destruction caused to the Welsh coastline and the wildlife in the area as a result of that incident, will the Government review their policy and introduce more stringent measures on shipping in such areas and make the penalties for such mistakes far more punitive?
Lord Lucas: My Lords, I note what the noble Lord says but he is rather wide of the Question.
Lord Williams of Elvel: My Lords, in my view the Minister did not respond adequately to the second part of my noble friend's Question about the remaining four sites identified in 1981. Am I right in believing that those sites will come under the habitats directive and will be submitted to the European Commission? Will we then be in a position in which Brussels decides which of our seas we protect?
Lord Lucas: My Lords, no, we decide which of our seas we protect. In fact, St. Abb's Head is not being submitted for SAC status. The other two sites, which are the Scilly Isles and Bardsey, are being submitted, but the decision which to submit is ours. The Commission has a function merely in terms of reviewing our decision.
Baroness Nicol: My Lords, is it not the case that the protection afforded under the habitats directive—that is, the status of special areas of conservation—is a different kind of protection and that what is needed for the four sites is the kind of special protection which comes with a statutory designation enabling research and teaching to be carried out? Will the Minister discuss with his right honourable friend the possibility of looking again at these areas, because that is most important from the scientific point of view?
Lord Lucas: My Lords, no. As regards the other three sites we are content that the voluntary arrangements already in place, coupled in two cases with the SAC status, will be all that they require.

Business
3.19 p.m.
Lord Strathclyde: My Lords, I should like to say a word about today's debates standing in the names of the noble Lords, Lord Borrie and Lord Clinton-Davis. In the first debate, other than the mover, Front-Bench spokesmen and the Minister replying, speakers will be limited to eight minutes. In the second debate, other than the mover and the Minister replying, speakers will be limited to 13 minutes.
I should remind your Lordships that if any noble Lord were to speak at greater length he would be doing so at the expense of subsequent speakers in the debate.

Business of the House: Debates this Day
The Lord Privy Seal (Viscount Cranborne): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord Borrie set down for this day shall be limited to two hours and that in the name of the Lord Clinton-Davis to three hours.—(Viscount Cranborne.)
Lord Ezra: My Lords, I should like to ask the noble Viscount, the Lord Privy Seal, on what basis it was decided that the speakers in the first debate should be limited to eight minutes and the speakers in the second debate to 13 minutes. I believe that the two debates are of equal importance and that, therefore, speakers should be given an equal amount of time to speak.
Lord Graham of Edmonton: My Lords, perhaps I may assist the noble Lord, Lord Ezra. It is for the party which has tabled the debates to decide how much time should be given to them. Yesterday evening when I looked at the lists of speakers, there were certainly fewer people to speak on the first debate than appeared this morning and at least half as many to speak on the first debate as on the second. The Labour Benches do not like debates to last for more than five hours. We felt that two two-and-a-half hour debates would be unfair, because the second debate had more speakers than the first. That is why we decided that the debates should be timed as they are.
On Question, Motion agreed to.

Business Regulation and Consumer Protection
3.21 p.m.
Lord Borrie Lord Borrie rose to call attention to the manner in which United Kingdom business is regulated and the manner in which the interests of the consumer are protected; and to move for Papers.
The noble Lord said: My Lords, in opening this debate, perhaps I may declare an interest in that I am a non-executive director of a number of UK businesses. Each of them in various ways is, of course, subject to quite a lot of regulation. I should add that I have been a regulator in that I was Director-General of Fair Trading from 1976 to 1992 and I am currently honorary president of the Institute of Trading Standards Administration which is the professional body charged with ensuring that there are high standards in the market place at local level.
In recent years we have heard a great deal about the burdens of regulation upon United Kingdom business and, indeed, we have heard quite a lot about deregulation. Like most of your Lordships, I am very keen on getting rid of unnecessary, out-of-date, over-pernickety regulation. But I think that it would be a pity if the case for regulation goes by default because I feel that regulation is absolutely essential for a number of important economic and social objectives. For example, in my view regulation is essential to ensure
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the health and safety of both workers and consumers. It is important for fair trading. It is important for honesty of dealing. It is important for the future of the environment. I dare say we could all add to the list.
Of course, regulation must be administered sensitively. I am very glad to say that trading standards officers, for example, are extremely concerned to create local business partnerships in their area to ensure a strategy not of rushing into prosecution in the courts but of having discussions and giving advice and information to businesses to enable them to conform and comply with the regulations which they have to follow. Businesses can be led to understand and appreciate that regulations are not just there for someone else—for the consumer or for the general public—but are there for businesses because they help to ensure that there is a fair trading environment in which their rivals and all players in the market must play by the same rules as themselves.
The competitive interplay of rival businesses is a vital ingredient in getting businesses to perform well to the satisfaction of consumers and the general public. But every developed country has found it essential to have a certain amount of basic law, basic regulation—I use the word in the Motion—to ensure that businesses do not engage in price-fixing cartels, in anti-competitive practices excluding others from the market place and so on. The United Kingdom was well ahead of the field at one stage but it is now well behind many other countries in the effectiveness of its competition law.
I was pleased last year that fines were imposed by the UK courts totalling some £8 million upon 17 ready-mixed concrete companies, the leading companies in the UK industry. They had been involved in price-fixing cartels going back to the late 1970s. The companies admitted that they had broken undertakings given to the restrictive practices court in 1978–79 that they would not take part in price-fixing deals to the detriment of their customers. Therefore, they were in contempt of court and heavy fines were imposed.
But my pleasure was somewhat tempered by the fact that in my capacity as Director-General of Fair Trading, I had brought proceedings against those companies in the late 1970s and it had taken 17 or 18 years to reach the point at which they were finally brought to book. My experience of trying to enforce United Kingdom anti-cartel law was that it was exceedingly slow to operate; its sanctions were incredibly weak; and the Office of Fair Trading lacked sufficient investigative powers.
The most amazing thing for any visiting German or American examining those matters in this country is that it is not illegal in this country for even the most blatant price-fixing agreement to come into operation unless it happens to affect inter-state trade across the other countries of the European Union. Then they are subject to the tougher rules of the Treaty of Rome. The United Kingdom law merely provides that a cartel must be put on a public register on public display at the Office of Fair Trading. It is not even a criminal offence and nor does it attract any penalty of any kind to fail to do that. In consequence, the United Kingdom law is an

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exceedingly ineffective deterrent to price fixing to the detriment of customers, whether they be business or private customers.
In 1989, the United Kingdom Government, led by the noble Baroness, Lady Thatcher, published a White Paper which I, among others, warmly welcomed. It proposed a radical overhaul of the law, including the prohibition of cartels on the lines of Article 85 of the Treaty of Rome, increased investigatory powers for the Office of Fair Trading and heavy sanctions of substantial fines for breach of the prohibition. Unfortunately, seven years have passed since that White Paper and there has been no attempt to incorporate it into United Kingdom law. Not surprisingly, last year the all-party Trade and Industry Select Committee in another place felt that the Government's excuse of lack of parliamentary time was, as they put it, wearing thin.
Now, at long last, published only last month, we have a consultation paper. It is rather curious to progress from a White Paper to a Green Paper but the Government have produced a consultation paper entitled Tackling Cartels and the Abuse of Market Power. It promises implementation of the 1989 White Paper and I trust that when the Minister replies, she will assure us that that is some sort of earnest for the 1996–97 parliamentary session, assuming that Ministers are in a position to control the legislative programme for the coming session.
I would go further than the consultation paper because, after all these years, it is still disappointing in one respect. It intends to deal effectively with cartels; but it does not intend to deal effectively with the abuse of market power. While something like Article 85 of the Treaty of Rome would become part of UK law, Article 86 of the same treaty would not. However, leaving aside what non-specialists among your Lordships may feel is some detail, there is at least some broad agreement about the law against those who wish to restrain, control, monopolise and avoid competition. Competition is a good thing for consumers and is a safeguard for the consumer interest. But I should like to add something to that point. While competition policy provides a necessary safeguard for the consumer interest, it is not sufficient.
If, as sometimes Members of this House on the opposite Benches might suggest, competition was the complete answer, why is it that in, say, the second-hand used car market (where there is plenty of competition) or, indeed, in the market for financial services in the City of London, such competition is not adequate to protect the consumer or the investor? Why is it that we need legislation like the Trade Descriptions Act and the Financial Services Act? I suppose that the core of the issue in such apparently unrelated subjects is that in those fields, and many others, where complex goods and services are being sold, there is an asymmetry of information, knowledge and know-how between the provider of the services and the customer.
Moreover, in relation to the privatised industries, if there are Members opposite who feel that the advent of competition in the field of gas or electricity may mean that the specific industry regulators of Ofgas, Oftel, and
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so on, can be abolished or done away with, I would suggest that their role is not just to control prices (a process which is at present needed to prevent overcharging by monopoly suppliers) but is, or should be, to ensure what the consumer wants above all, perhaps even above price; namely, adequacy, regularity and assurance of supply. In both the water and electricity industries there has been rightful concern about those matters in recent times. I believe that the objectives of the regulator must also include such environmental concerns as energy conservation and equity between different types of customer. The way things are going, I am a little worried in case domestic customers may have to pay the costs of large discounts to industrial customers.
I welcome the fact—at least, modestly—that some competition is being introduced into the various privatised industries, including, although they do not seem to have gone terribly well, the trials in the West Country for the supply of gas. If competitive gas suppliers emerge, it will be a good thing. But, unfortunately, that seems to have been rather badly managed. Indeed, my friends in the Devon Trading Standards Department publicly made available a report last week showing, for example, that companies were allowed to push householders into signing up with new suppliers before all the potential players had declared their intentions and before any independent advice was available.
The noble Lord, Lord Ezra, who is to speak later, initiated a debate in this House on 13th December last. Like him, I would argue that many of the problems besetting the regulation of the privatised utilities arise from the way in which they were privatised in the first place. Unfortunately, in the main, great monoliths were created which faced little or no competition. If I may personalise it, it seems to me that Sir George Jefferson in British Telecom and Sir Denis Rooke in British Gas should never have been allowed to have their way.
Moreover, although some competition is now coming in, it is difficult to discern any consistency in government policy. The noble Lord, Lord Ezra, asked a Question earlier this afternoon and I listened to the response. In fact, we have seen events go wider than those mentioned in the Question: we have seen cross-utility mergers being allowed between the electricity companies and the water companies. They may adversely affect competition or the consumer interest, yet they were not even allowed to be referred to the Monopolies and Mergers Commission before consideration. We also saw a merger between Scottish Power and ManWeb which, similarly, did not go to the MMC. Then, to the astonishment of all, including Members of this House who heard the Minister's response to that Question earlier today, the President of the Board of Trade barred the two English power generators from acquiring regional electricity companies. Neither the City nor the Financial Times—nor, indeed, many others—would have been able to understand what was going on had it not been for the fortuitous fact that the reports of the MMC in those cases were leaked and two powerful politicians of the government party, Mr. Norman Lamont and Mr. John

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Redwood, made clear that they were not in favour of the view of the MMC and not in favour of the generator merger going ahead.
I regret that I was not able to take part in the debate on 13th December, but at that time I was only a Peer in embryo. I believe I can say that I was expected but that I had not yet arrived. Therefore, I should have liked to say a few words at the conclusion of my comments on price regulation for the utilities and on regulatory institutions for the privatised utilities in order to complement what the noble Lord, Lord Ezra, said. However, I see from the clock that I have run out of time so I had better cease at this point. I shall listen to what other speakers have to say about that and, indeed, about other matters. My Lords, I beg to move for Papers.
Lord Ezra: My Lords, it gives me particular pleasure to follow the noble Lord, Lord Borne, and his excellent introduction to the debate. I give way to the noble Lord.
3.37 p.m.
Lord Kingsland: My Lords, I am perfectly happy for the noble Lord, Lord Ezra, to continue if he wishes; indeed, I do not feel any sense of precedence at all. I see that the noble Lord does not wish to continue. I am much obliged.
I should like, first, to congratulate the noble Lord, Lord Borrie, on initiating today's debate. He brings to it not only a formidable academic reputation, but also many years of experience as a Director-General of Fair Trading. From listening to the noble Lord, I must say that all that experience has come through in his speech. I should also like to congratulate the Government on their initiative in March of this year in producing not a Green Paper but a blue one entitled, Tackling Cartels and the Abuse of Market Power. I believe that it is entirely appropriate that it should be blue and not green, and I should like to address my remarks to the content of that paper.
The truth is that the dominant feature on the landscape of British competition law is the European Community, and has been so since 1972. That dominance is the consequence of two articles in the Treaty of Rome—Article 85 and Article 86. The first article deals with contractual restrictions and the second with monopolistic powers. They have direct effect on the territory of the United Kingdom. If an individual or an enterprise feels in some way restrained by the behaviour of an enterprise contrary to those articles, that individual can go to any court in this country and seek relief. So they are formidable weapons in the hands of the European Community. But they only apply to restrictions or monopolies which have a consequence for inter-state trade. Therefore, there is an important role for competition policy at national level. It has been a fact that our arrangements to date have not borne any relation to the prohibitions laid down in Community law.
The fundamental purpose of this excellent document—which shows a remarkable open-mindedness, even by the standards of this
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Government—and its central feature, is that it seeks to align British competition law with European Community competition law. That is an admirable objective. In the case of Article 85—the article which deals with restrictive distorting agreements—the approach taken is almost identical to that taken by the European Community. Any such restrictive agreement is void ab initio, and there is an absolute prohibition imposed upon it. Moreover, the system of investigation and remediation proposed for dealing with this is a system similar to that adopted by the European Commission. There is only one qualification I have with that. One of the questions the Government ask in this blue paper is whether or not so-called vertical agreements should be contained in the national prohibition. Their inclination is, I think, to exclude them. With great respect, I wish to warn them against that inclination. Vertical agreements are included in the Community prohibition. While it is true that many vertical agreements can be shown to enhance rather than retard competition, there are some notable exceptions. The Community and the national regime would not dovetail satisfactorily if we were to exclude vertical agreements from our national prohibition. Therefore, I urge Her Majesty's Government to look carefully at this issue before they decide to implement what they say they intend to implement in the blue paper.
The more controversial area relates to Article 86 on monopolistic—and what I think is called in the economics profession oligopolistic—practices. Here the British system is different to the Community system. I am somewhat concerned to see that the dovetailing approach taken in relation to Article 85 is not to be the approach taken in relation to Article 86. I urge Her Majesty's Government to look at this preliminary conclusion carefully before including it in legislation. I see no reason why, if a contractual arrangement which restricts trade under Article 85 is to be prohibited, a similar prohibition should not apply to a monopolistic or oligopolistic practice under Article 86. It is an important point of principle. We shall lose an important legislative opportunity if we do not take that opportunity to dovetail the two systems exactly.
I have one final comment to make. Why do we need an elaborate set of institutional and administrative arrangements to administer competition policy? If we are to prohibit restrictive agreements, why do we not simply leave it to the injured party to go to the ordinary courts of the land and claim that an agreement or a practice is void, and demand damages? There is some suggestion in the recent comments of the European Commission that this is the direction in which the European Community itself is going. The reason is simple. The administrative arrangements for examining monopolies in the European Community are snowed under. Some companies which seek permission to operate certain agreements are having to wait years before they can find out whether or not they have obtained it.
Therefore the Commission is saying to the member states, "Look, we would like you to take on a much greater burden of examining these agreements and it can

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be done through your national courts. If a judge is uncertain about whether or not an agreement is restrictive, we are prepared to give our view in your court". Just at the moment when the Commission is trying to unload a substantial portion of the burden, we find our own Government thinking of introducing an onerous and elaborate system to consider national agreements.
I am not saying that we should not do this. As long as it is our intention to fine wrongdoers, we have to have a system which gives the alleged wrongdoer every right to defend his position and to prove that his agreement is lawful. If we do not do so, we shall be caught out by the European Convention on Human Rights. As long as there is the prospect of a fine, which is a criminal penalty, that follows.
We are faced with a fundamental question of principle here. If we want as simple a system as possible operated by the civil courts of the land, we must accept that a fine is not an appropriate penalty for a company engaged in a monopolistic or a restrictively concerted practice. Of all the questions that the Government have to consider before this legislation is put into place, I believe that is the most fundamental.
3.45 p.m.
Lord Ezra: My Lords, I apologise to the noble Lord, Lord Kingsland, for having tried to speak in advance of him. I was so anxious to congratulate my old friend Lord Borne that I got quite carried away. I now wish to express appreciation to the noble Lord, Lord Borne, on his remarkable speech, bearing in mind his great experience on the subject. I am pleased that I heard what the noble Lord, Lord Kingsland, had to say because I agree with a great deal of it. The first three speeches in this debate at any rate will show a remarkable degree of consensus.
I start from the thesis that the best safeguard for consumers is the provision of goods and services in a competitive market. However, it is necessary to ensure that the competition is fair, that monopolies do not distort the market place, and that standards of health, safety and quality are maintained. It is the task of government to put in place the machinery to ensure that those objectives are achieved. I feel that the purpose of our debate today is to examine whether that machinery is adequate or whether it is in need of change or amelioration. That it exists of course there is no doubt; the question is, could it be made to work more effectively? I believe that the answer is in the affirmative as regards the three cases that I shall mention and which the previous speakers have already touched on.
In the case of competition policy, as the noble Lord, Lord Borrie, pointed out, it is now getting on for seven years since the Government produced their White Paper—now diminished to a consultative document—pointing out what needs to be done. There is no doubt in the Government's mind—as stated in this blue document—that the law needs to be changed. That is admitted on all sides. I agreed entirely with the noble Lord, Lord Kingsland, when he welcomed what the Government are proposing to do in regard to Article 85
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of the Treaty of Rome, which is to prohibit anti-competition agreements. He was quite right to query why they do not do the same as regards Article 86 which prohibits abuse of dominant positions in the market place. If one is to adopt one of these provisions, it is difficult to appreciate why one should not adopt the other. To have two different systems running in parallel strikes me as confusing. In the one case there is a clear prohibition but in the other it will be a case-by-case approach. In this consultative period we should put pressure on government to change their mind on the subject.
There is also the question—which has been debated for a long time—as to whether the OFT and the MMC should be brought together, or in some way modified. The case for bringing them together was pressed strongly by the Trade and Industry Select Committee in the other place, to which the noble Lords. Lord Borrie and Lord Kingsland, referred. The Select Committee pointed out clearly—and I thought convincingly—how they thought this could work. That is a matter which must be taken seriously. However, if it is decided that it is better to have two separate bodies, their roles and their functions need to be looked at again. This morning the CBI produced some ideas on the subject which certainly merit serious consideration. In the whole area of competition policy there is undoubtedly a need for change. The Government have anticipated some needs but, in my opinion—it is a belief shared by the previous two speakers—they have not gone far enough.
I turn next to trading standards with which the noble Lord, Lord Borrie, and I have had a close association. He is the current president of the institute; I was the previous president. There is no doubt that the trading standards organisation throughout the country is doing a remarkable job, and is recognised throughout the world as having done so. It leads the way. However, unfortunately the great skills which those dedicated people possess are gradually being eroded by the reconstruction in local government which in its train brings fragmentation.
It is the nature of trading standards these days to deal with many things of great complexity, such as counterfeiting, fraud and the operations of large multiple concerns. To consider that those matters can be dealt with at very low local level is totally misguided. We need to think again about the structure of the trading standards organisation. We need to ensure that there is a regional level at which these important strategic issues can be dealt with, as well as being supported at local level in giving advice to individuals and small firms. I believe that in that area, too, we need to be aiming for amelioration of the existing system.
Finally, I turn to consumer protection in the privatised industries—a subject on which, as the noble Lord, Lord Borne, pointed out, I touched in the debate that I introduced in December. Here, too, we must look again at the issue. What is becoming very apparent, in particular in relation to the energy sector, the gas and electricity sectors, is that they are moving closer together. The gas distributors are distributing electricity; the regional electricity companies are all distributing gas; and, therefore, the time is coming

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when we have to consider seriously whether the regulators should be brought together. Alongside a single energy regulator, I believe that there should be a clearly defined and independent energy consumer council with local representation.
The noble Lord, Lord Borrie, referred to the report prepared by the Devon County Council. I have a copy here. It points out that consumers who wished to make complaints went naturally, first, to their supplier. But if they did not receive satisfaction from their supplier, none of them thought of going to the regulator in the gas or electricity industry, or to the consumer councils. Apart from gas, they had not heard of them anyway. Those individuals tended to go to the local authority, the citizens advice bureau or the trading standards officer. Therefore, either we need an effective consumer council in those industries or none at all. I believe that we are in a half-way house where no effective use is being made of those bodies because people do not know about them. That comes out extremely clearly in the report that I hope the noble Baroness has read with care; and on which I hope that she will comment.
We have in place regulatory bodies to deal with market distortions and consumer interests. However, we need a sharpening of those operations; and I have indicated some of the ways in which I believe that that should be accomplished.
3.54 p.m.
Baroness Lockwood: My Lords, I thank my noble friend Lord Borrie for the comprehensive way in which he introduced the debate. I shall follow the example of the noble Lord, Lord Ezra, and concentrate my remarks on the privatised utility industries. Those industries are of vital importance to our economy and have a strategic interest for the nation as a whole. Hence the reason for their being in public ownership previously.
There are four players in those industries which the regulator needs to take into account: the shareholders; the customers; the workers; and the state or the Government as guardian of the national interest. Any regulatory system has to balance the interests of those groups. Sometimes one group may be of overriding importance, but generally the interests need to be kept in balance. That is not perceived to be happening at present. Consequently there is great dissatisfaction with those industries and with the regulatory system. Customers or consumers are very critical. People believe that too much weight has been given to the shareholder interest, in particular at director and senior management level, at the expense of the customer or consumer.
A regulatory system inevitably contains contradictions and tensions. That seems to reflect the contradictions in the Government's own policy. Deregulation was a corner-stone of that policy. Yet even the Government recognised that in privatising those utility industries unfettered market forces could not be trusted to safeguard all the interests. Hence we had a regulatory system attached to each privatisation Bill.
As regards the interests of the four stakeholders, let us consider, first, the shareholders. Enough has been said about them in the press and media. Certainly in the
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short term their interests have been catered for by rising profits. So we look, secondly, at the customers. Customers are becoming increasingly critical not only of the industries but of the regulator. The gas industry is an example where customer complaints have doubled during 1995 from some 18,000 to 37,000 complaints. In the water industry there is similar dissatisfaction. Since privatisation prices have risen by 42.5 per cent. Profits have also risen very considerably. But the service to the consumer has been severely under threat in recent months. It is felt that instead of concentrating on capital development—which is badly needed in the water industry—and on good management, far too much time and money has been spent on mergers, diversification and overseas investment. In the North-West area customers are questioning whether that has been at the expense of the home market.
As regards mergers, in reference to the consideration by the Monopolies and Mergers Commission of the bid for Northumbrian Water by Lyonnaise des Eaux, the regulator of Ofwat argued that the merger would be against the public interest as it impaired his ability to carry out his statutory functions by reducing the number of comparators.
The question arises as to where the final power lies in the whole regulatory system. The regulator's advice was overturned by the Monopolies and Mergers Commission. In turn, as has already been said, recently the commission's advice on the electricity industry was overturned by the Minister. So we must ask whether the powers and authority of the individual regulators are strong enough, where the balance of power lies between the different regulators and where the final policy decisions are made. Both my noble friend and the noble Lord, Lord Ezra, referred to that. We need to know whether decisions are being taken within a consistent framework of government policy. That seems not to be so.
The third group of interests or stakeholders, the workers, is one where the full brunt of the Government's deregulation policy has been felt. No one wants an industry—a utility industry or any other—to be run solely in the interests of the workers. But the workers are stakeholders and have a legitimate interest. Enlightened government and enlightened companies recognise that and build it into their policies. As a result, the workers accept that they are partners and therefore have a vested interest in the success of their company.
The fourth partner is the Government or the national interest. I do not regard myself as a xenophobic nationalist, but I cannot help questioning whether the takeover of utility companies, especially by overseas companies, is in the interests of the country and of our economy, bearing in mind the importance of the industries to the social structure. We also bear in mind that many overseas companies now see the British system as lightly regulated and one where the profit motive can be of great significance.
So it seems that we need to take a fresh look at the whole of our regulation of the nationalised industries. I suggest that now is the time to do so.
4.3 p.m.
Baroness Wilcox: My Lords, I am grateful to the noble Lord, Lord Borrie, for introducing the debate. Of course, he is familiar to me, since I worked with him when he was Director General of the Office of Fair Trading. As Chairman of the National Consumer Council, I spoke to him on many occasions. We did not always agree but he always listened to me and I hope that today will be the same.
I stand today as a businesswoman, a trader, a consumer representative and a consumer. I believe that free markets are the best markets. When they work well, free markets are wonderful for consumers; when they work well, they give us access, choice, safety, information, equity, redress and representation. But the world is not a perfect place, and sometimes it is necessary to interfere with and regulate the market to keep the balance of power between business and the consumer.
Britain has a long tradition of self-regulation which has been much admired and often emulated: that badge of trust we knew, the handshake of the City of London dealers, the codes of practice of professional bodies; of the guilds; of the societies; fiercely guarded and upheld. But I suspect that, as all national boundaries are blurred by international trading, technology and science, those voluntary codes will, perforce, be replaced by statutory codes with a much wider geographical application. Regulation and enforcement will have to be and are even today being looked at anew.
More and more in these fast-changing days, businesses recognise their need for regulation. At the Institute of Directors' recent conference on the subject, representatives of 800 small companies attending called for more and better regulation in areas like retailing, wholesaling, tourism, the licensing trade and, inevitably of course, car boot sales. They recognise that good regulation can help to improve quality standards and business performance.
However, implementation and application are causing such businesses great concern. They are looking for more clarity, for the law to be written in plain language that they can understand; better on-going information to aid compliance; fairness of application of regulation; a European approach to applying European directives reflecting the spirit rather than the letter. My noble friend Lord Kingsland has already alluded to that. At a cost to UK business of £43 billion a year, regulation must be necessary, effective, fair and meet consumer and industry demands.
But I believe that in future it will be much more difficult to achieve. We live in an increasingly complex world where science and technology are moving markets and consumers into areas and languages that none of us is fully able to comprehend. There are many new forces at play, huge amounts of capital roaming the world, free-wheeling supranational companies, often more powerful than the governments of the countries in which they manufacture, trade or consolidate, able to influence and alter local conditions. New challenges to the regulation of British business are upon us, as this timely debate proves.
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With your Lordships' permission, I shall mention three areas where we can see the changes happening. First, on technology, there are many significant changes taking place in the industry. The development of the information superhighway could bring enormous benefits to us all, particularly those with disabilities who cannot leave their homes or who live in remote, rural areas. The information society will fail to deliver its full potential unless consumers have effective systems of regulation and representation to ensure that the information society develops in ways to benefit everyone. There is no regulatory structure for the technology at the moment.
There are many bodies involved in the regulation of broadcasting and telecommunications. But technologies are changing. Telephone, television and computer can now work together across frontiers. Our Government acknowledge the need for review of the regulatory structure for broadcasting and telecommunications. But what of the information technology? How soon do the Government think they should start a review? It will be a long and complex picture and the sooner we start it the better.
Secondly, there are new risks. New challenges arise from new diseases such as BSE. The Government's responsibility is to introduce appropriate regulatory measures to protect humans from the disease. The Government introduced a number of measures, including the offal ban, as we remember. They relied on it to protect the human food chain from tissues known potentially to harbour BSE infectivity. It is important that such measures are properly monitored and enforced. It is welcome news that that is happening. But there will be new risks, and the need to ensure that regulations are properly monitored and enforced will have to be well supported, both nationally and locally.
Thirdly, and finally, on the green claims the Department of the Environment commissioned the National Consumer Council to look into them and we discovered that most of the claims are vague, devoid of meaning, often accompanied by symbols or logos and other green imagery which none of us really understands. We are keen to encourage shoppers to buy products which are less damaging to the environment; and I am delighted that the Government have now said, in the light of the National Consumer Council's report, that they will help to instigate a code of practice on the marking of "on product" claims. They will consider possibilities for changing the legislative framework for helping to protect the consumer against misleading information.
That is a welcome response, but as the three brief examples show, regulation will be no easy task in the future. Businesses, government agencies and consumer bodies will have to form new alliances—more often, much earlier and more openly—if we are to regulate, where necessary, to achieve the balance whereby British business can flourish and the British consumer remains king.
4.10 p.m.
Lord Haskel: My Lords, I begin by declaring an interest as a non-executive director of a cable company. Obviously, it is a firm that is regulated.

