Lords Sitting of 21 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 Coventry.

NHS Trusts: Government Guidance
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
Whether they have issued or are issuing any new guidelines to National Health Service trusts following the National Audit Office report on the Yorkshire Regional Health Authority.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, guidelines were in place on most issues before the National Audit Office published its report. The National Health Service Executive has nevertheless clarified its guidance on a number of points raised in the report.
Lord Dean of Beswick: My Lords, I am grateful for that reply. I know that the Minister studies these matters thoroughly. Does she recall that two or three years ago your Lordships' House spent much time discussing the Wessex and West Midlands health authorities as regards which some serious financial irregularities had arisen? The report states quite clearly that the same irregularities were occurring in the Yorkshire health authority at the same time. It would appear that there was an epidemic of such incidents at that time. Will the Minister try to persuade the Secretary of State to investigate health authorities as I believe that much money has been misused that could be reclaimed to the advantage of the health service? Is the Minister also aware that Mr. Alan Langlands, the chief executive of the health service, said that Mr. Keith McLean, who was involved in the incident I am discussing, would not be offered another contract by the National Health Service but nevertheless he has been given one by a National Health Service trust based in Mansfield? Will the Minister explain how that can occur?
Baroness Cumberlege: My Lords, I refer first of all to the Wessex situation which was on a completely different timescale from the Yorkshire situation. The Wessex incidents occurred in 1987 to 1989. In 1990 that whole project was abandoned. In the case we are discussing the first improper payments came to light in 1992. Therefore, it was a totally different timescale. This practice is not widespread. It would be remiss of the noble Lord to suggest that it is. It was in the 1990 legislation that we introduced the Audit Commission to supervise and monitor regional health authorities, district health authorities and trusts. Indeed the Audit Commission unearthed this particular instance. It has reassured us that there are no other cases pending at the moment. Finally, on the question of the job that was
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offered to Mr. McLean, we have to look at the laws governing this land. It was a different employer because trusts have employment contracts with individuals. They are not employed by the National Health Service per se.
Lord Clark of Kempston: My Lords, does my noble friend agree that in an organisation employing over a million people quite obviously every now and again there will be cases of human error, deplorable though that may be? Does my noble friend further agree that the way the health service has been run in the past 15 or 16 years has resulted in lower waiting lists and more treatment for patients? That is one aspect of the health service that we should surely blazon from the hill tops.
Baroness Cumberlege: My Lords, I thank my noble friend for those contributions. Of course he is absolutely right in that the health service has never been better as regards the services it gives to patients. I agree with his first comment. One has only to look at organisations such as the Salvation Army, of which I am a great admirer. It also has had problems in terms of a few million pounds walking away, but it has also recovered them.
Lord Carter: My Lords, is the Minister aware that with the scandals in health authorities involving their purchasing and employment practices, the hospital consultants association is forecasting—in its words— a financial meltdown for NHS trusts? The Audit Commission has called into question the claimed benefits of GP fundholding and the Secretary of State has had to launch a major initiative to reduce the mountains of paperwork which are the direct result of the Government's own policy. Is the Minister still absolutely sure that the internal market is working?
Baroness Cumberlege: Yes, my Lords. I am sure the noble Lord will agree that Ms. Harriet Harman also agrees with that. In the "Today" programme only this week she said that if the Labour Party came into power it would want to keep the purchaser/provider split. We are at one on that. Of course consultants and doctors in the health service are finding some of the changes difficult, and some of that is because they are being called to account in a way that they were never previously called to account.
Lord Carter: My Lords, if the Minister does not know the difference between the purchaser/provider split and the internal market, it is no wonder that the NHS is in such a mess.
Baroness Cumberlege: My Lords, I think the noble Lord totally misunderstands the purchaser/provider split and the internal market.
Lord Mackie of Benshie: My Lords, is the Minister aware that the Salvation Army got back the money?
Baroness Cumberlege: My Lords, yes, I said that it did; and in this case we also got back a great deal of the money.
Baroness Hayman: My Lords, I speak as one who has had experience of and battle scars from the past five years of the internal market in the NHS. Does the Minister accept that there is a large difference between separating responsibility for assessing health needs and responsibility for providing it; and what is the time-wasting, money-consuming, paper-chase of the internal market that diverts us from clinical priorities?
Baroness Cumberlege: My Lords, I am sure that the noble Baroness will agree with me that before the purchaser provider split we saw fewer patients, as my noble friend said. We treated fewer people. We had much longer waiting lists; we had "never-never" waiting lists; patients recognised that they would never be treated. Today we have brought the waiting time down to under two years, under 18 months and, in the West Midlands, under six months. That is a huge improvement. We are seeing general practice undertaking more and more. Primary care is being strengthened in terms of vaccination and immunisation. We have almost eliminated measles, the first country in Europe to do so. The successes go on and on.
Lord Dean of Beswick: My Lords, I am sorry to disagree with the Minister's answers; I do not usually do so. However, when comparing the timescale between Wessex and the West Midlands, is the noble Baroness aware that I did not quote my own figures but the observations in the report by the Comptroller and Auditor-General?
Finally, I am deeply concerned, as I am sure that most noble Lords are, that, while Mr. Alan Langlands, the top person in the National Health Service, has stated that Mr. McLean will not be offered a contract because of his conduct in this area, there is no mechanism to prevent him obtaining a contract from a national health trust in another area. Is that what the Minister is saying? If so, the legislation needs altering very quickly.
Baroness Cumberlege: My Lords, this is a question of employment law. If the noble Lord feels that the legislation is wrong, he will have to bring a Bill through Parliament and change the employment law. Individual contracts for employees are held with individual employers. In this case, as the noble Lord is aware, regional health authorities, other health authorities at district level, former FHSAs, and trusts, hold the contracts.
Finally, I respect the noble Lord, Lord Dean of Beswick. He has diligently sought to ensure that the health service provides good services with propriety. I respect that and I thank him for bringing this to our attention.

Youth Service: Funding
2.46 p.m.
Lord Rochester Lord Rochester asked Her Majesty's Government:
Whether they will review the current arrangements for funding the youth service.
The Minister of State, Department for Education and Employment (Lord Henley): My Lords, we have no plans to do so. The Government provide grant to
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fund all the services for which local education authorities are responsible. This grant is not earmarked for specific services. Arrangements for funding youth services will continue to be a matter for local authorities. My department also funds local education authorities to train youth workers through its programme of specific grants for education support and training.
Lord Rochester: My Lords, does the noble Lord accept that over the last four years for which figures are available there has been a reduction of 22 per cent. in the funding of the maintained and voluntary sectors of the youth service? The reduction is even greater in London boroughs and other metropolitan areas. It is attributable to the increasing pressure on local authorities. As the Government continue to express concern over youth crime, drug addiction and truancy, will they urgently reconsider their policy of ending their direct spending on services that provide positive alternatives to criminal and disruptive behaviour by young people?
Lord Henley: My Lords, perhaps I may start by correcting the noble Lord's figures. The amounts spent by local authorities over the last four years for which we have figures (up to 1994–95) have remained in real terms broadly consistent. I accept that the figures have fallen, as the noble Lord puts it, in particular in inner London. However, the amount spent per head is still considerably larger than the amount spent in other parts of the country.
We believe that it is for the local education authorities to decide how they should spend their resources. It is for them to assess their priorities and not for the Government.
Baroness Carnegy of Lour: My Lords, will my noble friend confirm that the answers he gave relate to England and Wales and not to Scotland? People sometimes are a little confused when the figures differ, the funding being different in Scotland.
Lord Henley: My Lords, although at the Dispatch Box we generally answer for Her Majesty's Government and therefore for the United Kingdom as a whole, on this occasion the figures relate to England and Wales, for which my department is responsible. If my noble friend wishes for either myself or one of my noble friends in the Scottish Office to write to her giving her appropriate figures for Scotland, we shall be more than happy to do so.
Lord Howell: My Lords, the demise of the youth service can be traced back to the decision to abolish the Youth Service Development Council. That led to the closing of many training colleges for professional youth leaders. It has had extremely unfortunate results, in particular in the inner cities, which demonstrate the results of so much boredom because no trained leadership or facilities exist. Would it be a good idea for the Government to re-establish something like the Albemarle Committee which a previous Conservative Government set up? It could review the serious situation existing in the youth service and come forward with recommendations which perhaps we could all accept as being pertinent to the problems facing young people today.
Lord Henley: My Lords, again I start by correcting the noble Lord. There has been no demise of the youth service, which continues in all local education authorities throughout the country. Most authorities provide a good service; some are trying new, interesting and innovative ideas. As I made clear earlier, the amount of money spent by local education authorities has remained broadly consistent over the past few years. I dare say it will remain the same in subsequent years. It is a matter for the LEAs themselves to decide on their priorities. It would not be right for the Government to impose a diktat in the area.
Lord Wyatt of Weeford: My Lords, will the Minister give an assurance that in no way will the Government fund any kind of youth service by stealing £2 billion or £3 billion of shareholders' money from the privatised utilities—because that is the intention of the Labour Party in funding its youth scheme?
Lord Henley: My Lords, as I understand it, the party opposite has plans to steal a great deal of money from the privatised utilities and spend it not once, not twice but of the order of 10 times over.
Baroness Turner of Camden: My Lords, does the Minister agree that it would be a good idea if we spent more money than appears to be spent at the moment on the youth service? Is he aware that the Council of Local Education Authorities has advised us that the funding of the youth service is a continuing problem, as LEA grant settlements become less and less adequate? For an LEA with a priority in the area of teachers' pay—which is one of the first priorities—discretionary grants come much lower down the agenda. For that reason, I fear, the youth service advises us on this side of the House that it currently faces a severe crisis, particularly in London.
Lord Henley: My Lords, I am interested in that further commitment to spending from the party opposite. I dare say that the noble Baroness has checked it with the Shadow Chancellor of the Exchequer. I believe I can say that her party will probably spend the money it plans to raise from raiding the privatised utilities not 10 times but 11 times over.
We make considerable sums available to local education authorities for education. It is then up to those authorities to decide on their priorities. We increased the SSA for education by nearly £1 billion this year. It is therefore for the local education authorities to decide on their priorities. I do not believe that the party opposite would like me to start telling its members exactly how they should spend the money.
Lord Howell: My Lords, is the Minister aware that one cannot escape spending money? As a result of the Government not providing facilities, there is the cost of delinquency and hooliganism in our society which cannot be lost. It must be met by police committees and by the Government themselves. When the Minister makes such statements, will he please discuss the finely judged balance between the cost of providing youth facilities and the cost when the Government fail to provide such facilities?
Lord Henley: My Lords, what the noble Lord said is simply nonsense. We are not failing to provide resources for the youth service. We provide money through the educational side of the standard spending assessment for local authorities. It is up to them to decide on the appropriate priorities, and they do so, because spending has remained broadly the same throughout the United Kingdom and throughout England over the past few years.

Female Offenders: Non-custodial Sentences
2.53 p.m.
Lord Hylton Lord Hylton asked Her Majesty's Government:
Whether they will issue guidance intended to reduce to a minimum the imprisonment of women responsible for the care of young children and to encourage the use of non-custodial sentences.
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, within the limits laid down by Parliament, it is for judges and magistrates to decide what sentence to impose. It would not be appropriate for the Government to give them any guidance on this. However, I know that judges and magistrates take account of the circumstances of the offender as well as the offence when considering the most appropriate sentence available to them. I am also aware that the Magistrates' Association is currently revising its guidance to magistrates on sentencing.
Lord Hylton: My Lords, the noble and learned Lord is well known for his care for the interests of children. Does he agree that the number of women in prison in the last three or four years has risen twice as fast as the number of men and that approximately half the women have dependent children? Does that not indicate a real need for more guidance than is currently available to magistrates' and other courts?
The Lord Chancellor: My Lords, I am concerned about the issues which the noble Lord raised. My understanding is that the pattern of sentencing for women, to which the noble Lord referred, is related to the nature of the crimes in respect of which women are sentenced. I am told that between 1991 and 1995 the numbers of women sentenced for violence against the person, robbery and drug offences rose by 46 per cent., 128 per cent. and 41 per cent. respectively. So it is not surprising that there should be some, perhaps not immediately corresponding increase, but an increase in the sentences of imprisonment.
Lord Irvine of Lairg: My Lords, will the noble and learned Lord confirm that in a recent case where a husband and wife had both been imprisoned because both had falsely claimed that she had been driving when he was the driver, the Court of Appeal, in quashing her prison sentence, emphasised that the courts are always reluctant to send the mother of young children to prison? Is the noble and learned Lord also aware that there is a disquieting number of cases throughout the country in which women who are responsible for the care of young

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children are being imprisoned because they are fine defaulters? That is happening to the great prejudice of the children. Will the noble and learned Lord take the opportunity of the Question to emphasise to the magistrates' courts that imprisonment must be regarded as a punishment of last resort and that responsibility for the care of young children is a major factor telling against a sentence of imprisonment?
The Lord Chancellor: My Lords, on the first matter, I confirm from my recollection what the noble Lord said about the case. On the second part of the question, it needs to be clear that imprisonment for fine default is in the nature of a last resort. The higher courts, the Divisional Court in particular, have emphasised the point to magistrates. That would be more appropriate than my doing so from this position. I do it, therefore, by reference to a quotation from the judgment in the Divisional Court of Lord Justice Simon Brown in the case of Cawley in November last year. It is not related particularly to women but generally to fine default. He said:
"Of course there are occasions when detention is called for when the defaulter is cocking a snook at the enforcement system and this ultimate sanction is necessary to underpin it. But it really must be a last resort".
Baroness Williams of Crosby: My Lords, I accept what the noble and learned Lord said about the rise in serious offences among women, although he will agree that the numbers involved in the beginning were relatively small. However, perhaps I may press him further on fine defaulters. I believe he will confirm that quite a few cases of judicial review have set aside the decisions of magistrates' courts to send fine defaulters to prison. Given that prison costs £500 a week per person, and that many fine defaulters are inside for relatively tiny financial debts, could the noble and learned Lord consider any way in which he could draw the attention of magistrates' courts to the decisions of higher courts in many cases?
The Lord Chancellor: My Lords, the decisions of the higher courts are brought to the attention of magistrates. The noble Baroness's point is made in the judgment of Lord Justice Simon Brown in the sentence following the passage which I have just read. He was dealing with a young person and he said:
"To send a young person into custody, sometimes following an offence not itself punishable by custody, with all that that involves, not only for the defaulter but in the way of prison overcrowding and public expense (cancellation of the fine apart) is no small thing".
There, the Divisional Court expresses itself in a way that is much in accord with the question which the noble Baroness asked.
Lord Taylor of Blackburn: My Lords, is the noble and learned Lord aware that many of us who have sat on the Bench for many, many years are most reluctant to send people to gaol, and it is done only as a last resort? Many of us on the Bench who give our time voluntarily realise the consequences and the cost involved. We do everything in our power to try to avoid people going to prison. It is only a last resort.
The Lord Chancellor: My Lords, I am sure that the noble Lord expresses the sentiments of many magistrates who give their service voluntarily to this particular responsibility. There are over 30,000 of them up and down the country. Their service in this connection has to be taken note of. I believe that the sentiments expressed by the noble Lord are widely shared by the magistracy.
Lord Gisborough: My Lords, does my noble and learned friend agree that when, for example, a woman on benefit who has a child is fined for having no television licence, the only way she can pay the fine is by starving her child, going out onto the street or bringing in a boyfriend. None of those methods contributes to her future and may lead to a charge in terms of the national health in the future. Will the Government try to introduce some method whereby those sorts of people are able to do piecework in order to earn money to pay off the fine rather than having to go out onto the street?
The Lord Chancellor: My Lords, the question of non-payment of the television licence fee is certainly a difficult one. Perhaps the most practical way of dealing with it is to try to introduce some system of smaller payments spread over a year, instead of the present system, in the hope of avoiding the need for action on the basis of evasion. It is a very difficult problem. As noble Lords know, so far it has not been possible to have a person's television set turned off if that person has not paid the licence fee.
Baroness Hayman: My Lords, is the noble and learned Lord aware that the noble Baroness who spoke from the Liberal Democrat Benches is correct in saying that the increase in the number of sentenced women is due not only to an increase in the number of violent offences but to an increase in the readiness of courts to imprison non-violent female offenders? Given the overall damage to society when the mothers of young children are imprisoned, is that not a course that we should follow with the greatest reluctance?
The Lord Chancellor: My Lords, the explanation for the rise in respect of sentence following on conviction is the one that I gave. The sentiment expressed by the noble Baroness is very much the same as that expressed earlier by the noble Lord. I am sure that these issues are in the minds of judges and magistrates when they come to sentence any particular case.

Russian Nuclear Submarines: Decommissioning
3.3 p.m.
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
Whether they have offered technical advice and other assistance to the Russian Government as part of an international scheme to help with making safe the decommissioning of redundant Russian nuclear submarines.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, Russia has not sought international assistance in decommmissioning its nuclear submarines, and there is no international scheme specifically working on this issue. However, UK experts from AEA Technology are undertaking a feasibility study for the safe removal and storage of unstable spent nuclear fuel from the Russian support ship the "Lepse" in Murmansk harbour.
Lord Campbell of Croy: My Lords, I am grateful to my noble friend for that reply. I am glad to think that we are helping in some way. Do the British Government accept that the Russians have a problem in disposing of many submarines containing elements of nuclear reactor engines and that, for reasons of safety and prevention of serious pollution, special measures will be needed that are likely to be expensive?
Baroness Chalker of Wallasey: My Lords, we do accept that there is a real problem. That is why the United Kingdom has been playing a key role, along with our G7 and European Union partners. Real progress is being made in the Ukraine, Russia, Lithuania and Bulgaria. The environmental concerns about a whole range of nuclear safety issues in Russia, including the disposal of nuclear components of obsolete vessels, are well recognised. In addition to the work being done by AEA Technology, MoD and MAFF scientists are also contributing under the auspices of the IAEA to a Russian/Norwegian programme to assess the implications of past dumping operations. Progress is being made. We welcome the Russian commitment last month to accept formally this year an amendment to the 1972 London Convention banning the dumping of all radioactive waste at sea permanently. We expect Russia to adhere to that commitment and we are doing our best to help Russia do so.
Lord Williams of Elvel: My Lords, I am grateful to the noble Baroness for that information. Do the Government have any feel as to the extent of the problem north of Murmansk? As the noble Baroness will be aware, there are press stories that many nuclear reactors from Russian submarines have simply been dumped in the sea without any protection at all. Is there any estimate as to how many and what the effect might be?
Baroness Chalker of Wallasey: My Lords, I, too, read the Sunday Telegraph article. It is very difficult to know the precise figures since they are literally known only to the Russians. We believe that at least 70 submarines have been decommissioned, although spent nuclear fuel has been removed from only 21. The most urgent problem probably relates to 10 submarine reactors which, either as a result of accidents or solidification of liquid metal coolant, are known to be impractical or impossible to defuel. In relation to the number of submarines to be decommissioned by the end of the millennium, I have heard estimates of as many as 150. There is a huge job to be done. It is very expensive; the cost is possibly as high as 4 billion dollars. Funding will be required from the international financial
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institutions as well as from Russia itself. We are working through TACIS and various other programmes to give all the help we can.
Lord Avebury: My Lords, has the Minister seen the report of the Bellona Foundation on the Russian Northern Fleet, in respect of which Alexander Nikitin, one of the co-authors, has been charged with espionage and high treason, notwithstanding the fact that all the information contained in the report was already in the public domain? Is the Minister aware that the report claims that 18 per cent. of the world's nuclear reactors are in the Kola Peninsular and that the risks involved in their inadequate storage and handling may be compared with the risk from a slow-motion Chernobyl? Will the Government, together with our partners in the European Union, make representations to the Russians in regard to the treatment of Mr. Nikitin and raids on the offices of the Bellona Foundation? Will they ask the Russians if they will enter into discussions with the international community on how best these appalling risks—which affect not just northern Russia and Norway but the whole of Europe—can best be solved?
Baroness Chalker of Wallasey: My Lords, the noble Lord asked a large number of questions. We know that Mr. Nikitin worked for the Norwegian environmental group, as the noble Lord said; he wrote, with another, the report on the storage of spent fuel and waste from Russian naval reactors in the Murmansk region; he was arrested last February; he was accused of passing secret and top secret information on the Russian Northern Fleet to Bellona Although this is a matter for the Russian authorities, we are watching closely. Our ambassador in Moscow has raised this case. I understand that Mr. Nikitin has now been allowed access to a lawyer; and we expect Russia to follow the due process of the law.
Whatever the reports and efforts of this organisation or any individual, the problem is there. That is why we have been in the forefront of international efforts in trying to make sure that as many high-risk civil reactors, as well as any other nuclear spent fuels, are made as safe as they can be. That is why a sum of over 100 million ecus has been committed to nuclear fuel recycling and radioactive projects, of which we pay some 16 per cent. We are working hard to resolve this matter.

Business
3.10 p.m.
Lord Strathclyde: My Lords, at a convenient moment after 3.30 p.m., my noble friend the Leader of the House will, with the leave of the House, repeat a Statement that is to be made in another place on the European Union beef ban. In view of the presence of a maiden speaker on the list for the first item of business today, I suggest that the convenient moment might be after the speech of the noble Lord, Lord Winston.

Housing Bill
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, on behalf of my noble friend Lord Ferrers, I beg to move the Motion standing in his name on the Order Paper.
Moved, That it be an instruction to the Committee of the Whole House to whom the Housing Bill has been committed that they consider the Bill in the following order—

Clauses 1 to 7,

Schedule 1,

Clauses 8 to 50,

Schedule 2,

Clauses 51 to 54,

Schedule 3,

Clauses 55 to 77,

Clause 89,

Schedule 6,

Clauses 90 to 97,

Schedule 7,

Clauses 78 to 80,

Schedule 4,

Clauses 81 to 83,

Schedule 5,

Clauses 84 to 88,

Clause 98,

Schedule 8,

Clause 99,

Schedule 9,

Clauses 100 to 107,

Schedule 10,

Clauses 108 and 109,

Schedule 11,

Clauses 110 to 126,

Schedule 12,

Clauses 127 to 154,

Schedule 13,

Clauses 155 to 188,

Schedule 14,

Clauses 189 to 194,

Schedule 15,1

Clauses 195 to 199,

Schedule 16,

Clauses 200 to 205.— (Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

London Regional Transport Bill
The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen): My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Viscount Goschen.)
On Question, Motion agreed to.

National Health Service (Residual Liabilities) Bill
3.11 p.m.
Baroness Cumberlege: My Lords, I beg to move that this Bill be now read a second time.
First, I should like to say how much I look forward to the maiden speech of the noble Lord, Lord Harris of Peckham, who has been unstinting in his commitment to the National Health Service and has given so much time, energy and skill to its management.
In the past five years we have seen a transformation of the structure of the NHS. By setting up hospital and community trusts and by establishing health authorities as commissions we have seen services develop, waiting times plummet and more people treated in both secondary and primary care. We have encouraged efficiency and given trusts both freedom and incentives to respond to patients' needs.
The 1995 Health Authorities Act, which came into effect on 1st April this year, completes the last stage of our reforms. It streamlines significantly the management structure of the National Health Service. The abolition of regional health authorities allows decisions to be devolved to a local level closer to patients, and it will deliver savings of £100 million per year. Creating single health authorities through merging district and family health services authorities will also result in better services to patients.
Having completed this latest stage in the reforms, we are confident that there now exists a structure that is flexible and responsive to local needs. Society is not static and the NHS has to continue to reflect changes, as it has done successfully since 1948. In the future we will almost certainly see trusts alter and, subject to statutory consultation, merge where it is in the best interests of patients. It is that flexibility in structural change and the wish continually to improve health services that provide the context for this Bill. Proper and prudent management of the health service should ensure that patients continue to receive the services they need and that those who contract with the NHS can do so with absolute certainty.
Under current legislation, provision for the liabilities of trusts, health authorities and special health authorities which cease to exist is at the discretion of the Secretary of State. In the past, where a health authority or trust, and before that a hospital, has merged, the liabilities have been transferred elsewhere. Recently in the lead-up to 1st April when district health authorities and family health service authorities were merged, their property, rights and liabilities were transferred. We have used the discretion to transfer liabilities in the past, and it is most unlikely that any Secretary of State would not do so in future. The provisions of this Bill, however, remove all doubts in the matter.
The Bill, if enacted, will reassure all those who contract with the NHS. In the event of further reorganisation involving the exercise of Ministers' powers, it will ensure that no liability will simply be extinguished.

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In detail, Clause 1 imposes a duty on the Secretary of State to ensure that all liabilities of a health authority, special health authority or National Health Service trust are dealt with on their ceasing to exist; that is, on their dissolution or abolition. "Dealt with" in this context means that the liability is transferred to another NHS body, being an NHS trust, a health authority or special health authority, or to the Secretary of State. The property and rights will remain subject to the Secretary of State's discretion to transfer, except to the extent that they need to be transferred to secure that all the liabilities of the body are "dealt with". The effect of this is that all the liabilities must be transferred, but they need not be transferred to the same person or body.
Clause 2 imposes the same duty on the Secretary of State with respect to trusts, health boards or special health boards in Scotland, except that liabilities may also be transferred to the Common Services Agency for the Scottish Health Service, which can itself be abolished only by primary legislation.
Clause 3 allows any corresponding provision made by Order in Council in respect of Northern Ireland to be subject to the negative resolution procedure.
During the debate on the Bill in another place, much time was spent discussing the benefits of the private finance initiative in the NHS. It is indeed the case that this Bill has arisen in the context of the PFI. The Bill will give comfort to all those who contract with the NHS and pave the way for the continued development of the PFI, to the benefit of patients and taxpayers alike.
We believe that the PFI offers a great opportunity to develop, be innovative and produce modern facilities to the benefit of patients. In the past five years the value of new starts on major schemes (that is, schemes with a capital cost of £1 million or more) has been £0.5 billion or less annually, following the peak in the late 1980s. There are now about £1.5 billion worth of schemes seeking private finance. Around 25 large schemes, each over £25 million in value, have placed advertisements in the Journal of the EC to seek a PFI partner. In the 10 years from 1985 to 1994 only 10 contracts of that size were placed. If only half the schemes seeking PFI now succeed, that will expand the NHS capital programme significantly.
Nevertheless, I want to reassure your Lordships of one thing; namely, that there are some important principles that will not change. The NHS will continue to be committed to the provision of a universal health service, largely free at the point of delivery and largely funded from taxation. There is a collective government commitment to the key founding principle of the National Health Service, that healthcare should be available to those who need it on the basis of their clinical need without regard to their ability to pay. The private initiative in no way erodes that principle.
The PFI is not intended to herald a new period of upheaval in the NHS. Health authorities will continue to manage budgets on behalf of their resident population; fundholding GPs will continue to reinforce the purchaser function of the health service; and responsibility for providing health care to meet the needs of patients will continue to rest on NHS trusts.
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All will continue to operate in the public sector. All will continue to be accountable through Ministers to Parliament.
Concerns were expressed in another place that the Government will be needlessly taking on uncontrolled and uncontrollable risks. That is not the case. Trusts are subject to a full and detailed framework of financial governance and there is a comprehensive system of controls already in place.
In terms of controls on trust borrowing there are four key elements. One: that trusts must obtain value for money in carrying out their functions, including any borrowing they undertake to support that. This generally means loans from the Secretary of State or guaranteed loans from the commercial sector. The process of issuing guarantees provides a supervision mechanism. Two: trusts may not mortgage or charge their assets as security or borrow in non-sterling currency without express permission. Three: every trust has an external financing limit—a limit on the amount of borrowing that the trust can make. Trusts submit a financial plan each year demonstrating how they will meet it and are monitored throughout the year to ensure that they do not exceed it. Four: the quarterly monitoring of expenditure would quickly alert regional offices if trusts started to take on unusual debts.
There is a statutory requirement for trusts and certain other NHS bodies to keep accounts which are audited by the Audit Commission. That audit is in addition to the examination within the NHS Executive of the annual accounts, which are statutorily required to be prepared and transmitted to the Secretary of State in respect of each financial year.
Chief executives of health authorities and trusts act as "accountable officers" and are expected to answer to Parliament through the NHS chief executive for the efficient, effective and proper use of all the resources in their care. In cases of serious management failure or unacceptable conduct, the accounting officer would expect the appropriate chief executive of the health authority or trust to accompany him to a hearing of the Public Accounts Committee to answer personally to the committee. The Comptroller and Auditor General also scrutinises the accounts of trusts, health authorities and special health authorities and lays them with his report before both Houses of Parliament.
Finally, the change the Bill makes is a technical one and does not represent any change in policy. This Government have always understood that any liabilities incurred by trusts should be transferred on dissolution. This Bill ensures that the Government will stand behind their liabilities in a proper and prudent manner. In conclusion, the provisions contained in this Bill are sensible and appropriate. They demonstrate the continued commitment that this Government have to the NHS—to those who work in it, are cared for by it and whose livelihoods depend on supplying goods to it. This is a sensible measure and we believe one worthy of the support of your Lordships' House. I commend it to the House.
Moved, That the Bill be now read a second time.—(Baroness Cumberlege.)
3.21 p.m.
Baroness Jay of Paddington: My Lords, I thank the noble Baroness for introducing this short but significant Bill and, like the Minister, I look forward to the maiden speech of the noble Lord, Lord Harris of Peckham, with his interest and particular involvement in this subject.
As your Lordships will know, this Bill has been designated as a money Bill and will not therefore be considered in detail by this House. But this afternoon we have an important opportunity to discuss our concerns about the troubled state of the private finance initiative in the health service. Frankly, it is somewhat disingenuous to suggest, as the Minister did in introducing the Bill, that it is about the NHS paying its debts. That suggests that somehow, over its 50-year history, without this legislation being in place, the NHS has had a rickety financial background from which the Bill may rescue it. When that assertion was made in another place honourable Members rightly challenged Ministers to show when, in its 50-year life, the NHS had not met its financial obligations without this legislation being on the statute book. But answer came there none.
Let us be quite clear what the Bill is about. It is not designed to fill some historical gap in the health service financial administration which the Government may suddenly have identified; it is designed to try to rescue, to breathe life into the private finance initiative which at the moment is in unproductive chaos. Let us also be clear how serious that unproductive chaos is.
In last autumn's Budget the capital resources for the health service were cut by nearly 17 per cent. The Chancellor and financial Ministers blithely suggested that the money for hospital building programmes and other major capital investments would be raised through the private finance initiative. A figure of £135 million was mentioned as a reasonable target to raise from private sector funding during this next year, even though I should point out that that target of £135 million would be less than half the cuts in public expenditure made in the autumn Budget even if it were practically realisable.
The real tragedy for the health service is that not a single private contract for a hospital has been completed and nothing has been finely agreed. That is not just since last November, since the cut in the public expenditure budget, but since 1992 when the PFI was introduced. People throughout the country—there are specific examples in Carlisle, Norwich, Amersham, North Durham, Swindon and several other places—have been promised new hospitals through the private finance schemes and not one brick has been laid. Several of those communities have been waiting for those hospitals for a number of years, waiting for the PFI to deliver, but nothing happens. And, as the Treasury Select Committee report on private finance in the health service published last month said,
"In some circumstances it [the private finance initiative] has delayed rather than encouraged investment".
One would not be aware of that from the stream of Department of Health press releases which emerge with regular optimism announcing new schemes, trumpeting new developments. But the private financiers, the bankers, just do not bite on those projects. I am grateful
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to my noble friend Lord Eatwell, the Treasury spokesman on these Benches, for defining the PFI as "probably fictitious investment". It certainly has little reality in the health service today.
The Government have now realised that hospital development and building programmes have ground to a halt and hence the rush to push this Bill through Parliament in order to reassure the bankers and persuade them to invest in order to get at least some building started in this pre-election year.
We on these Benches support the principle of joint public/private partnerships and the potential for spreading risk on major capital ventures. But ironically this Bill, by compelling the Secretary of State for Health to accept a health service trust's residual liabilities if that trust ceases to exist, simply brings the ultimate risk back to the public sector. Private bankers may invest; individual trusts may run up liabilities; but if things go wrong, the taxpayer must pick up the pieces. One would have thought that that would make any entrepreneur look at any investment in this area as very attractive; it is virtually gold plated.
Unfortunately for those who proposed the Bill—and indeed most unfortunately for the health service—since the Bill finished its passage through another place there has been growing evidence that the bankers and the building industry are still not convinced. John Laing plc, the construction group which has been a leading bidder for some of the NHS schemes, called the existing arrangements for negotiating contracts "farcical and appallingly slow". Mr. Martin Laing, the chairman, is calling for a complete overhaul of the Government's PFI arrangements by the Treasury.
At a banking conference in London earlier this month there was international scepticism about the extent of the guarantees provided by the Bill. Potential investors spoke at the conference about the risks involved in negotiating long-term financial deals with individual trusts who themselves have only one to three years guaranteed income from their contract with local health purchasers. There was also concern that the Bill does not exclude the possibility of an insolvent trust continuing to exist but being unable to pay the PFI investors. The magazine Building of 3rd May headlines its report on that conference,
"Banks Scorn PFI Hospital Safeguards".
That is not an encouraging verdict on something which was designed to give the private sector a total guarantee of its investment.
It is also not surprising that the Treasury Select Committee in another place, which recently took evidence from some trust chief executives, states in its report—also published since the Bill began its passage through another place—
"the evidence reveals some concern about the suitability of PFI for health projects".
The sixth report of the Select Committee on PFI published, as I say, since the residual liabilities Bill was first considered in another place, is a thorough and critical appraisal both of this Bill and of the general situation. Honourable Members in another place of all parties who serve on the committee were particularly

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concerned to establish how finance raised in this way—I remind your Lordships that under this Bill that would be ultimately guaranteed by the taxpayer—was to be monitored; how priorities were to be decided and what guarantees exist to prevent individual trusts not only raising private money for buildings and equipment, but also privatising clinical services and thus undermining the basic principles of the NHS.
The important issue of responsibility for sanctioning and monitoring borrowing by individual trusts seems to be extraordinarily complicated and obscure. Initially the Secretary of State for Health told the Treasury Select Committee that trusts did not have the power to borrow at all. Not surprisingly, Department of Health officials as well as better-informed honourable Members, quickly pointed out the arrangements which the Minister repeated this afternoon whereby, under Schedule 3 of the 1990 legislation, trusts can borrow. As the Minister said, they can borrow as long as they do not mortgage, do not borrow foreign currency or together do not borrow more than £5 billion.
After some rather confused discussions in the Select Committee hearing, the Secretary of State said that he thought it would be helpful if the Department of Health produced a paper on trust borrowing powers and the constraints on those powers—somewhat late in the day, it must be said, because the Bill your Lordships are considering this afternoon was due to have its Second Reading in another place a week after that hearing. However, the paper was produced and now forms Appendix 23 to the Select Committee report. Appendix 23 follows the lines that the Minister has described this afternoon and appears to give a clear line of accountability, albeit in rather general terms, through the various health service financial systems back to the Secretary of State, back to the Treasury and ultimately to Parliament. But in practice, when my honourable friend in another place, Mr. Milburn, asked the Secretary of State in a Parliamentary Question how many NHS trusts had borrowed from the commercial sector in the past year, the answer, as it is so often nowadays in the health service, was that the information was not available. Therefore, the trusts appear to be able to borrow up to £5 billion—now, under this Bill, secured by the taxpayer—and the Department of Health will not hold information on who has borrowed what.
There have been assertions—the Minister made them this afternoon—that the PFI would be controlled by the trusts' external finance limits which are subject to the conventional annual public expenditure controls. But I am advised that this is not the case simply because, unlike publicly funded projects where capital charges are up front in the first year in which they are committed, under PFI schemes there is almost no expenditure in the first two or three years. These schemes involve long-term charging for constructing a building or providing a service over the years in which the project is delivered. The EFL—the external financing limit—is therefore irrelevant because the commitment is made for future years in which there is no agreed EFL. Evidence from the Treasury to the Select Committee revealed that trusts are "encouraged" to register PFI projects, but this is entirely voluntary.
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The Select Committee report describes the overall monitoring process as "rather haphazard". "Rather haphazard", my Lords, and do not forget that we are talking of up to £5 billion in private loans underwritten by the Government.
Perhaps even more haphazard and worrying is the way that using this type of PFI in the health service may distort priorities and may undermine the ability of any Secretary of State to develop a national strategy for investment and service provision. If, as the Government are now suggesting, all NHS capital schemes must be subject to private finance schemes, we are effectively transferring the choice about which hospital projects go ahead from a publicly funded, publicly accountable system to one where the private sector calls the shots and chooses which projects are commercially attractive.
Perhaps I may give an example. If the Secretary of State were to decide that breast cancer services were most effectively and efficiently delivered through particular centres of excellence with a specific geographical spread, but, at the same time, individual trusts negotiated individual private sector loans to create their own breast cancer units, they, the trusts, could well cut across a carefully considered set of health service national priorities. Equally, if private investors decide that a necessary local unit—necessary, that is, on clinical grounds—is unacceptable and unprofitable, it will therefore not be available. Unless it can compete for some public money over a longer term it will not be available to local patients. This must further undermine the already shaky national framework of the NHS. So far as I can see, there is nothing in the present PFI arrangements to prevent it happening.
Again, I refer your Lordships to the bipartisan Treasury Select Committee report. In paragraph 7 the report states:
"If the need for a facility, and its probable profitability, do not coincide, the Government will need to take steps to ensure that services continue to be planned and provided. It would be unacceptable if the Government's planning for the future provision of … hospitals began to be driven by the shorter-term perspectives of private bidders. The Committee would welcome therefore the Treasury's views as to whether the prioritisation of projects should be the responsibility of Government and Parliament, or those seeking to provide projects on a commercial basis".
I can tell the House that there is little doubt which position we on these Benches would take about that.
This last point brings us inexorably to the issue of whether the PFI in its present form is bound to lead to the privatisation of clinical services, not just buildings. Again, there seems to be little to prevent this happening. The Secretary of State has said that clinical services should not be provided under the PFI—this is an interesting caveat—"without the consent of local clinicians". But frankly that does not seem to me to be a watertight enough guarantee against piecemeal privatisation. For example, one can easily imagine circumstances where local clinicians as well as local managers may well be prepared to make major compromises in order to get a new hospital building off the ground. Already at the Stonehaven Hospital in Scotland we are told that the design, building and management, including the delivery of clinical services, will be put out to private sector bidders. Indeed, there

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was some discussion—there was detailed but inconclusive exchanges between my honourable friends in another place and the Secretary of State and between Mr. Dorrell and the Treasury Select Committee—about what constituted clinical services and how to try to protect them.
As in so much of this area, the official picture is unclear but suspicious. I should be very grateful if when the Minister replies she could tell the House whether or not the department has come to a conclusion about whether, for example, clinical services which would be specifically excluded from PFI include such things as haematology, pathology, radiography or MRI scanning. If the Government genuinely wish to preserve the public service NHS, they must speedily define and ring-fence clinical services and specifically exempt them from the private finance initiative.
I hope I have shown that the Bill is not a technical measure designed to correct a long existing small problem in NHS finances. The Bill is part of the Government's determination to reduce public services, to devolve proper control and accountability in the health service to the individual small businesses that now make up NHS trusts. At the same time, ironically, the Bill compels the taxpayer to meet the private liabilities of dissolved trusts. I am extremely glad that, although this House cannot seek to amend the Bill because of the parliamentary timetable, we will have the benefit this afternoon of contributions from several of my noble friends who have vast expertise in Treasury matters, in economics, and practical experience of industry as well as of the NHS itself. At least their authoritative comments will be permanently recorded in the Official Report.
The authoritative and generally discouraging verdicts of the private sector and the Treasury Select Committee are already on the record but no doubt the Government will try to press ahead in their rather blinkered way. We shall just have to wait for the speedy election of a Labour Government to develop a system in which private finance may be able to work creatively in partnership with public finance in the public interest. The Bill before your Lordships today will certainly not achieve that.
3.37 p.m.
Baroness Robson of Kiddington: My Lords, I thank the noble Baroness the Minister for introducing the Bill and for trying very hard to justify it. I should also like to say how much I am looking forward to hearing the maiden speech of the noble Lord, Lord Harris of Peckham.
I was more than a little puzzled when I first saw the Bill. The reason for the introduction of it seems very difficult to comprehend. Ever since 1948 the Secretary of State has had the power to deal with the liabilities of any health authority or trust which finds itself with financial problems. As far as I am aware, this has always worked well. I do not know of any case where a supplier has been the loser because of reorganisation or closures. From reading the debate in another place, I note that not a single case was brought to the House's attention.
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The Bill changes the position of the Secretary of State by imposing a duty on him to deal with the situation. Why is that necessary if the system has worked well for 48 years? During the whole life of the NHS it has been understood that the taxpayer stands behind the liabilities of the health service. So why the need for the Bill to impose a statutory duty? It leaves us with no alternative, as the noble Baroness, Lady Jay, indicated, but to assume that it has more to do with the Government's desire to introduce into the health service the private finance initiative than with a need to improve a system which has worked well for 48 years.
I believe that the Government have two reasons for introducing this Bill. One has already been mentioned by the noble Baroness, Lady Jay. It is that the private finance initiative has not so far been a success in the NHS. Most investors have been wary about the health service partly as a result of the Government's endless reorganisation, but also because of medical advances and the difficulty of looking into the future. No private investment consortium is prepared to invest the money needed to build a district general hospital without at least a 25-year guarantee of a return on its investment. That means that the health authority, the trust or the taxpayer in the last analysis will be saddled with this revenue expenditure for 25 years, even if for any reason, and not always within its control, the hospital were no longer needed. If the hospital had been built with NHS capital funds, it would still belong to the NHS and the proceeds of a sale would accrue to the National Health Service. It would also be relieved of the recurring revenue cost, and that money could be used for patient care.
I suspect that the second reason why the Government need this Bill is that if they can persuade private capital to invest, they will be able to reduce the capital allocation to the NHS and present a Budget which opens up possibilities for tax reductions. They have already reduced capital allocations to the NHS this year by just over 16 per cent. However, the real cost to the NHS has not been reduced because all that has been done is to move the expenditure from the capital account to the revenue account in future years.
Can the Minister assure me that in the event of a hospital being built under the private finance initiative, the health authority will have its revenue allocation increased year by year by the amount it has to pay in the lease money to the consortium? Unless that is guaranteed, what we are doing is burdening future generations with the cost of possible improvements now to the detriment of patient care in the future.
I read with interest the evidence to the Treasury Committee of Stephen Dorrell on the private finance initiative. When asked if it were not true that some of the bankers wanted this Bill, he replied (at page 106 of the report):
"It is perfectly true that in the discussions with partners this lacuna in the law has been pointed out. What is not true is to suggest that this is in some sense special to the Private Finance Initiative. The same problem applies to the potato supplier to Southend Hospital. The potato supplier to Southend Hospital finds himself at risk at this moment of me reorganising the hospital and leaving his bill unpaid".