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The noble Baroness, Lady Wilcox, spoke of the convergence of broadcasting and telecommunications. What she did not say is that at least 10 different agencies have regulatory responsibilities for different aspects of telecommunications and broadcasting. With 10 different agencies, it is difficult for businessmen and consumers to find out what the current regulatory principles are. That gives rise to a whole new industry dedicated to second-guessing the regulator. We must move the debate forward and see how regulation can be applied to the real problems of the economy. I thank my noble friend Lord Borne for giving us the opportunity to do so.
To move the debate forward, it is obvious that in some sectors more regulation is needed and in others less. A flourishing, dynamic economy is moving all the time; so the need for more or less regulation will be constantly changing. My noble friend Lord Borne suggested that to introduce competition alone is not enough. He is absolutely right. Good regulation will improve the quality of competition; and that will improve the economy as a whole.
Regulators are obliged to control prices, encourage competition and look after the consumer. Let me briefly examine each of those duties in turn. In recent months, difficulties have appeared with the RPI-X price cap system. Takeover bidders and the stock market seem to think that this formula leaves a lot of scope for excessively high profits and excessively high executive pay and perks. They seem to be right. During the period 1991–94, Oxford Economic Research calculated that the average total return to shareholders of the regional electricity companies was in excess of 38 per cent.; whereas the average total returns calculated on the same basis in the Financial Times All Share Index has been just under 16 per cent.
That price formula is further complicated by the fact that many costs are outside the control of the utility. For example, we have heard from the Government all about lower gas prices. But they are not the result of privatisation or competition only. They are lower mainly because the price of gas itself has gone down by 50 per cent. Similarly, electricity is cheaper, largely because the fuel that drives the power stations has gone down in price. Telephone charges are less, partly because of competition introduced by the Government, but also because fibre optics and computerisation have cut costs considerably. What has regulation done? It has speeded up the passing on of those price reductions to the consumer. And that brings me to the second task of the regulator—competition.
As other speakers said, we have been promised a government policy for competition since the mid-1980s. At last, in March this year, the consultation document appeared. There is no doubt that the burden of regulation has been greater than it need have been because of the absence of a competition policy. Instead of vigorously introducing competition policy in the early days, the Government have used regulation as an excuse to delay it. I thought my noble friend Lord Borne was rather kind to the Government in his comments on that. To privatise monopolies for the purpose of introducing competition, and then for the Government to produce their policy for competition many years later, is an example of incompetence on quite a grand scale.
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For some time the utilities regulators have warned that existing laws are insufficient to control the powerful groups that they oversee. Referring decisions to the Monopolies and Mergers Commission now seems to add to their difficulties. The Secretary of State's decision, first of all to accept the MMC's recommendation and allow mergers in the electricity industry, and then, contrary to the recommendation, to block bids by National Power and PowerGen for electricity distributors, has only served to emphasise that uncertainty.
In reply to the Question tabled today by the noble Lord, Lord Ezra, the Minister said that using "golden" shares to block those bids was not confusing. He may be right. But it is certainly weak and indecisive government.
Let me give an example of the absence of effective regulation. The Government own the Post Office and are successfully exploiting its monopoly in the absence of regulation by taking out £925 million over the next three years, which effectively means that they are taking every pound earned by the Post Office. Inevitably that means that postage prices will be raised. Would a regulator in the private sector have allowed that? I doubt it.
The third person the regulator is obliged to look after is the consumer. I assume that "the consumer" means the domestic user, and particularly those on low incomes. Apart from to the elderly and the disabled, the social obligations of the privatised utilities are pretty minimal. They are mainly an obligation to provide universal service in gas and to satisfy all reasonable demands for electricity. How do the Government ensure that small users are not paying high prices by virtue of standing charges and that consumer rights are protected?
Regulation has increased as our life becomes more complicated. We have arrived at the position today whereby, if eating beef is risky, we do not blame those who fed infected sheep carcasses to cows or ignored regulations in abattoirs. No, we hold the Government responsible by virtue of their poor regulation.
The state as provider is being replaced by the state as regulator. That demonstrates the futility of the government slogan that more regulation is bad and less regulation is good. The reality is that, as life becomes more complicated, we come to depend more on regulation because we cannot control everything ourselves.
4.17 p.m.
Lord Dixon-Smith: My Lords, like everybody else I welcome this debate. Indeed there is almost a danger of our arriving at a state of sweetness and light over the whole subject. I intend to take a slightly different tack.
I well remember, some 12 years ago, landing at Dover late one evening on returning from a foray into France, and finding myself listening to an old friend on the radio as I drove up the A.2. It is somewhat ironic that, had he made it to this eminent place, he would have been sitting on the Benches opposite. The subject under debate was then very topical. It was the question of the regulation of the City. It is a very big subject, and not one that

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I am competent to go into in any detail. The point of my friend's argument was that, previously, the City had run on a high standard of honour, high standards of ethics and a high moral code in business.
The substance of his argument was that no regulation could replace that system. He said that you could bring into being all the regulators you chose and could give them all the legal powers that could be created, backed by the courts; but if the system of morals and ethics in business were not adequate then the regulators could not take their place.
We should do well to remind ourselves that all the regulation that has come into being since that time has not prevented malpractice. It cannot. Occasionally it takes steps to bring it under control. But somewhere in all of us there is—heaven help us!—what I call the schoolboy ethic of testing the limits of what is permitted. We need to bear in mind when considering the issue of regulation that, if our education system—we go right back to that—is not inculcating people, as a matter of instinct, with sound basic moral and ethical principles, particularly in matters of business but of course in all matters, then we certainly have a problem. Education is not the subject of our debate today. Nonetheless, it is relevant to it.
My second point is that, if one has those standards, regulators and regulations change nothing. I shall use two simple examples which are matters of law rather than regulation as such. I well remember that in my time in local government we were required to have a debate about employment policies because of the impact of the race relations legislation. The employment practices in County Hall were quite simple: the best person available for the job was employed. In those days, County Hall employed some 50,000 people, though there were—I cannot remember exactly—several hundred and probably a thousand separate employing establishments, all working on that system.
The law was passed and there had to be an employment policy to deal with the question of race. So a standing committee solemnly considered the matter; a paper was solemnly produced; and a policy was solemnly adopted and sent to every employing establishment. Everybody involved in employment was aware of it and they carried on doing what they had done before, which was to appoint the best person for the job. Exactly the same thing happened with the equal opportunities legislation, for quite obvious reasons. So it is legitimate to remind ourselves that the question of standards is fundamental.
Much has been made this afternoon of the problems of the privatised utilities, which often find themselves in a monopoly situation. The noble Lord, Lord Haskel, drew attention to that point. It has to be said that some of them have not always behaved in the most discreet and wise way. Although it has not been mentioned specifically this afternoon, I infer from what has been said that, despite the problems with the existing situation, it is preferable to the one that existed before when there were national monopolies, which were not subject to regulation but were subject to an enormous
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amount of political complaint and interference. At least now we have got down to something a little more manageable.
Generally speaking, the performance record of the privatised utilities is vastly superior to their previous record. We should be pleased with the progress that has been made. I infer from what has been said that there is no intention of trying to return to the earlier position.
Business and commerce exist for only one reason: they have customers. They do not have a symbiotic relationship, each working for the other's best interest. There are very real problems. But with all the regulation in the world, I still know of no sounder advice to give to any customer than the old Latin phrase caveat emptor. My humble opinion of regulation is that it is rather like insurance: it is always too much when you do not need it and never enough when you want it.
4.24 p.m.
Lord Desai: My Lords, we are very grateful to my noble friend Lord Borne for having introduced this important topic. So far the speeches have displayed a range of specialist knowledge on the subject. It is a debate which we must read with great care when it is published tomorrow.
Basically, I have a total lack of practical knowledge in this matter but I want to use my academic knowledge to as much advantage as I can. Let me first say that traditionally British policy has to been to leave things well alone—laissez faire —rather than employ an active enforcement of competition. In that we differ from the United States. The United States believes in free markets but also believes in vigorous enforcement of competition policy. By and large we have let things be. We have been much more tolerant of cartels, for example, than we ought to be.
That said, we now have to operate within the context of European law, as many noble Lords pointed out. There is a difference between cartels, which clearly fall foul of Article 85, and other matters, such as misuse of market power, which come under Article 86. I want to point up the contrast between Articles 85 and 86.
What is said about Article 85 is fairly clear. By raising prices and through, as it were, collusion between suppliers, cartels clearly represent an area which ought to be regulated. I am less sure about "oligopoly", as described by the noble Lord, Lord Kingsland. The doctrines of monopoly, oligopoly, and so on, were invented by columnists at a time when markets were by and large domestic, industries were simple, and one could more or less say of a certain industry that it had three, four or five competitors. As noble Lords have pointed out, with the current state of technology and the tremendous mobility of capital, it is not at all certain that industries can be defined as easily as they were. We have already discussed today how, in the regulation of the public utilities in the energy sector, it would be very good to have a cross-fuel-source competition. There should be competition for gas, electricity and other energy sources. We should have a policy which allows for that—not merely a lot of competitors in one industry. We should all think about competition across energy sources. That is obviously a matter for consideration.

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The House recently discussed broadcasting and the question of market power arose. How is market power measured? If one measures it in that sector—broadly speaking, the media sector—it is not enough to look at how many people are in the business of television production. One should go across to the print medium and other areas as well. So the notional market power that economists used to measure industry by industry and product by product may no longer be very relevant. There must be some new thinking about the relevant sphere of substitution across products. We must put forward a policy to promote competition in such a way that at the end of the process the result is an efficient, reliable and cheap supply of the commodity or service to the consumer. That is what we want. Rather than go by rules which say that there ought to be x number of competitors in the industry, we ought to ask ourselves how we achieve that result.
My noble friend Lady Lockwood said that she was not xenophobic but she did not like foreigners coming and taking over our industry. I am perhaps xenophilic, if anything. But we are in very much a global situation—a global competitive situation with an increasing degree of freer trade. For instance, in the 1950s people like the economist Galbraith used to think that the American automobile industry was oligopolistic and so powerful that it could control consumers. But once that industry allowed German cars to be imported, which were good competitors, its market power was undermined. Similarly, IBM, which was dominant in the computer industry, was undermined by a number of small personal computer producers.
Given the great amount of technology, if we do not restrict free entry and do not go down the path of protectionism much of what we want to achieve will be secured by competition between producers and by technological change. One good thing which may come out of this debate is that it is better to take a broader, more comprehensive view of industry and the economy rather than a sectional view. It is by competition across products and across industries that consumer interests will be better protected.
Finally, in relation to what was said by the noble Baroness, Lady Wilcox, when it comes to issues of health we need a tough regulation policy. It is important that we obtain as much understandable, non-misleading information as possible. I dare say that had beef been supplied by two or three firms, we would not have tolerated the situation that arose in respect of unsafe processes. Any decent corporation would have withdrawn the product long ago and improved its processing systems.
4.31 p.m.
Lord Blease: My Lords, I commend my noble friend Lord Borrie for his initiative in tabling this timely and challenging debate. I wish to compliment him and other noble Lords who have so cogently and forcefully presented relevant arguments on the many issues directly concerned with corporate governance, business regulation and consumer protection.
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Having had only a brief glance at the Department of Trade and Industry consultation document, Tackling Cartels and the Abuse of Market Powers, I am conscious that my contribution to the debate will be rather pedestrian. I propose to speak about some current provisions and measures concerning consumer interests and protection in Northern Ireland.
In addition to the various regulatory and law enforcement agencies which exist to ensure fair competition—to which reference was made by a number of noble Lords—it is important also to provide legislative arrangements that give an effective independent voice to consumers with adequate remedial action. Eleven years ago the Government established a General Consumer Council for Northern Ireland. Among the principles on which the council was founded was the need for a unified, comprehensive voice, the avoidance of confusion among consumers and the acceptance of the concept of independent funding for the consumer representative body to avoid capture by any industry or sectional interest, or even the suspicion thereof.
Today the General Consumer Council is the principal consumer body for Northern Ireland. Its aim is to promote and safeguard the interests of consumers and to campaign for the best possible standards of service and protection. The General Consumer Council gives consumers a voice and makes sure that the voice is heard by those who make decisions affecting consumers. In addition, it has specific responsibilities in relation to energy, transport and food. It investigates, researches and publishes reports; it seeks to influence both the public and private sectors and campaigns for a fair deal. But perhaps its strongest feature is its high public profile in Northern Ireland. Consumers recognise it as the body that looks after their interests.
The reasons for having a unified general organisation are pronounced. It is strongly held that the dilution of effort either increases the cost or results in ineffectual consumer attachment. Those points emphasise that it is widely accepted in the Province that we need to avoid a plethora of bodies; a rag-bag of structures which can be costly, ineffective and easily confuse the public and erode confidence. I underscore that point by reference to some of the remarks made by the noble Lord, Lord Ezra, in regard to regional and local bodies which bear upon specific arrangements.
The council is comprised of 12 members, including the chairman, representative of Northern Ireland's citizens and appointed by the Northern Ireland Office. It has a staff of eight full-time and three part-time members. Its budget for 1994–95 was £420,000, which was met by a grant from the Department of Economic Development. I hold that by any standards that is good value for money with the results achieved.
The chairman of the Northern Ireland General Consumer Council is Lady McCollum. Her 1995 annual report stated:
"The Consumer Council, armed with 'the power of persuasion', must increasingly play its part in protecting the rights of the consumer. For ten years we have been doing just that. We have been giving consumers a voice, and have endeavoured to make that voice heard by those who take decisions affecting consumers. It is an

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uphill task to try to persuade providers to make changes for the better. Our past record shows nonetheless, perhaps against the odds, that we are excellent persuaders. We have been able for the past decade to convince public and private sector providers that the council makes realistic recommendations; and wise and sensible people listen to good sense".
In that respect, the noble Baroness, Lady Wilcox, will be aware that the Northern Ireland General Consumer Council works closely with her national body and will therefore already know the details of the background that I am giving. The reason I felt it necessary to give that background at local and regional level is that it is evident that there is an urgent need at United Kingdom level to identify the growing gaps in consumer protection law and enforcement. The DTI consultative document glaringly presents those gaps in its text and the flow charts. The four main laws governing competition in the United Kingdom are policed by four different authorities all with overlapping roles and leading to inconsistency, loss of valuable time and resources.
It appears to me that a fair and forceful case can be and indeed has been made by a number of noble Lords today, for the establishment of a United Kingdom consumer affairs authority with suitable, regionally-based organisations along the lines of the Northern Ireland General Consumer Council. That point again was reinforced by the noble Lord, Lord Ezra. The United Kingdom consumer affairs authority should have powers to deal adequately with competition policy and regulation. It should also represent consumer interests and commission consumer research. I shall be pleased to hear the Minister's reaction to that suggestion.
4.39 p.m.
Baroness Seear: My Lords, it is—or should be—the mark of any democratic government that they are not in the pocket or, to put it less bluntly, unduly influenced by any specific lobby or sectional interest group. It is a constant battle among democrats to see that that does not happen. It is a point which has tied many of us to these particular Benches—but that is for another day.
The lobbies are one of the great problems of today, even though they are important. It is important that lobbies and individual sectional interests should be properly represented. There is considerable danger that lobbies have too much influence and are able to sway government far more than is appropriate. I would like to say more about that on some other occasion because I believe it is a central issue in getting the right government in this country.
We have talked almost exclusively about regulations, but those are for the benefit of the consumers who are the real subject of the debate today. Consumers have lobbies themselves: they can be regarded as, and in some contexts are, lobbies for particular interests. There is a great difference between the consumer lobby and others because all of us are consumers, and we would be in a very poor state if we were not. Therefore, one can distinguish the consumer lobby from any of the others. It is appropriate that the consumer's voice should be heard and heard very clearly.
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How are consumers best protected? There can be no doubt that competition is the way in which they ultimately get the best deal. That is why we have always been in favour of free trade. Protection has always been put up in furtherance of the objectives of particular interest groups rather than in the interests of consumers as a whole. Genuine competition is far and away the best protection for the consumer.
The consumer has to be protected in a market economy. We have to remind ourselves that this is where regulation comes in. We have to remind ourselves also that the market is not a jungle. The laws of the jungle are that everyone grabs what they can for themselves and runs for it. All markets, from medieval times onwards, have had a degree of control and regulation. So there is nothing incompatible about arguing for some degree of regulation while at the same time arguing the importance of the free market as being the best protection for the consumer.
But what do we have in this country by way of regulatory machinery to protect competition in the interests of the consumer? As everybody knows, we have two organisations; namely, the Office of Fair Trading and the Monopolies and Mergers Commission. Surely, one of the results of today's debate should be to look again at the case for not having two organisations, especially if they do not both work with the degree of competence and efficiency that is desired. There is a considerable amount of criticism about the way in which the Monopolies and Mergers Commission is working. A very strong article in the Economist recently drew attention to the way in which cases of unfair competition had been put to the MMC concerning industries as wide apart as instant coffee and, if I recall rightly, cars. Those cases had been turned down as not having any validity by the Monopolies and Mergers Commission. I have not read the cases, but it seems surprising that in a considerable list of cases given in the article the judgment of the Monopolies and Mergers Commission should go unchallenged. It is interesting that the CBI in today's press, I believe, has come out in favour not of the amalgamation of the two but of a change of a very drastic kind. It suggests giving the detailed investigation to the Office of Fair Trading with the commission hearing further appeals, as it were, if decisions are not totally acceptable.
One of the matters we should look at and should now be pressing is the division between the Office of Fair Trading and the Monopolies and Mergers Commission. It is strange that so many people in the commission are part-timers. How do we know that these people are able to give the time and attention necessary for an organisation as important as that and the development of competition in the interests of the consumer?
The Government say they are in favour of competition. The party has been converted to competition over the years. To be fair to this Government, they have always expressed approval of the idea of competition and free trade. That is a welcome conversion from the history of that party. But how well have the Government served the consumer? I wish to look at an example at how ill the consumer has been served in the recent debates, discussions and

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anguish over beef. Repeated Statements about what is happening in the beef market have been given to this House and column after column has appeared in the press, but nearly always from the point of view of the farmer and agriculture. How much attention has really been given to the problems of the consumer in the beef fiasco?
I gather that a study has been undertaken in Birmingham concerning over 300 retailers. Despite the fact that there has been inspection by the Government's meat hygiene service there are still appearing in the shops items of food which should have been banned but which nonetheless have been passed by the Government's agency. What are the Government doing to keep consumers properly informed? A plea has been made that there should be far more information given to the consumer. The Government say there is nothing to be afraid of; but people are very afraid. At least the consumer should be able to discover from labels whether articles contain beef. There is no such information available at present. The Government should be concerned about the consumer as well as the farmer. I am not against the Government being concerned about farmers because they are very important people but they are only there to produce the food that the consumers want to eat. If the consumers do not receive protection as regards food, there is a very serious gap indeed.
There is another fatal flaw in the organisation in this country which deals with these matters. I have urged a merger between the Office of Fair Trading and the Monopolies and Mergers Commission, or at least some radical change. It is an extraordinary arrangement that one government department looks after both agriculture and food. In the past many people have urged a separation of responsibilities, one department looking after the interests of agriculture and another concerned with the consumer. I wonder whether the noble Baroness has heard what I am saying because this is a very important suggestion. It has been put forward by other people, but I want to bring it to the fore. It has not been mentioned previously in today's debate.
To have food and agriculture controlled by one department in government brings a conflict of interest, which cannot be in the best interests of the consumer. This matter has been pressed before and I press it again today because this is the debate in which it should be stressed. There should be a separation of responsibilities. The department looking after consumers' interests in food should not be housed alongside the agricultural interests, which dominate the whole time, within MAFF.
4.48 p.m.
Lord Peston: My Lords, we have had a particularly interesting debate, introduced so ably by my noble friend Lord Borrie. It has covered a large number of topics, most of which I shall have to leave on one side because of the lack of time. My heart goes out to the Minister in having to deal with several topics which I had no idea were likely to arise today.
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As regards competition policy in particular, much has been said with which I agree. Again, I shall be unable to say anything on that because of the lack of time. Perhaps I may add that we do boast about how excellent your Lordships' House is in debating fundamental matters. In that connection I believe that the Government should find time for a debate on their recent Green Paper on competition policy. It would be a pity to let that go. What I would most like to do in that regard is to pursue in detail the type of important points raised by the noble Lord, Lord Kingsland. Therefore, I hope that noble Lords will forgive me if I do not go into those matters today.
I intend to speak on the subject which I thought the debate was about; namely, regulation. Even in talking about regulation and the regulators, I shall leave on one side financial regulation which is an enormous topic for which there is no room today. Financial regulation is in a terrible mess, but perhaps we could debate that on another occasion.
I am talking about a relatively new form of statutory regulation. We should bear in mind that so-called "self-regulation" has a statutory basis. It derives from the privatisation of the former nationalised industries and the need to regulate them in some form or another because most of them had immense monopoly power. That was the beginning and the end of it. I should say immediately that although we started off with the nationalised industries, during the past few years several new companies have emerged, operating in the very same economic areas. In addition, some of the original privatised enterprises have been purchased—or it is proposed that they will be purchased—by conglomerates. That too changes their economic position but, much more importantly, it complicates the position of the regulator. We have talked about the emergence of competition. Again, that changes the role of the regulator although that is not necessarily to say that we do not need regulators any more.
We have all said that we are concerned with the consumer first and foremost. I stand second to no one in supporting Adam Smith's dictum that consumption is the sole end of production. The whole point of production is consumption. However, having paid tribute to the greatest of all economists, I always add that if you do not produce anything, you cannot consume anything. It is worth bearing that in mind when looking at the way in which the economy works.
Having said that and having looked at the privatised industries, one of the tasks before us which has not yet been mentioned is to try to discover new ways of promoting competition. What has happened in the gas industry is a good example and I am glad that my noble friend Lord Borne raised it, particularly as it looks as if the experiments to which those of us who dealt with the Gas Act were looking forward have got off to a bad start. I hope that that can be put right in the fairly near future.
To echo the noble Lord, Lord Ezra, I am totally puzzled by the extraordinary mess in the electricity supply industry. It seems that the only person who thinks that everything is clear is the Minister who

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answered on behalf of the Government at Question Time. The rest of us, who thought that we knew something about the subject, have it in common that we are all completely puzzled by what is going on. However, there is never any harm in a Minister being in a minority of one.
It is worth bearing in mind that the regulators were mostly new to the task. They had little knowledge or experience of regulation per se and, for the most part, they were not experts in the industries that they sought to regulate. For them and their staff, regulation has been a learning process which is by no means at an end. I hope that I am not being more acerbic than usual when I suggest that although some of the regulators have performed reasonably well, a few are hopeless and seem to have learnt nothing from their high-salaried jobs. Perhaps I may add in that regard that it seems that in more than one case the interests of the shareholders have too easily overridden the interests of the customers.
We are aware of the classic problem to which my noble friend Lord Borne referred in another context. The Americans, experts in this area, are certainly aware of it. I refer to the asymmetry between the information that is known to the regulated enterprise and the information that is available to the regulator. I wonder whether too much is hidden under the cloak of commercial confidentiality. I also wonder whether the regulatory offices have sufficient expertise fully to protect consumer interests. Viewing regulation as a game of strategy—that is surely how it should be viewed—leads me to suggest that the rules are too heavily biased against the regulator and therefore against the consumer.
The role of the regulator is to bring us, in practice, closer to the outcome that would emerge from a correctly operating and competitive market if that were possible to achieve. The point that I make—I have made it before—is that in competitive markets profits are not guaranteed; nor is survival. That is the very essence of the market mechanism: you win some, you lose some. It follows that it is not the task of the regulator to guarantee profits or to create a cosy life for managers and shareholders. However, in my view that is precisely what the regulators have done. We have to find a way of ensuring that that does not continue to be the case in the future.
On the other hand, I am not seeking to say that the regulator should behave arbitrarily or that he should be able to add regulatory risk to the other risks that any business has to face. I argued that point when we considered the Gas Act. In the modern world, firms have enough problems without having to cope also with irrational regulation. Therefore, regulation must be rule-based and it must be transparent. However, we must recognise at the same time that in a changing economic environment, the process of regulation will have to adapt. What is not desirable—I state this strongly—is the ad hoc case-by-case approach, so beloved of the Monopolies and Mergers Commission, which is probably our most disastrous area of government at the moment—
Noble Lords: Oh!
Lord Peston: I agree that that is a pretty strong statement, so perhaps I should add "within the area which I have to consider".
It is certainly time to take stock of the regulatory process. It may well be that there is a group within the Department of Trade and Industry which does precisely that. I am interested to know whether that is the case and whether we may get a Green or a White Paper assessing the regulatory experience of the past decade-and-a-half and making suggestions with regard to the future. Perhaps the noble Baroness, Lady Miller, will be able to tell me whether there is such a group in the department.
I should also be interested to know whether the regulators tend to get together at joint meetings to exchange ideas. It would be interesting if they did. I should certainly like to know the outcome of any such meetings.
Looking to the future, another possibility is to establish a committee of inquiry. That might interest your Lordships because it is precisely the sort of area which one of our committees could consider. Yet another possibility, which is not incompatible with the others that I have mentioned, would be a large-scale academic study of the subject of regulation. Your Lordships will not be surprised to hear that suggestion from me because it would be a form of employment creation. Whichever way we do it, it would be a pity not to monitor or to learn from past experience.
It would be undesirable, but not unusual, to make policy changes without a full appreciation of where we are now and how we have got here. However, having said that I would not like to see a policy change without a firm research foundation, I am not insisting that the statutes under which the privatised industries and their regulators operate are perfect. Last year's consideration of the Gas Act in your Lordships' House convinced me that we must look again at all the relevant legislation.
In conclusion, my main desire is to end the debate on the note struck by the noble Lord, Lord Dixon-Smith, when he said that this is a subject on which we can have a meeting of minds. We can disagree, but our disagreements do not necessarily have to be ideological. In my view, they need not be ideological at all. This is a subject to which we can all contribute.
4.59 p.m.
Baroness Miller of Hendon: My Lords, this has been a most interesting debate, with excellent contributions from all noble Lords. I am certain that my noble and learned friend Lord Fraser, who is away on a trade mission, would have liked to be present to hear all the excellent contributions. Possibly your Lordships would have preferred that because he would be much more able than I to answer the points raised. For my part, I hope that I am able to do it justice. The noble Lord, Lord Peston, was right to say that the subject was extraordinarily wide ranging. My officials have given me so much information: although they believe that I am a fast reader, I would have to inhale all of the words to get through them. If I do not manage to mention all noble Lords who have spoken or cover all of the points

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that have been raised, I will look at Hansard and my notes to see what I have left out and reply in writing. However, I have never had to do that because I have managed to get through it.
The noble Lord, Lord Borrie, has made some interesting proposals on the regulation of British business and the protection of the consumer. I have also followed closely the wide-ranging and fascinating debate which has followed. As others have remarked, the noble Lord draws on a wealth of knowledge and experience, including as a long serving and greatly respected Director-General of Fair Trading. Other noble Lords have also brought us the benefit of their experience in the constructive and helpful points they have made. The Motion before us links regulation of business with protection of the consumer. I have no difficulty in acknowledging that there are circumstances where, at least in the short term, the interests of business and the consumer may diverge. Regulation may be the appropriate policy response. But it is all too easy to slip into the frame of mind which sees regulation as a cure for all ills. In most cases, competition is the more effective remedy. Competition is at the heart of the Government's economic policies, and our aim is to let it flourish. In regulating business, the Government aim for the greatest possible effectiveness in promoting competition and providing the necessary protection for the consumer while avoiding unnecessary burdens on business. In our approach to proposals in the European Union we seek to promote the same aims.
We must be careful to ensure that regulation does not inhibit competition or stifle entrepreneurial activity. Regulation, or rather over-regulation, must not be an excuse to interfere in the detailed decision-making of companies. The unhappy experience of nationalisation demonstrates the blind alley into which that philosophy sometimes takes us. Through privatisation we have sought to liberate whole sectors of the British economy from the unnecessary constraints imposed by government. There may be some who see regulation as a means of putting back the shackles. That is not the Government's position. Through the Government's deregulation initiative we have sought to strip away the dead hand of outdated, ill-fitting and often petty rules, or rules which, while once valid, are no longer relevant but remain unchanged through sheer lack of legislative or administrative time. Red tape is not just a nuisance. It puts a real cost on our economy—a cost in profits, jobs, investment and inefficiency.
Every extra burden placed on business drives up its costs. These costs fall disproportionately on the small businesses which are a major contributor to the UK economy. Unnecessary regulation also stifles innovation by adding to the time taken for new products to reach the market. Of course, it is the consumer who ends up footing the bill. Deregulation can also be of direct benefit to the consumer. For example, over 50 per cent. of shoppers now do their shopping on Sunday thanks to reform of Sunday trading. This means greater choice for consumers as well as business.
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As I said earlier, competition is at the heart of the Government's economic policies. It is competition, not regulation, which provides the best possible guarantee of value for money for the consumer. But make no mistake. The Government's steadfast promotion of competition through privatisation, liberalisation and deregulation does not mean that we are content to see the law of the jungle prevail, to use the words of the noble Baroness, Lady Seear. Consumer confidence is an essential element in the operation of an effective market. Consumers need to have confidence in the quality and safety of the goods and services which they buy. As we continue to dismantle barriers to competition, ensuring an adequate framework for competition law is of crucial importance. We are not content to rest on our laurels. The Government are conscious that certain aspects of the current competition law regime are definitely open to improvement.
We are committed to the introduction of legislation to prohibit anti-competitive agreements and to strengthen the powers of the Director-General of Fair Trading to deal with abuse of market power. The consultation paper published by the Secretary of State for Trade and Industry in March, to which the noble Lord, Lord Borrie, and other noble Lords have referred, underlined the Government's commitment to introduce meaningful reforms. They will provide further stimulus to the continued development of an enterprise economy where competition can flourish, while imposing the minimum necessary regulatory burden on business.
I am conscious that one of the most critical interfaces between the regulatory framework and the interests of consumers arises in the privatised industries. These utilities touch the daily lives of every single consumer throughout the country. It is therefore vital that they perform efficiently and provide top quality services. It was equally vital that they had access to capital resources for much needed investment without the constraint of the PSBR or having the Treasury constantly perched on their shoulders. Indeed, it was the desire to see improvement in the level of performance, investment and service which led the Government to privatise the utilities and introduce competition where feasible. A stable regulatory regime is crucial to overseeing the transition from nationalisation to competition and ensuring that consumers benefit from increased efficiency, lower prices and better quality.
I should now like to turn to the many points made by noble Lords in the course of today's debate. My noble friend Lord Kingsland and the noble Lords, Lord Borrie and Lord Ezra, have commented on the strategy of the Government for updating the framework of competition law in the United Kingdom. I have already referred to the major consultation exercise which the Government have launched—and about which my noble friend Lord Kingsland has made such generous comments—with a view to ensuring that our competition regime is equipped to deal with the challenges that face it. Perhaps I should say just a little more. The essence of these proposals is two fold.
First, we intend to replace the existing restrictive trade practices Act with a prohibition on anti-competitive agreements, such as cartels. The

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Government believe that this will be the most effective way to target genuinely anti-competitive behaviour. The new prohibition is along lines similar to the prohibition contained in Article 85 of the EC Treaty. It is a prohibition which has been adopted by many OECD countries, although the Government have been consulting on how to introduce reforms which will best suit our national interests.
Secondly, the Government propose to strengthen provisions in the fair trading and competition Acts to deal with situations involving abuse of market power. This will make it harder for dominant firms to shut out potential competitors. The Director-General of Fair Trading will be given stronger powers of investigation and powers to enable him to impose interim orders.
My noble friend Lord Kingsland and the noble Lord, Lord Ezra, have argued that the Government should introduce an EC-type prohibition on the abuse of market power. The Government recognise that there are shortcomings in the existing arrangements to deal with such abuse in the economy at large. In particular, where a business is damaged by an abuse of market power at present it is not possible for that business to seek a restraining order temporarily halting that behaviour while an investigation is carried out. But the Government remain to be convinced of the need to adopt a prohibition approach. There is a danger of inhibiting genuine competitive behaviour and stifling innovation and enterprise. We believe that the better approach is to strengthen the powers of the Director-General of Fair Trading to investigate and to provide him with powers to impose interim measures, giving a more certain and rapid response to abuses of market power. However, the strengthening of existing legislation now does not preclude the adoption of a prohibition approach at some future date if compelling arguments for it develop. The Government are calling for public debate about these issues. This does not and should not preclude action in the meantime to address weaknesses in the current regime.
The noble Lords, Lord Borrie and Lord Ezra, have criticised the delay in introducing the reforms. I believe that another noble Lord touched on the same point. The introduction of legislation is always subject to the parliamentary timetable. It is not always possible to bring forward every piece of reform as soon as ideally it would be desirable. Nevertheless, the recent consultation demonstrates the Government's continuing commitment to bring about a reform of the United Kingdom's competition law as soon as practicable. We are grateful for the support of the noble Lord, Lord Borrie, for the Government's deregulation initiative to remove unnecessary regulations on business. He rightly draws attention to the need for regulations to be fairly enforced. I welcome his support for the local business partnership scheme which the Government are actively pursuing.
The noble Lord, Lord Borrie, also mentioned the decisions last month of my right honourable friend the President of the Board of Trade on the MMC reports. My right honourable friend considered the reports very carefully. As he made clear, he also took into account
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the advice of the Director-General of Fair Trading, the views of the Director-General of Electricity Supply and the dissenting note in the MMC report. My right honourable friend the President of the Board of Trade explained the reasons for his decision in his announcement on the 24th April.
The noble Lord, Lord Borrie, suggested that trials of gas competition in the West Country have not gone well. Consumer interest is strong. About 35,000 consumers have already signed up with new suppliers—5,000 within the past fortnight. We have ensured that customers have a right to cancel should they wish to do so.
My noble friend Lord Kingsland queried the need for a system of penalties imposed by an administrative body rather than recourse to court action. The Government recognise the importance of private actions and see a role for administrative action and a court system for dealing with anti-competitive agreements.
A number of noble Lords suggested reforming those institutions currently responsible for implementing UK competition policy—the Office of Fair Trading, the MMC and the Department of Trade and Industry. As noble Lords will know, the Government are far from complacent about the state of competition law. A number of practical steps to reinforce the powers of the competition authorities are the subject of the Government's consultation paper on competition law reform. We see no benefit to be gained from a radical overhaul of the institutional framework. Of course the sceptics cannot believe that the existing tripartite structure can work without causing confusion and bureaucratic delay. But the current set up ensures a clear and rational delineation between the tasks entrusted to the Director-General of Fair Trading, the MMC, and the Secretary of State for Trade and Industry. That well-ordered distribution of roles provides the scope for the necessary checks and balances to operate. We believe strongly that the existing structure represents a healthy institutional balance, and one which operates in practice as a constructive and responsible partnership.
The noble Lord, Lord Peston, cast doubt about the effectiveness of the MMC. I cannot accept the description of the MMC that he put forward. In the overwhelming majority of cases the Secretary of State accepts the findings of the MMC. The combination of the specialist expertise of its members and the experience of its full-time staff provides a sound basis for thorough and well-argued conclusions. The noble Baroness, Lady Seear, wondered about part-time members of the MMC. For a short while until I came here, I was a part-time member of the MMC. When one has experience in business as a businesswoman and as a consumer—as we all are, as the noble Baroness said—and have to face the day-to-day problems it is a good thing to have part-time members. They do not sit in their ivory towers.
Lord Peston: My Lords, perhaps I may interrupt the noble Baroness just for a second.
Baroness Trumpington: Brief!
Lord Peston: My Lords, I was very brief. I wish the noble Baroness would not tell me how to behave, because that takes even more time.
Is the Government's position as clear as the Minister said—they are perfectly happy with the MMC? Is that what she has just said?
Baroness Miller of Hendon: My Lords, I was reading quickly. I believe I said that I could not accept the noble Lord's description. I did not use the words, "We are perfectly happy", but the noble Lord said that it was absolutely useless, or something to that effect. I said that I did not accept that. I think we will leave it at that.
The noble Lord, Lord Ezra, suggested that there should be just one energy regulator. There is of course an inter-relationship between the energy markets, and the present regulators work closely together. The major changes in prospect in the gas and electricity markets require the undivided attention of specialist regulators to assist the transition to competitive markets in 1998. After 1998 of course there may be stronger logic in having one regulator and one consumer body for those markets.
The noble Lord, Lord Ezra, suggested also that the reform proposals amount to aligning UK rules with EC competition laws. Although it is proposed that the new prohibition on anti-competitive agreements is along similar lines to the EC prohibition contained in Article 85 of the EC Treaty—a prohibition which, as I said, has been adopted by many OECD countries—the Government have been consulting on how to introduce reform which will best suit our national circumstances. We are not just seeking harmonisation within the EC for harmonisation's sake.
Several noble Lords pointed to the criticism that domestic consumers gain least of all from utility privatisations. The noble Baroness, Lady Lockwood, was selective in the example she gave of how bad it was for consumers. If I had time, I could give many of the benefits of the other privatised utilities. However, the initial thrust of competition has been directed towards the larger customers. They have benefited substantially. Since privatisation, industrial gas prices are down 48 per cent. in real terms, while electricity prices are down 11 per cent.
Competition is growing for both business and domestic customers in telecommunications where prices are down about 40 per cent. since privatisation. I have many examples of benefits in the domestic market, but I shall pass on because we do not have time for them.
The noble Lord, Lord Borrie, and my noble friend Lady Wilcox, draw on great experience within the area of consumer policy. As the noble Baroness, Lady Seear, said, we are all consumers. Consumer policy cannot be seen in isolation from our initiatives to promote competition in domestic markets and overseas. It is the stimulus of competition which will be the most effective guardian of the general consumer interest over the longer term. The Government recognise that consumer confidence is also vital.
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Consumers need to have the legal rights necessary to ensure that contracts are fair and enforceable. In order to do that, the Government promote better information for consumers to help them make informed choices. We also support voluntary arrangements where they can be effective in promoting best practice for consumers. On the other hand, as the noble Lord, Lord Borrie, and my noble friend Lady Wilcox said, the world is not a perfect place. We do not hesitate to use legislation and formal regulation to protect consumer interests where that proves to be necessary.
As the noble Lords, Lord Borrie and Lord Ezra, have said, the trading standards service plays a vital role in protecting consumers by ensuring compliance with the regulations by businesses. By providing an important advisory information service, it assists consumers to make an informed choice, and of course businesses also benefit.
The noble Lord, Lord Haskel, drew attention to the need for good regulation. We agree. By good regulation we mean regulation in which the costs arising are outweighed by the benefits. That is why the Government now require all regulatory proposals to be assessed for their costs as well as for their benefits.
My noble friend Lord Dixon-Smith suggested that ethics are better than regulation as a protection for the customer. The Government believe that there must be a framework of legislation which provides necessary protection for the public. The purpose of the deregulation initiative is to ensure that departments adopt a more rigorous approach to regulation. That means undertaking a thorough analysis of regulatory proposals to ensure that the benefits justify the costs and all those affected by the proposed regulations have an opportunity to comment.
The noble Lord, Lord Blease, referred to the General Consumer Council of Northern Ireland. We agree that it works well. Here we have the National Consumer Council and the Office of Fair Trading as a fair balance.
The noble Lord, Lord Desai, put forward an interesting analysis. If he will forgive me, we shall reflect upon his suggestions.
This has been a stimulating occasion. The Government are certainly not complacent about the challenges facing them in ensuring that the regulatory system allows business to thrive while ensuring a proper level of protection for consumers. We certainly do not dismiss the need for adequate regulation.
When it comes to protecting the consumers' interest, regulation will often be a blunt instrument in comparison to the rapier-like qualities of competition. It is, I am sure, vigorous competition which will serve as the best guarantee of the consumers' interest, and it is competition which the Government have consistently and successfully striven to promote within the British economy over the past 17 years.
5.19 p.m.
Lord Borrie: My Lords, perhaps I may express my considerable gratitude to the Minister for explaining the broad principles of government policy in relation to

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consumer interests, and for replying in such a full and complete way to the points made on all sides of the House.
There are just two things I should like her to take beyond today's proceedings. The first is to suggest that the important consultation paper that the Government have produced has not been mentioned adequately. I wonder whether the Minister would take away the suggestion made by my noble friend Lord Peston that the Government might find time for a debate on that subject so that the Government's consultation process will have the benefit of having included within it the thoughts of Members of this House.
The other matter that I would like the Minister to consider was raised by the noble Baroness, Lady Seear, in relation to the structure of MAFF and its attempt to represent industrial farming interests as well as those of the consumer, about which many of us are concerned, and the structure of the regulatory bodies for the privatised industries. A number of noble Lords have mentioned the words "profusion" and "proliferation". Obviously, as the structure of the industry changes the old regulatory structure may no longer be appropriate.
Again, I thank the Minister and all noble Lords who have taken part in the debate. I beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.