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I have been involved in the health service for many years, as governor of a teaching hospital, as chairman of a postgraduate hospital and as chairman of South West Thames Regional Health Authority for eight years. I have never been aware of difficulties in obtaining a regular supply of potatoes because the supplier was concerned about non-payment of his bill.
The demand for this Bill has certainly not emanated from regular suppliers to the health service. One must therefore conclude that the only reason for the Bill is an intent to encourage private venture capital to invest in capital projects in the NHS.
Stephen Dorrell also claimed that the private provider is carrying a great deal of risk under the PFI arrangements—that is to say, if the hospital is not completed on time and there are cost overruns. That is not new. A prudent health authority or trust will ensure that a contract with a construction company includes a time limit and a penalty clause for non-compliance. So the project can be carried out without the PFI.
The Select Committee in the other place warns that the PFI may not provide the best value for money and that capital spending on health will be cut on the basis of expected PFI investment which has still to materialise. It is not there yet and the investment has already been cut.
Finally, the willingness of the private sector to become involved in a new building project will increasingly influence whether the project goes ahead or not. This raises the prospect of the siting of hospitals being determined by commercial considerations rather than being planned on the basis of need. I believe that the public are deeply concerned about the expansion of the private finance initiative into the National Health Service. They are worried about the impact and whether it will still remain a truly national service. I realise that there are opportunities for extra capital in the health service through the PFI, but I do not accept that to cut capital expenditure by 16.8 per cent. before we have any guarantee of PFI is the right way to go about it.
3.47 p.m.
Lord Harris of Peckham: My Lords, I do not believe that I have ever been so nervous as I am today in making my maiden speech in this House. I thank noble Lords for my welcome.
I am going to talk about the importance of administration and management in NHS hospitals and NHS trust hospitals. My experience is of two years as chairman of Guy's and Lewisham Trust between 1991 and 1993. I should like to explain to noble Lords the size of the budget that we had at Guy's and Lewisham. It was £140 million, which is bigger than most companies in the top 100 of the FT Index. We employed over 7,000 staff.
On becoming chairman, I had to appoint a new chief executive, two new general managers—one from within the hospital and one from outside—and promote other people from within. What is also very important is that we had four new non-executive directors, and I believe that they are a very important part of the NHS. One of the non-executive directors is now chairman of the
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Lewisham NHS Trust, and one of the others is deputy chairman of the Guy's and St. Thomas' Trust; the other three still work at Lewisham.
The total cost of the total administration was £250,000, which is a lot of money, but less than one quarter of 1 per cent. of the total budget. When we speak about administration today, at Guy's and Lewisham we moved the director of nursing, who was a matron, onto the administration costs: the medical director changed his status from being on the hospital budget to the administration budget. The total budget of Guy's and Lewisham Trust was £250,000.
Once I became chairman of the trust, I had to look at the previous year's budget and performance. I was told in the trust application that there would be a profit—or rather, a surplus—of £1 million. However, once we had the numbers, we saw that there was a deficit of £1.5 million. If we had carried on in the same way in the following year, we would have had a deficit of £7 million.
Of course, difficult times lay ahead and we had to make difficult decisions. Between 65 and 70 per cent. of the total cost of the NHS goes on the payroll. We had to reduce our staff by 300, but we did not lose any nurses or doctors. We stopped using agency nurses as soon as possible because they cost double the rate of an ordinary nurse. We started to use what is called a "banking system" of nurses. We started to use people who had worked at Guy's and Lewisham previously but who now wanted to work only one or two days a week. We brought them in at a lot less cost than agency nurses. The savings on that alone amounted to £5 million.
We also budgeted slightly differently than ever before. We allocated 48 per cent. of our budget for the first half of the year and kept 52 per cent. for the second half. That was important because it meant that there was no shortage of cash in February or March so we could still treat as many patients as possible.
I made sure that all members of management and the board, including the non-execs, spent two hours each week walking round the hospital, talking to staff and patients. We also went out to see local GPs. Having done that, we could tell what we needed to do, and the board produced a charter. I have four copies of it with me. The charter told the public, our patients, staff, the local community and GPs exactly what we were going to do. Every six months we report back on what we have achieved and how far we have moved forward. In the first year we fulfilled 90 per cent. of the promises that we had made. That was a high level of achievement, but by the second year we had increased it to 93 per cent. We concentrated on improving patient care, treating more patients and on putting the patients first.
We also improved working conditions for our staff. We provided a canteen service for those staff working at night. We paid attention to health and safety matters and made sure that our staff were safe when working at night. We installed video cameras to try to prevent attacks. We provided better restrooms for them. After 12 months, we reduced the hours worked by junior doctors to 80 hours per week and, after two years, we further reduced them to 72 hours. I believe that we were the first trust in the country to do that.

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Communications are very important but very difficult in an NHS hospital. We had to talk to, and liaise with, 7,000 workers. As I have already said, we also had to talk to the patients and their GPs. We did that all the time. We felt that we had to do it; we concentrated on it and we learnt much from it. All that—and we had to live within our budget.
After that, staff morale definitely improved. We had an agreement whereby we would pay low-paid staff—that is, anyone earning less than £4.92 per hour—an extra £6 per week for turning up at work. If staff turned up for work for five days a week, they got £6. Attendance increased from 70 per cent. to nearly 90 per cent., so the scheme was definitely self-financing. We also improved the quality of our supervisors. The extra rate for supervisors in the NHS is only about £2.50 or £3 a week more. We reduced the number of supervisors from 24 to 12 over the two hospitals, but paid them an extra £2,000 a year. Again, that was self-funding.
We also opened a nursery at Guy's for the first time. That meant that many staff who had left Guy's when they had had children then returned to us. We introduced a hotline so that staff could raise problems immediately with the general manager. We let our nurses have £2,500 per ward twice a year so that they could choose the equipment they wanted to have. They knew what they wanted to have on the wards far more than we did centrally, so they picked it and we bought it for them. As I have said, morale in the hospital was constantly improving. For the first time, all the nurses, doctors, other staff and unions were working together.
We provided a card on which patients could tell us what they thought about the service in the hospital. In its first year, we asked people to fill it in while they were in hospital. However, when we later sent the cards to people's homes, we received slightly different results. After 12 months, 75 per cent. of in-patients thought our service was excellent; 20 per cent. thought it was good; 3 per cent. thought it was average; and 2 per cent. thought that we could do better. We concentrated on that last 5 per cent. One of the problems that such patients reported to us was that no bed was available for them when they arrived in the hospital. Another problem was that when they left hospital no one told them what to do or what treatment they should follow. Having looked into that, we now have a "leaving hospital package" which tells patients what should happen when they leave hospital.
We increased daycare provision by 12 per cent. That resulted in a waiting list reduction of 12 per cent. in the first year and another 12 per cent. in the second year. Fewer than 50 people wait more than 12 months for treatment.
We have spent an extra £6 million on hospital maintenance. We painted the outside of Guy's for the first time in 14 years and refurbished 16 wards—that is double the previous average. The in-house cost of that was £25,000; but when we tried to contract out that work, we found that it would cost £250,000. The in-house cost was 90 per cent. of that.
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We introduced signposts in the hospital so that people knew where they were going. Previously, people could not find their way around Guy's, but that is no longer the case. I am also very keen on keeping places clean and tidy. I firmly believe that a clean and tidy hospital leads to better service and helps the patients, so I installed waste paper bins. That is all very well, but they have to be emptied. As I said earlier, members of the board walked round the hospital regularly and we sometimes found that those waste paper bins needed emptying. We were always told that they had only just been filled, but we decided to have a change of thought. We used black bin liners on Mondays, grey on Tuesdays, black again on Wednesdays and grey again on Thursdays, so we could soon tell whether they were emptied regularly.
In our first year we treated 6,000 more patients. That figure rose to 8,000 in the second year. In our first year we reduced the unit cost of treating patients by 12.9 per cent., and in the second year by 14 per cent. That was the first time in 20 years that the hospitals comprising the Guy's and Lewisham Trust lived within their income. In fact, we have a slight surplus. Over the two years we have made savings totalling £20 million. That money has been put back into the buildings and our staff; but, more importantly, it is spent on treating more patients and on providing a better service.
Finally, perhaps I may say this: people think that the NHS is free. It is only free when you use it. For the rest of the time, we all pay for it from our taxes, so we must make sure that patients get first-class treatment as soon as possible.
3.58 p.m.
Lord Winston: My Lords, I suppose that I should first declare an interest in that I am a National Health Service consultant, with an academic backing, working in West London.
With my usual lack of organisation, I have only just noticed my position on the speaker's list and I find that it is my privilege to thank the noble Lord, Lord Harris of Peckham, for his maiden speech. His expertise within the National Health Service will be of considerable relevance in this House and we are delighted to hear from him today. The noble Lord has a very distinguished business record. He is a member of the Court of Patrons of the Royal College of Obstetricians and Gynaecologists in London, to which I belong. He has given most distinguished service to that college. I believe that he is also an honorary fellow of Oriel College. A little while ago I mentioned that I had gone through Dod and made a study of the number of noble Lords who had been to Oxford or Cambridge. I find that very few noble Lords have a relationship with Oriel College, Oxford, so it is very good to welcome the noble Lord on that ground alone. Most of all, I wish to thank the noble Lord for his extreme generosity and remarkable commitment to many health issues, in particular research. I refer to his support for so many charitable endeavours. Sadly, I do not believe I have ever benefited myself from it, but I am very pleased that so many others have. Having seen the results of that work, I can assure noble Lords that it is work of very

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high calibre and international standing. Without people like the noble Lord, the National Health Service and the university sector in this country could not function.
The problems that face the National Health Service are basically three in number. I am sure that the noble Baroness, Lady Cumberlege, will wish to argue with me about it. However, from my side of the fence it appears that the first chronic problem faced by the National Health Service is that of under-resourcing. I know that the Government have increased health service funding. I will not argue about it, and I do not make political points. However, most people who work in the health service feel strongly that, because of the way in which health is financed in this country, the health service is under-resourced. That can be seen in many areas. For example, one recent example is the difficulty in west London to get emergency beds for patients. I do not believe that the PFI will help under-resourcing in any way.
The second problem was the one to which the noble Lord, Lord Harris, referred: morale. Only a month or so ago we debated this issue. I believe that there was overwhelming support for the notion that the health service suffered from a terrible loss of morale. That is patently clear. Of course, we are all proud of the health service and no one wishes to talk it down, but there is a crisis of confidence among those who work in it. The PFI will not prove to be a benefit in that regard either.
The third problem, which in many ways is the most crucial one, is the lack of central planning. That is no fault of this Government. It was in place long before this Government or any previous government this century came into power. As far as concerns the old hospitals like Guy's, St. Thomas', Barts or the London Hospital—all of which were founded in previous centuries and have outlying hospitals associated with them that provide various kinds of specialist care—it is inevitable that there will be a lack of planning. In the major cities, particularly London, this is a very serious problem. First, in view of the way that the PFI is currently structured, I do not believe that this kind of central planning will be improved. I argue that, as the PFI is structured, it is likely to make the situation worse. Building in the health service is bound to be haphazard, is unlikely to reflect many regional needs and cannot reflect national needs.
Secondly, the PFI requires income stream. It requires the companies to generate income to service borrowings and make some kind of profit. Consequently, as we know from the Government's own document, the companies which come in need to take over many activities. It is true that there is a notional split between clinical and non-clinical activities. Thus, one may hive off one's cleaning activities to the PFI but retain nursing, but in practice that will be very difficult. Already a number of hospital trusts have mentioned this, as in the case of Sheffield. Recently, I have been involved in negotiations relating to a relatively small PFI rebuilding project at my own west London hospital. At the initial negotiation, those who were eager to put venture capital into it came up with the notion that they would try to pay pretty well all salaries except medical salaries. There is already a conflict. They believe that
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they will generate much of their profit and income from taking over and rationalising, or (as they say), improving these services.
Thirdly, those matters which are glossy, i.e. profitable, are much more likely to be funded and improved under the PFI than perhaps less essential services which will not generate income. I believe that that is a very serious issue which requires much more thought. I hope that the Minister will answer that point at the end of the debate.
Fourthly, the PFI is bound to increase delays in many rebuilding schemes in the health service. Indeed, there is evidence of it already. For example, the Central Sheffield University Hospitals Trust has that particular concern in regard to its own PFI. I believe that that concern is shared by many other trusts in the country. Therefore, it is not an advantage to the health service where sometimes there is a need to get on with these projects.
Fifthly, there is an inevitable tendency for the PFI to increase competition. The whole purpose of setting up a PFI is to encourage competition between those who tender. That is mentioned in the report of the Treasury Select Committee. My difficulty with that philosophy is that competition will spill over not only after the passage of the Bill but in terms of the services that are supplied. Perhaps I may take the trivial example of my own service because I understand it. We may undertake a PFI for new obstetric and gynaecological services in west London. Any sensible person who tries to initiate a PFI on the company side will immediately conclude that IVF is very profitable and perhaps one should snatch at it and downplay essential gynaecological services which, on the whole, do not make much money but are desperately needed.
I believe that there is a very special problem in regard to the university sector. There is a growing need for the interface between hospital and university practice. In the debate on the research councils last week I was rather critical of the fact that sometimes that interface was not present. I congratulated the Medical Research Council on its clinical research initiative. If we want our medical research to bite it must do so in the closest proximity to clinical services. There must be a concomitant degree of development of both services and rebuilding of both services. While the NHS may provide income stream, the university sector in general cannot provide it. It may do so if its research is so glitzy that it makes new developments, but there is no guarantee of that in any private finance initiative.
Finally, there is a genuine concern about the health service ethos. On all sides of the House we are proud of the National Health Service. It is something that has been freely accessible. However, speaking as someone who works in the health service that attitude is already being corrupted. There is no question that managers, doctors, nurses and other workers in the health service now look to see where the finance is coming from for the individual patient and his or her treatment. I say to the noble Baroness, Lady Cumberlege, that that is beginning to colour the practice in the health service. I fear that it is very much to the detriment of that service in the long term. While the PFI may be

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necessary, its structure has to be considered carefully so as not to cause those areas of damage. I fear that the current recommendation goes far short of what is needed for rebuilding in the health service.

Beef Exports: Ban
4.10 p.m.
The Lord Privy Seal (Viscount Cranborne): My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister. The Statement is on our continuing efforts to get the ban on British beef and beef products lifted and the implications for a wider European policy. The Statement is as follows:
"As the House will know, we have been making every effort with the Commission and the member states to lift the ban on beef and beef products imposed by the European Union two months ago. We appreciate the difficult situation on the beef markets of a number of member states, the fragile state of consumer confidence across Europe and political pressures faced by a number of governments.
"But we have put in place a wide range of measures to ensure that all products reaching the market are safe on any normal definition of the word. As a result of controls on feed, the incidence of BSE in Britain is falling rapidly and will continue to do so. We believe that there can no longer be any conceivable justification for the ban remaining in place. It is having a hugely damaging effect on the beef industry throughout Europe.
"We have explained very clearly the extent of the measures we have taken—going well beyond those in place in many member states—to ensure the safety of British beef and beef products. The Commission has played a notably helpful role in following carefully the scientific advice.
"As a result, the Commission recently put forward a proposal to lift the ban on gelatine, tallow and semen. This is based on the scientific evidence that these products are safe when produced in agreed ways. A majority of member states supported this proposal when it was put to the Standing Veterinary Committee yesterday but it did not attract the required qualified majority to enable it to take effect. I should like to thank those countries that supported it and President Santer and Commissioner Fischler for their determination to put it to the vote.
"President Santer and Commissioner Fischler have confirmed that they stand by the proposal they put to the Standing Veterinary Committee yesterday. That proposal has to be confirmed by the Commission tomorrow. It will then be submitted to the Agriculture Council on 3rd and 4th June. Under the procedures the proposal would then be implemented unless there were a simple majority against it in the Council.
"There is therefore a prospect of progress on this narrow front. I am grateful for the firm view taken by the Commission and for the support of the majority
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of member states. However, the present position is clearly unacceptable. A balanced proposal based on the best scientific advice has been ignored by a number of member states, in some cases despite prior assurances of support. I must tell the House that I regard such action as a wilful disregard of Britain's interests and in some cases a breach of faith.
"Moreover, we have still been unable to reach agreement on further steps towards a progressive lifting of the wider ban, which is clearly our main objective. Some of our partners are reluctant even to contemplate moves in this direction, for reasons which have nothing to do with the science involved.
"Important national interests for Britain are involved here. I cannot tolerate these interests being brushed aside by some of our European partners with no reasonable grounds to do so. The top priority of our European policy must be to get this unjustified ban on beef derivatives lifted as soon as possible and to establish a clear path for the lifting of other aspects of the wider ban. We will continue our present efforts. But this is not enough.
"We have a strong legal case against the ban as a whole and particular aspects of it. We made it clear from the outset that we believed the ban to be unlawful and disproportionate and that we would therefore be bringing proceedings. Those proceedings will begin this week. We shall also begin this week our claim for interim measures aimed at achieving those interim remedies unreasonably denied us in negotiation. Although our wider proceedings will inevitably take time to be heard, the application for these interim remedies should be heard within two to six weeks.
"The interim measures application has a number of separate elements. One is the lifting of the ban on gelatine, tallow and semen. If the Agriculture Council does not approve the lifting of this ban on 3rd and 4th June, we shall ask the Court to lift it. We shall also be asking the Court to lift the worldwide ban on exports of British beef. The beef is safe and there is no practical possibility of it being reimported into the Community.
"A third element is the ban on beef from specialist beef herds, in particular slow maturing grass-fed herds which have never seen a single case of BSE and are among the finest in the world. As soon as appropriate verification schemes are in place—and preparations are already well advanced—we shall ask the Council to lift this ban. If we get no satisfaction, we shall again pursue the legal remedies open to us.
"But these legal steps are also not enough. We shall continue to press the scientific case on our partners and to pursue our own programme to eradicate BSE. But I have to tell the House that without progress towards lifting the ban we cannot be expected to continue to co-operate normally on other Community business.
"I say this with great reluctance. But the European Union operates through good will. If we do not benefit from good will from partners, clearly we cannot reciprocate. Progress will not be possible in

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the IGC or elsewhere until we have agreement on lifting the ban on beef derivatives and a clear framework in place leading to lifting of the wider ban.
"We will raise the question of the ban at all Councils, including the Foreign Affairs Council. If necessary, we shall ask for special Councils. I will also be making clear that I expect agreement on how to deal with these problems to be behind us by the time the European Council meets in Florence on 21st and 22nd June. If they are not, the Florence meeting is bound to be dominated by this issue. It could not proceed with our normal co-operation unless it faced up to the crisis of confidence not only affecting consumers but also governments.
"This is not how I like to do business in Europe but I see no alternative. We cannot continue business as usual within Europe when we are faced with this clear disregard by some of our partners of reason, common sense and Britain's national interests. We continue to want to make progress through negotiation. But if this is not possible, we are bound to use the legal avenues open to us and the political means we have at our disposal.
"I believe that the whole House recognises the strength of our case and the need for urgent progress and that the approach I have outlined should therefore command support across the House."
My Lords, that concludes the Statement.
4.19 p.m.
Lord Carter: My Lords, I thank the noble Viscount the Leader of the House for repeating the Statement that was made in another place by his right honourable friend the Prime Minister, and, as always, I declare an interest as someone involved in dairy farming.
My first response to the Statement—I have to say this with some regret—is that it has much more to do with the internal problems of the Conservative Party than the future of the beef industry. That split within the Conservative Party and the attitude of some members of the Government have been in large part responsible for the problem. When Ministers refer, as they have, to ignorance and malevolence by our European partners, that is no way to influence them or to get them on our side. We have had a Statement a week, sometimes two, for the past nine weeks. Every Statement has promised progress and each subsequent Statement has revealed another reversal in Europe.
The Minister referred to the controls on feed. The incidence of BSE in Britain is falling rapidly and will continue to do so. However, the Government have still not produced a satisfactory answer as to why there have been 27,000 cases of BSE in animals born after the feed ban. I understand that some time ago Professor Lamming, who is well known in agricultural scientific circles, recommended the appointment of a committee to oversee the feed ban. The proposal was supported by the SEAC but was not accepted by the Government. Why was that?
It has been agreed and recognised that contaminated feed is the cause of the disease. However, we have been told that there was a continuous flow of contaminated
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feedstuff to our cattle after the feed was banned and that that was why the rules were tightened up as recently as April this year. Does the Minister accept that if we were able to identify more accurately the cattle which are likely to have been exposed to the contaminated feed a more effectively targeted slaughter policy would be allowed, which would do us no harm when it came to convincing our European partners that BSE was under control and that therefore the ban on beef should be lifted?
We all welcome the Commission's proposal to lift the ban on gelatine, tallow and semen. That is important but it is not the major problem. Billions of pounds are involved in the overall ban affecting the beef cattle and not the derivatives. Furthermore, it appears that in the Standing Veterinary Committee the proposals did not attract the required qualified majority. Will the Minister confirm that the proposals that we made to change the qualified majority have now caught us out, which is ironic?
There is to be a meeting of the Agriculture Council on 3rd and 4th June. If there is a simple majority—there is a chance that we will get the proposal through that meeting—it will take three months to achieve the lifting of the ban on tallow, gelatine and semen.
The Statement refers to establishing a clear path for the lifting of the other aspects of the wider ban, which is much more important than the ban on the beef derivatives. However, as it has taken three months to lift the ban on the tallow, gelatine and semen will the Minister give us an idea of how long the Government believe it will take to get the rest of the ban lifted?
We welcome the fact that the proceedings will begin this week in the European Court but why has it taken so long? When we debated the matter on 7th April we were told that the proceedings would be brought soon. We also welcome the claim for interim measures. I believe that we suggested that; indeed, I referred to a claim under Article 186 of the treaty.
The appropriate verification schemes have been mentioned. When will such schemes be in place? We have heard about them for weeks and weeks but still there is no sign of verification schemes to exclude the old and the clean beef which never had BSE. When will those schemes be in place to relieve the great worry on all the farmers who are involved?
A disturbing figure was given on the "Farming Today" programme this morning. The estimate for the cull cows is 750,000; that is, 15,000 a week to be slaughtered. However, this morning's programme reported that when the proposal was made neither the NFU nor the Government knew the number of clean beef animals over the age of 30 months which would be involved. We are now told that the figure could be between 300,000 and 400,000. Can the Minister confirm that or say whether the Government have other figures?
The Statement refers to pursuing our own programme to eradicate BSE. We have the cull cow slaughter policy, the problem with the clean beef animals and also selective slaughter. We began with a figure of 40,000 but yesterday that rose to 80,000. We have said many times that the Government are playing a numbers game

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which they cannot hope to win. We were told that the slaughtering of the first 40,000 animals would catch one in 30; in other words, for every 30 animals slaughtered one potential BSE case would be removed. I was told only last night that the slaughter of the second 40,000 would produce an incidence of 300 cases; that is one in 100. Are those figures correct? If so, the slaughtering of 80,000 cattle to reduce incidence at that level is extraordinary. I see that the Minister is nodding. How many more animals must we slaughter in order to get the ban lifted?
If the ban is lifted through the European Court, what will happen to the slaughter schemes? Presumably the cull cow, the over-30-months scheme, will stay in place. If the ban is lifted, will the selective slaughter scheme have to be imposed? The Statement refers in Delphic terms to matters in Europe not proceeding with our normal co-operation. If the normal co-operation of the past few weeks has been any example we can all worry. It would be extremely helpful if the Minister would tell us exactly what the Prime Minister means by,
"could not proceed with our normal co-operation".
The Statement marks a complete failure of our negotiations in Europe; it contains vague threats of non-co-operation. However, I ask your Lordships to consider the dates. We are told that interim relief might take from two to six weeks. If we know the European Court it will be six weeks. That takes us to the week beginning 1st July to wait for the judgment on interim relief. There will be the Agriculture Council meeting on 3rd and 4th June and the European Council in Florence on 21st and 22nd June. All our partners have to do is to sit and say that they will wait for the judgment of the European Court in July on the interim measures.
Non-co-operation is not defined in the Statement. It has taken two months to get the claim to the European Court and it will probably be July before we know the judgment on interim relief. In the meantime, how will any of that help the farmers and those in the rest of the beef industry to deal with this truly awful crisis?
Lord Jenkins of Hillhead: My Lords, we in no way under-estimate the seriousness of the problem and the great desirability for British beef farming of finding an early solution. Therefore, we are fully disposed to support the Government's objectives on British beef, if not always their tactics. The Government increasingly proclaim that British beef is the safest in the world. In that case, what exactly was the point of Mr. Dorrell's Statement on 16th March which began the whole matter?
Government policy has tended to alternate from day to day—indeed, sometimes within a few hours in the same day—between pleading for support and reaching for a big stick. The latter tactic was generally renounced within a few hours on discovering that we did not have a big stick. Today's Statement appears to combine the two tactics within the same 10 minutes. The first part of the Statement thanks the Commission, which is something fairly new from this Government, for its constructive attitude and the fact that its view was
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supported by a majority of member states. However, under the present rules it was not sufficiently large enough to get it adopted.
That is a classic example of the Government being hoist by their own petard. We all enjoyed yesterday's intervention by the noble Lord, Lord Bruce of Donington, when he asked what on earth is allowing the German Government alone to hold it up. What is allowing them to hold it up is the near approach to a national veto, which I believe the noble Lord considered to be the epitome of the only thing good about the European Community. Indeed, the fact that we could not get the vote through yesterday marches oddly with the tremendous effort of the British Government in ensuring that the qualified majority should be as high as possible. Our hope for the future is that we shall be able to achieve that by the Commission having a second go at it with a simple majority. I hope that the Government will reflect on those issues and will learn a little from their experience in these matters.
If that does not work, we go to the Court. That seems to me perfectly proper. I am glad that the Court has not so far been undermined by some of the Government's ideas—although they are put forward by their Back-Benchers—so that it is not in a position to be totally ineffective on this matter.
Beyond the Court, if necessary, we shall withhold our normal co-operation up to and at the European Council in Florence in late June. That threat might be more formidable if our normal co-operation was more co-operative than it normally is. As our normal co-operation is to try to block everything and, if it goes through, to ask for an opt-out, I am not sure that that will be exactly earth-shaking in its effect upon the Community.
I just make two further points. In order to try to understand this issue in a more co-operative way from the point of view of Europe, we should occasionally put ourselves in the shoes of others. Let us suppose that there was no case of BSE in Britain and there were 160,000 cases in France and another 160,000 cases in Germany. What does the noble Viscount the Lord Privy Seal think would be the attitude of the Sun or the Daily Mail—the Euro-sceptics, the Euro-nihilists—to that filthy foreign food coming across the Channel in those circumstances?
Finally, I believe that certain other factors which have emerged rather slowly illustrate, like a flash of sheet lightning across a rather bleak landscape, how few are our other options in reality. Should we turn from the unco-operative Community which, it was suggested, is almost conspiring against us, to welcoming countries across the oceans? The Americans and Canadians banned British beef in 1989, as did the Australians. The New Zealanders had a flicker of co-operation. They imposed a ban which they then removed but it has now been imposed again. There is not a great alternative course. I hope that the Government will succeed because I really wish to see confidence restored in the British and European beef industry and I wish to see removed those grave difficulties for British farmers. But I hope

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that the Government will reflect on some of the lessons which can be drawn from the rather sorry experience of the past two months.
Viscount Cranborne: My Lords, I am at least grateful to the noble Lord, Lord Jenkins, for his support for the Government's objectives. Knowing the noble Lord, Lord Carter, as I do, I am sure that he would associate himself with that expression of support although he confined himself to what was clearly a rather tempting jibe about what he sees to be the internal divisions of my party. The noble Lord also declared a direct interest. Sadly, I am no longer able to declare a direct interest, as the noble Lord knows, because I sold my dairy herds as soon as I discovered a high incidence of BSE in them. But, as he knows, I have something of an indirect interest which perhaps your Lordships would expect me to declare.
What underlies the questions of both noble Lords is some puzzlement about what precisely my right honourable friend and the Government mean by a threat to withdraw co-operation. I make it clear to your Lordships beyond peradventure that this Government are not now, never have been, and never will be interested in pursuing policies which involve the breaking of the law. I do not believe that either noble Lord would expect that of any British government. Also, we are not interested in pursuing what I might describe as a Gaullist empty chair policy. However, the Government have followed a determined co-operative policy in the wake of the original SEAC declaration. But, as my right honourable friend says in his Statement, they have been confronted by evidence of at least lack of goodwill and some bad faith on the part of some of our partners. Therefore, it seems reasonable that we should react fiercely and firmly when we have tried as hard as we can to show co-operation, in spite of the elegant jibes of the noble Lord, Lord Jenkins, a few moments ago.
We have in mind that there are certain matters which require unanimity and not necessarily agreement by QMV. Until there is a clear path established towards the lifting of the ban we propose to withhold our agreement to those matters. We shall look extremely carefully at any decisions which can be blocked at the IGC. In consequence, we may find it extremely difficult to co-operate in relation to reaching decisions.
I merely give two examples of the sort of matters which my right honourable friend and my colleagues and I have in mind. The convention on insolvency requires unanimity and that is to be brought forward this week. There is also the convention on Europol. We hope to reach some agreement on those parts of it which relate to the ultimate power of reference to the European Court of Justice. We have made some very good progress on that but we shall find it difficult to see our way towards making any further progress.
Also underlying the remarks made by both noble Lords is the implication that we are interested in being difficult for its own sake. I make it clear that we are interested in establishing a clear path towards the eventual lifting of the ban. We regard the lifting of the ban on tallow, gelatine and semen as a first step towards
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that. There is no question in my mind that the assurances that we have been given were those on which we thought we could rely. It would be curious if any British government worth their salt were not to react firmly in the face of what we regard as an act of bad faith by some of our partners.
The noble Lord, Lord Carter, asked, in so many words, "How long, oh Lord, how long?" As I say, we need to agree a framework. We hope that we shall be able to see that first step taken by 3rd and 4th June. We should like to see the next steps taken in as short a time as possible.
The noble Lord also asked about the relationship between the lifting of the ban and further culls. I should remind the noble Lord that our original proposal for a selective cull was based on identifying cases of BSE in cattle born between 1990 and 1993. The proposal was to cull cattle born on the same farms and at the same time which might therefore have been exposed to the same infected feed. It was estimated that that would lead to the culling of about 40,000 cattle, as the noble Lord knows.
The new proposals put forward last week extended that to cover any cases of BSE which are confirmed in the future. The impact of that is clearly uncertain for obvious reasons. The best guess at the moment is that that may lead to the culling of some 80,000 cattle in total. That includes the first 40,000. But that could be implemented only in the context of a programme for lifting the EU ban. The two would operate in tandem and we should not volunteer a further cull unless it was clear that it would lead to a full agreement implemented in good faith by our European partners.
As the noble Lord said—and he is a considerable expert in these matters, as the House knows—we are happy to rest on the advice given to us by SEAC and Professor Pattison. That advice is clear: for all everyday purposes British beef is safe. Therefore any additional measures that we take must clearly be measures directed at restoring confidence rather than implying that the measures we have taken so far are not adequate to improve safety. This is a distinction which again I know the noble Lord understands extremely clearly.
I am conscious that I am taking rather a long time over this but both noble Lords asked a number of questions. The noble Lord, Lord Carter, also talked about traceability schemes. As he knows, these are complicated but we hope to have them running by early June—June this year, I hasten to add! We have taken steps to tighten the feed ban, including extremely rigorous inspections of feed mills. These, I am advised, are bearing fruit. I would be interested—as indeed would my colleagues—in view of the professional skill and knowledge of the noble Lord, if he could make any further suggestions for improvements in that area. He is in a good position to do so.
I do not think there is any point in having any more committees. We have more than enough committees as it is. What we need is clear and simple direction. Both noble Lords had a good deal of fun at the Government's expense over the question of QMV. I am sorry to disappoint them. I think it is perfectly plain that

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whatever the position of QMV, it had no impact whatever on this particular vote. The vote in question was 39 votes. I think it is clear that QMV would not have changed matters at all.
The noble Lord, Lord Jenkins, asked me about the Statement of my right honourable friend the Secretary of State for Health. With the greatest of respect to the noble Lord, I should like to ask him what he would have said to me if my right honourable friend had not made a Statement as soon as possible and as soon as it was clear what the advice from the SEAC was. Even if the Government had not been careful to adhere to their long established policy—which I fully support—of telling Parliament as soon as possible and as frankly and as clearly as possible what the situation was in regard to matters of public health, I have no doubt whatever, given that we live in the world we live in, that the Government's desire to dissimulate (which of course does not exist) would have been revealed in an immediate leak from some helpful individual in the know. Given that the matter was leaked on the morning that the Statement was made, it was entirely sensible, purely from the point of view of self-preservation, let alone the higher motives which informed the Government's actions, that my right honourable friend came to the House at the earliest possible opportunity, as he did.
I ought to emphasise again in this context—this underlies a number of the comments made by both noble Lords—that the entire basis of the Government's approach in terms of safety has been to act on the recommendations of the SEAC under its chairman, Professor Pattison. We are not scientists—or at least I am not—and even my right honourable friend the Prime Minister is not a scientist. It would be rather curious if we had established a committee to give us clear advice in these matters and we had decided to disregard the advice it had given either by not doing as much as it had recommended or by doing more. As I say, it seems to me that the fact that we acted immediately on the advice that the SEAC gave us seems to me to be not only sensible but also in the best interests of all political self-preservation.
On the matter of cull cows and the operation of the various schemes which the Government have brought in, I am sure the noble Lord, Lord Carter, would expect me to admit that the introduction of the scheme so far has been far from free of difficulty. He and I are probably in daily contact with people who have experienced difficulty. As he equally well knows, the introduction of a scheme on this scale is hugely complex. The Ministry of Agriculture has been extremely fortunate in the co-operation that it has received over the past few weeks from the National Farmers' Union, from individual farmers and from the agriculture industry in all its manifestations. It is absolutely essential that that scheme should be up and running as soon as possible with as few glitches as possible. The entire government machine is bent to make sure that that will happen, and that improvements are put in place.
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I hope I may add one other remark in this context. I think that a free flow of information is extremely important. It is, I would suggest, important both that the victims of this ghastly crisis should feel that they have free access to government agencies and to the Government themselves, and that the Government should describe as openly as possible not only what their own position is and what they want to do, but be frank about the difficulties that they are experiencing because it is only through the building of a team effort that we shall be able to succeed in addressing the problem. I am glad to see that the noble Lord is nodding.
I have two other remarks to make. I apologise for taking so long. Let me make it perfectly clear that the European Court of Justice is an absolutely essential entity if we are to realise what is one of the most valuable benefits of European Community membership as regards the Government, and that is the establishment of the single market. It is clearly impossible for the single market to operate effectively unless we have an effective European Court of Justice. We therefore in no way wish to denigrate the existence of the court, or indeed to try to ensure that it cannot carry out its work properly. I hope that noble Lords will read again what we have put in the White Paper, which we published, setting out our negotiating position on the IGC. I hope noble Lords will agree with me that what we are proposing will, if accepted, improve the operation of the court rather than the reverse. After all, as I emphasised, it is no business of this Government not to support the rule of law.
I must finish with a rhetorical question. I listened as always with the greatest of respect to the noble Lord, Lord Carter, who probably knows more than anyone else in this House about the nuts and bolts of agricultural matters. However, I have to say that I was particularly struck by the fact that he was—if I may put it this way—rather long on hindsight and rather short on foresight. It would be extremely helpful if during the coming weeks and months—and indeed perhaps during the coming days—the Labour Party could tell us in some detail what it would do now that is different from the Government's policy. If it would do nothing different I would hope that, with the good will that I always associate with the noble Lord, he would come forward with an enthusiastic endorsement of what the Government are doing.
4.49 p.m.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that this Statement appears to many of us to be much more robust than any of the preceding ones, and that for that reason it is particularly welcome? I for one found the tone of the Statement ideally adapted to the situation and clearly calculated to have a substantial beneficial effect. I would therefore like to thank my noble friend for making the Statement in this way, and equally I express gratitude to the Prime Minister for originating it.
I have only one question of fact. I was not clear as to when it was indicated that the hearing by the European Court of the application would begin. Presumably we can be given a precise answer as to when the Government contemplate that the decision will be made

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and known. It would be extremely helpful to have the one certain date for the beginning of the hearing and the Government's judgment as to when the result of the hearing is likely to be announced.
Viscount Cranborne: My Lords, I am most grateful to my noble friend for the welcome he gave to the tone and content of my right honourable friend's Statement.
I emphasise that we would be wise to remind our European partners that our habit of adhering to the rule of law makes us slow to anger and that we have attempted, as always, to be as reasonable and co-operative as possible, despite what our opponents occasionally allege in this House and the other place. However, it is clear that there has been some evidence of ill faith, in stark contrast, if I may say to the noble Lord, Lord Jenkins of Hillhead, to the extremely co-operative and helpful attitude of the Commission, which we have been only too happy to acknowledge. It is only when driven, if I may so put it, beyond endurance that we are forced to defend our interest in the only way left open to us.
On the hearing, as regards the interim measures we would hope to have some result within two to six weeks. The noble Lord, Lord Carter, expects it to be nearer six weeks than two weeks. But I would not venture down the road of prophecy with quite the same gay abandon as he does.
As regards the main hearing, my right honourable friend the Attorney-General will probably begin proceedings this week; and those could be expected to take very much longer.
Lord Mackie of Benshie: My Lords, I listened to the noble Viscount the Leader of the House. In Germany and in other countries the issue appears to be one of confidence. That confidence was severely dented by the Government's attitude. The noble Viscount said that the Government announced that there could be a link as soon as they had the facts in their possession. However, the Government asked the committee to sit over the weekend to give them the essential facts. I believe that that dented confidence more than anything else.
Two months have now passed and I hope that the Government will take measures to ensure that the scientists now give a reasonable answer. For example, two or three who appear to seek publicity more than anything else prophesied an enormous increase in cases of the new form of CJD. Can the noble Viscount tell us whether there is any rise in the normal incidence of CJD? That appears to be a factor which could be used in argument in Europe. I believe that it would help.
First, the confidence of farmers at home in the effectiveness of the Government's measures has been severely shaken. I realise that the issue is complicated. The organisation of slaughter on the scale talked about is difficult. However, the allocation of slaughterhouses to different tasks should have been carried out quickly. That would have given confidence to the marketing chains which sell beef.
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Secondly, the Government should press ahead with a test; I know that there are tests. What are the Government doing to see whether we can have a test for BSE? Slaughter of animals would then be a logical process instead of the guessing game that it is at present.
We are all anxious to back the Government and to make progress instead of being in the extraordinary state that we now are. But the Government must take some blame for what has happened.
Viscount Cranborne: My Lords, I am extremely grateful to the noble Lord for the constructive tenor of his remarks. I do not wish to swap anecdotal history with the noble Lord. However, I should point out to him that the first intimation that my right honourable friend the Minister for Agriculture had about the SEAC's revised views on the possible transmission of BSE to humans occurred the weekend before the weekend to which he referred. Therefore, it was important that the Government made as rapid a judgment and as rapid a Statement as they possibly could in order to keep the public informed. It was important, if, as these issues always do, the matter were to leak, that the Government came forward and were frank earlier rather than later. The penalty was obvious; it meant that we had to wait a little longer before we and the public could be fully informed about the further deliberations of the SEAC. This is the goldfish bowl in which we all live. We must do what we can to ensure that the situation does not lead to panic.
As regards the allocation of slaughterhouses, I take to heart what the noble Lord said.
I believe that I am right in saying that at present we do not have a suitable test for BSE. Vast sums of money are now being spent on research into BSE in this country. The most obvious result is that in this country we probably know more about BSE than any other country in the world. That means that it is easier for people with a strong sense of sensationalism sometimes to build into scientific reports conclusions which they do not merit. Of course, if a test were to become available, it would be a very splendid result and we would hope to introduce it as soon as possible.
The Earl of Onslow: My Lords, can my noble friend help me on two points? First, there seems to be doubt about the link between the food and the cause of BSE. Many other countries, especially the Republic of Ireland, use the same food that we used and have not had a BSE epidemic. Secondly, the number of cattle with BSE does not seem to have been affected by the food ban in the bell curve of the epidemic. It fits more naturally into the phosnate use for warble fly eradication. The type that we used was, I believe, called Phthaladine. That was the active ingredient that caused the hassle as regards thalidomide babies. Will my noble friend please ask his scientists to look even more carefully at this issue? The logic that the food caused BSE seems to be broken by the fact that some places where such food is available do not have an epidemic. And the figure is not falling at the same rate as it should do had the feed ban worked.

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The Government have stated consistently that there is no harm in any beef, even that over 30 months, and that they are doing this not for a public health reason but for a consumer protection reason. What possible legal authority do the Government have for killing many of our cattle so that the Germans will not be frightened? It seems more sensible not to pander to frightened Germans. If we say, "We're not going to kill the cattle. It's all right", and continue to eat the beef, eventually the Germans will not be frightened. They are so keen on being frightened, yet we seem to pander to their fear. Will my noble friend give the legal authority for the slaughter of healthy cattle when his colleague said that there is no health risk whatever?
Viscount Cranborne: My Lords, although I should not be, I am constantly surprised by the breadth and variety of my noble friend's technical knowledge. I am sure that government scientists will have noted his point. I am glad that I have no ministerial responsibility for what beef cattle or any other kind of cattle are fed in the Republic of Ireland so I hope my noble friend will forgive me if I do not comment on that point.
As to the authority, it is plain that my right honourable friend the Minister for Agriculture has the authority to make the culls that he has suggested and to pay the proposed compensation. As regards the Germans, from my reading of the Spectator, I understand that, particularly in recent decades, the Germans have become almost obsessively keen on hygiene. It is greatly to their credit, but it is no business of mine to do anything but encourage my right honourable friends to do the best they can to restore confidence in the British beef market. If possible, despite hysterical claims to the contrary, they should try to reassure our German friends and allies that British beef is a great deal more health-giving than sausage.
Lord Desai: My Lords, although the Statement concerned European matters, as the noble Lord, Lord Jenkins, said, British beef is banned almost around the world. I believe I heard on a television programme that only Afghanistan and El Salvador have not banned British beef. First, what are the Government doing to lift the ban in countries other than those in Europe? Secondly, I am ignorant of such matters, but I heard that when a similar disease occurred in the Republic of Ireland, the culling was much more thorough and total and therefore the republic was able to restore confidence more quickly.
Lastly, if it is true that there have been 27,000 cases of BSE since the ban on the feed was introduced, do the Government know where the farms are? Should they be singled out not to receive compensation for their culling? After all, they broke the law and should therefore not be compensated for damage due to breaking the law.
Viscount Cranborne: My Lords, on the final point, it is by no means clear that it is always the farms' fault that BSE occurred after the ban on feed. There may be a number of reasons for the disease occurring. I agree
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with my noble friend Lord Onslow that we are by no means certain that the new form of CJD is caused by BSE. It just appears on scientific advice to be the most likely cause.
There is one aspect which we must examine, as I tried to explain to the noble Lord, Lord Carter, who knows a great deal about such matters. If we can find a sensible way of passporting cattle, it would be a better way of closely directing the cull than having a blanket cull of animals. None of us wishes to see that, particularly when we know that not only is there a small danger but also, as the noble Lord, Lord Carter, said, the overwhelming likelihood is that the majority of animals would be unaffected by BSE.
As for non-European countries, I merely observe to the noble Lord, Lord Desai, that one of the most effective ways in which we could reassure non-EU members as to the safety of British beef is for the European Union to lift the ban. That would be an enormous step forward. We shall continue to do the best we can to provide unbiased and sensible information to all inquirers and to press those in posts abroad to ensure that people are aware of the facts. The noble Lord has given me a chance to add that it is surprising how little foreign Ministers and some heads of government and state understand not only what is at stake but also what we have done so far. It is important that Her Majesty's Government should pursue a powerful information campaign. That is in the minds of a number of my right honourable friends.
Lord Elliott of Morpeth: My Lords, does my noble friend accept, from someone like myself who has been involved in the production of beef cattle over a considerable time, that we realise the enormous logistical problem involved in the proposed killing of so many cattle? From time to time, we hear criticism of the Government for being slow in getting the process under way. However, those of us who understand slaughtering and what it involves become angry at those criticisms. Can my noble friend assure me that although the slaughter of the cattle is necessary and is going ahead, the process will be humanely carried out?
Viscount Cranborne: My Lords, I am grateful to my noble friend for his understanding. We all wish to see the difficult process proceed seamlessly and without problems. The fact that it had to be introduced speedily, involving a massive number of cattle, has made teething problems more the order of the day than anyone would wish. However, I hope and believe that they are being solved rapidly.
Of course, humane killing is extremely important. My noble friend will be aware of the improved measures that have been taken in that respect in the past few years.
Lord Soulsby of Swaffham Prior: My Lords, I am grateful to the Leader of the House for the Statement. All of us in this country who are connected with animal health, as well as those on the continent, in Germany, France and countries which appear to be giving us trouble, understand that the scientific evidence is that there is no reasonable connection between BSE and the human disease, CJD.