Railway Privatisation
5.20 p.m.
Lord Clinton-Davis Lord Clinton-Davis rose to call attention to the effects of privatisation on the interests of passengers, the carriage of freight by rail and on Britain's railway system; and to move for Papers.
The noble Lord said: My Lords, I wish to mention at the outset that the final Railtrack prospectus was not available in this House until late yesterday afternoon. I regret that because Ministers have said that there were disparities between what was said in the pathfinder prospectus and in the final prospectus. It is a little difficult to search through more than 250 pages in order to find those disparities.
This Government are purblind to the disenchantment, indeed the antagonism, of the electorate towards them. They are unable to comprehend the messages of the Staffordshire South-East by-election and the council elections. They plough on with their discredited policies, pursing their own course of self-destruction. Privatisation, or rather the fragmentation, of the railways plays a significant part in all of that.
Of course, while that may redound to the electoral advantage of the Opposition, my case is that privatisation is against the interests of the nation and of the transport system in particular. There are better ways of dealing with the chronic underinvestment in the railways. No doubt today the Minister will assert that many people are expressing interest in Railtrack shares. But he would be very unwise to equate the readiness of
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people to accept the sweeteners that are on offer—an obvious inducement—with the propriety and popularity of the policies in the nation at large.
I wish to deal first with the contradictions that have accompanied the proposals to privatise Railtrack. I believe that it is a company which is being privatised before it is ready on any showing. What have been omitted from the prospectus are the assertions which were made repeatedly by Ministers in this House and another place during the passage of the Railways Bill in 1993 that the Government had no intention of privatising Railtrack in advance of British Railways.
At that time the then Minister said:
"Outright privatisation of all the railway is not on the agenda for the foreseeable future, not least because subsidy from the taxpayer is needed, and we have made it clear that we shall continue to provide that".—[Official Report, Commons, 2/2/93; col. 160.]
Of course, the Government have gone ahead in completely the opposite direction with hardly an explanation given to either House.
Ministers said that there would be no share options for Railtrack directors. The latest assertion was on 23rd October last year. Now we discover that directors are to double their salaries—that is not unexpected because it usually happens, and I suppose that "doubling" the salary is to put it pretty low—and that that will be paid in shares. That is the complete reverse of what Ministers said.
My noble friend Lord Carmichael will recall that during our long debates we were told repeatedly that there would be no problems about a unified timetable. Then we had the fiasco of a 400-page revision due to errors and a further 91-page correction due to further errors. What did all that mess cost?
Without any or any proper explanation, they deliberately misled Parliament, just as with such bad grace they accepted an amendment of this House to enable British Rail to bid for franchises. The result, however, is that British Rail has been denied the opportunity and we have a French water company instead.
We have a motley group of bidders, some of whom are distinctly dubious. Stagecoach, for example, is a company which has had 22 references made against it to the Monopolies and Mergers Commission. Compagnie Gànàrale des Eaux, the French water company to which I have referred, was described by a French judge as one of the two most corrupt companies in France. As for Resurgence Railways, Ministers were happy to surrender Great Western to a failed double glazing salesman. Had it not been for the vigilance of the Opposition that bid is unlikely to have been thrown out and Great Western management able to take over.
James Sherwood—I do not class him with the others—a short time before being handed the East Coast mainline said that the franchising formula was a formula for a no-investment railway. Is that to be his formula? We must remember that that line was so successful under public ownership that it cross-subsidised the rest of the InterCity network.
All those companies realise that what the Government have done in collusion with Mr. Horton, whose track record in BP was hardly enlightening and successful, is to turn Railtrack into what is essentially a property company. That is how it has been described in seeking to sell the company. A share shop described it in the following terms:
"essentially a property company and the land that Railtrack will own could be regarded as one of the most valuable pieces of real estate in the United Kingdom".
It goes on,
"the track passes through valuable commercial and industrial sites all over the United Kingdom…It is ripe for exploitation".
That is how the Government are selling Railtrack.
To conjure up interest in the Government's flawed policies of fragmenting the railway system they have chosen to resort to some pretty questionable tactics, including the issue of a prospectus which in a number of material respects is misleading. I invite the House to consider only some of the dodges. The overall cost of preparing for privatisation of Railtrack has been more than £1 billion. Not a single new railway line, not a single new signalling unit, not a piece of extra track and not a single new train has arisen from that. The subsidies to be paid by the taxpayers to enable the private companies to function are of the order of £2 billion. That is taxpayers' money. Perhaps in the due course of time we shall find that they were even more generous.
Then we have the sweeteners. Sweeteners which were devised to sell off public assets are a further massive charge which the taxpayers must pick up. They are excessive by any standards. Railtrack is being flogged off for £1.5 billion when experts calculate that its true value is far in excess of that. Private investors are to receive a 25 per cent. return on their shares in the first year. No wonder they may be interested! The calculations deployed by the Government and their allies are clearly faulty. But never mind, the taxpayers are there to be milked.
Then the Government are prepared to write off £1.46 billion of debt, adding to the £22.55 billion which has been written off for privatisation during the years. We never hear from the Government Front Bench about those write-offs. We never hear about those charges to the taxpayers. Incidentally, those write-offs vastly exceed the amounts which have been injected into the industries which have been privatised by the privatised companies. Again, that has been done at the taxpayers' expense.
I point out that £69 million-worth of profits were earned while Railtrack was in public ownership. Those sums are now to be transferred to the shareholders. Where did they come from? They come from the maintenance programme.
Then we have the substantial bonuses to which I have referred already. They are to be paid to the leading executives. On what basis? It is on the basis that they maximise short-term profits at a time when the railways need not the maximisation of short-term profits but long-term investment.
There is then the question of track access charges. In order to achieve that short-term goal, they are clearly set far too high. As my honourable friend, Clare Short, said when she led the debate on this matter in another place, it costs £175,000 in track access charges simply to put one passenger coach on the railways. She compared that with the £300 to £450 in vehicle excise duty for a coach to be put on the roads at a time when, for environmental and economic reasons, it is vitally important to transfer more freight and more passengers to the railways.
What of the prospectus? There is the extraordinary letter written by Mr. John Welsby, the Chairman of British Rail, on 2nd April to the Department of Transport. He said that the draft prospectus did not give a:
"fair view of the vulnerabilities"
of the business or the powers of the regulators over Railtrack investment plans. In relation to Railtrack's performance he said that BR had:
"serious concerns regarding the service offered on the line in and out of Euston".
He went on to criticise the draft for omitting reference to a "significant downturn in performance" of a number of train operating companies over recent months. He thought that that was highly material information for investors, but it was not in the prospectus. I could not find anything in this prospectus about this but perhaps the Minister will correct me if I am wrong. However, it is rather odd that the prospectus is only made available to this House just a few hours before we debate this matter.
Railtrack must pay penalties if it breaks its agreement deliberately or otherwise with the railway operators. There are some matters within its control and other matters outside its control; for example, the weather and perhaps even industrial action. A sum of £75 million per year is provided over and above the usual access charges to cover such contingencies. But any performance improvements on the part of Railtrack will not match the amount paid for in penalty payments. Indeed, in 1995—and this is an extraordinary fact—Railtrack paid £80 million in penalty payments, which is £5 million more than the amount allowed for in the prospectus in relation to penalty payments. That appears on page 66 of the prospectus. Those are a few of a number of serious issues which can be raised with regard to the prospectus.
What other revelations are there in that remarkable document? It says that Railtrack's passenger access is unlikely to benefit materially from any increase in passenger use. That is not misleading but it is an extraordinary assertion. Therefore, what incentive is there for Railtrack to assist in that vital element of privatisation and the running of our railways? It goes on to say that the opportunities for expanding rail freight operations are limited. How is privatisation designed to stimulate passenger and freight use of the railways?
How will investment be boosted? It is certainly needed. Railtrack proposes a £10 billion investment programme over 10 years. That is £2 billion less than

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the current investment proposed by British Rail. That is the benefit that we are told we shall derive from privatisation.
I shall not say too much about safety, but a deteriorating infrastructure does not enhance safety. Today, 50 sections of track on the West Coast mainline are subject to speed restrictions which did not apply under British Rail when it was handed over to Railtrack. Railtrack has been issued with two improvement notices by the Health and Safety Executive which expresses serious reservations about some aspects of Railtrack's policies.
Finally, I turn to our alternative policies which are set out in detail as an annex to the prospectus and by the Shadow Secretary of State—she will be Secretary of State—in her speech of 29th March, which is also annexed to the prospectus at page 101. I have only time to paraphrase what she then outlined.
Labour will use the extensive powers which are contained in the Act in relation to the regulator; the £2 billion subsidy and the power to acquire ownership to reintegrate the railways under a renewed British Rail; and the public and private partnership scheme, of which I spoke quite extensively in yesterday's debate, to enhance investment in rail and to increase passenger and freight usage.
The rail regulator is the most potent of all the utility regulators. He has the power to effect changes in the current regime. He can change Railtrack's obligations and its priorities so that the interest of the public rather than the shareholders can be reflected.
Through legislation we propose to make the rail regulator answerable to the Secretary of State. Through those means, we shall be able to control Railtrack's economic behaviour in a number of important ways, including the way in which investment spending is undertaken. We shall establish a different regime for access charging. We shall limit the possible disposal of extremely valuable land assets and we shall give consideration if necessary to clawing back virtually all income derived from property disposal.
We shall make Railtrack answerable to the national interest. We shall not allow it simply to search for short-term profits. That will enhance realistically the prospect of greater investment in the rail infrastructure and develop greater use of rail, which is what the country requires. It would have been better not to have embarked on the ridiculous exercise of privatisation, but through the means that I have outlined briefly we shall seek to remedy the curse that the Government have bestowed upon the nation. My Lords, I beg to move for Papers.
5.37 p.m.
Lord Astor of Hever: My Lords, I am delighted that the noble Lord, Lord Clinton-Davis, has given the House the opportunity to discuss this important subject. I feel that the noble Lord has scored something of an own goal as this is a privatisation of which we on these Benches can be proud. I believe that Railtrack's stock market debut on 20th May will usher in a new era
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Privatisation should be a colossal improvement on British Rail as regards which we have all experienced years of lumbering decline and low staff morale.
Rail privatisation will bring entrepreneurial ideas, marketing flair, innovation in services and access to private capital which will improve quality and choice in the range of services available to customers. Most important, it will change fundamentally the culture of the railway industry.
The first batch of new-style train operating companies has been running for only a few weeks but already those companies are brimming with ideas of how to improve efficiency and service, free from the dead hand of "state-producer" culture and Treasury constraints. Privatisation has transformed large parts of our national life and has delivered dramatic improvements in a wide range of transport industries; for example, long distance coach and bus companies, road haulage companies, British Airways and the British Airports Authority.
Privatisation will improve the management and performance of British railways as it has done in those and so many other industries. In terms of the quality, quantity and variety of those services, firms perform far better in the private sector. In 1979 the nationalised industries were losing £50 million every week. Privatised companies now contribute £50 million to the exchequer every week and are able to compete abroad and generate overseas earnings for the United Kingdom economy.
Of course, the Labour Party has opposed every privatisation since 1979 and is trying to derail this privatisation. The honourable Member for Oldham West began by saying, in effect, that no sane investor would contemplate buying Railtrack. But when he was switched by the Leader of the Opposition from transport to employment his successor, the honourable Member for Birmingham Ladywood, insisted that Railtrack was, in fact, full of jewels and was being flogged off at a price that "ripped off' the taxpayer. It must have been demoralising for her when it emerged that two million retail investors had registered their interest in buying Railtrack shares, as the noble Lord, Lord Clinton-Davis, admitted.
It must also have been demoralising for the four shadow Cabinet members sponsored by the main rail union, the RMT. The leader of the RMT expects complete re-nationalisation from an incoming Labour government, in the unlikely event that this were to happen. The honourable Member for Birmingham Ladywood has promised all sorts of evil things should Labour gain power. In the absence of a policy, the Labour Party is reduced to making scaremongering threats. However, I wonder whether Railtrack will be a priority when it is seen that privatisation delivers a better service. British Rail has become weighed down by its own unionised culture and monolithic structure. As the Economist wrote last year,
"waste remains endemic; when a railway in a small country employs 35,000 civil engineers, something is amiss".
Rail has been notorious for its anti-consumer culture: queues, crowds, and poor communications; indeed, 40 per cent. of all telephone calls are unanswered

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within 30 seconds. How many other companies neglect potential customers to such an extent? Now rail operators will have to co-operate with each other to meet the tough, new performance standards that the regulator has set to improve the services. TOCs (train operating companies) will be responsible for ensuring that calls about their services are answered promptly, even if they come through to another TOC. That means that train operators will have a shared interest in producing a fast and efficient national TEB (train enquiry bureaux) network.
I understand that the RailDirect facility will be upgraded to handle several million extra calls a year and that steps are being taken to establish a single, national telephone number for train inquiries to come on stream later in the year. If local lines are busy, callers will automatically be switched to a TEB elsewhere in the network.
I am looking forward to new private sector management skills being introduced which should transform the attitude of those working in the industry. We should see upgraded facilities for business class travellers, improved facilities at stations, with particular emphasis on passenger security measures, improved access for disabled passengers and passenger lounges. We should also see dedicated bus links to selected stations, improved customer information and lighting on stations, refurbished rolling stock, faster services and extra ones on Sunday. I was delighted to see that the National Express Group plc aims to introduce on-board check-in facilities on the Gatwick Express for airline passengers in Club Class.
Rail's share of the freight market has been in decline since the 1920s. I believe that that decline can be checked and reversed through privatisation and liberalisation of rail freight services. In a few years, customers will be enormously grateful for this privatisation. It will focus operators' minds on the need to treat consumers as customers rather than their being made to feel as though they are an encumbrance to the running of the railway, instead of the reason for it.
Therefore, I feel that privatisation will have very positive effects on the interests of passengers and the carriage of freight by rail. I congratulate Her Majesty's Government and look forward to a railway system that provides an improved service at lower prices.
5.45 p.m.
Lord Methuen: My Lords, I am pleased to be able to support the noble Lord, Lord Clinton-Davis, in today's debate and I thank him for his introduction to it. I come to the debate with a strong feeling of scepticism at the Government's attitude to rail privatisation. However, listening to the previous debate, I was struck by how much of what was said is applicable to this debate and the subject of competition.
I read the debate in the other place on 17th April. One phrase stands out to me, which I shall paraphrase:
"Railtrack's assets will increase enormously [by investment in stations, land and other infrastructure] to the benefit of shareholders who will buy into Railtrack in the coming months".
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Noble Lords should note that there is no mention of any benefit to the travelling public or freight operators.
A recent television programme suggested that Railtrack's investment in infrastructure is vastly underestimated at £1.4 billion per annum. The York Report suggests that a figure of some eight times that amount—that is, £10 billion a year—would be nearer what is actually required. It has been suggested by the consultants, W.S. Atkins, that a significantly higher figure would actually be relevant. The lack of investment in maintenance may well result in an insuperable maintenance backlog, speed restrictions and line closures. Indeed, those have already been mentioned as being applicable to the West Coast main line. The speed restrictions themselves are likely to make lines less economic and hence drive away would-be passengers.
The railways used to pride themselves on their safety record. Now we have Euston Station (the hub of the West Coast main line) closed by the railway inspectorate for emergency maintenance as the track is too dangerous to use. Then we come to track renewals. A figure of less than 1 per cent. per year has been suggested, resulting in perhaps 125-year life. British Steel and long-welded rails may have improved track life but that should be compared with the 30 to 40 year life expectancy on the Continent.
Perhaps I may now turn to the rail operating companies. It is good to hear the old names—for example, the Great Eastern, the Great Northern and the Great Western—coming into use again. I hope that they will succeed in living up to the traditions of their forebears, though I hope that the suggestion of a Member in the other place of reverting to Brunel's seven-foot gauge is not taken up! It is also suggested that local communities might take over the running of certain marginal branch lines. That harks back to the inter-war years when an enterprising railway engineer, Colonel Stevens, ran a series of rundown country railways using dilapidated, second-hand equipment, all of which I believe has now disappeared. I hope that that is not what our customers will get in such an instance.
We need a proper integrated and co-ordinated railway system, with guaranteed connections and consistent timetabling. Recently Midland main line suffered a major disruption to service, leaving its timetable in chaos. That did not prevent Regional Railways dispatching my local service five minutes before the train from St. Pancras arrived. The regulators in large power-operated signal boxes, such as Derby, have visibility of operations over a wide area, but Regional Railways do not connect with Midland main line. That is the sort of frustration which privatisation is bringing and which a recent European Union Green Paper on transport attempts to forestall by the linking of long-distance and local services. It is the sort of thing which really drives people back into their motor cars.
I have said nothing so far about freight traffic. In general we suffer in this country from having too short freight hauls to make railway freight economic at distances of less than about 200 kilometres, although there are obviously exceptions for certain train load

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traffic. I hope that increasing use of the Channel Tunnel to convey freight to and from Europe, and the use of piggy-back vehicles may have a positive effect, but I am not hopeful of any significant transfer from road to rail. That opinion is supported by the almost total lack of any freight handling facilities at even the largest stations.
I wish to make two further points. First, I refer to the almost total destruction of the British railway rolling stock industry due to the lack of orders for new stock, caused by the hiatus of privatisation. Not even the antiquated "slam door" stock in the south east has been replaced. Does this mean that we have lost yet another industry in which we were supreme to Europe and to the Far East? Secondly, can the regulator do something about the ludicrous situation of rail vehicles being carried by road to maintenance depots due to the excessive charges levied by Railtrack? It must be obvious to everyone that there is something seriously wrong with our transport system when something like that occurs. What the railways need is long-term investment in infrastructure and rolling stock. I hope that privatisation will bring that about. We shall see.
5.50 p.m.
Baroness Castle of Blackburn: I wish to congratulate the Government on having at last, after 17 years, produced a consultative document, Transport—The Way Forward. It is very green. The delicate green of the print is so faint that one can hardly read it. Of course it does not commit itself to anything. Oh no, after all there will be an election within a maximum of 12 months and that would be rash for this Government.
It is admitted that a year ago, after 16 years of Conservative Government, the present Minister of transport's predecessor, Brian Mawhinney, said there must be a national debate on transport. Therefore they went out to other bodies and there were consultations and the rest of it. We are told that this marvellous document highlights the areas of greatest concern. Some of us could have done that when the Government first came into office, and indeed we were doing so. Those areas of great concern have hardly been shy violets. The public have been screaming aloud about the growing congestion on our roads, the deliberate running down of our railways by this Government, and the growing menace of pollution, and absolutely nothing has been done.
I think the House will agree that I am about the most modest Member of it, but I cannot help contrasting the concern of this Government for transport problems—which we all admit are haunting us—with my own. Transport Policy is admittedly a much smaller document. I produced it after seven months, not 17 years and it is a White Paper. There is not a bit of green on it anywhere, because we were laying down policy in it; we had given thought to it before we entered Office. We discussed the matter and we produced documents. Any intelligent politician will have consulted on, argued and thought about transport problems in this congested little island ever since he or she entered politics. Therefore we were ready with our own approach. To cap it, the
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White Paper was followed 10 months later with the largest and most comprehensive transport Bill in this country's history.
Our approach was to say that because we are all living on top of each other and because the precious green areas of our country are shrinking all the time, we must have an integrated transport policy. We must cast aside the follies of the Tory Act of 1962 which stated that road and rail must be in competition to see which survives. We are still dealing with the result of that approach. I could not help but contrast not only the sluggishness of this Government in facing up to these problems but also the whole philosophy with which they have approached them. The Government are utterly confused about transport policy. Of course you cannot have such a thing as an integrated transport policy, which is only really possible if the major units are under public ownership! No, that will not do, they must have competition and so they must fragment the system.
I also cannot help contrasting the speed with which they are now pressing ahead with rail privatisation policy with the slowness with which they failed to produce a comprehensive transport document. Does not the motivation stand out a mile? The Government beg us in this transport policy "greenery" to have a consensus. We must think about it; we must not rush it; certainly we must not decide anything this side of the general election in case anything we decide is a bit unpopular with someone. Heaven knows the Government are desperately in need of any votes they can scavenge from anywhere! I sympathise with their mood but would you not have thought that common decency would have made them say, "OK, we cannot go ahead with unpopular decisions that might be involved in an integrated transport policy, so we shall hold up rail privatisation as well, instead of indecently pushing it ahead as quickly as possible." They are fragmenting, not integrating. They are chopping up the rail network into little bits and selling them off to the highest bidder and then dare to talk of a comprehensive transport policy. Why have they done it? They have done it, of course, to ditch the "reds". It is a combination of dogma and spite. The only motivation behind the present haste in selling off our rail network bit by bit is to present the next Labour government—which they know is inevitable—with a problem. It is a case of, if we cannot save ourselves let us at least make sure we do them mortal damage.
The Government may ask what our policy is. Of course we would not have sold it in the first place. It is true—and the Government know it—that they are planning in the coming general election the most savage and the most ruthless propaganda campaign against the Labour Opposition. If we say we shall buy back anything, they can then retort that people's tax will go up by sixpence in the pound, or any other figure they care to conjure up in their fevered imaginations. That is the tactic they will use to put us on the spot, and never mind whether they put the country on the spot too.
I remind the House of some words that I heard come ringing over Radio 4 this morning. They were spoken by no less a stern authority—a man of stern integrity—than Sir Edward Heath who said,

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"The job—the intention—of privatisation is not to provide a service but to make profit. In the process, privatisation may provide a service for some, but not all. That is the automatic result of any economic analysis".
He went on to warn his colleagues. He continued:
"The Government must decide to draw the line and stop carrying on in a dogmatic manner, believing that whatever they do in that sphere is correct. The public have come soundly to the conclusion that it is not correct, which is why the Government are suffering in many ways".—[Official Report, Commons, 7/5/96; col. 1320.]
That speech was made in a debate on the Civil Service pension scheme. He was pleading for the protection of our Civil Service. But he also drew a line. He said that there is a major field for privatisation probably in the production of goods but services are different. There is no doubt that the public would agree with him.
The Government know that there is no majority among the people of this country for this rail privatisation. That is why they want to get it through before they lose power. I shall tell you why there is no support. The public are not fools. They know that the Government's sums over this whole unhappy business do not add up. Every time we make a caveat, or enter a little warning to the Government or to the people at large that prices, charges, fares will go up, the reply is, "Oh no, that will all be regulated. We shall strictly control them". We then say, "You'll be cutting rail services," and the reply is, "No, every franchise will contain a commitment to maintain services". So where will the profit come from; or is it being done out of love for their fellowmen?
It is true that shedding labour is already going ahead—that one great panacea for everything in this Government's philosophy. I point out to those who ask, "What about taxation?" that the whole aim of privatisation is to make a profit for the shareholder out of the sacking of thousands. And who has to pick up that bill? It is the taxpayer. That is why public expenditure today as a percentage of gross domestic product is just a little higher than it was in 1979 when we left office. It is higher, despite all the cuts.
As one speaker has already pointed out, the Government are concentrating on short-term profit; and as long as they gain that, it is all right if a chief executive or two fails. He can always retire gracefully with a £1 million pension a year. The Government cannot lose. But the ordinary man and woman in the street can. Public sense is the answer to this mysterious arithmetic which does not add up.
On closures, the Government sense that the only way to make profits when maintaining services on the operational lines is to trim off the less economically rewarding parts.
I strongly support the powerful speech made by the noble Lord, Lord Clinton-Davis, in opening the debate. It is unanswerable. I do not have his mastery of all the figures and details, but I have a knowledge, and so have the public, of what this lot are up to, and the aim of the Government's privatisation stampede. We can see it happening. When the Government have broken the system up in the name of competition, they allow private firms to stick it together again until a public monopoly
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has become a private one. That is the whole idea. I have to admit that they are very skilful butchers. The swiftness of the hand deceives the eye of the public.
I asked a Question in this House not many weeks ago. I asked why the Government, who had broken up British Rail Freight into three companies, were selling them all to the same bidder in the same deal. The answer I received—
The Earl of Courtown: My Lords, I apologise for interrupting the noble Baroness, but she is now on the 15th minute, and it is a debate in which speakers are time limited to 13 minutes.
Baroness Castle of Blackburn: If you had not protracted it, I was about to come to a passionate climax, as is my wont. I must, therefore, just set the scene a little again. It is not my fault if that takes another minute.
The reply that I received was of powerful significance. The reason for agreeing to sell the three companies together, when the Government had said that the whole aim of privatisation was to break them up and achieve some competition, was the market's strong preference for the combined sale. They are the believers that the market über alles must rule; and the market always prefers a private monopoly. We are seeing that in electricity, water, and all over the place.
I suppose it is too late to hope that the Government will change their minds. I hope that the public will see through their manoeuvres; and we on this side of the House will help them to do so.
6.7 p.m.
Lord Harding of Petherton: My Lords, I am very grateful to the noble Lord, Lord Clinton-Davis, for initiating this debate. It enables me as a regular passenger on Great Western Trains to praise the improved performance of this privatised line. I am afraid that I do not recognise from both the noble Lord, Lord Clinton-Davis, and the noble Lord, Lord Methuen, any relation to my experience in practice. I am always amused by and lost in admiration for the noble Baroness, Lady Castle of Blackburn. I wish that I could speak as well as she did. However, to be quite honest, I believe that she went into the realms of fantasy in her speech.
I travel daily from Taunton to Paddington and back and have seen the benefits of privatisation on Great Western trains. It was one of the first lines to be privatised. I have been travelling on this line for the past five years. During the first three-and-a-half years the service was disrupted by frequent delays and my train was often late. During the past 18 months, in the run-up to the selling of the franchise on 5th February of this year, punctuality has improved tremendously. In the short time that Great Western trains has taken over from British Rail, the quality of the conductors has changed dramatically for the better. Although there were some who were always good, there were those who were not; and the latter have obviously been moved to other jobs.