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What needs to be done now is to make that fact abundantly clear, both to our own public and to people in the European Union by whatever means the Government have in their power. Unfortunately, I meet many people who ask me about the evidence when it is quite clear to me, but it seems that it has not yet reached the public. I make the plea that an effort be made in that direction, not only with our own public but also that of the European Union and elsewhere in the world where our beef is banned.
Viscount Cranborne: My Lords, as the whole House knows, my noble friend speaks with great authority on such matters and I am grateful for what he said. I can only refer him to my earlier answers. The fact that he is as keen on it as I will make us redouble our efforts.
Lord Monson: My Lords, in order to put the significance of our current negotiations in Europe in proportion, can the noble Viscount tell us approximately what percentage by value of our traditional exports of beef and beef products is accounted for by tallow, gelatine and semen?
Viscount Cranborne: My Lords, I fear that I cannot do so off the top of my head. Rather than mislead the noble Lord with an approximate answer which I could give him, I shall write to him.

National Health Service (Residual Liabilities) Bill
5.8 p.m.
Second Reading debate resumed.
Lord Blease: My Lords, the written content of the Bill is small but in my view the text presents large issues of definition, compliance and practical application. While I shall address my remarks to Clause 3 concerning Northern Ireland, I fully support and concur with the points ably and clearly stated by my noble friend Lady Jay.
Over the past five years, it has been my misfortune to be a more frequent user of the Northern Ireland health services than I should have wished. In my experience, there have been many great forward, progressive and effective developments in the health services in Northern Ireland, especially in hospital treatment and care. Much of that steady improvement has been the result of —of the personal attention and dedication of doctors, surgeons and nursing staff.
There is, I believe, a link between the issues in the Bill and the sitation in the Northern Ireland health service over the past few months. A newspaper leading article, after quoting a Northern Ireland doctor, who is also an MP, said that,
"the Health Service (…proudly) created in 1947, and which in the past decade has been systematically dismantled [by those] intent upon imposing free market ideologies on an essential service that belongs to us all".
I could continue with various quotations on the situation as expressed in numerous newspapers in Northern Ireland which indicate that the Northern Ireland health
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service is in a very serious situation. Indeed, some of the trusts already established are on the verge of collapse. That is not an over-exaggeration. I do not want to take up the time of the House on that particular detail. I merely want to mention that there is a crisis in Northern Ireland and elsewhere throughout the United Kingdom in relation to the future of our health services and health authorities.
It is worth drawing attention to the fact that health and healthcare policies involve much more than financial and economic factors. Disciplines such as ethics, sociology and medicine have crucial roles to play in helping to resolve the difficult dilemmas that face contemporary health policy makers and the necessary health and hospital services. In that respect the Bill ignores the full implications of the proposed transfer of residual liabilities.
I invite the noble Baroness, Lady Cumberlege, kindly to defend the word "liabilities" in Clause 1. As I understand it, the legal implications of the word include obligations and duties. So, in any transfer, consideration must be duly given not only to finances and property rights, but also to obligations and duties and the commitment of the body concerned to patients and the community and the vital ethos of the health service unit concerned.
I turn to the proposed procedure for exercising the power in Clause 3 of the Bill relating to Northern Ireland. The Order in Council procedure of the Northern Ireland Act 1974 is exercised by the Northern Ireland Secretary of State and the Northern Ireland Office. Surely the time factor involved in implementing the Clause 3 provisions is unwieldy, especially when one is faced with the consequences of the day-to-day administrative necessities of modern health services and hospital commitments and also the proposed transfer of liabilities, in the full sense of the word. What about community traditions? Can those be transferred? Can the Bill provide for the continued support of local voluntary workers?
It is claimed that the Bill is necessary to fill a gap in health service legislation. I hold that the Bill is seriously flawed and inadequate. I should welcome in the Minister's reply some hope of ministerial adjustment and administrative reality, all in the best interests of our world-renowned National Health Service.
5.15 p.m.
Lord Rea: My Lords, I declare an interest. Until recently I was for nearly 40 years a National Health Service practitioner working mainly in a health centre but also in National Health Service hospitals.
In the Explanatory and Financial Memorandum to the Bill it is stated that there is,
"the possibility of … expenditure under other enactments relating to the NHS… [which] It is not possible to quantify".
Thus, the relatively innocent seeming change that the Bill introduces from the permissive mode of the 1990 Act to the mandatory mode in a reference to the Secretary of State's "duty" to settle the liabilities of trusts opens up a potentially bottomless pit, since trusts may borrow up to £5 billion. I found that a surprisingly

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large amount. However, I read the Treasury Select Committee's report and the noble Baroness, Lady Jay, also quoted that same figure from her reading of the report. It was a highly informative document. Despite that, perhaps we should take some of its contents with a little pinch of salt since it was published on 1st April. It certainly contains some passages which are truly worthy of a publication of that date.
The point is that although the Bill was designed to encourage PFI bids by giving applicants greater security in the event of the financial collapse or other inability of a trust to pay its due fees to a PFI contractor, it contains nothing restricting that proposal to the PFI scheme as such. So debts run up in a variety of other ways could be covered by the Bill. This is where the famous remark of the Secretary of State, already quoted by my noble friend, is relevant. When he said, erroneously, (in col. 618 of the Official Report) that trusts could not borrow, was he revealing his ignorance or was he trying to throw the committee off the scent? Up until now potential lenders may have hesitated a little before making a big loan to a trust. From 1990, when trusts were created, until now, a trust has not been able to offer its physical assets as security, as my noble friend pointed out. That was hastily mentioned by Mr. Andrew Neill, the Secretary of State's adviser before the Treasury Select Committee. Now the sky is virtually the limit in terms of what a trust can borrow, since the Secretary of State will pick up the tab if the trust cannot pay and is dissolved.
In theory, that presents another problem. The Bill requires the Secretary of State to settle outstanding liabilities only if a trust ceases to exist. I see a hypothetical situation in which a trust may not be in a position to pay its agreed PFI dues but does not cease to exist. In fact, it may well be in the Secretary of State's interest to keep that trust afloat, since under the new Bill, when it becomes law, the Secretary of State, in the name of the taxpayer, will be required to settle the liabilities only if the trust ceases to exist.
Potential PFI bidders may not be completely satisfied that this Bill offers them the total security (at taxpayers' expense) that the noble Baroness has claimed for it. It will be interesting to see whether and how quickly the many long awaited PFI-funded schemes get off the ground after the Bill becomes an Act.
Up to now, I have spoken largely about the Bill in front of us rather than the PFI scheme as a whole. With a professor of economics, businessmen, bankers and financial experts also speaking in this debate, I feel rather ill qualified to discuss matters of finance. However, I have a number of worries about the PH, which are shared by my noble friend Lord Winston and the British Medical Association. In a sense, the whole scheme is a form of hire purchase. It has always been my policy to avoid hire purchase like the plague, because I know that in the end I shall have paid through the nose, possibly double or more than the original price of the article for sale. If I do not have the money, it is cheaper to borrow from the bank. In the Government's
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case, they can obtain a much better rate from their equivalent of my bank than I can. So why go for hire purchase?
I am aware that the public sector borrowing requirement is too large and we must try to avoid increasing it whenever we can do so. But if, through increasing the PSBR, an asset is created as a result, surely that is different from using money taken from the PSBR for current expenditure or revenue. It is the same kind of equation that is known by any competent housewife.
Finally, I am very concerned about handing over not only the building but also the running of a hospital to the private sector. Clinical services, it is said, will be exempt. My noble friend Lord Winston went into that matter in some detail. But the whole ambience of a hospital should be therapeutic. The noble Lord, Lord Harris, in his very interesting maiden speech, said as much. It has been pointed out here and in the other place that the ward or out-patient housekeeper is very much part of the clinical team. Making a profit from a fixed payment is difficult to reconcile with that. Also, voluntary help, which all hospitals have and need, may be less likely to be forthcoming when private profit rather than public interest sets the tone.
Nothing that we have said will be able to prevent the Bill becoming law exactly as it stands—so much for your Lordships' House being a revising Chamber—but it is appropriate that we record our misgivings. It is extremely important that the operation of the PFI is clearly monitored. I hope very much that the noble Baroness will be able to say that independent health economists outside the department will be invited to undertake carefully designed studies to evaluate the effect not only of the Bill but of the whole PFI scheme as it develops.
5.23 p.m.
Lord Haskel: My Lords, the Minister clearly described the relationship between the NHS trusts and the Secretary of State. Obviously there is a flaw in that relationship which so concerned the banks that they required more than a clear statement from the Secretary of State that he will assume the liabilities of NHS trusts if the worst should happen. They required a law—hardly "a technical change", as the Minister described the Bill. Can the Minister tell us what that flaw is?
I am in favour of the PFI. Indeed, some would say that its origins lie with the Labour Party. I well remember some years ago working on a partnership system of raising additional finance for the railways from the private sector. I have no doubt that if private finance is to be used in the public sector, the public sector must be in control. That is not only because the public would expect the project to continue operating even if it got into financial difficulties, but also because, as my noble friend Lady Jay said, the public sector must set the priorities. That is why private finance is suitable for projects which are in addition to publicly financed projects and not, as the Government seem to intend, instead of them. That is why I am surprised that the Minister said to the Treasury Committee on 16th January 1996:

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"the case where the PFI is the option that we are required now under our own guidance to examine first is where there is a major investment project".
Of course, that created a bottleneck, through which every NHS project had to pass. Perhaps that is one reason for the delays about which my noble friend Lord Winston complained. However, he will be pleased to hear that help was at hand. In April, the bottleneck was partly cleared by a Treasury circular saying that the PFI option need not be examined first if the option was "patently absurd or unrealistic".
Surely the decision on whether to use public or private finance is not a matter of absurdity. It must be a matter of suitability. It is suitable to use private finance in a long-term project, say, to construct a building and operate some of the services, where there is every incentive to benefit from good design, efficient management and the opportunity to create a goodwill element. However, the commercial reality that appears to prompt the Bill is different. Risks are being transferred and NHS assets pledged as security. The lenders take the view that the assets belong to the Secretary of State and so we have the Bill.
My business instincts are against the Bill. Perhaps I may explain why. First, no businessman rushes to take on more liabilities. If the Secretary of State already has those liabilities, the Bill is unnecessary. If he does not have those liabilities, does he know what he is taking on? My noble friend Lady Jay explained that he probably does not know, despite the Minister's assurance that "controls" are in place. My suspicions are aroused by the aura of undue haste which surrounds the Bill. Sensible businessmen and presumably sensible Ministers move gingerly and reluctantly to take on new liabilities, even in a sector that they know well. The PFI is untried in the National Health Service. To rush into taking on more liabilities in an area not fully understood will only end in tears.
Secondly, the commitment is open-ended. How can the Secretary of State honour the liabilities of any NHS trust, irrespective of the manner in which they have been incurred? Despite the monitoring, is the Minister satisfied with the probity of every NHS trust? Is the Minister happy to guarantee the liabilities of a yacht in Cannes harbour without which trustees and manager stoutly claim that they cannot run their business? My Lords, stranger things have happened. Would it not be wiser to guarantee the liabilities after proper control and appraisal and after adequate scrutiny by Parliament?
That leads me to my third objection, which is about the issue of off-balance sheet debt. The Bill seems to imply that, instead of using private finance to fund specific projects, the Government are using private finance to fund projects which are not separately identifiable. The benefits of the project appear in the trust accounts as an asset, but the liabilities are in another account. Is the Minister satisfied that the monitoring described by the Select Committee as "rather haphazard" will pick that up?
That kind of accounting is deliberately misleading. The only way to deal with it is to have full transparency because the devil is in the detail and the Bill ignores
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that. It also ignores the fact that, by assuming that liability, the Secretary of State is removing the ultimate sanction of the market; that is, bankruptcy.
In normal business the sanctions are clearly understood. If a company goes bust and nobody else can be persuaded to take it on, then the business ceases. But if a company running an NHS activity goes bust, nobody expects the patients to be put out onto the street. Presumably the sanction is that the management is sacked and new management is brought in to sort out the problems. Without the normal sanctions there must be transparency and clear moral priorities.
The point I wish to make is that, as the sanctions of bankruptcy are removed by the Bill, so the discipline of clarity must be put in its place. Then it will be clear what happens if the trust or the supplier of the hospital goes bust; what the Government do; what the lenders do and who takes over the obligations. The public are entitled to know what arrangements have been made and they need to be spelt out clearly. That is why I entirely support the recent report of the Treasury committee in another place which raised similar concerns and recommended that an annual report be produced which brings together the details of PFI-financed projects undertaken by individual departments as well as details of projects where PFI finance was considered but conventional public finance was eventually preferred.
The Minister assured us that the finance of the NHS trusts is, in practice, under the effective ultimate control of the Secretary of State. If that is so, we need to know precisely what is the nature of their independence and why the Government have to guarantee their liabilities. What has changed since the NHS trusts were created in 1990?
One final point about the Bill that concerns me is the ever-increasing encouragement by the Government for hospital trusts to out-source. They do that not only by guaranteeing liabilities, but also, in April, by exempting the private health contractors themselves from VAT. I cannot speak from experience of serving on a hospital trust, but I can speak with experience of business. Out-sourcing is not all good, as we are finding out. It needs careful management to handle it successfully. The chances of success are much greater when we give an outside organisation something to run which is already up and working. If it is a new activity, it is far less risky to manage the development oneself and retain the skills in one's organisation. The Bill and the pressure to out-source encourage management to ignore that.
During the development phase there are constant changes, and every change costs more money when it is outside one's organisation. We are seeing that happen with the benefits system and the National Insurance computer system. Organisations must retain skills in-house so that they have the option of taking back activities which have been out-sourced unsuccessfully. The Minister may remember that that is exactly what happened when the police tried to out-source electronic finger printing. It was unsuccessful. Because we did not retain the skills, the work had to be contracted out to the police department in Seattle, Washington, at

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immense cost. If the skills are not retained in the NHS, ultimately there will be no alternative to privatisation—whether or not the Government wish that.
Clearly there is uncertainty and confusion here—perhaps that is why there are so few noble Lords opposite supporting the Bill. A lot of public money is at risk and, more importantly, public health is involved. Where public health and public money are concerned, there should be no confusion. I therefore urge noble Lords to oppose the Bill and the Government to think again.
5.34 p.m.
Lord Dean of Beswick: My Lords, I listened with interest to the speech of my noble friend Lord Haskel. It was extremely thorough from a business point of view about the dangers of mixing the public and the private sectors. I should like to ask one or two questions on the costing of projects.
Historically, in the health service and in local government, when local authorities were developing and hospital authorities were instituting procedures to undertake large capital projects, more often than not—certainly in the case of local authorities—they would run into the government yardstick. That quickly indicated whether the project was over the top or whether the money would be forthcoming in support of it. If the yardstick was not changed, the project did not go ahead.
I see my noble friend Lord Sefton nodding his head; I believe that I am right. But in this case we have the reverse. The project will go through and, when it gets into difficulty, the Government will help it out. The trouble is that there is no normal yardstick. Two trusts may have two different standards. If somebody built a hospital in one of the poorer areas of the country socially, I suspect that it would not be as palatial as one built in the stockbroker belt by the trust registered there. I wish to ask the Minister a question, though I do not expect her to answer tonight. Is it worth considering what yardstick should be used to prevent willing investors, if there are any, putting in their money and going over the top on the basis that they cannot lose anyway?
I read extensively the Second Reading speeches in the other place and some of the evidence submitted by the Secretary of State to the appointed finance committee on the subject. I can only draw the conclusion that, whatever takes place, if the project collapses the Government will have to step in. They certainly could not stand aside and do nothing. We have heard it asked in the past, "Who will launch the lifeboat?" There is no question but that the Government would have to launch it. They could not leave an area of the community without adequate health services simply because a business collapsed.
I asked a Question today which the Minister answered meticulously and pointedly. However, I may have misunderstood part of the answer; it may simply be a matter of words. It concerned a National Health Service chief executive who talked about a gentleman who was
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extensively reported for his lack of probity in the Yorkshire Regional Health Authority. The chief executive did not say that the gentleman would not be employed in the health service; he said that he certainly would not be given another job as a regional controller when the changes took place.
I have with me today a friend who is a prominent consultant. He said that those comments underpin quite clearly the fact that, if a person is found to be at fault in connection with a large number of incidents which result in substantial sums of money being lost to the National Health Service—minor sums can be reclaimed—even though he can be dismissed for that lack of probity, there is no way that he can be prevented from taking a job with another trust if he applies and is offered one.
In my experience in local government, if a city treasurer—we are talking about a senior officer, not an office boy; the person involved was a regional controller—of one of the large cities was found to have manipulated funds to suit himself, he would receive short shrift. I have no doubt that none of the other local authorities would touch him. When we were on the Wessex trail before, I asked the Government to bring in punitive measures against people who were raiding public funds.
What comes across clearly from the examination by the National Audit Office is that those who were at fault felt in some way that what they were doing was all right by the Government and that they were not bound by the Whitley Council. One of the ladies concerned who was found to be grievously at fault in the Yorkshire Regional Office said that they had checked with some of the other regional authorities. They already knew what was going on in Yorkshire but they were using health service money to balance up the negative equity of their houses. It is beyond belief that health service money could be used for any such purpose. I am not a lawyer but that is not ultra vires; it is outright fraud. No one has been prosecuted.
When the Government first brought into the health service this method of privatisation I wonder whether they were right in saying, "We are going to introduce the entrepreneurial factor". An entrepreneur means someone who is a yuppie or a whiz-kid—they will do it their way but they will succeed. I believe that when they read that they were all entrepreneurs and that they were being given these jobs, they felt that the rules did not matter. Was any example set to dissuade them when the first clutch were found out?
I do not want to go back to the issue of Wessex but I must because it has been mentioned today. What took place there and subsequently is mentioned in the National Audit Office report. What did the Government do over Wessex? The loss of money to the health service in that area alone had reached £63 million. Those are not my figures but the figures of the National Audit Office. Some of that money was reclaimed but the majority was not.
It took me almost two years, with the assistance of other Members—the noble Baroness, Lady Robson, was one—and of a new Back-Bench Member in another

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place who lived in Wessex, to get to know what was happening in Wessex. The then Secretary of State, Mrs. Bottomley, and her number two, the Minister of State—the present chairman of the Conservative Party—had issued an instruction that a district auditor's report had to be kept confidential. The Public Accounts Committee met for four-and-a-half hours to grill the then chairman of Wessex, Mr. Robin Buchanan, and Mr. Duncan Nichol, who was then the top gun in the health service, and discovered that the way they had run the place was beyond belief. If a town clerk or a council leader had run a city in the way they had run their authorities they would soon have found themselves with Ronnie Barker doing "porridge". There is no question of what would have happened. But nothing was done.
One of the people most criticised by the Public Accounts Committee was then the chairman of Wessex. He was not the main culprit. He was put in to rescue the job. However, he did not do it very well and he himself came in for severe criticism from the Public Accounts Committee in its final report for purchasing a computer for £3 million which could have been bought for £1 million. Someone was criticised for paying 104 salaries for a period in order to privatise the computer sector when fewer than 70 people were actually working. When he was challenged by the Public Accounts Committee, he said, "You don't expect me to go round counting". No, but we do not expect someone to pay 104 salaries which he had no right to be paying.
I come back to this question. What did the Government do? They knew that all this was going on and they knew that it was bound to hit the surface. When Bob Sheldon, the Chairman of the Public Accounts Committee, commenced his remarks by saying that the proceedings of the committee would be open as there was so much public concern on the matter, the lid blew off. But then the Government made a colossal blunder. They gave the impression that it did not matter, because while all that was going on, the second chairman, who had been severely criticised, was appointed chairman of the Supplies Authority, a new body which the National Health Service was setting up, which is the biggest spending unit in the National Health Service. It has an out-turn of between £3 billion and £4 billion a year.
It is only realistic to assume that all the chairman of these bodies knew what was going on. I had it in local government. I knew what they were doing in Liverpool and they knew what we were doing in Manchester because we used to meet and talk about what was going on. I firmly believe that when the chairmen of the former regional authorities came down to London for meetings and dinners they knew what their colleagues were doing. They were not islands. They did not act in isolation. They knew the code of conduct, but they all broke it. In this situation a person criticised by a senior committee of the House of Commons was not only not dealt with but was given a substantial promotion.
People who were doing the same or similar things, but not on the same scale, in other regional health authorities might say, "They are not going to touch us. It is okay". I pleaded in this House for the Government to subject those people to the same surcharges faced by
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local councillors. I am talking about appointed members, as I know that employees can be dealt with. I am talking about appointed members, whoever they are and whichever party they belong to. But no one bothered. We were told that they had done nothing wrong, that they were lacking in probity but had done nothing illegal. We were told that it was ultra vires. And on that basis they got away with it.
I believe that there are still substantial sums of money which may have been removed from the aegis of the health authorities. The cases of Wessex, West Midlands and the one in Yorkshire may involve enough money to build a major hospital. We are not talking about peanuts. The former nine regional health authorities that were left ought to be examined on the basis of what people have said. As far as I am concerned—I might be wrong—three authorities have been examined and the probity of the people involved at the highest level was found wanting. It is worth calling in the National Health Service ombudsman or someone from the National Audit Office to go through the whole matter so that if there is a clean sheet we shall know and we need not waste our time in future tilting at windmills.
5.49 p.m.
Lord Desai: My Lords, this is a short Bill. I do not intend to discuss the merits of PFI as such. I shall confine myself to discussing whether the Bill is necessary. There is a cautionary tale behind the Bill.
As the noble Baroness, Lady Robson, said, there has always been a provision in the National Health Service since 1948 that the Secretary of State for Health is responsible for the assets and liabilities of hospitals and other practices in the National Health Service. So why do we suddenly need this particular Bill? Thereby lies a story of what I might call the unforeseen consequences of privatisation, as the Secretary of State said to the Select Committee in another place. Now it is necessary to make clear that the Secretary of State has the duty to take over the liabilities of trusts, etc., which may shut down. Before that the Secretary of State did not have a duty, but a general responsibility. That is because if there are private finance initiatives in the National Health Service, it is not clear what is the status of a trust. A trust is not a private company which can be made liable for its own debts. Therefore, one has to have some kind of a new quasi-law of bankruptcy as regards trusts.
Because of private finance initiatives one has to make the risk very clear to private investors that if they invest in a health trust and undertake a project in a hospital they will not be left with a firm which goes bankrupt with debts unpaid. So we are now saying that anyone who invests in the National Health Service under the PFI will have a clear guarantee that if anything happens the liabilities will be taken over by the Secretary of State for Health.
That is a very interesting consequence because PFI was originally invented in order to get money from the PSBR. We have not thought through the consequences of PFI properly and there is a likelihood that some of them may come back to the PSBR. I am intrigued to

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read in the first clause of the Bill the words, "ceases to exist". Why does a hospital trust "cease to exist"? It can be administratively shut down or it may merge voluntarily. But can it technically go bankrupt? Is this Bill being introduced because we may find that units undertake liabilities for which there is no matching cash flow and, because of that, they go bankrupt? Is this Bill being introduced foreseeing the possibility of what we technically call bankruptcy in commercial operations as regards units in the National Health Service?
If that is so, we have to be very clear that such cases which involve a mismatch of cash flow and liabilities will not harm the clinical operations of the unit. A hospital trust may go bankrupt because some building, or whatever, takes place under PFI but does not generate sufficient revenue to meet the interest commitments. The unit will go bankrupt. That will happen if something is privatised or semi-privatised.
Given the distinction between clinical and non-clinical operations, how does one make sure that the clinical operations of a technically bankrupt hospital trust are protected? If bankruptcy arises that does not mean that it ceases to exist. The trust is only financially bankrupt and not physically destroyed. I would like the Minister to address the question of whether the Government have thought through technical bankruptcy for hospital trusts and whether this Bill is designed to foresee those conditions. If a trust ceases to exist for financial reasons, are there ways of protecting its clinical operations so that at least that side of the hospital is allowed to proceed while the unit is being restructured financially?
As I am sure noble Lords who have been in business know, a company which goes bankrupt can be reconstructed and begin operating again. I would like the Minister to say whether the financial and clinical side will be sufficiently separated to protect the latter, whatever happens to the former?
The next matter is germane to the general PFI issue although not necessarily to the NHS. This provision is going to come to the universities. The Government are urging PFIs on universities in quite a large way. The liabilities of universities are not going to be taken over by the Secretary of State for Education. If a university goes bankrupt because it has taken on private finance and cannot meet its commitments, have the Government thought through the consequences? The noble Baroness need not answer that question because it does not concern her department. Have the Government really thought through what will happen to universities which go bankrupt? Since the Government have postponed decisions by appointing a committee to look into university finance, within the next 18 months one or two universities are going to go bankrupt. At that stage we shall have to face up to the question of what happens to the assets and liabilities when they go bankrupt.
My general point is that if one adopts a market strategy without having a full range of private property institutions there will be problems. We shall have then a half-baked market. Hospital units are neither private firms nor government departments. We now have to consider the possibilities. The NHS operates not under
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market conditions but with quasi-fixed prices, so we shall continue having the problem where this kind of privatisation will lead to unforeseen difficulties. I hope that the Government have thought through what they are doing in this Bill because it is too short and has no explanation. I am not at all sure whether the Government are aware of many of these difficulties.
5.57 p.m.
Lord Monkswell: My Lords, I had hoped to keep my contribution very short tonight. I hope to keep to that. It has been a very interesting debate so far. One of the most interesting contributions came in the maiden speech of the noble Lord, Lord Harris of Peckham. I believe he reported that there had been a 90 per cent. cost reduction by doing a job in-house rather than getting contractors to do it. I wonder whether, in the fullness of time, we might find out that massive savings to the Treasury and the Exchequer will be provided by converting these private finance initiative projects into straight, public sector borrowing requirement elements.
We are stuck a little by the creative accounting that appears to be emerging not only within the different National Health Service trusts and the way in which they seem to account for some things "off balance sheet", which I believe is a technical term, but also in terms of national accounts. Various speakers have mentioned the problem that the Government have with the very high PSBR that we are faced with and the desperate need to satisfy the international money markets to reduce it. We need to look a little more closely at how the Government are doing that. We have the PFI and the reason for it appears to be to cut the PSBR.
We have heard from the noble Lord, Lord Haskel, that the idea of the private finance initiative came from the Labour Party when it was looking at ways of ensuring capital investment in the railways. It is worth looking at that a little more closely. Perhaps I may give an example. Ford makes a large range of engines for its cars at Bridgend. The cars themselves are produced in Halewood, Dagenham, Germany, Belgium and Spain. If Ford decides that it wants to transport those engines from South Wales to its car manufacturing plants across Europe by rail, it could go to British Rail and the other railway companies on the Continent and say, "We would like to move our engines by rail. Will you provide the rolling stock and the engines to haul that rolling stock?" Given that most railway systems are nationalised, the burden of that would fall on the public sector borrowing requirement and the capital investment to provide that rolling stock would have to be provided by governments.
If, however, Ford invested in that rolling stock itself so that it retained ownership of the rolling stock and provided the capital financing necessary for that, and if that rolling stock was used on the national railway systems and hauled by national railway system locomotives, the effect would be to move what is a capital requirement for the public sector borrowing requirement on to the private sector. That would be genuine private financing of a capital requirement. I am sure that everybody recognises that. The international

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money markets could say, "This is not a government liability. It is a private liability and Ford will have to carry it".
The added advantage of doing it that way is that Ford would have an incentive to utilise the capital stock that it had created by continuing to move its engines by rail. If Ford did not have that capital involvement, it could turn round a few months later and say, "We have decided not to bother moving our engines by rail", and the Government would then be saddled not only with a capital debt owed to the money markets through the public sector borrowing requirement, but would have assets that were virtually useless because the rolling stock would probably have been specially constructed to haul those Ford engines. That situation is rather different from what happens in the National Health Service, the university sector or the education sector generally, where the provision of the service is a public provision. The public can turn round and say, "We may or we may not carry on with that activity".
One of the interesting things about the Bill is that it changes that situation. Previously there was a real risk for private investors in capital projects in the National Health Service that an NHS trust would, effectively, go out of business and leave the investor with those liabilities. There was therefore a justification for charging a higher rate in the market because of that associated risk. In effect, the Bill says that that risk no longer obtains. In effect, the Government would be the lender of last resort and the liabilities that accrue as a result of capital expenditure patterns by NHS trusts would reside with the Government. In that situation, it would make sense for the Government to borrow money as a lender of last resort from the international money markets at a cheaper rate than is available to any private financier, and for the Government to use the money to provide the capital infrastructure. On that analysis, it seems to me that, although it absorbs some parliamentary time and keeps us in employment, putting this Bill through Parliament is a nonsense because it destroys the argument for private finance in the National Health Service.
6.4 p.m.
Viscount Chandos: My Lords, I thank the Minister for her introduction of this far from technical little Bill and pay tribute to the sang froid that she showed in explaining its merits. It was perhaps a case of the unhesitating in pursuit of the unquantifiable. The precision with which other noble Lords have dissected this particular specimen speaks highly for their surgical and intellectual skills and just as tellingly of the extraordinary contradictions contained in the 37 modest lines of draft legislation.
I should repeat a previous declaration of an interest. A company of which I am a director has a subsidiary which acts as an adviser to NHS trusts on PFI funding and to consortia bidding for contracts with such trusts. I play no part in its running or its operations and I was not involved in setting it up. Indeed, I opposed it—not just on political but on commercial grounds. In the light of that and of the fact that the views that I shall be
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expressing are unlikely to be regarded as in the company's financial interest, I decided that it would still be appropriate for me to speak today.
If that was the first quandary that I faced, I immediately came to a second. If any measure proposed by this Government promised to promote investment in the National Health Service, could there be any grounds for quibbling? Other noble Lords far more expert than me—namely, the noble Lord, Lord Harris of Peckham, in his authoritative maiden speech, and my noble friend Lord Winston—have described the urgent requirements of the health service, while my noble friend Lady Jay of Paddington described the catastrophic shortfall in investment which this Bill is being rushed through to rectify.
Even increased funding may not be a sufficient condition for the improved provision of services by the NHS, but it is certainly a necessary one. It is perfectly possible to acknowledge that the nature of healthcare provision means that the demand for new services, updated technology and better resources cannot be fully met but still to assert that an improvement in the current level of investment is needed and can be determined within the insatiable demand that exists.
Does the end justify the means? I think not. My noble friend Lady Jay, the noble Baroness, Lady Robson of Kiddington, and others have demonstrated that rather than PFI adding incremental investment to the NHS, it is merely substituting for what has previously and properly been the Government's direct responsibility. Instead we should recognise that at the heart of the Government's rapidly growing projection for the use of PFI in health and other areas lies dodgy accounting—the public accounts equivalent of the racy old days of the 1980s when an enterprising company could buy another one twice its size and yet one would have been hard pressed to tell from the published accounts subsequently that the chairman had done any more than buy a new helicopter. Just as economic reality caught up with creative accounting in the corporate sector, the same will inevitably be the case in the public sector. When there is that rendezvous with reality, you can be sure that the reaction, the correction and the restructuring will negate whatever temporary benefits there may have been in the meantime, if any.
Let us go back and examine the principles of PFI. The Government may seek greater efficiency in both the construction and purchasing of new facilities and in their subsequent operation. There is no reason for that to be muddled up with how those facilities are financed. The subcontracted outside provision of non-clinical services on a turn-key project basis can be perfectly well achieved, if that is what the situation demands, quite independently of the source of funding for that project. The taxpayers' interest is that the funding of the project should be on the best possible terms. Since the Government will, in almost all circumstances, be able to borrow on finer terms than any other entity in the UK, the only justifiable reason for raising finance by other means is if there is a transfer of risk. As long as the Government had at least the theoretical option of allowing an NHS trust or any other PFI-funded enterprise to fail, there was at least a veil of intellectual

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respectability behind the use of more expensive private sector funding in lieu of direct borrowing by the Government. This Bill removes that thin veil and lays bare the creative accounting, as described by my noble friend Lord Monkswell, that is being perpetrated by the Front Bench opposite.
Can the Minister say whether, as a consequence of this Bill, the aggregate future obligations of the NHS trusts to the private sector will be included in the public sector borrowing requirement? If not, why not? In the corporate sector the accounting standards bodies have increasingly required leases to be brought on to companies' balance sheets. Surely the fact that the Bill has been deemed a money Bill is prima facie evidence that the obligations covered by it should be included in the public sector borrowing requirement. Students of this Government's past inconsistency towards the definition of the PSBR may remember in the 1980s the abandonment of the gas-gathering pipeline project in the North Sea, which promised a valuable economic and environmental return, because of the Government's insistence that the residual liability entailed had to be counted in the PSBR. That occurred at the very time that the formal guarantee of the debts of the computer company, ICL, which the Government had deemed to be politically expedient to support, were excluded. Even with that and other precedents in mind, I find it difficult to imagine how the hard men of the Treasury—the praetorian guard of the financial Chief Secretary—can be squared to exclude these obligations from the PSBR. If the noble Baroness tells your Lordships' House that the obligations will be included in the PSBR, perhaps she can also justify the additional costs to be incurred by paying private sector rates for explicitly public sector obligations.
At the heart of this Bill lies not a commitment to the interests of the NHS and its patients but, I suspect, the most vivid illustration of the manipulation of the public accounts by the Government in a desperate attempt to give themselves the apparent ability to offer tax cuts in the next Budget—if they last that long. The ever-increasing levels of PFI funding projected in the Red Book in recent years—so little of which has taken place—betray the purpose of the Government, which is to consign essential, not optional, investment to the never-never world of the PFI in order to give themselves room for manoeuvre and throw the electorate a little pourboire here and a douceur there when the underlying state of public finances, stripping away the mirrors, wheezes, dodges and fiddles, would not otherwise justify this largesse.
We are watching the Benches opposite and their trick accounting. The country is watching them, too. When the Minister says in her introduction that the Bill is for the benefit of taxpayers and patients alike, we know that this is being as creative with words as the PFI is with public accounting. How can the noble Baroness maintain that it benefits the taxpayer when the cost of financing is higher than direct government borrowing? How can it be to the benefit of patients when the funds,
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if and when they are raised, merely replace the 17 per cent. cut in the NHS capital budget referred to by my noble friend Lady Jay?
This should be the Bill that died of shame—shame at its intellectual dishonesty and cynical electoral motivation. As my noble friend Lady Jay has said, we on these Benches still support the principles of partnership funding, but only when there is a true reduction in cost or transfer of risk. That is unlikely to provide quickly a massive flow of funds. Therefore, in reality the largest part of the NHS's capital expenditure will need to be financed by traditional means and accounted for accordingly.
Nor do we accept uncritically what may be termed Treasury orthodoxy. There remains a powerful case for separating capital and current expenditure in an accurate fashion in the public accounts so that the Government, electorate and markets can judge more clearly the true position of the nation's finances. In the meantime, the Government should stop fiddling and get on with putting out the fires by direct and established methods.
In the end, however, this Bill will inevitably pass. It may at least free the investment blockage created by the Government's cynical policies that threaten the comfort, health and even lives of patients. For that we should be thankful.
6.16 p.m.
Lord Carter: My Lords, we have had a very good debate on the Bill. We have heard some excellent speeches, but none better than the maiden speech of the noble Lord, Lord Harris of Peckham. We look forward to future contributions from him to debates on the National Health Service with the great experience that he brings to them.
This is a money Bill. It will pass through all of its stages and we will not be able to amend it. From this side of the House—the lack of contributions from the Benches opposite is noted—we will try to point out the weaknesses in the Bill, which we believe has already been done very well, and examine the situation when the Bill becomes law, as it surely will. If we look for a definition of PFI in the context of the National Health Service, it can be described as a wheeze for transferring risk from the public to the private sector, at the same time as transferring a good deal of government costs from the pot marked "capital expenditure today" to the pot marked "current expenditure tomorrow". That definition, which was given in the Independent on 16th May of this year, sums up the position very well. That point was extremely well made in the speech of my noble friend Lord Chandos.
I should like to make clear from the Dispatch Box that the Labour Party is not opposed to PFI in every situation. However, in the present circumstances of the National Health Service it is not in favour of PFI as a substitute for proper capital investment by government and as a possible route to the privatisation of clinical services.
I shall deal immediately with clinical services. The Secretary of State has made clear that clinical services will not be put out to the private sector without the

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consent of local clinicians. First, it means that the Government are prepared to contemplate in principle the letting out (privatisation) of clinical services. Secondly, it means that that will be done as long as local clinicians consent to it. But patients must also be involved in it. What is to happen to the Patient's Charter if we are to privatise clinical services and only the consent of local clinicians is required?
I turn to the heart of the PFI: the cost of money. At Second Reading in another place on 12th March the Secretary of State made it clear, at cols. 813 and 820 of the Official Report, that 48 schemes costing a total of £225 million in the NHS under the PFI had already gone ahead. Therefore, those schemes must have passed the value-for-money test and got the go ahead without this Bill. It follows that the Government must know the costs which the finance providers are charging without the Bill. They have said that they have already spent the £225 million involved in the projects which have been agreed without the Bill, so they must know the finance costs of those schemes. It further follows that the Government must now be able to negotiate the finance terms after the Bill becomes law. They can look at the proposals as they come forward and the cost of finance included in them with the Bill on the statute book. We know that it is the bankers who want this Bill. As lenders they will now have a government guarantee for their ultimate liability. If a trust or health authority goes broke, or whatever happens, they will be repaid. Therefore, the Government must be able to negotiate the keenest possible rate of finance to be provided when the Bill becomes law. The figures that we heard from my noble friend Lord Chandos throw doubt on that. But that is a fact. If the bankers know that whatever happens they have the finest possible guarantee for their ultimate liability, surely the Government must be able to negotiate a keen rate. There is a simple question which I am sure the Minister will be happy to answer. What is the cost of finance without the Bill, and what is the cost of finance with the Bill?
If I go to a bank and borrow today, the keenest rate I can obtain for lending, secured on, say, agricultural land, is 1 per cent. over base rate. In the calculations for the PFI, what are the carrying costs of the money which are being included, which has, as I said, a government guarantee against risk? It is a simple question. If the Minister is unable to provide the answer, our worst fears will be realised. To put it another way, as other speakers have done, exactly who carries what risk and for how much?
A further question arises. What are the residual arrangements at the end of these agreements? Normally, on a finance lease, the property reverts to the borrower at the end of the lease for a nominal sum. Do the Government intend to negotiate similar arrangements for the NHS PFI? What are the residual arrangements at the end of these agreements? Who gets the property?
I have to say in the nicest possible way that a Secretary of State who did not know that the NHS trusts had the power to borrow is likely to be something of a pushover when it comes to hard financial negotiations.
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So where are we with the NHS PFI? The Evening Standard put it extremely well on 10th May in its pink financial section:
"The Private Finance Initiative could never be deemed one of the Government's greatest successes. It has been plagued by the worst excesses of civil-servanthood: delays, obfuscation, abrupt changes of plan and startlingly few completed projects".
It is the Evening Standard and not the Labour Party saying that, although we agree of course. The article continues:
"The Health Service has not been immune to these setbacks but it has a separate problem all of its own. This little difficulty cuts to the very heart of private finance in the State sector, exposing fundamental flaws in the way the Government proposes to fund its plans".
The article goes on to state that the bankers are saying that the funding mechanisms employed by NHS trusts and authorities are not compatible with long-term loans. Most trusts take on contracts with purchasers, which run for between one and five years, but we know that the trusts will be seeking much longer terms for their PFI agreements. We all know that borrowing long to operate short is a sure route to Carey Street, except in the case of the NHS PFI at the end of Carey Street will be the welcoming arms of the taxpayer, if the trust ever gets there.
However the Evening Standard had it wrong in its final paragraph when it stated:
"But banks will need more reassurance before they are prepared to risk their capital to fulfil the Government's ambitions. Eurotunnel can never be far from any banker's mind".
Eurotunnel is the wrong analogy, but a first-class warning. If Eurotunnel had been financed on the same terms as proposed for the NHS PH, it would be the taxpayer who would be picking up the £8 billion overrun costs and not, as it is now, the consortium of lenders. The Government and the banks have both learnt a lesson from Eurotunnel. Unfortunately the bankers appear to be quicker and shrewder learners than the Government.
Only this morning at a meeting of trustees—not to do with the Bill—it so happened that one of the other trustees present was the chairman of one of the largest building firms in the country. I happened to mention in passing that this afternoon I would be dealing with the National Health Service (Residual Liabilities) Bill. It is as well for the Minister that she was not present to hear his reaction. Naval language would be the politest way that I could put it. He said that the PFI in that company's case—it is a substantial household name in building—had led to delay, confusion and substantial extra costs with a substantial reduction in its hospital building programme.
Perhaps I may return to the point made by my noble friends Lord Chandos and Lord Monkswell regarding the PSBR. It seems to me that the Government are taking on what an auditor would call contingent liability. What are the Treasury rules on that? Do the Government intend to include a note to the national accounts as any auditor would, which would spell out that contingent liability? It will be interesting to see how the masterminds in the Treasury draft the appropriate note. If it is not to be included in the PSBR, there should