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Punctuality has also improved even more since the privatisation date. Great Western has given me its own figures to back up my own personal experience. Punctuality for the four week period from 1st April to 28th April this year was the best recorded performance since the launch of the Passenger's Charter in 1992. The figure of 95.4 per cent. of all trains arrived on time or within 10 minutes; and 99.8 per cent. of its 3,500 trains in the timetable were operated. Great Western charter targets are 90 per cent. and 99.2 per cent. respectively.
My wife travels to London occasionally on the Sherborne to Waterloo line run by South West Trains. That is the other line which was privatised first; there were two on 1st February. The introduction of new trains—they are called 159s—three years ago under British Rail management made a great difference to the comfort of the journey. However, the punctuality was not at all good until 18 months ago when it started to improve, as it did in my experience on Great Western Trains. That was obviously due to the impending sale of the franchise. Since 5th February she has travelled three or four times to Waterloo, London, from Sherborne for the day. She tells me that her trains were punctual to the minute. Not only that, but the attitude of the staff has improved tremendously. The air conditioning on the new trains has given much trouble. Last summer my wife was nearly boiled alive on one journey. South West Trains tell me that the company will spend a considerable sum to solve the problem. Before privatisation, the investment was not available to do anything about it.
As a bus operator, Stagecoach, which owns South West Trains, is committed to a number of dedicated bus links to selected South West Trains stations. I see no fear of abuse of monopolistic power in those arrangements. That has been one of the sound bites which the Opposition party have used against a bus company owning a rail franchise. Surely that is what is meant by a co-ordinated transport system.
Indeed, I hope that Great Western Trains in future years will be able to improve the transport arrangements in my part of the world. At the moment I take half an hour to go by car from Langport, where I live, to Taunton station. I then take about 10 minutes travelling back the same distance on the train, passing 500 yards from my house. If there were a station at Langport—as there used to be before Dr. Beeching did away with it—the pollution caused by my car would be removed. That must be the case for several other people. Lord Beeching went a bit too far in shutting stations. Maybe it made sense in those days, with the monolithic, inefficient, union-dominated organisation which British Rail had become. Somerton, a few miles to the east, also had a station before Beeching. I should have thought that it would pay to resurrect the stations and run shunter trains to Taunton in the west and Castle Cary in the east, to connect with the mainline trains. Little shunter trains operate in other parts of the country, stopping at small places. I have travelled on one in East Anglia.
Some stations have reappeared. Templecombe, which is only a large village on the south-west line, a few miles east of Sherborne, had a new station some years ago. That was due to the initiative and energy of some locals. After a determined campaign, they persuaded British
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Rail to rebuild the station. I believe that they raised significant finance to help. The initiative was hard to achieve with British Rail. It should be much easier to persuade a privatised commercial operator to do that kind of thing.
Almost everyone, or everyone if they are honest, finds a car convenient. It gives freedom and flexibility. There is a limit to the amount which railways can contribute to the slowing of the ever-increasing number of cars on our roads and in our cities. However, they can contribute much more than they have done up till now. I believe that with the impending privatisation of Railtrack and the franchising of train operations, we shall have a far more efficient, passenger-friendly and responsive rail network than we have ever had in British Rail. By efficient commercial management, better marketing and making railways a better way to travel, the privatisation of British Rail can do much to ameliorate the bad side effects of the car.
6.13 p.m.
Lord Haskel: My Lords, I congratulate my noble friend Lord Clinton-Davis who quite rightly calls for attention to be drawn to the damage inflicted by railway privatisation. Before considering that in detail, it is important to understand why the process of privatisation is damaging. The reason is quite simple. The process is designed to break up the system and smooth the path of entrepreneurs to run the fragments. The proof of that is the shameless way in which the Government reneged on the right of British Rail to bid for franchises, as my noble friend Lord Clinton-Davis pointed out.
The Government's criterion of success is not an efficient and effective railway system which the country needs, but whether profitable private businesses can be created from the franchises. In addition, it is not clear how the isolated decision-making of the various franchisees can work towards a national policy objective. Each franchisee is quite rightly concerned with its own sectional objectives. Perhaps my noble friend Lady Castle is right: the final objective is to stick it all together again and have a private monopoly.
Perhaps the Minister can tell us how the railways can be given an overall strategic direction when the system of railway privatisation chosen by the Government takes us away from an overall transport policy. Surely the aim must be to have a seamless public transport network which meets social and environmental, as well as economic objectives. That could have been possible with Railtrack in the public sector, but it is very different with Railtrack as a private company.
Remember, the main competition to rail is transport by bus, car, truck and aircraft—not other railway systems. Privatisation of Railtrack puts the railways at a considerable disadvantage in competition with the car. As my noble friend Lord Clinton-Davis told us, under the privatised structure it costs £170,000 in track access charges to put an extra passenger coach on the railway lines. He told us that to put an extra coach on to the roads costs between £300 and £400 in vehicle excise duty. Does that mean that the taxpayer is subsidising

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road vehicles? Yet we never hear of the taxpayer's subsidy to road vehicles, all we hear about is the taxpayer's subsidy to railways.
Freight by rail is at a similar disadvantage. Access charges paid to Railtrack are up to 60 per cent. of the revenue paid by the customer, whereas access to the road system costs about 20 per cent. of the revenue.
So how will that affect the passengers? First, the way the railway system has been split up bears little relation to the way passengers use the railway. I agree with the noble Lord, Lord Methuen, that most users want to buy a national, seamless network. However, since the national campaign has been run down, InterCity sales have begun to stagnate. The noble Lords, Lord Harding and Lord Astor, are mistaken in speaking of early signs of improvement. The figures reported last week are that punctuality in all but seven of the 25 different service groups had fallen. Also, trains are now more likely to be cancelled. Even East Coast mainline—the showpiece—has had to report more late trains. If passengers are to be attracted back to the railways, punctuality is surely one of the most important elements.
The noble Lord, Lord Astor, spoke of how the telephones will be answered more quickly. That has been overtaken by new technology. Contrast it with the way information technology has revolutionised the commercial aspects of airline operation and its timetabling. The French are making systematic attempts to build an IT rail information system which they are selling world-wide. We hope that we will benefit from it.
As other noble Lords have said, the future success of the railways will depend on investment. Can the Minister explain to us what are the obligations of the franchisees to invest in new trains and what are the penalties if they do not do so?
In the debate that took place in another place on 17th April, the Secretary of State for Transport spoke of lavish plans for new investment in rolling stock, but said little about actual commitments. At cols. 730 and 731 of Hansard, he said:
"Great Western plans to introduce more trains".
Gatwick Express plans similar improvements. Each new franchisee plans new investment in the network. National Express plans to have completely new rolling stock by 1999. The franchisee on the InterCity East Coast line plans to spend more than £17 million. The only obligation to invest is for the South Eastern franchisee with a 15-year franchise. With seven-year franchises I can understand the operating companies being reluctant to make a firm commitment to supply new equipment—equipment that should last 15 to 20 years—unless, of course, there are sweeteners in the form of subsidies or property, about which the noble Lord, Lord Clinton-Davis, told us. Unless these investments are made, the major impact of railway privatisation will be to squeeze the maximum amount of life out of the existing equipment—with all the implications that has for safety and punctuality.
The sad thing is that, if there should be orders for new trains, our train manufacturing industry has virtually disappeared. It is geared up to deliver only
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small orders and cannot deliver trains quickly, as a seven-year franchisee would require. The noble Lord, Lord Methuen, is right. The Government's muddle over privatisation has destroyed our railway rolling stock industry. Shall we see in railways a repetition of the occurrence in the bus industry following privatisation, where very little is being invested in new buses and the nation's bus fleet is dwindling and ageing?
The adequacy of money for investment in Railtrack is equally uncertain. To use Railtrack's own words, it needs £800 million a year to maintain the track in its present state. Renewals require £570 million a year, making a total of £1,370 million. From reading the prospectus, it seems that £1 billion a year could be available for investment. Is that why the word "electrification" does not appear in Railtrack's 10-year investment plan?
As my noble friend Lord Clinton-Davis said, the biggest loser in all this is the taxpayer. The massive costs of fragmenting the system, write-offs, and preparing it for privatisation—nearly £2 billion—is greater than the £1.75 billion the taxpayer should receive for Railtrack. Added to that, sweeteners in the form of taxpayers' property being handed over with Railtrack are enormous. Already land around King's Cross and elsewhere, handed over to the private sector with Union Railways for the channel rail link, has been valued at well over £1 billion.
In March 1995, Railtrack's property was valued at £1.4 billion. The importance of the property element in Railtrack is demonstrated by the fact that it employs 1,100 staff preparing development strategies for 14 of its largest stations. The Government are deliberately ignoring that and using it as a sweetener, in exactly the same way as they ignored the retail potential of airports when the British Airports Authority was sold off in 1987. Retail space now brings in £350 million a year to the airport authority.
Certainly the Government have introduced a property claw-back mechanism; but it is entirely inadequate. Railtrack will be able to keep 100 per cent. of its property income up to £1 billion over the next six years and the regulator will then be able to claim 25 per cent. of the excess. That will be passed on to the privatised train operating companies and not to the taxpayer. Surely the right thing to do here is to plough all property profits back into the railways.
Of course there is investor interest in the flotation of Railtrack. Everybody can recognise a bargain. You can always sell something if you reduce the price enough. That has been the history of previous privatisations. Electricity was sold for £15 billion and is now worth nearly £35 billion. The price of Railtrack has been cut and extra dividends added to the point where the effective yield will be about 25 per cent. in the first year and 7 per cent. in year two. "Priced to go", as the brokers say. I asked a broker about Railtrack being a long-term investment. His response was: "Would you invest in a regulated property business?"—confirming the view of my noble friend Lord Clinton-Davis. It is a very attractive deal to the short-term speculator.

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That is to be the basis of future investment in our rail infrastructure system. Once again we are going to have shareholders benefiting at the expense of taxpayers, due to the dogma and incompetence of the Government.
6.25 p.m.
Lord Cadman: My Lords, I add my thanks to the noble Lord opposite for tabling this Motion. It gives us an opportunity to discuss an extremely topical subject. From my point of view it is especially welcome, as railways have always been a subject dear to my heart. After some initial misgivings, I have to say that I welcome their transfer to the private sector.
The trouble with public ownership is that such an enterprise has only to fulfil a function. It is not really necessary, or indeed desirable, to make large profits other than those needed to finance improvements or renewals. Decisions about almost anything have to be justified within the available finance, which is all too often restricted by government policy, political interference or lack of funds due to competition from other government departments. Railways do not pay, so Treasury officials and politicians, who probably do not like travelling by train anyway, are loath to throw good money after bad. The railways are full of people who have to live under that sort of regime. That must go a long way to explain why there have been so many incidents recently that have enabled the media, and especially the specialist media, to be so critical of the privatisation process.
Perhaps it explains why Railtrack has introduced a regime of approving and certifying equipment to he used on its tracks—a process not unlike the type approval of a motor vehicle under the construction and use regulations. That regime has resulted in an embarrassing impasse, with new equipment languishing out of use simply because the technology of today's trains is too far advanced for yesterday's railways. Decades of public ownership seem to have failed the railways. Only 30 or so years ago, the West Coast main line out of Euston system was electrified and upgraded to allow 100 mph running. It is now worn out and in need of total refurbishment.
So what benefits can we expect from privatisation? For a start, proper commercial decisions can be made without seeking political approval. Of course, any management decision has to be commercially viable, but there are many more ways to skin a cat than that which went on before.
The new train operating companies, six of which are now up and running with three others imminent, will be consumer-driven. Their profitability depends on their ability to win customers, the travelling public. It is significant that management buy-out teams seem to be in the minority, which will result in new people with new ideas and probably a different approach. It also justifies the franchising director's decision that it would be inappropriate to allow British Rail to bid for the franchises.
Freight has been the most neglected area of railway business. The independence of being able to transport goods by road in trucks to wherever is necessary is very powerful competition. However, it seems to have gone
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too far and our roads are becoming over-subscribed. The railway system is capable of much more in that regard. The Piggyback Consortium, along with others, is actively exploring the carriage of road trailers by rail. The sale of the greater part of the freight business to the Wisconsin Central Transportation Corporation is to be welcomed. It is a very enthusiastic and practical operator and, as such, has been very successful in turning round ailing railways in many parts of the world. There is no reason to suppose that it will not be successful here. There is the potential to win freight business back to the railways and the arrival of that company bodes well for the future.
My only reservation with regard to the success of privatisation is Railtrack. Railtrack's behaviour recently has been very strange and seems to have been extremely negative. Perhaps that is because it has been labouring under a sort of public ownership yoke. Once in the private sector, perhaps it will throw off that yoke and positively embrace the enormous task that lies ahead.
Worryingly and uniquely among privatisations so far, Railtrack will not be consumer driven as, in the main, its customers will be the train operating companies, many of whom show considerable signs of improving the services. That will depend on Railtrack's co-operation. Thus, it is vital that Railtrack realises that its success depends on its ability to deliver a modern, up-to-date system of infrastructure fit for the 21st century.
We are now connected to Europe via the Channel Tunnel. Travellers have access to the railway systems of other countries where, somehow, considerable strides seem to have been made in modernisation and improvement. We now have a new international station at Ashford which, having been opened under British Rail's stewardship, has now been handed over to the private sector. It is well accessed locally but lacks services from further afield. There is a service from Brighton, but the equipment is well past its sell-by date. I wonder which of the train operating companies will be brave enough to connect Ashford with the rest of the country via, let us say, Reading. Eventually, under privatisation, such a service should not be difficult to introduce and could be very successful given good marketing and a fast, comfortable transit time.
My other hope is that the train operating companies will pay particular attention to parking cars at stations. I feel that the convenience of the motor car is the main competition from which the companies will suffer. Any means that can be devised to encourage motorists onto the trains must be cost effective. The co-operation of Railtrack and local authorities is vital, as land will need to be made available at suitable locations. Car parking has been well addressed in some areas in the past but there is considerable scope for improvement, which should result in increased ridership. Let us hope that such innovations and improvements become commonplace in due course and that the privatisation of the railways will be of great benefit to the nation.
6.31 p.m.
Lord Berkeley: My Lords, I congratulate my noble friend Lord Clinton-Davis for introducing the debate at

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a very important time in the development—or not, I suppose—of our railways. I also congratulate my noble friend Lady Castle, who referred to the famous Green Paper which was published last week. I hope that the Government will be able to find time to debate it before the Summer Recess. It is a very important document, even if it does not say very much. I declare an interest in Eurotunnel and ADtranz and in the piggy-back consortium to which some noble Lords have referred.
The pressure to sell off the railway family silver before the election is reaching almost panic proportions, as my noble friend Lady Castle said, with franchises for passenger trains, possibly Railfreight Distribution, Railtrack and many smaller parts of the former British Rail—I suppose they are still part of British Rail. I visualise the privatisers not, in the terms of the noble Lord, Lord Cadman, as cats to be skinned but as a herd of friendly, committed, Gadarene swine hurtling faster and faster over the cliff, in the absolute conviction that they will land unharmed beside a welcoming trough of food while the rest of the world looks on in disbelief. The trouble is that there is less of a trough for the railways and more for the legal, insurance, financial and other services, and—as my noble friend Lord Haskel said—development teams as well. There are also tons and tons of paperwork.
The railways will survive because the people who work in them are committed. New ideas are coming in, certainly on the freight side, as many noble Lords have mentioned. Long may they continue! I believe that some good will come out of all this. In the meantime, the industry is struggling under increasing mounds of paperwork and bureaucracy as a consequence of the new structure of the industry which the Government set up.
What do we find under all that paperwork? Sadly, we find more paperwork, called safety cases. Safety on the railways is paramount. It always has been and, I hope, always will be. The whole industry is committed to safety. But effective safety is being hampered by a burgeoning bureaucracy. Over £400 million worth of rolling stock—that is not my figure; it comes from observers and members of the industry—lies idle in the sidings, sometimes for up to four years.
Perhaps I may give a few examples. The Class 92 locomotives are supposed to haul Channel Tunnel freight. It does not matter what kind of trains haul the freight. They can be diesels or electric locomotives. They are working perfectly well through the Channel Tunnel but they are a wasted national asset. They have been produced now for over two years but they cannot run except in the tunnel. They cannot run from London to Folkestone and they cannot run up the country because there is £33 million worth of work on track circuits around Redhill that has not been completed. That is nothing new. It has been known about for years. The problem is: who pays?
I have had sight of a letter from John Watts, the Minister for railways and roads. I think it was the first letter he ever wrote to British Rail. That was a year or two ago. The letter said that the Government would pay the £33 million cost. Perhaps the Minister can confirm
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that that is still the case. If it is, why have the Government not paid Railtrack? If it is not the case, what has changed the Government's mind in the meantime? While that is going on, the locomotives sit rusting.
Post Office trains represent another exciting topic in the press at the moment. The Royal Mail is trying to put much of its mail on the railways, which is a very laudable project. It gave the go-ahead for £150 million worth of work in 1993 on terminals and trains with a hub near Willesden. The new trains are very similar to the Thameslink trains which have been around for the past eight years travelling between Bedford and Gatwick Airport. They still do not have their safety case. They are only freight trains and do not take passengers but they still need a safety case. After 15 months of attempting to satisfy Railtrack's safety assessment panel and getting nowhere, the frustration of John Roberts, the chief executive of Royal Mail, has finally boiled over. He has written to Railtrack and the Secretary of State for Transport—the President of the Board of Trade is also involved—saying that enough is enough.
Suddenly, the government penny has dropped. They have realised that the Railtrack privatisation may be in jeopardy if the Post Office trains do not get approval and provide revenue to Railtrack, which they will do if they run but not if they do not run. Do we see commercial considerations coming into play at last? There is a further threat that the Post Office could use; namely, "If you do not give us our safety case soon, we will dump the whole lot and use road and air." That is quite possible too.
Railtrack has proudly responded—this week, I believe—that driver training has started on one four-coach train on one route. Twelve-coach trains are supposed to go all over the country. So the likelihood of having them up and running by October is nil.
There has been mention of the West Anglia-Great Northern trains, which are also miles away from approval and have similar problems. But the Government or Railtrack have also twigged that if those trains could get approval, the trains from West Anglia could be cascaded to London, Tilbury and Southend and make that line more saleable. Are these commercial considerations again? I do not know.
So how does one get a successful safety case? While Railtrack is in the public sector, presumably one obtains it by complaining loudly to government Ministers, preferably at a time to give maximum embarrassment during the flotation of Railtrack. I ask the Minister whether the Government will give an assurance to all other operators waiting for safety cases—rail freight distribution, Class 365 freight wagons and much other new rolling stock—that they will make Railtrack speed up all applications to weeks rather than years. Or is the Post Office just a special embarrassment and therefore a special case? If so, why?
In short, if a delay in getting a safety case will embarrass the privatisation, there is a good chance that the safety assessment panel snail will accelerate. If not, there is a risk of being relegated to the Birmingham extra-slow snail, which is the Class 323 train. Those

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trains trundle around Birmingham. They are very nice, but not that special. Indeed, they are quite ordinary. It has taken four years at a cost of £10 million in paperwork to get their safety case.
What will happen when Railtrack is in the private sector? Will commercial pressures speed up the process or will the insurance industry put so much fear into those who have to sign the magical safety certificate that it will get worse? It is a gamble which few will wish to take.
The franchising director recently announced that the South Eastern trains franchise would be let on the basis of new trains—as my noble friend Lord Haskel mentioned—if those were available within three years from the start date. We can forget that. It may take three or four years to build a new train, but if the 323 process is anything to go by, it will take another four years to obtain a safety case. It will be more than half-way through the 15-year franchise before our friends in north Kent ever see a new train at a cost probably of an extra £10 million just to reach to that point.
Railtrack says that since the Class 323 train received a limited area safety case, the system has been shown to be satisfactory. But what manufacturer, franchisee or operator will commit to new rolling stock if it takes four years and costs over £10 million to obtain approval? It is interesting to reflect on what would happen if a private sector rail company—passenger or freight—had £400 million worth of assets sitting around for four years due to some unspecified bureaucratic snarl-up with a government agency. I can imagine what Ed Burkhart—the chairman of Wisconsin Central which bought up most of the freight business in this country—would have to say about that. But since most of the equipment is, or was until recently, owned by us, the taxpayers, it is surely a matter for the Public Accounts Committee in another place to look into. It is a waste of a national asset. I am a beginner in this field, but it is certainly something I believe should be looked at.
It is not all Railtrack's fault by any means. All the parties—manufacturers, operators, franchisees and the rolling stock owners—have a responsibility and must accept some blame for what has been going on. But they are all trying hard to work under a system set up by the Government—who have a responsibility to make it work—to sort out the problems and knock heads together rather than pass the buck. I hope that that will happen.
What is the problem with safety? Under the 1993 Railways Act, Railtrack is responsible for the overall safety of the railways and is required to receive and approve safety cases for all new rolling stock. It set up a safety and standards directorate to set the standards and police the implementation, assisted by an independent safety assessment panel. But in many cases that independence is illusory since many of those on the panel are consultants who also advise operators on how to obtain safety approval. In my experience the one thing that consultants do is advise people to give them more work.
The problem is the way Railtrack approached the situation. It may set the standards, although in my opinion it has been slow to take over those used for
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many years by British Rail. It seems to be unable to provide instructions about what information should be included in submissions, possibly through fear of incurring liability.
Alongside making life impossible for operators of new trains, Railtrack is also not very good at managing its own safety activities. Noble Lords have spoken of the Euston problems and the speed restrictions on the West Coast main line. Last week a north London line was closed for a long-term upgrade and all the trains were diverted through Primrose Hill. But the track failed and a freight train was stuck there for two days. Wine in one of the containers spilled all over the track; it was like a West African pillage. The track was just too old or over-used. Surely it would have been possible for Railtrack to ensure that the Primrose Hill route was satisfactory before closing the other one. It seems simple to me.
While all that is going on, the railways inspectorate, which has been responsible for the safety of our railways for years, must be looking on in bemused irritation and concern. What is the solution? If some of my remarks about Railtrack are thought to be unreasonable, they are not meant to be. I have the greatest respect for the staff, from Bob Horton downwards, who have been required by the Government to set themselves up from scratch as a company; to take over assets from British Rail which has been starved of investment for years by successive governments; and to take responsibility for overall safety and privatise themselves. I know what a strain it puts on people—perhaps that is why Roger Salmon prefers spending time in a monastery to working for the Secretary of State. That is an interesting idea.
We are talking about our national transport asset. The Government cannot be allowed to let it wither away. The safety structure was created and must be sorted out. The strong feeling in the industry, supported by David Gillan, director of the Railway Industry Association, is that the safety and standards directorate must be separate from Railtrack and must be seen to be separate. I support that view. Now that Railtrack is going into the private sector it is unacceptable for it to have any overall responsibility for safety on behalf of the industry. That would produce a conflict of interests. The separation would provide a quick and effective way of getting £400 million of rolling stock to work and is an essential part of rebuilding the confidence of the industry. I strongly urge the Government to consider seriously the separation of Railtrack and the overall responsibility for safety before it is too late.
6.46 p.m.
Lord Teviot: My Lords, like all noble Lords I am grateful to the noble Lord, Lord Clinton-Davis, for bringing this matter before your Lordships today; though I believe it is a trifle soon. We are not yet in a position to criticise privatisation either fairly or unfairly. I strongly support the Government's endeavours and do not follow some speakers in believing that we are in a doom and gloom situation. The main objective is to get as many people travelling on the railways and as much freight carried as soon as possible. The figures showing the decline speak for themselves.