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be some indication of the contingent liability that the Government are taking on. I never thought the day would come when I would see a British government indulging in financing off the balance sheet, which is the term usually used.
An interesting point arose in the speech of my noble friend Lord Desai: what about the university medical schools? He said that the universities are not protected in the way that the NHS will be. They have no protection. Is it correct that if a university were to go broke the Government would not be standing behind the liabilities as they will with the Bill? If there were a medical school in that university, how would it be affected?
Finally, we heard this afternoon in the Statement on BSE made by the Prime Minister and repeated in this House, that we have now wheeled out the heavy artillery with regard to Europe. We are going to hold up the convention on insolvency. Will that have any effect on the PFI?
Far from being the sound money government that the noble Baroness, Lady Thatcher, espoused as Prime Minister, I fear that we now have a profligate government who are happy to adopt live now and pay later policies. There is a simple reason for that which has been referred to by a number of speakers. They know that they will not be there to pay the reckoning. As with so many other aspects of policy, it is a Labour government who will have to deal with the problem.
Lord Graham of Edmonton: Now answer that!
6.26 p.m.
Baroness Cumberlege: My Lords, I shall endeavour to answer that. I am grateful to all noble Lords for having taken part in the debate and for the way in which today's proceedings have been marked by sensible discussion on the merits of the Bill. I should like to associate myself with the remarks of the noble Lord, Lord Winston, who paid a tribute to the maiden speech of my noble friend Lord Harris. I know that my noble friend is the chairman of a go-ahead and thrusting company called Carpetright. I can assure him that he does not get just his business affairs right, but also the business of this House.
Your Lordships will know that the Bill is about proper and prudent management of the health service. It seeks to ensure that patients continue to receive the services they need and that those who contract with the NHS can do so with absolute certainty. They need to be confident that the contractual liabilities of certain NHS bodies which become defunct will not merely die along with the defunct body.
I gained the impression from the noble Baronesses, Lady Jay and Lady Robson, that all was well with capital schemes in the past. But the noble Baroness, Lady Robson, who is a distinguished former regional chairman, will remember that year on year the NHS transferred capital to revenue. Capital funds, although available, were not used. Why? Because of the red tape. It is well known in the NHS that it took
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20 years to build a hospital. Many of the schemes overran, despite the measures outlined by the noble Lord, Lord Dean. With PFI, that will not be the case. With a private partner there is a real incentive to get on with schemes.
As noble Lords will be aware, and as I said in my opening remarks, there is £1.5 billion of schemes in the pipeline. The noble Baroness, Lady Jay, suggested that PFI in the NHS is failing, but, as she stated, the Labour Party supports in principle a private-public partnership. That view was endorsed by other noble Lords on the Opposition Benches. So I am sure that she and those noble Lords will be pleased to know that some 54 schemes have been approved since the launch of the PR, bringing in private sector capital worth nearly £0.5 billion. A further 40 major schemes, each over £10 million, with a total capital value of over £1.5 billion, are testing private finance options as part of the PFI procurement process. Last month the Secretary of State for Health gave the go-ahead for the biggest ever private finance venture in the NHS at the Norfolk and Norwich NHS Trust and for a major hospital rebuilding project at the Swindon and Marlborough NHS Trust.
The noble Baroness, Lady Jay, asked for a definition of clinical services.
Baroness Jay of Paddington: My Lords, I am grateful to the Minister for giving way. We are aware of the exciting proposals within the NHS/PFI agreements. However, have any of the contracts to which she referred in relation to the specific hospital building programmes been signed? If they have been signed has any building work been started?
Baroness Cumberlege: My Lords, I am in a quandary on this issue because on the one hand I detect a sense of impatience on the Benches opposite but on the other I listened to the noble Lord, Lord Haskel, who so wisely reminded us that it would be unwise to rush through the approval processes and the singing of the contracts simply to demonstrate the success of the initiative. We believe that there is a case to go forward with caution. As I said, the schemes are in the pipeline and I am sure that in time many of them will be signed.
Baroness Jay of Paddington: My Lords, I am sorry to interrupt the Minister again. Is the answer to my question, no?
Baroness Cumberlege: My Lords, I explained carefully to the noble Baroness that a balance must be struck. She is right to say that not a single specific hospital buildings contract has yet been signed but I am right to say that there are many in the pipeline. I subscribe to the view of the noble Lord, Lord Haskel, that it would be unwise for us to rush through the approval processes merely to demonstrate the success of the initiative. Noble Lords opposite would criticise us most severely for doing so.
The noble Baroness, Lady Jay, asked about the definition of clinical services. She sought a definition of what constitutes a clinical service and a clear statement on a number of clinical specialisms. The division

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between occupational groups which provide clinical and clinical support services, as she will know from her close contacts with the NHS, is becoming increasingly blurred and can vary from organisation to organisation. The concept of a recognised healthcare professional is evolving as new forms of therapy become accepted in clinical practice.
The noble Baroness also asked about the privatisation of clinical services. I remind her that it is no part of the Government's policy through PFI to transfer the delivery of NHS clinical services into the private sector. By sub-contracting responsibility for design, construction and operation of the building, support services and other supporting facilities, an NHS trust allows itself to concentrate on the efficient provision of high quality clinical services. However, if a trust explores local arrangements for private sector provision of some clinical and clinical support services we would not stand in its way. As the noble Lord, Lord Carter, said, it is a matter of local determination and it cannot be carried through without the support of clinicians. If a PFI project is submitted for approval and its viability depends on the privatisation of clinical or clinical support services which does not have the consent of local clinicians it would not receive departmental backing.
Lord Carter: My Lords, I am grateful to the Minister for giving way and for her clear answers. Will the patients be consulted if it is decided to privatise or to let out the clinical service contracts?
Baroness Cumberlege: My Lords, we believe that the running of trusts is up to the trust boards. The noble Lord will be aware that trusts work closely with community health councils which, I am sure, will want to listen to what the general population has to say. However, in the end it must be the decision of the trust or of the department if it falls within the parameters I have mentioned.
The noble Baronesses, Lady Jay and Lady Robson, were concerned that PFI is replacing capital expenditure. The great benefit to the NHS in developing the opportunities given by PFI is that the private capital involved in this way is additional to that which can be obtained from public funding sources. The PFI allows a much greater number of major projects to proceed. As I pointed out in opening the debate, the capital programme for this year is £1,542 million.
The noble Baroness asked whether PFI removes the role of government in setting NHS priorities. We need to look at that in the context of a local devolved health service. If it is for local health authorities to set their priorities in their strategic purchasing plans and for local trusts to respond to that plan by coming forward with proposals for capital investment if those are needed for it to fulfil the requirements of the plan. However, it is
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important not to ignore the fact that there is a substantial continuing publicly funded capital programme of £1,542 million for the current year.
Baroness Robson of Kiddington: My Lords, is it purely coincidence that the emphasis on PFI comes together with a reduction of 16.8 per cent. in the capital grant?
Baroness Cumberlege: My Lords, as I explained earlier, it is ridiculous to set aside whole sums of money which cannot be spent. That has been the tradition of the National Health Service. When I was a regional chairman almost every year we transferred capital to revenue. Therefore, it would be foolish to earmark the money for capital expenditure when it cannot be spent. Clearly, the PFI and the allocations made for capital expenditure must be seen in tandem.
The noble Baroness, Lady Robson, was concerned that PFI will be expensive for health authorities in the future. All schemes must be affordable to the purchasing health authorities which must be able to provide through contracts with the trusts the funding that the trusts need to pay a PFI partner. The affordability criterion is very important in the approvals process and helps to ensure that the health service is not committed to expenditure it cannot meet.
The noble Lord, Lord Winston, raised the issue of morale. I can never remember a time when detractors of the NHS did not say that morale was low. I cannot accept that it is at an all-time low. I do not believe that people would be working so hard, that there would be more people treated, that GPs would be doing more sophisticated work and that nurses would be taking on an extended role if morale were low. And I do not believe that so many young people would want to enter the healthcare professions.
PFI makes a difference, although the noble Lord, Lord Winston, suggested that it does not. Only this morning I opened a new £1.8 million health centre. Almost every week I or my ministerial colleagues open wards, units, clinics, surgeries and departments. Although it is people who, in the end, matter with their professional skills, knowledge and commitment, buildings also have an effect on the way in which they work. We believe that the PFI and its train of new fabric and new buildings will help them to do their jobs better.
The noble Lord, Lord Harris of Peckham, from first-hand experience, vividly accounted the need to run hospitals and other healthcare facilities efficiently and well. Good management clearly affects the quality of care given to patients and that also raises morale. I am sure that the noble Lord, Lord Winston, who clearly listened so carefully to the noble Lord's well-informed maiden speech, will agree that there are many ways to raise morale, not least through enlightened leadership.
The noble Lord, Lord Blease, asked for a definition of liability. The term "liabilities" in the Bill refers to the term as used in the Secretary of State's existing statutory powers to transfer property, rights and liabilities. Those are listed in paragraph 7 of the Notes on Clauses. If it would be fair to summarise a liability as an obligation enforceable at law.

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The noble Lord also raised the issue of the use of the negative resolution procedure. Since the introduction of direct rule it has been normal practice to legislate for Northern Ireland by way of Order in Council in respect of the transfer of matters. They are those areas for which if there were a Northern Ireland Assembly the body would legislate. The Government recognise that the Order in Council procedure is not ideal but in the circumstances of direct rule it is the only practical way of dealing with the majority of Northern Ireland legislation. If it were possible to create a local administration with legislative powers in Northern Ireland locally elected politicians would have greater scope to debate and decide legislation.
The noble Lord, Lord Haskel, was concerned about the reaction of the private sector to PFI. If it is our view that at the end of the day the Secretary of State needs to retain his existing powers to organise the National Health Service as he thinks fit. If it would not be right to allow some outside body, however closely involved with the NHS, to make such decisions or to be able to require the Secretary of State to dissolve a trust. Perhaps I may add that no Secretary of State has ever ratted on a debt. Officials have held a number of meetings with firms on that issue and they have been helpful. I should be happy to follow that up if the noble Lord has further suggestions.
The noble Lord, Lord Haskel, was also concerned about out-sourcing and market testing which he said can cause difficulties. I am aware that as a result of market testing of non-clinical services it is estimated that since 1993 the NHS has saved £1 billion. The improved value for money achieved has released additional resources for direct patient care. I agree that where it is not successful there must be an opportunity for the NHS to take back the service. Indeed, we have some examples of that.
The noble Lord, Lord Dean of Beswick, again raised the issue of the Wessex region. Your Lordships will be aware that earlier this afternoon I paid tribute to the noble Lord for his vigilance on the issue. But the noble Lord goes too far in suggesting that a former chairman and chief executive of the NHS should be "doing porridge." I think those were his words. The noble Lord has qualified privilege in your Lordships' House but those allegations are quite disgraceful and false. The noble Lord knows that the police were involved. The authority was totally open. Inquiries were held within the NHS and there were also in-depth investigations through Select Committees and the Public Accounts Committee. 'Those who transgressed were disciplined. To defame others who were not found guilty and were not prosecuted is unworthy of the noble Lord.
The noble Lord asked also about irregular payments in the Yorkshire RHA. Any suggestion of misuse of public funds is a matter for great concern and should be investigated fully. That has been done in respect of Yorkshire and in his report the Comptroller and Auditor General acknowledges the prompt and decisive action taken by Alan Langlands, the chief executive of the NHS Executive, in setting up an inquiry to investigate those matters.
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I agree with the noble Lord that it is right that the public and Parliament should expect the highest standards of probity and public accountability in the NHS. We have sought to achieve that. Since those incidents occurred, the NHS has issued codes of conduct on accountability and openness. The codes are mandatory on all NHS boards and compliance is a condition of appointment for both executive and non-executive board members.
The noble Lord, Lord Desai, asked when a hospital or NHS body ceases to exist. All the NHS bodies covered by the Bill are creatures of statute. They can be established only by statutory procedure and can cease to exist only by statutory procedure. Existing NHS Acts lay down the means whereby those bodies can cease to exist. There are no other means by which they can do so. There is nothing sinister about that. It is a matter of language. The 1990 Act gives the Secretary of State power to dissolve NHS trusts. The 1977 Act, as amended by the 1995 Act, talks about abolishing health authorities. "Ceases to exist" is merely a phrase which covers those actions in plain English. While I respect the noble Lord's greatly deserved reputation as a respected economist, I can tell him that yes, we have thought through those issues.
The PFI is about harnessing the skills of the private sector to improve hospitals and healthcare facilities from which dedicated NHS doctors, nurses and other clinicians provide high quality health care. I assure the noble Lord, Lord Blease, that the NHS is not for sale and NHS services will continue to be available on the basis of clinical need, largely free at the point of delivery. That applies as much to volunteers as it does to staff.
In fact, this Bill reinforces the position of trusts as part of the NHS structure. Private finance makes little or no difference to the basis on which health care is provided. There is no impact on responsibility for the provision of health care which remains with the Secretary of State as before other than that it may be easier to obtain redress against the poor delivery of those services which support the NHS. There is no impact on patients in relation to accessing health care other than improving facilities and those facilities will he realised more quickly. There is no cost impact on patients other than that the same services will cost less for taxpayers who are, of course, patients too. And there is no impact on clinical activities which can continue to be provided by NHS staff other than that they take place in a better environment.
The noble Lord, Lord Rea, and the noble Lord, Lord Monkswell, were concerned about the potential costs caused by the Bill. It was suggested that the Bill would result in significant extra expenditure for the Government. But that is really not the case. As the Explanatory and Financial Memorandum makes clear, any additional expenditure occasioned by the Bill is likely to be negligible. The reason is that in all places where NHS trusts have been dissolved, property, rights and liabilities have been transferred on dissolution. In fact, it is inconceivable that the Secretary of State would walk away from liabilities to contractors, staff and patients. I assure the noble Lord, Lord Monkswell, that

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the Bill does not require the Secretary of State to meet those liabilities at the time at which the body ceases to exist but ensures that they are transferred to another body which can continue the obligation. Thus, the liabilities do not actually become a charge to the Consolidated Fund or moneys voted by Parliament until they need to be paid.
The noble Lord, Lord Monkswell, and the noble Viscount, Lord Chandos, were concerned that the Bill removes the risk for the private sector. It was suggested that the provisions of the Bill undermine one of the principles of the PFI which is that of risk transfer. That is to misunderstand the situation. It is one of the central principles of PFI that the risks should be borne by those who are best placed to manage them and their consequences. The Bill seeks to ensure that private sector partners will not be left high and dry following, for example, the dissolution of a trust in any future NHS reorganisation. It does not in any way affect the many and varied types of risks which will be borne by the private sector under PFI.
Viscount Chandos: My Lords, I am afraid that a number of noble Lords on this side of the House do not understand the Minister's explanation of how, if the Government will act as lender of last resort or guarantor of the obligations of the NHS trust, it leaves any risk with the counterparts who contract with those trusts. They have a government guarantee on those obligations.
Baroness Cumberlege: My Lords, the private sector cannot have it both ways. It is seeking some confirmation that the Government will not rat on their obligations and yet the noble Viscount suggests that there is not sufficient risk.
I turn to the question of the relationship between the PFI and the PSBR. PFI contracts are treated in the same way as other public spending. The impact on expenditure plans for the PSBR occurs as and when the public sector spends money. That is because PFI is about buying services. Until we buy those services, we spend no money.
The noble Viscount suggested also that the capital cost of PFI schemes should be scored as public expenditure up front. But that would be wrong since the capital spending is by the private sector. But we illustrate the scale of public sector capital spending under the PFI in Table 6.5 of the Red Book.
The noble Lord, Lord Carter, asked specific questions about the costs of borrowing. But that is only half the story. History shows that large tracts of the economy perform better in the private sector than in the public sector because the private sector is able to use resources more efficiently with the result that although capital costs are higher, total project costs are lower.
Lord Carter: My Lords, I understand the point which the Minister makes about relative efficiency. I asked a simple question. The noble Baroness said earlier that the Bill gives the ultimate lender that absolute guarantee. Two £25 million schemes were
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undertaken without the Bill. The Government have now obviously been able to negotiate a keener rate in the contracts as a result of that. What is that rate?
Baroness Cumberlege: My Lords, I suspect that it will alter according to the scheme. I need to look at the detail of that and I shall write to the noble Lord. However, as I said, I believe that that is only half the story. Our experience has been that when public companies, public concerns, are privatised, they flourish and do better because the private sector is able to use resources more efficiently.
The noble Lords, Lord Rea, Lord Winston and Lord Dean of Beswick, were concerned about the high limits on trust borrowing. I assure them that the Treasury has set out very strict delegated limits on approval for the business cases which, in usual Treasury form, are not over-generous. I shall not go through them this evening because time is pressing but I shall write to noble Lords.
This Bill is designed to ensure that in the event of general or local health service reorganisation where a trust is dissolved or a health authority or an FHSA is abolished no liabilities would simply be extinguished. It gives security to all those who contract with the NHS and paves the way for the continued development of the PFI in the NHS to the benefit of patients and taxpayers alike.
Lord Winston: My Lords, before the noble Baroness sits down—with the greatest personal respect that I have for her—I feel she has made what I think is a deeply defamatory remark. I hope that she will retract it. She implied that I was a detractor of the National Health Service. I have given 30 years of my professional life to the health service. My team has raised literally millions of pounds towards the health service and I remain totally committed to it, as do all the Members of the House on this side. What we are trying to do is to sort out the difficulties which have been created successively by this Government over 17 years. I find it incredible that having raised eight specific points the Minister has been unable to answer any of them.
Baroness Cumberlege: My Lords, it has never been my intention to cause offence to any Member of your Lordships' House. If I have done that I certainly apologise. I am just very concerned when people go on and on about the NHS, the low morale, the poor pay, the this, the that, and the other. For people in the NHS it is demoralising when they are told that they are poorly paid, that they have bad conditions, that the NHS is going to the dogs, and that the principle is being eroded. I visit the NHS. I go round the whole country. I am not just in one institution. I travel throughout the whole country. I have to say that morale differs. I did not say that it was not low; I said that it was not at an all-time low. I want to defend the NHS and to say that if people are detractors of it and if they talk about low morale, that affects not only those working in the NHS but also those who want to join it because no one wants to join a sinking ship.
Baroness Jay of Paddington: My Lords, before the noble Baroness sits down, I must speak on behalf of

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my noble friend and say that today the person who has discussed the state of the NHS, in the words that the Minister has just used, is the Minister herself. Everyone who has spoken from these Benches has referred to the need to improve the facilities in the NHS; to support the Private Finance Initiative where it is appropriate; and to hope that the NHS will be improved in this way. We are concerned that this Bill—as I think we have demonstrated in speech after speech with absolutely no support from the Minister's own side except the speech of the noble Lord, Lord Harris of Peckham—will not achieve any of those aims.
Baroness Cumberlege: My Lords, that is a view the noble Baroness can take. However, I have to say that it was not I who raised the issue of morale this afternoon; it was the noble Lord, Lord Winston.
On Question, Bill read a second time; Committee negatived;
Then, Standing Order No. 44 having been dispensed with (pursuant to Resolution of 13th May), Bill read a third time and passed.