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As other noble Lords mentioned, since 1948 £54 billion has been invested in the railways but the share of journeys has fallen from 17 per cent. in 1953 to a mere 5 per cent. today. Again, we must have confidence in the Act and the Government's power to operate it. The only point on which I am qualified to speak in this debate is that I was heavily involved in the 1985 Transport Act, which dealt with the deregulation of buses. At that time I was totally against deregulation, feeling that the regulations that were mainly put in place in 1930 were adequate, and that it was unwise for the industry to suffer the upheaval that followed. In fact, the noble Lord, Lord Carmichael of Kelvingrove, referred to me and the late Lord De La Warr as the "militant" tendency.
Apart from the Government, few people were pro the Bill. In fact, 95 per cent. of operators, whether in the public or private sector, were against it. But 10 years on I must confess that I was wrong. I was closely involved in the industry, and perhaps too closely involved. By and large the Act has been a success. More mileage is now covered; the number of passengers carried is fewer but is beginning to increase. And the financial situation, the buoyancy of the industry, has greatly improved. The structure now exists for the industry to expand.
For example, the National Bus Company was a large and not unsuccessful institution with excellent trade and very well run under the noble Lord, Lord Shepherd. It may have been too large and perhaps a little inflexible. Competition was stifled and competition is all important. The profit margins were low and one was of the opinion at that time that nobody with any sense would invest in bus services, whose sole reason for running was the public benefit and nothing more.
However, again one was wrong. There are now some very successful companies and a few have become railway operators, and good luck to them. Again, one accepted that cross-subsidy was permissible and acceptable. For example, there is a bus company in the Home Counties which made huge losses every year, but that was all right because it was counteracted and cross-subsidised by the northern companies which did very nicely. That company has been turned round. There has been sound investment in new vehicles and it is doing very well. Surely, that is a good thing.
We must have faith. As a result of the new Act fares are now being pegged. At last the rot is stopping because there had been a 22 per cent. rise in costs ahead of inflation. Surely, that will get a few people back on the trains. That is a tremendous improvement. The safeguards and the commitments which the Government have made about passenger regulation requirements all seem to be perfectly in order and successful. Through tickets and railcards remain and nothing horrible has happened.
My noble friend Lord Cadman and others mentioned the awful business of traffic congestion on motorways. Recently I had to drive from my home in Sussex to Matlock in Derbyshire. Time did not allow me to travel there by train. It is quite fast to Derby, but then there is the branch line to Matlock. I left at 5.30 a.m. and the
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M.25. was still about possible, but when I turned onto the M.1. there was a massive tailback at 6.30 in the morning, which I gather is the norm. It was not Monday morning, but Tuesday morning and people had been working on the Monday. Whether or not one has sympathy for these people, every endeavour should be made to woo them back either onto the trains or, if possible, onto some other form of public transport or into shared cars. I cannot imagine what their performance at work is like and what their lives must be like. It must be totally intolerable because presumably they go home again in a massive tailback.
British Rail has done its best in the past, but new ideas must prevail. There must be more competition and a new approach. Over the years British Rail has become more caring and has more concern for its passengers. Let us hope that the franchise holders will continue with that and not just concentrate on the smart InterCity trains about which people have very little to complain, and consider the wretched commuter trains on which so many people have suffered. I do not know where the noble Lord, Lord Berkeley, has been, but he spoke of no new trains on the North Kent line. It is now alive with new trains including the Thames turbos.
Lord Berkeley: My Lords, I am very grateful to the noble Lord, Lord Teviot, for allowing me to intervene. I was referring to the Kent coast trains and not the inner London suburban trains as regards which the noble Lord is quite right. There are new trains on the inner London routes.
Lord Teviot: My Lords, I am glad that the noble Lord has made that point. There are new trains on the South-West lines too. I hope that when the noble Lord, Lord Clinton-Davis, reintroduces this debate this time next year, there will be some better news.
6.53 p.m.
Lord Ewing of Kirkford: My Lords, I join all who have contributed to this debate in recording my thanks to my noble friend Lord Clinton-Davis for initiating it and for making it possible. Perhaps I may at once place on record my slight displeasure at the rather critical comments of the noble Lords, Lord Astor and Lord Harding, about the staff of British Rail trains. My experience is exactly the opposite to that described by the noble Lord, Lord Astor. The staff of whom I have had experience are certainly very helpful and very kind people. Whatever be the way in which the people of this country choose to seek to serve the public, the staff of British Rail choose to do one of the most difficult jobs that it is possible to do. Therefore, I wish to place on record my tribute to the staff.
I cannot avoid the feeling today that whatever we say will go unheard. Public opinion registered time and time again through the ballot box on the one hand, and through opinion poll material on the franchising and privatisation of our rail network system on the other, has shown clearly that the mass of public opinion is against the proposals that are now being implemented. I do not come to this debate uncritical of British Rail. I have no

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hang ups that everything which is publicly owned is good and that everything that is privately owned is bad. I have no hang ups on that at all.
Indeed, over the years I have been heavily critical of ScotRail, for example, because there is nothing more frustrating for people travelling from east, north-east and central Scotland to Edinburgh airport than to find that the train passes the perimeter fence of Edinburgh airport. It would be the simplest of simple measures to build a rail halt and to run a shuttle service from there for the two minutes down the road to the airport. Instead, over the years British Rail has refused to build that facility and passengers are taken into the heart of Edinburgh. They then have a fair walk from the train to the airport bus and another 45-minute journey from there out to the airport. So I do not come to the debate uncritical of British Rail. I hope that, if anything, the new franchise holders of the east-coast main line—although they are not responsible for the domestic network in Scotland—will be able to bring their influence to bear so that the nonsense of passengers being taken into the heart of Edinburgh only to be brought back out again is brought to an end.
Franchising has nothing to do with improving the services. As so eloquently put by my noble friend Lady Castle, it is primarily about profits for shareholders. That is not the best motive, although it is a motive. "Profit" is not a dirty word. I do not complain about companies making profits because without profit there is no investment. But it is when profit becomes the prime function that trouble is caused. One needs to look no further than British Gas. It is now the most unpopular of all the privatised companies in this country and the water companies are rapidly following suit where profit takes precedence over service to customers.
I wish to ask the noble Viscount, Lord Goschen, one or two points in relation to Scotland. What now is the position regarding the fast rail link to the Channel Tunnel? What are the plans, because they seem to have been pushed aside? If Scotland is not to have access to the fast link it will have very serious repercussions in relation to the development of the industrial infrastructure of Scotland. What is the position of the Forth rail bridge? My noble friend Lord Clinton-Davis mentioned the fact that the Health and Safety Executive had issued Railtrack with two restriction orders, and one of them relates to the Forth rail bridge. I do not want to alarm or cause unnecessary anxiety, but the rail bridge is in a state of disrepair. It is one of our great engineering achievements. When the Minister winds up can he say what is happening in relation to the repairs that the Health and Safety Executive want carried out on the bridge before it will lift its order?
I now turn to the privatisation of Railtrack. It is noticeable that the National Westminster Bank, whose chairman is a highly respected Member of your Lordships' House, has this week advised its clients not to buy shares in Railtrack. That advice was based on NatWest's belief, which I share, that there is going to be a Labour Government. The advice went on to say that a Labour Government would take Railtrack back into public ownership. All that I can say to that is that
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I hope that NatWest is right. I hope that a Labour Government do take Railtrack back into public ownership because that is what people want.
I am a simple chap and bring forward simple solutions to simple problems. The question that is asked is: how can you buy back Railtrack? How much will it cost? From my point of view, the answer is to say to those who buy shares in Railtrack, "You didn't give your money to a Labour Government. You gave it to a Tory Government, so you will get that money back from the Tories the next time that they are in power". It is a simple solution to what everybody seems to be presenting as an insurmountable and complicated problem.
Running side by side with NatWest's advice not to purchase shares in Railtrack was the revelation that it will cost £11 billion to put the rail network into a good state of repair. One of the promises made by the franchise holders is that they will speed up journey times. From my limited knowledge of the railways I can say with certainty that it will not be possible to speed up journey times unless the Railtrack network is put into a good state of repair. The French speeded up their journey times and were able to introduce the TGV by straightening all the bends and getting rid of all the bridges which obstructed fast-moving trains. Anyone who thinks that you can come round the Morpeth bend just outside Newcastle station any faster should take account of the incidents that have taken place over the years on that very bend. The network is riddled with such obstacles to speeding up journey times. In any case, where will that £11 billion which is to put the rail network into a good state of repair come from? It will not come from putting Railtrack into the private sector, so where will it come from?
We are told that in order to provide an incentive to encourage people to buy shares in Railtrack, a dividend will be paid in October—before it has been earned. I know Bob Horton very well. He was chairman of BP, with which I was closely involved because of my constituency interest in the petro-chemical complex at Grangemouth. I have been in the company of Bob Horton and his fellow directors at BP on a number of occasions and I can advise your Lordships that if Bob Horton had suggested at a BP board meeting that that company should pay a dividend before it had been earned, the company car would have been locked away and 10 minutes later Bob Horton would have been on the Clapham bus going home. Trying to justify the indefensible makes a professional man of Bob's standing look rather silly. It was not to his credit, but let us leave that as it is.
What is to be done? First, there must be a general election. Secondly, there must be a Labour Government. Thirdly, we must return to having the integrated rail network which the people of this country want. I am not talking about politicians now. There is no meeting place between us on some of these points. I respect those who take the opposite view from me. We can argue all day about it in this House, but the people of this country want an integrated rail network. They do not want to see incidents such as occurred last week when disabled people had to leave one train to buy another ticket and

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then had to climb back onto the train which they had left. People do not want such things to happen, but that is what fragmenting the service leads to. The people of this country want an integrated rail system, and the incoming Labour Government will bring that about.
7.5 p.m.
Lord Mountevans: My Lords, I declare two non-financial interests: first, as chairman of the British Rail/Railtrack best station judging panel and, secondly, as honorary secretary of the all-party West Coast Main Line Group. The former has this year given me a 10,000 mile snapshot of where the railway was as the first franchises were being let, while the latter inevitably involves me and several other Members of this House in watching a railway struggling to survive in the face of a worn-out infrastructure, worn-out rolling stock and stalled investment.
My 10,000 mile snapshot showed the former regime doing generally rather well, as its European peers (which tend to admire British Rail rather strongly) would expect, with one notable and worrying exception: the East Coast main line. To experience one train running on half power and later the same day another train failing totally was bad enough; to find the wires down two days later, with consequent two-hour delays both going north and coming back again, was even worse.
We are told that privatisation will unleash investment, but the East Coast main line has had the investment. It has had £450 million-worth of investment in the past decade. If that does not deliver—and for me it certainly it has not—it will take something other than privatisation to marshall disciplines and new management skills. It will take something much more than bullish press releases to do that.
Like other speakers, I am grateful to the noble Lord, Lord Clinton-Davis, for giving us this opportunity to debate rail privatisation. But when I started developing my thoughts, I found something of a vacuum or a grey area. Those in favour of privatisation promise us all manner of benefits; those against it stress and stress again their doubts. The former know where we are going, they believe; the latter scare us by saying that we will never get there. But I believe that as of today we really do not know the outcome. I cannot believe those who promise us the earth—any more than I can believe those who suggest that the end of the golden era of British Rail coincided either with their own retirement or, in wider terms, when their party lost either the debate or the election. I find myself in a wait-and-see situation.
While I wait and see, there are things which I believe that we can influence. I look forward to the Channel Tunnel Rail Link Bill and to making progress towards Thameslink 2000. I hope that other noble Lords will join me in fighting for accelerated progress on CrossRail. More importantly, we should push for progress on West Coast main line refurbishment. Like a photograph of the launch of the Midland main line franchise, it appears to have hit the buffers.
We need replacements on the West Coast main line because it is Britain's spinal route. We need that now—not at some indeterminate date in the future. Decisions
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must be taken quickly on line speed and capacity. The urgency of reaching those decisions will be one of the criteria by which I, for one, will judge Railtrack and the whole privatisation concept.
That might seem unfair. There are all the users' interests to be taken into account. If, for example, the principal user, the West Coast main line train operating company, was to go for a diesel-hauled tilting train—after all, that is being tested in Canada and the United States—it would be for the franchising director to decide whether, within existing financial limits, he could agree the increased access charges which would be the price for the other 10 train operating companies which interface with West Coast main line, the five freight companies and, indeed, the European passenger services because they would have to pick up the whole tab of funding replacement of the power supply infrastructure.
Similarly, only the franchising director can decide whether the train operating companies, the users, can afford a new and as yet largely unproven radio-based signalling system. It is unproven in the sense that although it has been proven on brand new railways like the TGV in France, it has never been put to the test on a route with the traffic volumes of the West Coast main line or its intensity and complexity. Can one afford to have that as yet unproven railway signalling system? I have mentioned the 15 operators involved. It is not only the 15 operators. Almost all the traction in British Rail, apart from the third rail equipment in the South, either does or can use West Coast mainline infrastructure. It will cost a fortune to make every locomotive and trainset compatible with the new signalling system. The price to pay will be a very heavy one. I wonder whether that can be met within the budget of OPRAF, because after all he will be the principal paymaster.
Finance is one concern and technology is another. At the moment, the design of the signalling system is out to tender. I believe that installation is planned for the year 2000. It is interesting that the two largest railway companies in the world, Burlington Northern Santa Fe and Union Pacific in the United States, are pursuing the same concept but with a much slower implementation schedule and specific review points. "Are we going down the right route? If not, let us not waste any money going any further". If those truly great and successful railways—which are great and successful because they have the commercial skills and judgment which are such a pillar of privatisation—are deliberately making slow progress why we are rushing along at the projected rate?
Another factor that we can try to influence, as mentioned by several noble Lords earlier in the debate, is the switch of freight from road to rail. I welcome the inquiry by the Select Committee of another place into the adequacy and enforcement of regulations covering coaches and lorries. We know that rail loses freight because road hauliers can cut corners and thus costs. There is a much looser safety regime on the road side of the business than there is, or ever has been, on the railways. One only has to read reports of recent police roadside checks to appreciate the volume of tachograph, overloading and vehicle faults, which are far too

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frequent. Given the safety regime imposed on the railways—the noble Lord, Lord Berkeley, almost said "over-imposed on the railways"—surely we should look for a level playing field for both, especially in respect of the road transport industry.
I turn to an ongoing concern: bridge bashing. Last year there were 1,100 strikes, a 56 per cent. increase on 1992. Yesterday, there were six instances, delaying or cancelling 65 trains and giving the worst annualised rate of over 2,200 instances per year. When I last raised this matter it tended to be a problem of a lorry hitting a bridge and the driver, having passed three signs indicating the bridge height, saying that he did not realise how high his load was. Much worse than that, since the matter was last raised the Glasgow tragedy occurred. I am sure that that tragedy will be remembered by the noble Lords, Lord Ewing of Kirkford and Lord Carmichael of Kelvingrove (for whom it is very close to home). As I recall, seven adults and children were killed when a double-decker bus hit a railway bridge. The disaster that we had awaited happened, yet the department remained singularly unconcerned. When shall we see action, and what action shall we see?
Many of your Lordships will remember that some 12 years ago I argued for what I christened a big bang privatisation, that is, privatisation of the railways as an entity. I still wish that the big bang had been the chosen route. That sentiment and wish was reinforced by a recent visit to the United States, in particular to Burlington Northern Santa Fe, the world's largest private enterprise railway. That company tried to headhunt a very senior executive of British Rail. It had discussions with Stagecoach because it saw opportunities in franchises. But it pulled out when it realised that the Railtrack concept gave it no control over the infrastructure. Once that was clear it decided to give franchises a miss and to look for investment in suburban railways in South America. As we fragment, Burlington Northern Santa Fe is consolidating and centralising. When we talk of West Coast mainline signalling we are thinking perhaps of 450 route miles run from one signal box. That company is already operating 30,000 miles of railway from one room the size of the main auditorium in the Queen Elizabeth II Centre. As we go into leasing that company is pulling out of it because it believes it is not capital effective. That company has had 15 to 20 years' experience of the leasing concept. As we rush forward—as with the West Coast mainline signalling project—that company makes slower but deliberate progress. In every respect I believe that we can learn from that company's commercial judgment.
7.16 p.m.
Lord Carmichael of Kelvingrove: My Lords, I always find railway debates rather interesting. There is something fundamental about them. The railways are a link with so much of our history, literature, social life and memories of early holidays. Over the past half-century some unbelievable changes have taken place in transport. I refer to the sheer convenience of the motor car, although for the city dweller it is a diminishing convenience. In most of our cities the motor
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car becomes a serious problem. When one gets to one's destination one wonders what to do with the car. The availability of parking in city centres is not unlimited.
As a Glasgow man who occasionally needs to go to Edinburgh, the train is the only way. The journey time is 50 minutes with a service of one every 30 minutes. I understand that there was an intention to increase the service to 15 minutes. My noble friend Lord Berkeley and the noble Lord, Lord Mountevans, will recall that the Class 158 DMUs were brought in which made the journey from Glasgow to Edinburgh in 50 minutes. The intention was to reduce the service from every half an hour to 15 minutes, which would have been perfect. It would have taken a great number of cars out of the city centres. However, the engines and units had teething problems and, coupled with the start of the recession, that ambitious scheme was abandoned, but let us hope that it is not too late. It was a pity that it did not work. Looking at it in retrospect, in years to come it might well be said that a first-class rail service between two big cities 40 miles apart could have been an example worthy of study. That experience could have been extended to many other areas and cities. If we do not try bold experiments, our towns and cities will become more and more uninhabitable.
Government attitude to road and rail has always been very lopsided. In another place the Minister for Railways and Roads gave a reply to my honourable friend Mr. Jim Cunningham. He asked the Minister about the proportion of research money devoted to rail and road by the Ministry of Transport. The proportion was 88 per cent. to road and 5 per cent. to railways. Why does road not carry more of the burden when rail has to carry so much? I am not one to decry the motor car; but one of the points that we must remember when we talk about the railways and road traffic is that the roads are carried on the backs of 22 million motorists who pay for their licences, whereas the railways are freestanding and the passengers must pay when they use them.
In another answer on the same day, the Minister told another of my honourable friends in another place that a certain number of fares on the railways would be regulated by the franchising director. That was good news. But when one looks at the matter closely one sees that there will be a number of uncontrolled ticket prices. The prices will be decided by the operator and not the franchising director. The Minister listed the tickets which would be free of any control. They include all first class fares, APEX fares, super APEX fares, network awaybreaks, super advance tickets, cheap day returns, special day returns, shuttle advance tickets, voyagers—I do not know what those are!—and rover tickets. Some prices will be controlled, but the list I have read leaves lots of room for increases.
That brings us to the big question of costs. The rail regulator will decide the level of charges for access to the track. The majority of Railtrack's income will come from that source; and, to quote the regulator:
"Railtrack's performance in the efficient and effective operation, maintenance and renewal of the rail network is critical to the future success of the rail industry".

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What figure will the regulator use? What figure will he be given by Railtrack for its maintenance and rail costs? We must remember that the railways have been starved of investment for a long time, which is why we have problems. The only big investment that I can think of in the past 28 years was the East Coast main line. As the noble Lord, Lord Mountevans, said, the quicker we get on with the West Coast main line, the better it will be. The railways have been starved of funds and investment. The Daily Telegraph—a newspaper about which noble Lords opposite will be reassured—of 29th April disclosed some figures which came into its possession. They are based on the BR Rail Civil Engineering Design Group based in York. The report looked at three representative groups and extrapolated them to the network to build up a national overview of the costs that Railtrack will need to pay. It estimated that the cost of maintaining bridges, tunnels and sea defences would be £10.63 billion. Another £324 million was assessed as being needed to maintain the condition of the general structural inheritance. Thus, its total cost came to £10.96 billion, which is way below the £1.39 billion set aside for that purpose in the Railtrack prospectus.
The Minister must be aware of those studies, and if I am seriously wrong, I am sure that he will have the correct figure to give to the House when he winds up.
Noble Lords will want to know how we on this side of the House look at the future of our vital railway industry. My noble friend Lord Clinton-Davis made a powerful speech, and gave a full answer to that question. The shadow Minister of Transport in another place made clear in her speech on 17th April in another place:
"That we [the next Labour Government] are interested in mobilising public-private partnerships … in order to secure more investment in the rail network. That is occurring in other countries, and it should happen here also".—[Official Report Commons, 17/4/96; col. 722.]
That is the future not just for rail but for transport generally.
This step towards privatisation, especially Railtrack, is a privatisation too far. I was impressed by the remarkable speech made by my noble friend Lady Castle, to whom I pay a great tribute. I came to transport as one of her young, raw people when she was introducing the 1968 Act. That Act was an exceptional Act. It may have gone further than we were ready for at the time. It did so much, that we shall never be able to undo it all, despite what this Government do.
The noble Lord, Lord Astor, spoke about money coming in from private sources. He must realise that in all the privatisations, the shareholders have been bought off. I quote from the Independent—
The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen): Oh!
Lord Carmichael of Kelvingrove: My Lords, surely the Independent is not a proscribed newspaper in this House. The reference is:
"Fattened for market: The price of disposal".
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It gives figures for British Steel, British Aerospace, the National Freight Corporation and others. It gives about 10 privatisations. The amount written off in present day prices totals £22 billion.
Lord Graham of Edmonton: How much?
Lord Carmichael of Kelvingrove: My Lords, £22 billion. The same will happen with rail. Sir Edward Heath, who has always been a moderate understanding man, said this was a privatisation too far. That is something with which we all agree. The public may not know all the details, but in their bones they think that privatisation has gone too far. This is one that they will not stand. It will be another way by which we shall gain power whenever the Government decide to call an election.
7.28 p.m.
Viscount Goschen: My Lords, I thank all noble Lords from all parts of the House who have spoken in today's fascinating debate, as ever, on the railways. I owe my particular thanks to the noble Lord, Lord Clinton-Davis, for choosing the subject of today's debate. I do not believe that there is a subject on Government policies which I would rather debate with noble Lords than the benefits of privatisation to the travelling public and the benefits in terms of encouraging freight onto the railways.
The debate is largely and rightly about passengers, which is what is specified in the Motion. So I was somewhat surprised that the noble Lord, Lord Clinton-Davis, did not largely talk about passengers but concentrated upon the timely, yes, and important, I would certainly agree, subject of the Railtrack privatisation. I hope to deal with some of the points that the noble Lord made on that, at times, technical issue.
The debate reinforces my conviction that privatisation is the only policy which will arrest the long-term decline of the rail industry. It is the only policy which provides the industry with a direct incentive to compete with other modes. It introduces new ideas, skills and resources and produces a sharper focus on the needs of the customers. Last month my right honourable friend the Secretary of State for Transport published a comprehensive statement on transport policy entitled Transport: The Way Forward. I was pleased that the noble Baroness, Lady Castle, and the noble Lord, Lord Berkeley, referred to it and welcomed it.
The noble Baroness wanted to see decisive policies. I do not believe that she has found any coming from the Bench in front of her but she has found one coming from the Benches directly opposite her. The railway privatisation is the biggest shake up, the biggest structural change, in the railways for a long time. It was a key policy in the manifesto of the Conservative Party on which the electorate voted and wisely kept the party opposite out of office for some 17 years.
Perhaps it might be worthwhile to look at the effects of nationalisation of the railways before we consider the effects of privatisation. Between 1953 and the mid-1990s the railway industry's share of the passenger

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transport market shrank from 17 per cent. to just 5 per cent. Its share of the freight market dropped even more dramatically. Successive governments came to power with warm words and good intentions. They wanted to effect a shift from road to rail. But the fact is that year after year the railways lost ground. We must face the issues and ask ourselves why.
The era of state ownership was marked by poor industrial relations, low productivity, rising fares and a poor public profile. It was often said that the British public loved the railways but resented British Rail. As my noble friend Lord Astor rightly said, the old railway was a monolithic, monopolistic nationalised industry which never had the opportunity or the incentive to focus on the needs of its customers. It was insulated from the commercial pressures of private ownership and its command structure was not geared to the needs of customers.
Despite the almost unique admiration of the noble Lord, Lord Ewing of Kirkford, for the standards of service put forward by the old British Rail there has been a problem with the motivation of staff. Almost anyone involved with the railways will appreciate that point. The basic problem with the railways was structural and not financial. The Railways Act addressed those structural deficiencies for the first time and the benefits of that bold initiative are becoming more and more apparent with every passing week.
Privatisation is a reality. Over half the rail industry—worth more than £4 billion by aggregate turnover—has now been transferred to the private sector. We have sold the three rolling stock leasing companies and most of the domestic freight and parcels businesses. We have sold six of the infrastructure maintenance units, four of the track renewals companies and a large number of other former BR businesses, including BR telecommunications. In addition, 80 per cent. of the passenger railway by revenue has either been sold or is on the market and almost one-third of the passenger railway by revenue is now in private hands. Six franchises have been awarded and five are already running services. LTS is being retendered. Prequalification has been completed and bids invited for a further five and the prequalification process is under way for a further eight. Overall, some 53 former BR businesses are now in the private sector. Privatisation has acquired an irresistible momentum.
The latest example of the ongoing privatisation process is the flotation of Railtrack. Your Lordships will know that on 1st May the prospectus for the sale was published, starting the final leg of the journey to transfer the owner of the national rail network to the private sector. The noble Lord, Lord Clinton-Davis, felt that insufficient information was available and complained that he had not received a copy of the prospectus until recently. If your Lordships feel that that has been the case I apologise for not providing the House with the information at an earlier stage. On the basis of the indicative price range, that gives the market capitalisation of between £1.75 billion and £1.95 billion. Expressions of interest from small UK shareholders are encouraging with around 1.9 million potential investors having registered their interest with share shops by the closing date.
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The noble Lord, Lord Clinton-Davis, claimed that the prospectus was misleading. I entirely reject that suggestion. It went through an exhaustive process of verification and to the best knowledge and belief of the Railtrack directors and the Secretary of State for Transport it contained all the relevant material information and no material omissions.
The noble Lords, Lord Clinton-Davis and Lord Carmichael of Kelvingrove, questioned the issue of Railtrack and the expenditure required to maintain and renew its infrastructure. They believe that that had been underestimated. I understand that CEDG was commissioned to inform the directors of Railtrack as to the expected future costs of maintaining and renewing certain of its assets. CEDG's report to Railtrack was produced over a short time-scale, was based on an extrapolation of a small sample and used less sophisticated and analytical techniques than those subsequently used by W. S. Atkins. It was based on assumptions about asset lives which were not in accordance with prudent management of the assets concerned. Its cost estimates were inconsistent with historical spend in that area. The report was rejected by Railtrack. Having regard to the matters above and the superseding works of W. S. Atkins, its contents were not regarded as material or appropriate information for inclusion in the Railtrack prospectus. I hope that that covers the particular matter.
We are already seeing the successes of our rail privatisation programme elsewhere. Take the franchising of passenger services. For the first time key services are contractually safeguarded in franchise agreements. It is worth reflecting that all six of the franchises awarded so far will maintain the same levels of service as were previously operated by BR. In a number of cases franchisees will be adding new services to the timetable to fill gaps in the market which BR had not previously spotted. I believe that that is in direct contradiction with the scare stories put around before we reached that stage in the privatisation process. Take Midland Main Line as an example. On MML, National Express will run an extra half-hourly weekday service between St. Pancras and Loughborough; or London and south coast providing new off peak and Sunday services for south London; or Stagecoach doubling services between Southampton and Salisbury. Franchising means rail services are safeguarded and improved.
Key "network benefits"—such as through-ticketing and discount cards for the elderly and the disabled—are contractually safeguarded under rail privatisation. Indeed, these benefits are being legally safeguarded for the first time as a direct result of rail privatisation. The rail regulator has been set up to act as an independent defender of passengers' rights and the Railways Act gives him far-reaching powers to intervene if those rights are ever threatened. Franchising takes customer benefits, which might have been eroded under the old nationalised industry regime, and gives them an explicit legal foundation.
Tonight we have heard criticisms of not caring for the railway as a whole and of fragmenting the railway. I do not believe that the criticism is rightly placed. We have certainly split up the railway into new, smaller, more

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focused companies better able to meet the needs of their customers. But we have preserved the essence of the railway network so that, as far as passengers are concerned, their journeys across the country should, as far as possible, be no less convenient than under British Rail. And while there will be some competition and rivalry between franchisees, there will also be extensive co-operation so that trains continue to connect with each other and through tickets continue to be available. It is clearly in private-sector operators' interests to make it easier not more difficult for passengers to use their trains. That way they will attract more customers and increase their revenue.
Those fundamental points were missed when a little while ago we had all the scares about the loss of network benefits and so forth. It is clearly in the companies' commercial interests to address even the hideous spectre of the commercial interest raised by the noble Lord, Lord Ewing. It is clearly in their commercial interest to keep such arrangements going and working well.
Lord Methuen: My Lords, I was informed by Derby station personnel that there is no connection between Regional Railways and Midland Main Line and that there is no interest in maintaining the connections. Would the Minister care to comment on that?
Viscount Goschen: My Lords, I am interested to look at any specific details which the noble Lord wishes to bring to my attention. I shall take up the point which he raises. But the senior people from all the franchising companies involved in the process realise fully the real benefits available. It is like asking what on earth would be the commercial advantage of making sure that someone misses his next bus or cannot buy a ticket. Those benefits are to be found on all other transport modes and the idea that it will not happen in relation to the railways is frankly absurd.
The critics were wrong to suppose that franchising would mean less investment. Franchisers have come forward with impressive plans for investing in new rolling stock. In particular, the users of the services in Kent run by South Eastern Trains have been clamouring for investment. There is now the prospect of new rolling stock. National Express, the winners of the Gatwick and Midland Main Line franchises, is committed to replacing the Gatwick Express stock and investing in additional trains for the Midland Main Line to provide significantly improved services between London and the Midlands. Even those franchisees who do not need new rolling stock are in many cases planning to refurbish and improve existing trains.
Franchisers are committed to improving services for passengers. Certainly the voice of the consumer, the passenger, has been heard. My noble friend Lord Harding described the improvements to the services in the West Country under privatisation and indeed in the lead-up to privatisation. I welcome that up-to-date information.
In the South-West, Stagecoach has introduced co-ordinated bus links to railway stations with feeder services from Romsey to Winchester and Bordon to Liphook. It is investing £3 million in station
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improvements, including better security, lighting and information. Great Western Holdings is doubling the amount of compensation available to passengers when trains are delayed and is looking at introducing motorail services to the West Country.
For the inter-city East Coast services, Sea Containers is investing £17 million in service enhancement, including improvements to the rolling stock and stations. I could go on, but in the interests of time I believe that those few examples will suffice.
All franchisees are committed to improving passengers' charters, some with significantly higher punctuality and reliability targets than were set by the old BR services.
The next important issue is fares. I was extremely surprised to hear the somewhat half-empty glass of whisky argument put forward by the noble Lord, Lord Carmichael, on the issue of safeguarding fares. For the first time ever, those key fares have been safeguarded; that is, key fares for commuters and also key leisure fares. I was interested to hear the noble Lord, Lord Carmichael, safeguarding in his own thoughts the interests of the first-class passenger. We are concerned to give maximum commercial freedom while at the same time protecting those key fares. That is what has been done. That announcement has been welcomed widely throughout the country.
Lord Carmichael of Kelvingrove: My Lords, I wonder what will happen if the names of the services are changed. Will the regulator need to intervene? There is a feeling that there are so many exceptions that the privatised rail companies will be able to do as they like.
Viscount Goschen: My Lords, they certainly cannot do as they like. The main key fares have been capped and have been linked to an RPI formula. There is no getting away from that. Nationalisation has given rise to steadily increasing fares. Privatisation is giving the consumer, the passenger, a better and more reliable service with capped fares.
I turn now to the interests of the taxpayer. A cheaper and better railway will benefit the taxpayer as much as it will benefit the travelling public, although in so many cases, it is one and the same. BR required financial support of £326 million in 1995–96 to run the six franchises awarded so far. The new private sector franchisees will require support of only £269 million to run the same services this year. In seven years' time, they will need less than £100 million per year. By any standards, there can be no argument with those figures. Franchising means a better deal for the taxpayer.
The noble Lord, Lord Berkeley, and my noble friend Lord Mountevans referred to the issue of safety. I assure the House that safety has been of paramount importance in the privatisation process. That has always been so in relation to the railway and always will be. The HSE's independent advice on the new safety regime was implemented fully by the Government. The HSE has confirmed that there is no evidence of any overall decline in health and safety standards. Indeed, there is

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no complacency. The HSE will continue in its independent monitoring and enforcement to ensure that standards are maintained and commitments are met.
The noble Lord, Lord Berkeley, raised the issue of the responsibility for demonstrating safe operation. That rests with the vehicle manufacturer and owner. However, Railtrack recognises that the present processes for accepting new trains need improving. I certainly welcome the remarks made by the noble Lord, Lord Berkeley, at the end of his speech when he said that he might be interpreted to be over-critical of Railtrack. For me, that was a good argument in favour of the private sector. But we all put a different interpretation on the words which fall from noble Lords' lips.
I should like to mention briefly the Channel Tunnel Rail Link. That is a major project which will bring substantial benefits. We welcome that. We welcome the consideration of the Bill in this House and I look forward to the contributions which noble Lords will make.
Those are the hard facts of privatisation so far. A sea change in the culture of the railway industry is under way. So far, I have dealt mainly with aspects of the passenger railway, but I believe that they are true also in relation to freight. It is no secret that the railway's share of the freight has been in decline for several decades. While 42 per cent. of goods in Britain were moved by rail in 1952, that figure is now barely 6 per cent. That is a trend which can be seen throughout Europe in the face of the flexibility and cost advantages offered by road haulage.
Noble Lords will be aware that many of BR's operations in that sector have already been transferred to private ownership. Its parcels carrier, Red Star, became Omega in September and mail train operator Rail Express Systems was sold to North and South Railways in December. The three bulk-freight Trainload Freight Companies were also sold to North and South Railways in February. In addition, final bids have been received for the domestic and deep-sea container business, Freightliner, and BR and the Government are examining the options for privatising Railfreight Distribution, principally concerned with international services through the Channel Tunnel.
We certainly wish to see a revival of domestic freight haulage by rail in Britain. We have taken the necessary steps to create the environment in which that can happen. Free from the restrictions of state ownership, freight-operating companies will be better placed to replace the long-term loss of traffic to road haulage and to pursue innovative, customer-oriented strategies. I believe that a clear example is North and South Railways, a consortium led by the US railroad operator Wisconsin Central Transportation. That has a wealth of experience from its operations around the world which it will bring to bear.
As I said at the beginning of my response, I welcome the opportunity to set the record straight on rail privatisation. I certainly welcome the opportunity to discuss the very important issue of freight on the railways. Indeed, there is a great deal more that could
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be said, but we are slightly constrained by time. Suffice it to say that we have moved the rail freight businesses into the private sector. We believe that that is where they can flourish. All our policies are dedicated to ensuring that rail is given the best chance possible to win its proper share of the freight market.
As I said, I have welcomed the opportunity to demonstrate once again that our policies are delivering a better deal for passengers and for taxpayers. As each week goes by and we see more businesses pass into the private sector and more advantages coming from those actual operations, I believe that that fact will come very clearly across to the travelling public and, indeed, perhaps to noble Lords opposite.
Today's debate has been about what passengers want. They want good levels of service, and they have been provided with that. They want affordable fares, and now the key fares are capped. But, above all, I would say that they want a better quality of service; and, of course, that has also been provided. The privatisation initiative has already changed attitudes which have moved away from the old producer-led way of running a railway towards putting the consumer first. I really believe that there is a strong contrast between this and the old railway.
To sum up the position, we have had a wide-ranging attack from noble Lords opposite. I hope, therefore, that those noble Lords will not consider it an insult if I say that we have heard some very good old Labour speeches. We have heard attacks on the principle of privatisation expressed with the feeling that public operators provide a better service. However, my mind slips back to a quote from a Member of the Labour Front Bench in the other place who described British Airways as being the "pantomime horse" of privatisation. I hope that that sort of remark will be consigned to the museum of old Labour, along with a number of the speeches that we have heard this evening.
Finally—and I know that I have spoken for some considerable time—I should say that I shall read the Hansard report tomorrow morning extremely carefully in order to check the remarks made by the noble Lord, Lord Ewing of Kirkford—an official spokesman of the Official Opposition in your Lordships' House—regarding the importance which he attaches to the principles of private ownership. Having said that, I hope that I have been able to answer all of the points that have been made this evening.
Lord Haskel: My Lords, before the Minister sits down, will he please confirm that, where he uses the word "plans" about various franchises, there is no obligation on that franchisee to invest in new rolling stock?
Viscount Goschen: My Lords, it depends on the basis upon which the franchise has been awarded. Indeed, in some of the new franchises, the Franchising Director has stated that they have been awarded on the basis of there being a certain commitment as regards new rolling stock. However, in other cases, the new franchise operator has made commitments to certain levels of investment. He is committed to the level of

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service but has also said that he will put services on top of that. It all depends on the detail of the franchise agreement between the Franchising Director and the rail operating company.
7.53 p.m.
Lord Clinton-Davis: My Lords, I should like to thank all speakers who contributed to our interesting debate. We have heard some outstanding speeches. Perhaps I may congratulate my noble friends Lord Haskel, Lord Berkeley, Lord Ewing and, indeed, my noble friend Lord Carmichael of Kelvingrove for their speeches. However, if one were to give a "man-of-the-match" award, I believe that it would have to be awarded to a woman on this occasion. Indeed, it would be my noble friend Lady Castle who spoke not only with great experience as a former Minister of Transport—and an outstanding one at that—but also with wit and penetrating good sense. Long may my noble friend be able to make such contributions to our debates in this House.
This Government really have illusions or delusions of adequacy. Indeed, that was reflected with great charm by the Minister who has just responded and for whom I have great admiration. The noble Viscount maintains an ability to whistle in the dark to keep up his spirits. However, he lives in a fanciful world of assertion and of hope. I do not disagree with him as regards living in a world of hope, but he is going to be disappointed.
In relation to the railways, the Minister and his colleagues have revealed in this House, elsewhere and in the other place a vivid example of what is tantamount to a scorched-earth policy. It will not fall to them to rebuild. They are on the way out: new Labour is on the way in. Having said that, I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Dogs (Fouling of Land) Bill
7.55 p.m.
The Earl of Northesk: My Lords, I beg to move that this Bill be now read a second time. Your Lordships may recall that I was responsible for bringing forward a very similar Bill last year. That Bill ran out of time, but I take this occasion to congratulate my honourable friend, Mr. Andrew Hunter, on being successful in the ballot in another place, thereby giving us another opportunity to consider this important measure.
There are two points that I should like to stress at the outset. First, the concept of requiring owners to clean up after their dogs is not in any sense new. Local authorities can and do control dog fouling by by-laws and have been doing so for around 60 years. However, that control has proved less than satisfactory for local authorities and dog owners alike. It is worth noting that there still exist some by-laws which make it an offence to foul, whether or not the owner removes the faeces. Almost all of those older by-laws will be superseded under the Bill. I am sure that your Lordships will
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welcome that fact. The Bill will not entirely replace the by-law system, but it will streamline the administration process very considerably.
Secondly, support for the Bill is not only very widely based; it is also very well informed. It comes not only from local authorities but also from dog owners and from bodies such as the Pet Advisory Committee, which represents almost every major organisation which has anything to do with dogs, the NFU and the Tidy Britain Group. I ask noble Lords to bear those point in mind when considering the Bill.
As the previous Bill was so recently debated in this House, I shall not detain your Lordships with a lengthy explanation of the Bill's provisions. I shall, instead outline what the Bill seeks to achieve and go on to explain how the Bill differs from the one previously considered.
The Bill creates an offence of failing to clear up after one's dog if it fouls on land designated by a unitary authority or a district council in England, or by a county or a county borough council in Wales. These councils will be able to designate, subject to certain exceptions,
"land which is open to the air",
and to which the public are permitted, or are entitled to have, access. I should emphasise that at present a local authority can adopt a by-law to create such an offence but then has to seek the Secretary of State's confirmation of the by-law. The complexity of the system, with its 11 by-law enabling powers, is compounded because, for places like parks and open spaces, each piece of land has to be separately identified in the by-law. As I indicated, the Bill will streamline that administrative process.
The Bill introduces a fixed penalty which offenders can be given the option of paying within 14 days instead of being prosecuted. That is based on the litter fixed penalty and is entirely consistent with the 1994 recommendations of the Litter Advisory Group. With a fixed penalty in place, local authorities will be in a position to enforce the offence without having to take every offender to court. If a person declines to pay the fixed penalty, the local authority has the option to prosecute, but I understand that the experience of the litter fixed penalty is that over 90 per cent. are paid within the 14-day period.
Turning to the changes from the previous Bill. I should explain that the Bill has been recast and the clauses are now in a slightly different order, although for the most part they have the same effect. The most significant changes are contained in a new Clause 1. This clause prevents the designation by local authorities of certain types of land. These exceptions are carriageways with a speed limit of more than 40 miles per hour and land running alongside them; land used for agriculture or for woodlands; land which is predominantly marshland, moor or heath, and rural common land. The broad thrust of the exceptions is to prevent designations in the open countryside. This is a sensible change which recognises the difference between the urban and rural environments and seeks to address the concerns expressed by some noble Lords last year.

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There was some debate in another place about whether there should be other types of land which local authorities could not designate. The Bill was amended at a late stage to remove the blanket exclusion of land in national parks. I think that was right. The Bill already provides for a wide range of places where the Bill's provisions cannot apply. The effect of the national park exclusion would have been to prevent local authorities designating land in towns and villages within national parks. Other types of land such as land used for agriculture, land which is predominantly marshland, moor or heath, and rural common land are already excluded.
There was also discussion about whether there should be an exclusion for bridleways and various types of footpaths. I think we are in danger here of getting bogged down in unnecessary detail. The power under which by-laws are made for footpaths and other rights of way is Section 235 of the Local Government Act 1972. This is an extremely broad enabling power which is not related to type of land or ownership. I was reassured to hear my honourable friend the Minister in another place say that he was not aware of a problem of by-laws being imposed inappropriately on footpaths and long distance ways by local authorities under existing legislation.
It was also suggested that there would be problems about boundaries between land where the Bill applied and land where the Bill did not. This happens now with by-laws and is a feature of any legislation that affects some but not all land. I think it must be for local authorities to be clear when they describe designated land.
A further new feature in Clause 1 allows a person entitled to exercise powers of regulation of land conferred by a private Act to exclude the application of the Bill to that land by notice to the local authority. It is right that where Parliament has given a power of regulation under a private Act, a local authority should not impose the new system against the will of the person exercising that power. They may well wish to continue to control dogs on the land by their own by-laws and this change would allow them so to do.
Clause 2 of the Bill enables local authorities to designate land to which the Bill applies. In the previous Bill the Secretary of State was given the power to make regulations to prescribe the form of designation order and the procedures to be followed in the making of such orders. The regulations could also include provision requiring local authorities to publicise the making and effect of such orders. There was no requirement for the Secretary of State to make such regulations, although my noble friend the Minister indicated that it was the intention of the Government to do so.
During the Committee stage of the previous incarnation of the Bill I accepted an amendment to require the Secretary of State to make regulations. This has been carried forward into the new Bill, but in addition the regulations must now include provision requiring publicity. This is sensible as it ensures that not only will there be a standard procedure set nationally but also that there will he a requirement for publicising designations.
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Clause 3 sets out the offence of failing to clear up after one's dog forthwith. There is a blanket exclusion for registered blind people but although there was much discussion in another place about other exemptions, the Bill before us has no others. Both my honourable friend the Member for Basingstoke and the Minister strongly opposed the idea of a list of exemptions. It could not be complete and there would always be an element of controversy concerning selection. They felt that the defence of reasonable excuse covered any circumstance where the Bill's provisions were likely to be considered unreasonable. I concur with that approach.
Clause 6, which deals with the effect of the Bill on by-laws, differs from the equivalent provision in the previous Bill in two main respects. First, the Bill's provisions will no longer automatically overtake by-laws made by councils other than those able to make designations, although if a designation is made, then the by-law has no effect. This is important as it will allow dog fouling by-laws made by county and parish councils in England and community councils in Wales to continue where there has been no designation. This applies even after 10 years when all designating councils' by-laws will cease to have effect in relation to land which can be designated.
Secondly, the Bill allows local authorities to retain by-laws on land where designations cannot be made because of the exclusions set out in Clause 1. These changes are entirely reasonable. I believe that the Bill before us today is a great improvement on the one we considered last year and meets the concerns expressed about the inappropriateness of applying the offence in the rural environment. It is a measured response to a problem of considerable and growing concern. Dog owners do not have some God-given right to allow their dogs to foul public places without taking responsibility for the resultant mess. The responsible dog owner who does not allow his dog to foul in public places or clears up any mess need not fear the Bill. It is the irresponsible owner at whom it is aimed. It is an important measure which simplifies and rationalises control of dog fouling and, in time, will largely replace the existing system of dog fouling by-laws. It emphasises the idea of being a responsible dog owner.
As I mentioned earlier, support for the Bill comes not only from local authorities, which have to deal with the mess in public places as well as the complaints, but also from the dog interests, notably the Pet Advisory Committee which represents almost every major organisation which has anything to do with dogs. I beg to move.
Moved, That the Bill be now read a second time.—(The Earl of Northesk.)
8.7 p.m.
The Earl of Harrowby: My Lords, I must start by making an apology in that I must leave this Chamber by 9.15 in order to catch my last train to a destination 160 miles north of here. I shall certainly read with great care everything that has been said in case I miss anything.
I do not want it to be thought that I am against the Bill in principle. I certainly am not. I accept that a large number of your Lordships and a large measure of the

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population require such a Bill. I have no axe to grind. However, I have serious concerns about the kernel of the Bill which is Clause 1. I am concerned about the likely difficulty of interpretation. The only people I can imagine will benefit directly from it are practitioners in magistrates' courts.
In the other place this Bill received virtually no attention at Committee stage. It was discussed in a matter of minutes with about two or three people present. It received no serious attention until the Report stage when it was debated for three solid hours. In my view that debate was a complete tangle. Anyone who thinks that the interpretation by the courts or by anyone else of Clause I of this Bill will be easy has only to spend perhaps an hour reading that debate in Hansard to realise just what difficulties can, and undoubtedly will, arise.
I shall not be entirely negative. I do not wish to be negative as I recognise the demand for movement on this subject. However, I have a few points to make. What does one do about Hampstead Heath, which is partly woodland? What does one do about Richmond Park, which is partly woodland? What does one do about woodland? The Minister in the other place defined woodland, after some pressing; but there was no clear answer at the end of the debate. Let us remember that it is not the Minister's Bill. It is a Private Member's Bill although it is drafted by the Department of the Environment. The definition given by Mr. Clappison in another place referred to commercially operated woodland. I submit to noble Lords that that is nonsense. It is nonsense so far as concerns Richmond and Hampstead, and as regards dog owners. In particular, it is nonsense with regard to Moseley Bog, in the suburbs of Birmingham. My honourable friend in another place, Mr. Hargreaves, is the Member for Hall Green. Moseley Bog is beloved either by his dogs or by his constituents' dogs. I have given an illustration of the difficulty of interpreting Clause 1.
There are other illustrations. What about riding stables in the middle of a village? I realise that my noble friend will say that we are not referring to stables but to dogs. However, riding stables invariably have dogs, and so forth. The point is relevant. What about dog breeders who exercise numbers of dogs together? What about the growing commercial operation whereby people exercise dogs in groups for old people? Do they chase one dog to see what it is doing while they have four others hanging around? It may sound amusing, but the Bill has to deal with such a situation. I do not believe that the Bill as drafted is the way to do so.
There may be adequate answers to some of these points, but perhaps I may refer to hunts. They present another difficulty. I object to the inclusion in the Bill of a reference to privately-owned land, or to the need to opt out if one is a private owner. It should be a question of opting in. A private owner is perfectly capable of making his own rules on the subject. Many private owners give access to the public. Many, especially in urban areas, might wish to make their own rules. They may wish to use the Bill, but I do not think that
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stipulation within the Bill is right. Exactly the same point applies to regulators as regards private Acts and public land.
It is all very well for my noble friend who promotes the Bill to say that he does not wish to go into details. However, in legislation one has to foresee situations which may arise. Someone has to interpret the measure. For instance, let us consider canal paths with grass verges, with designated or undesignated land just beyond. When a dog fouls the footpath, there may be a need to clear up, whereas on the grass verge there is none; and on the other side again there is a need to do so.
Two aspects have never been discussed during debate on the old Bill or the new Bill. First, I refer to the question of trespass. I shall deal with the other point later. However, under the by-law authorised by the Bill, or the action of the local authority authorised by the Bill, one might commit a different offence in pursuance of the obligations under this Bill; namely, one might commit a trespass. Such matters have to be sorted out.
At col. 639 of the Official Report, Commons, of 22nd March 1996, in replying to Mr. Fabricant, my Member of Parliament, Mr. Hargreaves stated:
"Had he been at Crufts last weekend and met members of the Kennel Club and others, such as breeders, he would realise that, although there is general support for the Bill's principles, there is serious concern about its scope".
I believe that that is a valid point which noble Lords will need to take into account when considering the Bill in detail.
A number of Members, including the son of my noble friend who sits on my right, made the point during debate that they were unable to give the Bill totally adequate attention both in detail and in general. They looked to this House to debate the Bill and to produce a presentable piece of legislation on the statute book. In my submission, we must look afresh at Clause 1. It is nonsense as drafted. Ninety-five per cent. of the problem arises as a result of highly populated areas. We must concentrate on that 95 per cent. figure and get the provision right. We can leave the remainder to local authorities to deal with as they think best under the more cumbersome original by-laws. I do not suggest for a moment that there are no needs, but to seek to define them in this Bill would be dangerous and illogical.
I propose some measure along the following lines: that Clause 1 should cover public land, and public land only, within X hundred metres of any area of Y housing density. Housing density is a well known formula in various local authority Acts. Therefore one concentrates on urban areas and a small fringe around them. Everywhere else is left to the local authority to decide in the light of circumstances. I believe that there is a case for public land—I repeat, only public land—being blanket-covered by such legislation.
As noble Lords will have gathered, my main concern is as regards Clause 1. However, I wish to make a few remarks on Clause 3. One subject has not been touched on. I hope that noble Lords will forgive the lack of delicacy in your Lordships' House. I refer to

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diarrhoea—and dogs get diarrhoea, as I know to my cost. That subject must be considered. It may be impractical to deal with faeces in that situation.
I am not sure whether there is adequate exemption for dogs used for sporting purposes. I referred to this point at Committee stage of the old Bill. I am quite sure that there is inadequate provision as regards children exercising dogs—and children frequently exercise dogs. Further attention needs to be paid to presenting children with such an obligation.
I am worried about the reliance on "a reasonable excuse" which my noble friend mentioned. For several reasons it is not an adequate way of dealing with the problem. I can foresee endless arguments about what is reasonable and whether blindness and old age are covered. In particular, I do not fancy the possibility of an old lady of 80 with arthritis having to go to the magistrates' court. The situation could arise where a park keeper or someone responsible had had a bad morning, having got up with a hangover. The old lady might have to prove in court that she had a reasonable excuse: that she was too old and could not bend down or some similar reason. That aspect of the Bill requires further attention. I also believe that a maximum fine of £1,000 on a first offence is excessive.
The implication in the Explanatory Memorandum is that the Bill would cost the public purse nothing. If that includes the local authority purse, if local authorities quite rightly wish to make use of the Bill, whether or not it is amended, it would not cost very little, it would cost a great deal. I can envisage horse patrols round Richmond Park or similar activities as an excuse for a jolly time.
I hope that my noble friend will consider my remarks carefully. I have a horrible feeling that he will not because they have all been made before in the other place. The Bill has useful purposes; but it requires careful consideration at Committee and later stages. I do not believe that it is right at the moment. It will lead to much trouble for individuals and magistrates' courts.
I hope your Lordships will forgive me for taking up so much time. I am not a dog owner but I feel strongly about allowing on to the statute book a Bill which I foresee will be ineffective and troublesome.
8.23 p.m.
The Earl of Bradford: My Lords, first I should declare my personal interest in the Bill as a member of the Policy Advisory Committee of the Tidy Britain Group and also chairman of its West Midlands Consultative Committee. I should like to congratulate my noble friend Lord Northesk on bringing the Bill to your Lordships' House.
In an ideal world people would happily accept responsibility for the litter problems that they create. Sadly, as we all know, this is seldom the case and all too often the perpetrator tends to react violently when his misdeed is pointed out to him. This was pointedly, and nearly painfully, apparent to me on one occasion, just round the corner from your Lordships' House. I was at a standstill in my car in a queue on the Embankment when a lorry driver chucked a cigarette packet out of his
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cab window. I leapt out of my car and at the third attempt managed to throw the packet back into his cab and suggested, helpfully, that he put it into a litter bin instead. Alas, he obviously did not appreciate my concerned assistance, because as we rounded the bend into Parliament Square he managed very accurately to discard his cigarette directly into the air intake of my car, filling the vehicle with smoke and bringing me very quickly to a halt.
While human beings should be required to behave less anti-socially, dogs cannot be expected to control themselves to man's satisfaction. Unfortunately, and all too frequently, an owner will make that standard statement, "time to take the dog out to do its business". Too few will take a pooper scooper out with them to ensure proper clearance afterwards.
How often I have wandered happily around town only to find on stepping inside someone's house that I have brought in an unfortunate and definitely unwanted visitor with me. There is even a danger of injury from slipping over on a faeces-strewn skidpan of a pavement that is too frequently encountered and where the unnatural hazard is not easily spotted after dark. Even worse are the health worries, particularly for young children in parkland and play areas.
The public's concern about the matter was clearly highlighted in the Tidy Britain Group's attitude and awareness survey of litter and the environment of September 1995. In the survey dog fouling topped the list of concerns with a response of 74 per cent., compared with vandalism at 72 per cent. and littered streets at 56 per cent., while graffiti registered 36 per cent. We should certainly not belittle those other problems, but obviously that demonstrates where the greatest distress is caused.
The excellent purpose of the Bill is to simplify and to strengthen powers that already exist. For the Department of the Environment, it reduces a considerable amount of wasted time and expense, as present by-laws take anything up to three years to be processed. In the case of local authorities, among whose officers the Tidy Britain Group found that over 90 per cent. were wholeheartedly in favour, it creates a standardised offence: that faeces must be removed forthwith. It allows blanket designation of areas; for example, all public open spaces. At present, those areas to which by-laws apply have to be listed individually.
Most importantly for local authorities, it saves administrative time, expense and unnecessary bureaucracy, as they will no longer have to gain the approval of the Department of the Environment but can adopt measures themselves. Lastly, it speeds up the whole process enormously for them, although of course they must still go through all the usual procedures and systems, like advertising their intentions, passing proposals through appropriate committees and presenting them to the full council.
For the public, it at last gives a simple message that dog owners will now become responsible for clearing up the mess that their pets produce. Owners will still have every chance to object to proposed action in their local area. However, they are likely to find that they will

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have to bow to overwhelming pressure from others. I hope that on this occasion sense will prevail and parliamentary time will be on our side and that Britain will be able to continue the slow process of becoming a cleaner and more pleasant land for all of us to live in.
8.27 p.m.
Lord Jenkin of Roding: My Lords, I apologise for intervening in the gap, but owing to my incompetence yesterday I failed to give notice that I wished to speak on the Second Reading of the Bill. Like others, I congratulate my noble friend Lord Northesk on bringing the matter forward again in an obviously significantly improved form, compared with the previous Bill. I listened with great interest to my noble friend Lord Harrowby who seemed to have several points which will need to be addressed during the Committee stage.
My excuse for intervening, I hope briefly, is that in another place I represented the constituency of Wanstead & Woodford. Several parts of Epping Forest were included. Epping Forest was a substantial amenity for the whole of east and north-east London; "a lung for London" was a phrase frequently used. The forest's history goes back to the Epping Forest Act of 1878; it was constituted by Act of Parliament. The conservators who run Epping Forest are currently the Corporation of the City of London. I am sure that the noble Lord, Lord Graham of Edmonton, will remember occasions when that remarkable Member of Parliament, Arthur Lewis, not normally an admirer of the Establishment, used to stand up in another place and sing the praises of the corporation for what it did for Epping Forest, on the fringe of his constituency. Indeed, all the Members representing constituencies in that area owed the conservators and the City of London Corporation a great deal for its magnificent administration of what is now six-and-a-half thousand acres of forest.
The Bill as originally introduced allowed local authorities to designate land such as Epping Forest under the provisions of Clause 1, whether the managers of the land—in this case the conservators, who are also the owners—wanted it or not. One has only to examine it to see what the effect of that might have been. The effect of designation would be to take the responsibility for enforcing the anti-dog fouling provisions out of the conservators' (the corporation's) hands and give that function to the local authorities for the areas concerned.
That may seem a perfectly simple proposition. However, an area like Epping Forest lies within a number of different local authorities. The boundaries follow absolutely no defined line across the forest. There would therefore be considerable doubt as to which local authorities would be responsible for policing in a particular area. It would give rise to the possibility of different sets of officials from different local authorities attempting to enforce anti-dog fouling laws on different parts of the same open space owned by the corporation. Apart from being quite extraordinarily bureaucratic, this would give rise to all sorts of difficulties, as I say, in
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regard to boundaries. Epping Forest extends from well into north Essex right down to the London Borough of Newham.
A further difficulty, therefore, in applying the legislation on such land as this is that it would give rise to a sort of patchwork quilt effect. Parts of the land would not be subject to the dog fouling offence even if the land was designated. That could not possibly be a recipe for efficient enforcement.
The matter goes further than that. Where parts of Epping Forest are already subject to dog fouling by-laws, the Bill would have compounded the problems. A good example of the kind of land I have in mind is West Ham Park. That lies to the south of the Wanstead Flats and within the borough of Newham. There is a scheme in the park imposed under the powers of the private Act. The corporation's staff enforce the scheme as part of their normal keeper duties. Under the Bill as it was originally presented to Parliament, the local authority would have become the designating authority. Once the land was designated, it would be subject to the new dog fouling offence created by the Bill, and the corporation's own by-laws would cease to have effect. Then, those new laws could be enforced only by the staff of the London Borough of Newham. The situation would have arisen whereby the corporation's staff would have to sit on their hands so far as dog fouling controls were concerned, leaving a second lot of officials to carry out the functions under the Act. That would be wholly inappropriate and would probably result in the laws not being enforced at all.
Happily, in another place those difficulties were recognised and Clause 1(4) of the Bill that is now before us deals with the matter. Clause 1(4) would in effect allow the corporation, as owners and conservators, to decide whether the Bill should apply in its open spaces.
My noble friend Lord Harrowby, as I understood him, was critical of that provision. I shall want to examine carefully why he felt that position was wrong. It may be that it can be framed in some other way. However, as I hope I have persuaded the House, without such a clause one would be landed with a considerable bureaucratic mess. I am happy to give way to my noble friend.
The Earl of Harrowby: My Lords, perhaps my noble friend will allow me to explain my point. I was advocating that, like private landlords, the conservators should have the right to opt in, not opt out. I was thinking on the same lines as my noble friend.
Lord Jenkin of Roding: My Lords, I should want to examine that point rather carefully. What is absolutely essential is that there should be a provision, however couched, which at the option of the landowner can allow the Act to be disapplied. That seems to be the point.
There are places where there are already dog controls and it would be perfectly proper to enact the Bill's controls—for example, the village greens at Theydon Bois and Epping Green, where there is already a good system but it would make sense for measures to be enforced by the local authorities.

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The conservators now support the Bill in its present form. I hope that Clause 1(4) will form part of it when it reaches the statute book—as I hope it will. My noble friend Lord Harrrowby made a number of criticisms that we shall have to examine in Committee.
8.35 p.m.
Lord McNally: My Lords, I am very pleased to support the Bill. I thank the noble Earl, Lord Northesk, for the very clear way in which he took us through its provisions. I am sorry that the noble Earl, Lord Harrowby, has to leave at 9.15 since he is likely to miss half of my speech in so doing! Nevertheless, as he said, he will be able to read it.
One thought comes to mind in relation to this debate. There is one person who is missing and who, I am sure, would have been here given his great interest in these matters. I refer to Lord Houghton of Sowerby. I knew and loved Douglas Houghton during all my political life. I was very sad at his passing. It is poetic that we debate a Bill that would have been so close to his heart on the briefing of the Pet Advisory Committee, of which he was president. The committee states:
"irresponsible owners who fail to clear up after their dogs cause understandable nuisance and distress to other members of the community and bring all dog owners into disrepute".
That is the crux of the Bill. One of my friends, who is a dog owner, on learning that I intended to speak in this debate, said: "I do hope it's not going to be one of those 'beat up the dog owners' Bills". As the noble Earl, Lord Northesk, presented the Bill, it is quite clearly not that. It is a necessary measure to encourage responsible ownership.
I intervene to state very clearly my experience of the past six years. Six years ago, perhaps rather belatedly in life, I became a parent and became very aware of the conflict between dog ownership and the freedom and health of children. I have lived in two places during that period: Hackney and St. Albans. I shall detain the House briefly with a description of my experience in both places.
Hackney is an Inner London Borough where there is a great deal of social deprivation. In the community there is a great fear of crime. There is no doubt that in recent years that fear has led to an increase in the ownership of dogs—not as pets in the classic sense, but as a form of protection and deterrence. Anybody who has canvassed on an inner-city estate knows the truth of that, and knows the size and ferocity of the dogs kept.
At the end of the road where we lived in Hackney there was a public park which an earlier generation of city fathers had provided for rest and recreation amid the hubbub of city life. Quite frankly, it could no longer be used for that. It was, and probably still is, a dogs' lavatory, where very large animals are taken out from the high-rise flats and houses around to defecate. They make that park unusable by children or residents in the neighbourhood.
More genteel St. Albans, one would imagine, would not have the same problem—well, maybe not with that kind of intensity. But let me take your Lordships on a walk of about a mile and a half from my six year-old's
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school to our home. It is rather a pleasant walk. But the pathway which covers about 400 yards from the school gate to a park is covered with dog mess, despite the fact that there are notices from the council under the by-law provisions. The sports field, which we can walk across, is used by residents who walk their dogs not inconsiderable distances to use the facilities of the field.
Irony of ironies, about one-fortieth of the field is fenced off as a play area and dog free. A copse, which in my childhood I would have used for adventure and exploration, equally is unusable by children. A disused railway line which has been turned into a nature walk is littered with dog faeces and mess.
The fact is that for children, their mothers and those concerned with children, the tensions between dog owners and children are very real. It worries me that, at the moment, although undoubtedly there are responsible dog owners, there are many quite respectable people who do not see in any sense irresponsibility or danger from allowing their dogs to defecate at will in public places. I know, because when my wife, who is somewhat tougher than I am in these respects, has challenged dog owners, she has been roundly abused for her trouble.
So there is a need, even beyond the proposals of this Bill, for education on quite a grand scale before we get the change in public attitudes that is wanted. Probably some time in the 21st century the idea of allowing a dog to defecate at will in a public place will seem as strange and alien as the practice of people in the Middle Ages who poured the contents of their chamber pots from their upper windows. The truth is that at the moment there is not that public understanding.
The noble Earl, Lord Harrowby, misses the psychological frame of mind of a dog owner, who does not have to take out a copy of the Bill and look very carefully to see whether the dog is defecating in a designated place. There should be an attitude of mind: if you can clean up the mess, then clean it up, wherever it is, rural or urban. There should be an attitude of mind which recognises the distress that dog fouling causes to a large section of the community. It is in no way being a dog lover to defend or try to justify anti-social behaviour.
I do not consider this Bill to be nannying legislation, in the terms in which the noble Earl put it forward. It is a necessary step in the process of public education to which I referred. The 1994 Advisory Group on Litter made an overwhelming case for action, as did the Tidy Britain Group under the noble Earl, Lord Bradford. But, as well as legislation, we need a clear response from dog owners and those associated with dogs. For example, I welcome the initiative of the Good Dog campaign, which is financed by Pedigree Petfoods. A lot of money is made from the sale of dog food. A lot of money is spent on advertising dog food. I suggest that as well as that welcome initiative, the dog food manufacturers could spend a lot more on educating dog owners in social responsibility.
So too could some of the animal charities. It is not in the interest of the animals to have tensions between parents and dog owners. I would also encourage

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newspapers to take on their responsibility. A couple of years ago the Independent ran an excellent Dirty Dog campaign. There is a need to lift public awareness and make dog fouling not a matter of legislation but of education, so that we, as a nation of dog lovers, can also be seen as a nation which is socially responsible and health conscious in respect of dog ownership.
This is a good measure. It may well be improved in Committee. I commend it to the House.
8.46 p.m.
Lord Graham of Edmonton: My Lords, as is usual, I speak in a personal capacity to a private measure. The noble Lord, Lord McNally, made a great deal of sense. He echoed my thoughts on a number of aspects of the legislation. The noble Lords, Lord McNally and Lord Jenkin, like myself, have been Members of Parliament for a constituency. There were many occasions, during the time when I was Member for Edmonton, when I received petitions and deputations to do something about the state of certain streets and little community areas which were generally near a public park.
The council was concerned, as was the community. The intention was always good. By and large, if one has to choose between the welfare of dogs and the welfare of children, then—I do not need to spell it out and there can be no argument—the health of the child is paramount; not the freedom of the dog to defecate wherever it wants.
How do we address the problem? The noble Earl, Lord Harrowby, did the House a service when he told us that the Bill was drafted by the DoE. It seems that the department can see the problem because it has been passed on to someone else to have an airing. I do not object to that. Clearly, this is a matter which has to be tackled seriously and sensibly, whether one talks in terms of large sums of money, enormous expenditure of time or, as the noble Lord, Lord McNally, said, an education programme among the community.
I have had the same experience as the noble Lord. I have been unable to understand how dog owners can believe that a public park is a place to take their dogs to defecate. Such dog owners may very well have children themselves, children who sometimes complain or cry because they have put their foot into something left by their dog or someone else's. The noble Lord is right. They cannot understand what we are trying to do in asking them to recognise the problem.
The noble Earl, Lord Harrowby, should not feel uncomfortable at raising his points. He has served notice on the House that, if the Bill is to make progress, it needs further debate on suitable amendments. We look to those debates. He said that 95 per cent. of the problems were concentrated in urban areas. I do not disagree. We understand the difficulty in trying to get those responsible for that 95 per cent.—dog owners, the councils, councillors and the law—to do something about fouling. By and large, they have failed abysmally. There is a clean-up campaign and an improvement taking place. But there are great problems also with the
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5 per cent. The League against Cruel Sports drew my attention to a number of problems that already exist where people die as a result of hydatidosis. That is a disease from which at least 12 people a year die from cysts caused by tape worms and several hundred undergo surgery to remove cysts.
One cannot ignore the problem. Tonight sees an attempt to solve it. But, to be honest, I am pessimistic. I am not saying that more money is needed or making a complaint. Not only constituency MPs, but also those, like the noble Lord, Lord Jenkin of Roding, who have served on councils, know the problems of resources, priorities and so forth. There will be a swell of opinion in a council and in a community that something needs to be done. There may even be talk of employing dog wardens and publicity. But, given the money required for education, housing or transport, I cannot argue that those services should be diminished in order to provide more money for this Bill.
Somehow or other the department must examine the seriousness of the issue. As in most things, the intentions are good but enforcement is difficult. It is difficult to deliver that which legislation says is right. It was said, according to my note, that no one gives a God-given right to dogs to foul in public places. I owned a lovely Labrador called Kylie for 15 years. We were extremely conscious of attempting to train her to defecate within the curtilage of our house, in part of the garden which we meticulously and scrupulously cleaned ourselves. Obviously, there were occasions when our dog defecated in places where we would have preferred that it did not. However, we were conscious of trying to avoid that happening.
When one speaks of large groups of dogs, such as hunts, it is difficult to make sure that the dogs run only within designated areas. Dogs are dogs. Not only do they defecate; they are not always easy to control. Members of this House probably know the terminology better than I do. I seem to recognise the term "whipper-in". Some people are responsible. But we are discussing two different species, the human and the canine. We are trying to marry up the interests of a civilised community with those of the canine. I do not relish living in a community which is more regimented than our own whereby dogs are virtually non-existent. We are a dog-loving nation—of hunting dogs, terriers or pets. We want to do nothing that destroys that.
The noble Earl, Lord Harrowby, raised an interesting point about reliance on the term "reasonable excuse". I can understand that many people who take their dog out for a walk may not be conscious of every movement the dog makes. To that extent they may have a case for saying, "We did not realise it was happening."
The Bill is sincere and merits further consideration. We are all conscious of the problem, but in a busy life we are not certain that it takes priority over others. Unless and until the Government, through the department, take the matter more seriously than they are, simply by drafting a Bill and flying a kite here tonight, the solutions are far away.
8.55 p.m.
Lord Lucas: My Lords, I am grateful to my noble friend Lord Northesk for his admirable introduction to the Bill and for setting out so clearly how the Bill differs from the one which we considered last October. I join him in congratulating my honourable friend Andrew Hunter, who introduced this Bill in another place. I am grateful too to other noble Lords who contributed to today's debate.
The subject of dogs undoubtedly generates great passion and a great divergence of views. But there is one issue on which most people would agree; that is, that the fouling of our streets, parks and other public open spaces by dogs is unacceptable. That was echoed by my noble friend Lord Bradford and others in this House this evening.
At present, local authorities have a duty to keep most public areas clear of dog faeces. However, a local authority in England and Wales cannot prosecute anyone for failing to clear up after their dog unless the council adopted an appropriate by-law and that by-law was confirmed by the Secretary of State. The Advisory Group on Litter concluded that by-laws are not the best way of tackling the problem. It suggested that there should be nationally defined offences of failing to clear up after one's dog. The Government accepted that and the Bill seeks to fulfil that aim.
I agree with my noble friend Lord Northesk that the Bill is an improvement on the one which we had before us last year. It addresses in particular concerns expressed in this House about applying this kind of offence in the countryside. By virtue of Clause 1, the offence in this Bill cannot apply on land used for agriculture or for woodland, land which is predominantly marshland, moor or heath, rural common land or carriageways with a speed limit of over 40 miles per hour. Furthermore, it cannot apply on land to which the public are forbidden. As before, a local authority may not impose a "poop scoop" requirement against the wishes of the landowner or occupier. Finally, where land is subject to regulation under a private Act, the local authority cannot impose the new system against the will of the person exercising that power, as my noble friend Lord Jenkin explained.
My noble friend Lord Harrowby expressed surprise at the laughter which accompanied his initial announcement. I can assure my noble friend that it was merely nervous laughter at the prospect of the length of his speech which would be required in order to keep us here until 9.15 p.m. It may have been justified nervous laughter. I am afraid that I cannot give him any considered reaction to the many points he raised. Perhaps I may run through just a few of them. In relation to riding stables, the faeces in that regard are of a different nature and are entirely people-friendly. On the other hand, in relation to hunts the faeces are not people-friendly.
The Earl of Harrowby: My Lords, I thank my noble friend for allowing me to intervene. I thought I had explained that we are not talking about the faeces of horses; we are talking about the faeces of dogs which habitually live in riding stables and go with the riding team.
Lord Lucas: My Lords, we see no reason why dogs associated with riding stables or hunts should require a special licence to foul land.
In relation to private owners, we believe that they are put in a secure position by the Bill. Private land can only be designated if it is open to the air and the public have access, and it is not one of the types of land described in Clause 1. The designation procedure will allow landowners to make representations. Even if the local authority decides to go ahead with the designation, the owner, occupier or other person having control of the land can agree generally or in specific cases that dog mess need not be cleared up. I believe that that puts private owners into the position where they need not he concerned in any way about the effects of this Bill.
As regards trespass, that would not be relevant at all, as designations can be made only on land to which the public are permitted or are entitled to have access. So land where the offence of trespass is possible cannot be designated. As regards some of the other small points which my noble friend raised, Hampstead Heath is not a heath and it is also City land so it will come under Clause 1(4). "Woodland" is land used for woodlands, as was said in another place. It is very much a question of it being commercial woodland or having other purposes. We do not see any reason why dog walkers should be exempt and the dogs be allowed to foul land any more than any others.
As regards diarrhoetic dogs, that would count as reasonable excuse, as would offences committed by dogs belonging to arthritic 80 year-olds. On the question of children exercising dogs, that will very much depend on the circumstances as to whether they should he expected to have control. If sporting dogs are at large in the areas to which this Bill applies, we do not see why they should have any special exemption.
It is not possible to address all the detailed points which my noble friend makes. Clause 1 sets out descriptions of land which local authorities cannot designate. The Bill does not seek to identify "urban" because of the practical difficulties of finding a suitable definition. That is why the Bill takes the approach that it does. The alternative suggested by my noble friend would be just as fraught as he suggests Clause 1 to be.
This Bill also introduces the concept of a fixed penalty for the offence created under it. The Government fully support that. It will mean that local authorities shall be able to enforce the new offence without every offender having to go to court.
As the noble Lord, Lord McNally, said, much can be done by education and partnership between local authorities and the general public. Indeed, I had the pleasure this year to present the local authority "Good Dog" awards backed by Pedigree Petfoods. Indeed, I presented them in the Pedigree Cholmondeley Room, which seemed to me to be very appropriate!
We clearly need stronger and more effective legislative back-up than we have at the moment. As the noble Lord, Lord Graham of Edmonton, said, this Bill is no panacea and there is nothing that is perfection about this legislation, although it is a considerable improvement on where we are at the moment. The

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Government consider that this Bill is a measure that will be broadly welcomed and that it undoubtedly deserves the support of your Lordships' House.
9.2 p.m.
The Earl of Northesk: My Lords, we have had an interesting debate. I take this opportunity to thank my noble friends Lord Bradford and Lord Jenkin of Roding for their support. I am pleased to have confirmation of the backing of both the Tidy Britain Group and the Corporation of the City of London.
I referred in my introduction to the improved Clause 1 which enables the Corporation and others to take responsibility for their own by-laws. It is gratifying to note that they already have plans well in hand for making Epping Forest, and other areas under their control, cleaner and safer places should the Bill be enacted.
I am bound to say to my noble friend Lord Harrowby that I believe his anxieties to be misplaced. As a general principle, the difficulties of interpretation to which my noble friend alludes, do not present problems to the existing by-law system. The reality is that the powers of designation granted under the Bill to local authorities are in no way any greater than those to which they already have access under the by-laws system.
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Furthermore, the provision that local authorities publicise giving effect to the designations provides an additional safeguard.
That said, I shall read my noble friend's remarks very diligently in Hansard tomorrow and give them all due consideration. No doubt we shall return to them in greater detail at Committee stage. I am grateful also for the support of the noble Lord, Lord McNally. My wife, like the noble Lord's wife, is much more rigorous over this issue than myself. I am also grateful to the noble Lord, Lord Graham, for his albeit qualified support and to my noble friend the Minister. I can but hope that, notwithstanding the anxieties of my noble friend Lord Harrowby, the general enthusiasm for the provisions of the Bill presages a fair wind for its passage during its remaining stages. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

University of London Bill
Brought from the Commons, read a first time, and referred to the Examiners.
House adjourned at four minutes past nine o'clock.