Channel Tunnel Rail Link Bill
6.52 p.m.
Viscount Goschen: My Lords, I beg to move that the Bill be now read a second time.
The Channel Tunnel Rail Link Bill seeks powers to construct a new high speed railway from the Channel Tunnel to London, the first new mainline railway in this country for a century. It is a project of major national significance which will provide a high speed link with the rest of Europe. The competition for a private sector partner to build and operate the new railway was successfully completed in February this year with the selection of London and Continental Railways. The completion of the Bill will be the last major public step for this flagship project of the Government's private finance initiative. With timely Royal Assent, the rail link should open in the year 2003.
The Bill provides powers for the construction, operation and maintenance of the link between a new international terminus at St. Pancras and the Channel Tunnel. It also includes powers for associated works, including a connection to provide access to Waterloo international station, connections to other lines, provision in outline for a station at Ebbsfleet and the alteration to St. Pancras station, including advance works for the Thameslink 2000 project to enhance the capacity of that cross-London railway. The Bill contains powers for an open box shaped cutting at Stratford, of a size to accommodate a combined international and domestic station there, although the powers to turn this into a station will be sought separately. The Bill also provides powers to widen the A.2 at Cobham and the M.2 between junctions 1 and 4.
The main reason for embarking on the Channel Tunnel Rail Link project was the forecast need for extra capacity for international passenger trains in several
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years' time. The new railway will more than double the capacity for Eurostars, and it will achieve much more besides. It will cut journey times substantially; enable new express domestic services to be provided for north and east Kent, which is an area that currently has particularly slow services; increase overall capacity for freight trains through to the Channel Tunnel; boost regeneration in the Thames Gateway through new stations at Stratford and Ebbsfleet; and assist in spreading benefits to the Midlands, north and Scotland through excellent access, notably to the west coast main line.
Journey times for Eurostars from London St. Pancras will be cut by over half-an-hour compared with the current services from Waterloo. Paris will be two hours 20 minutes away and Brussels two hours for non-stop services. The time reductions for regional and Scottish services will be as much as an hour when these services start in the not too distant future. For example, the Birmingham to Paris service will be a little over four hours under the LCR's plans when the rail link opens. The reductions will increase the area of the country for which overall journey times will be competitive with air travel.
Up to eight high speed domestic services per hour will use the new line in the morning and evening peaks and the journey time reductions to London are remarkable: Gravesend would take 20 minutes rather than 50 minutes and Ashford 40 minutes rather than 75 minutes. Some 25,000 commuters from north and east Kent will benefit. The rail link is primarily a high speed passenger railway but it will have a freight capability. Two freight loops and a connection to the existing freight inspection facility at Dollands Moor have been provided in the Bill and an undertaking has been given that they will be built. The rail link will increase overall rail capacity to the Channel Tunnel, which will provide more room for future growth in demand. This is an important regional benefit. with so much of the demand for international freight through the Channel Tunnel arising beyond London.
The route for the Channel Tunnel Rail Link was chosen especially to foster regeneration in the Thames Gateway area. We expect to see considerable regeneration benefits as a result of the decision to locate international and domestic stations at Ebbsfleet, Stratford and St. Pancras. Investment will be attracted to the areas served by the stations, bringing jobs to areas where they are particularly needed. It has been estimated that the regeneration benefits created will be worth at least £½ billion, with development being attracted to some 1,300 acres of derelict or underused land. These benefits cannot, of course, be gained without some environmental impact. It would be astonishing if a 68-mile railway running through Kent, Essex and London could avoid generating significant impacts. But the time taken to develop the CTRL project has been well used to produce the optimum route, always taking careful account of environmental impact.
In 1991 the Government selected a broad corridor to approach London from the east after considering the results of a lengthy comparative study of the four main options. This broad route was chosen as it had less

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environmental impact and created more opportunities for regeneration, even though it was more costly, than the originally proposed southerly approach route. The easterly route was then refined by comparing and sifting all the possible local route variations, taking account of environmental appraisals and soundings with the local authorities. Union Railways presented the major options to the Government and in March 1993 a route for public consultation was published. In January 1994 the route was confirmed, with some enhancements. Further work was commissioned on two sections of the route that caused acute local concerns. Following this work the route for consultation was changed further to produce the route that was incorporated in the Bill on introduction in November 1994.
The process of route selection was very thorough, with proper public consultation, and with comparative environmental appraisals produced at every stage. For every mile of route selected, nine miles were rejected.
A full environmental statement was produced by expert consultants to accompany the Bill at introduction. That statement identifies significant impacts and the options for mitigation. It is a remarkable document in terms of its scope and quality for a project of this size.
The route was then considered by the Select Committee in another place and important changes were made. Supplements to the environmental statement have been produced for each change. Taking those route changes into account, around 25 per cent. of the route is now in tunnel and 85 per cent. is either in tunnel or follows existing transport corridors. I think that it can be fairly claimed that the route before your Lordships' House has been painstakingly produced and has developed into maturity. It is unlikely that there is any reasonably achievable option for a section of the route which has not at some stage been studied and rejected and had the reasons for this explained.
As I have said, the Select Committee in another place made certain locally significant changes to the route for the protection of petitioners. By significant changes I means changes outside the Bill limits which required additional provisions entailing fresh plans and environmental assessments and a further round of petitions. The most important changes were extending the long tunnel in London for a further two-and-a-half miles from Barking to Dagenham; lowering and moving the railway where it runs close to the Mardyke Park housing estate in Thurrock; and changes to reduce the impact of the approach to St. Pancras. The Government accepted all of these changes—seeking only to optimise them—at an additional cost of more than £100 million. That is a substantial sum even for a project of this size. The committee also considered and rejected other changes in the route, notably a long tunnel at Boxley near Maidstone.
It will be for the Select Committee of this House, under the proposed chairmanship of the noble Lord, Lord Ampthil I, to decide whether it wishes to propose further route changes requiring additional provisions. The Government's clear advice is that the committee should not seek additional provisions. This is for two main reasons. First, the route is already of a high
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environmental standard in terms of alignment and mitigation, with extensive use of tunnels that have added considerably to the cost of the project. Secondly, promoting additional provisions would cause significant delay and difficulty to the Bill. It would take a number of months to prepare designs, draw plans, undertake environmental assessment and then reopen petitioning. However, it will be for the committee to decide.
It may be for the convenience of the House if I now briefly describe the Channel Tunnel Rail Link and A.2/M.2 widening projects and the content of the Bill. The 68-mile long rail link starts at St. Pancras, which will be refurbished and the deck extended to accommodate the long Eurostars and the new domestic trains as well as existing trains that use St. Pancras. Underneath this deck a new station for Thameslink would be provided as an advance work for the Thameslink 2000 project that has recently been given the go ahead by the Government. The rail link route then crosses the railway lands before entering a long tunnel. Outside the Bill, London and Continental Railways propose to seek the powers for a twin track connection to the North London line that will enable more trains to run through to the west coast main line bypassing St. Pancras.
The tunnel emerges at Stratford in a long, box shaped cutting and powers will be sought separately to turn this into a new international and domestic station. LCR envisages that trains running through to the west coast main line will call at Stratford as the stop in London. Returning to tunnel, the route does not surface until Dagenham, where it runs by the existing Tilbury Loop railway and passes under the QEII bridge before entering a tunnel under the Thames. The route then runs through the Ebbsfleet Valley where there will be an international and domestic station and a connection from the north Kent line. At Gravesend a disused line will be reinstated to provide a connection to existing lines for Eurostars serving Waterloo. The route then follows the A.2/M.2 corridor, crossing the Medway on a high viaduct before entering tunnel under the North Downs. The route emerges to run through the Boxley valley so that it can then take up the M.20 corridor. Approaching Ashford, the route departs from the M.20 so that it can run into the town and serve the recently opened international passenger station. The route then regains the alignment of the M.20 and the existing railway all the way to the Channel Tunnel terminal at Cheriton.
The Bill also includes a widening scheme for the A.2/M.2 between Cobham and Junction 4. For majority of its length, this road improvement will be adjacent to the Channel Tunnel Rail Link. The Government agreed to the request of the local Member of Parliament, supported by the local authorities, to include the road improvement in the Bill because this will facilitate simultaneous construction and enable the combined impacts of the two projects to be considered. An environmental statement for the widening scheme accompanied the Bill at introduction and it, too, is a thoroughly professional assessment produced by independent consultants. There is also an assessment of the combined effects of the road and rail schemes.

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Part I of the Bill deals with the rail link. It grants compulsory acquisition powers to the Secretary of State, with the powers to construct, maintain and operate the authorised works vested in a nominated undertaker. After Royal Assent, the intention would be to appoint London and Continental Railways as the nominated undertaker for the rail link works. There is a special planning regime and local authorities can opt for greater powers to deal with detailed matters where they adopt a planning memorandum that is being prepared with the benefit of two years' consultation with them. While there are some things that cannot be directly controlled within the Bill limits, such as the alignment of the railway, the extra powers available to qualifying authorities are unusually wide. There are also special heritage arrangements, again with agreements associated with the Bill. Part I also establishes a regulatory regime for the rail link and makes provision in respect of competition and finance.
Part II of the Bill provides for the widening of the A.2/M.2 as I have outlined. Part III has various miscellaneous provisions.
There are four particular matters on which it may assist the House if I say something more: heritage; property purchase and compensation; the competition and public financial support; and the relationship of the CTRL competition with the Bill.
First, as regards heritage, the rail link will undoubtedly have a substantial heritage impact in the St. Pancras area. I do not say this defensively, because I think that the nation's heritage will be greatly enhanced by the creation at St. Pancras of a 21st century railway use for such a fine 19th century, Grade I listed railway building. The train shed will be refurbished and the presence of an international station will create the conditions under which the Chambers—that is the Victorian hotel frontage to the station—can benefit from being brought back into some productive use. Some Grade II listed gasholders in the vicinity have to make way for the deck extension to the station to be built, but even so this loss is more than compensated for by the gain to the Grade I station. At this stage I shall not go into the requirements which the Government have imposed on London and Continental Railways, nor the controls over details that have been provided, but if petitioners raise concerns, these are matters that the Select Committee might examine.
The second matter is property purchase and compensation. The rail link will in fact require a very small number of homes to be taken and these properties qualify for voluntary purchase now. There is also a discretionary purchase scheme for properties that are not taken but are seriously affected and where hardship arises. The contentious issue is in relation to properties that do not qualify for purchase but for which there is a perception—not necessarily rationally based—that they will be seriously affected by the rail link. The Select Committee in another place viewed this as a wider issue and the Government agreed in the light of the committee's concerns to review the scope, cause and effect of blight arising during the various stages of major infrastructure projects and to consider whether
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any practical changes can be made to the existing arrangements for property purchase and compensation. Furthermore, the Minister for Railways and Roads in another place has given an undertaking that any changes introduced to the compensation code as a result of the review will be given effect in respect of blight arising from the rail link.
The third matter is the relationship of the competition and public financial support. In February, London and Continental Railways won the competition for the private sector partner to design, build and operate the £3 billion CTRL project. The contractual details are contained in a development agreement; copies of an explanatory memorandum on the development agreement have been placed in the Library. The Government's financial contribution has a present value of £1.4 billion, which will be paid in instalments towards the end of the construction period after LCR has met at least 68 per cent. of the construction costs itself. Certain assets will be transferred that sensibly form part of the CTRL, notably European Passenger Services. This company runs the Eurostar international passenger services which are currently loss making but to which LCR can apply its expertise to bring into profit. The proportion of the capacity of the rail link reserved for domestic services will be purchased from LCR for some £340 million and these services will be franchised in due course. Land for redevelopment at St. Pancras and Stratford will also be transferred. LCR will also inherit the expertise of Union Railways, which has acted as the Government's agent and will continue to do so for the duration of this Bill. I would like to pay tribute to Union Railways for the way in which it has brought the project from its difficult early stages to the mature undertaking that we are considering today.
This leads me to the fourth matter: the relationship between the Government's selected private sector partner, London and Continental Railways, and the CTRL Bill. A huge amount of design work has been undertaken to produce the Bill design which is assessed in the environmental statement, but the final level of design, the construction design, has not been produced as yet. This will be for LCR to undertake, mostly after Royal Assent, working within the limits of the powers contained in the Bill. The consequence of this is that it is not possible to be specific at this stage about construction design details.
Instead, arrangements have been established to enable details to be dealt with later. Most importantly, in carrying out construction design work LCR is required not to worsen materially the assessed environmental impact. In addition, there are several hundred specific undertakings and assurances which LCR is bound to discharge and qualifying authorities will have detailed controls provided by the planning clause and various associated agreements. This regime compensates for the lack of detailed construction design today, which is an occasional but unavoidable source of concern for petitioners. It is to these specifically designed arrangements for dealing with detailed matters that petitioners can look for their protection.

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The Bill and the 293 petitions that were deposited by the closing date of last Friday will now be considered by a Select Committee. This is an onerous burden and the House will share my gratitude to the seven noble Lords who have offered to serve. I am particularly grateful that the noble Lord, Lord Ampthill, has indicated his willingness to accept nomination as chairman. The House will know that he has already been a distinguished chairman of two hybrid Bill committees, including the Channel Tunnel Bill in 1987. His unrivalled experience and expertise will be invaluable to the committee.
In closing, perhaps I may observe that the Channel Tunnel Rail Link is one of the largest and most significant projects undertaken in this country for many years. Indeed, I feel privileged to be opening the debate today. I believe that there is a general feeling that the rail link should now proceed with all reasonable speed.
Moved, That the Bill be now read a second time.—(Viscount Goschen.)
7.14 p.m.
Lord Clinton-Davis: My Lords, at the outset I thank the Minister for explaining the Bill in general terms and some of its most important elements. I echo his words in giving our support to our Select Committee in this place, led by the noble Lord, Lord Ampthill. We wish him and his colleagues well. I also wish to put on record our appreciation of the assiduous work undertaken by the Select Committee in another place and of the successes that it was able to achieve. I wish to say how much we appreciate the work of Union Railways and to express our good wishes to London and Continental Railways for coping with the challenging work that lies ahead. Theirs is a daunting but, I hope, rewarding task.
We welcome the Bill and will do nothing to impede its progress through the House. The Channel Tunnel is a stupendous British engineering feat with the French playing an important role as our partners. One can only hope that the rail link will achieve similar distinction. As the Minister described, the potential of the link is that it can and should provide immense advantages for international rail transport between Britain and the mainland of Europe. It is extremely important that it should represent a vital link with the trans-European networks and the development of the single market which is critically tied up with the whole project. The cuts in journey time between London and Brussels and London and Paris will be remarkable. I am sure that some of the first users of the fast link will be my noble friend Lord Bruce of Donington and the noble Lord, Lord Pearson of Rannoch.
Lord Carmichael of Kelvingrove: And my noble friend Lord Stoddart.
Lord Clinton-Davis: Indeed, my Lords. Perhaps during the course of this long debate we can all compile lists of those who are likely to use the link most assiduously, particularly between London and Brussels.
There are other important cuts in journey time for commuters travelling from some areas of Kent to London each day—for the most part beleaguered
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commuters at present. Many other benefits will accrue from the Bill, so it is a vital and exciting scheme which is essential to the wellbeing of the country and, I believe, of Europe as well.
I wish also to pay tribute to those who campaigned for the promotion of Stratford as an interchange station. Many of my honourable friends in another place were in the forefront of the campaign, as were Newham council and many others. Their reward will be the benefits accrued for this country as a whole.
However, if I may say so in the kindest way, I thought that the Minister's speech was rather like a Soviet speech. It was not so much a rewriting of history but the omission of salient historical points which I should put on record during the debate. The speech was full of praise for what was going to happen, but what has happened is almost despite the Government's muddle, delays and incompetence. What we might have achieved is the realisation of the benefits far earlier. We have had an inordinate waste of taxpayers' money, the failures, and the inconsistencies of the Government's private finance initiative, much lauded by them. We have had the ideological barriers which were allowed for so long to obstruct progress, the fiasco over compensation for blight which has caused a great deal of heartbreak to many people; the lack of strategic planning by concentrating almost exclusively on the south-east and failing to appreciate that the United Kingdom as a whole should derive benefits from the scheme. Those benefits can flow only from harnessing the strength of the regions, by properly linking them to the objectives of the scheme.
In parenthesis let me add that I am glad to note that London and Continental Railways has made some provision to add to the plans the small but significant link north of King's Cross which would permit a connection to the West Coast main line. But that is not enough. Nor is there any coherent view about the role of high-speed freight traffic. Certainly the Government evince little enthusiasm for it beyond tenuous references to its "possible" development focused on in part by the Bill. Let us remember that it was not so long ago (I cannot remember exactly when) that Mr. Rifkind, virtually on taking office as Secretary of State, pledged the enhanced development of rail freight—regrettably, with little or no effect.
I turn to the delays. At the earliest, the British end of the high-speed rail link will not be completed until 2002. Let us compare that with France, which finished its high-speed link before the tunnel opened; and Belgium will complete its line by 1998. Britain's position could be characterised as "l'escargot anglais"—the British snail. There have been so many changes of mind on the part of the Government. First, they said that there was no need for a dedicated line. Then there were major policy reversals dealing with environmental damage, the nature of the consortium, the question of alignment and, above all, finance. On finance, the Government rejected the possibility of deriving European money, on purely ideological grounds expressed vehemently by the then Prime Minister, the noble Baroness, Lady Thatcher. That was because of the need for additionality, for

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matching finance. The rail link, they thought, could do without any state funding whatever. I shall come to that in a moment.
On 11th June 1990, the noble Lord, Lord Parkinson, then Secretary of State for Transport, said, that it was,
"illegal for the Government to subsidise any fast tunnel link on the grounds that it would create unfair competition for ships, road freight and airlines".—[Official Report, Commons, 11/6/90; col. 4.]
Today, with—regrettably—the same Government, the taxpayer bears over 50 per cent. of the financial burden. A vast subsidy is being provided for London and Continental. I shall turn to that later, too.
What should have happened, in our view, was the application of a proper private finance initiative, not the half-baked concept that the Government have invented and which has been ridiculed in so many ways, notably by the construction industry, which finds it burdensome, complex and very difficult to operate. The Minister knows that. He has only to speak to the construction industry to appreciate its point of view. The Minister smiles. I have spoken to the construction industry and I know how it feels. What we really need is a partnership of private and public sector finance, with some sensible government guidelines as to what a national integrated transport policy should be about.
I remember crossing swords for years with the noble Viscount's predecessors. They did not understand what an integrated transport policy was. They have now come round to it. The noble Viscount understands it and the present Secretary of State understands it. But for years they denied that there was any possibility of that. We have had contortions, U-turns and so on.
I now turn to the waste of taxpayers' money. It is intimately connected with the delays—the loss of use for so many years; the humiliating comparison with the development in France and even the pace of development in Belgium. This project could have cost something in the region of £1 billion in 1989. The Government, hidebound by their belief that everything in the public sector is bad, set their face against any public involvement.
Let me turn to the realities of the U-turn and the current and future subsidies. There was not a word about it in the Minister's speech. There is to be a £1.4 billion hand-out; £3 billion worth of taxpayers' assets simply handed over; a £1.3 billion loan write-off for Eurostar; a total of £5.7 billion at least for something we could have had for far less—billions of pounds less—in 1989.
There are plum sites at King's Cross with an existing value of £5.8 million and a development use value of £10.6 million. Stratford is in a similar situation. There are station properties at King's Cross and Waterloo—incidentally, built exclusively with public money. Publicly owned assets are now in the deal that the Government have struck. All of it is public money. There is not a word about that from the Minister in proclaiming the huge benefits that he alleges from this marvellous private finance initiative.
It is all in line with the Railtrack give-away bonanza. An asset valued at £6 billion has been given away for less than half. It is the Government's belief that the
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milchcow can be raided almost any time they like. They are all in favour of public subsidies, even though not so long ago they were dead against them.
There is also the question of blight and issues of compensation. The Government were condemned by the ombudsman for maladministration. That verdict was confirmed by the House of Commons Select Committee and unprecedently ignored, initially, by the Government. I remember crossing swords with the noble Viscount at the time. The view of the Government was that they were not prepared to accept the verdict of the parliamentary commissioner.
The people concerned, and probably many others in the future, will be involved with environmental disruption, noise nuisance, huge inconvenience, probably substantial losses in property values on the part of some, and certainly a lot of distress for many. The Minister admitted as much, and we have to accept that sad fact in a development of this kind of magnitude. Communities have been, and will be, seriously affected. We cannot dodge that. People will be irate. What they expect is a fair deal. The question is, are they likely to get it against the background that I have just described of the Minister's reaction to the report of the parliamentary commissioner?
That issue was considered in some depth by the Select Committee in the other place. The committee recognised that under current rules compensation would not be payable, as I understand it, save in respect of the use of new or altered works, and not until after the link has begun to operate. Over time such concerns are bound to grow. Members on both sides of another place expressed them very vividly.
Ministers said that people should not be given benefits and then become substantially better off as a result of compensation arrangements. They stated that repeatedly in debates elsewhere. But equally it is wrong that they should be allowed to become substantially worse off through a denial or long-term postponement of compensation.
The Government say that they will act on the report of the inquiry they have currently set up. I hope that is right. I hope they will not try to wriggle out of it. It is no use playing about with mortgage indemnity premiums. That will not be the solution to a lot of these problems.
Another fact is that, under the Bill, the Government pass responsibility for compensation to the undertaker. I suppose that could be fine. But a problem arises if the undertaker suffers a fate similar to that of those who have been engaged so far in the undertaking to Eurostar. Can it be assumed that they will always have the ability to bear the burden? What happens if they cannot do so? One's confidence in ensuring that the issue will be dealt with in an equitable way, is, as I said, undermined by what has happened in the past. I hope that the Government will react very positively when the report is published. Perhaps the Minster could indicate in his reply when that will be.

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I was also concerned about the response of Mr. Watts, the Minister of State in another place, when Standing Committee A considered this matter on 19th March. In resisting the argument about compensation, he said:
"I do not accept that the project is wholly exceptional".—[Official Report, Standing Committee A, 19/3/96; co1.112.]
I thought that was the whole burden of the Minister's case tonight; namely, that it was wholly exceptional. That is why I am a little worried that the Government may squirm and avoid their responsibilities. Let us hope not. Clearly this is a very exceptional arrangement.
I turn from the question of domestic properties to an issue that has been raised with me and no doubt with other noble Lords about businesses which are likely to be affected by the proposed line. Their needs should not be overlooked. There are three categories to be considered.
First, there are firms seeking alternative accommodation but unable to know when it will be, with a corresponding reluctance on the part of vendors and landlords to deal with such businesses because of the uncertainty of the completion date that will be required and the inability of businesses of that kind to find the purchase price or the rent, or to set up sufficient cash for investment which would follow the move. Amid all that, there is also the very great likelihood of a loss of jobs in consequence. The second category comprises those who will be affected by the inadequacy of three months' notice. I hope that the Select Committee will look at that. In a situation of this kind, three months' notice is hopelessly inadequate. Thirdly, there are those who will be affected by the disturbance when they are forced to remain on the site, trying to continue running their businesses amid huge disturbance and through environmental pollution, dust, fumes, vibration and noise. Are those people able to rely confidently on fair compensation?
The next point that I wish to raise briefly is the position of Crossrail. Is it to be consigned to the scrap heap or will we see it in the year 2010 or 2015? Is there some hope for it or none at all? I remember when Crossrail was much lauded by Ministers at the Department of Transport. That enthusiasm has evaporated recently, presumably under Treasury intervention. But it has already cost £140 million of taxpayers' money since 1988, with another £38 million to go down the drain over the course of the next three years. Ministers should be held to account for the way in which they have squandered that money. It is a project that is now, presumably, under wraps. Yet it could have given greatly improved access to the City and West End and provided better and faster transit for commuters into King's Cross and Stratford, so that people would be less dependent on the car.
Just as mysteriously, the confidence expressed by Mr. Rifkind, the Secretary of State, in the transfer of freight from road to rail has disappeared from the lips of transport Ministers. I recall Sir Alastair Morton's confident assertion in 1993 that the railways planned to transport 3.3 million tonnes of freight through the tunnel in 1995. In reality it was 1.3 million tonnes.
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We believe that the requirements of freight and passengers for the regions have to be taken fully into account when the high-speed link is built and that it should happen from the beginning. It should not be left as an afterthought. The finished link must have the capacity to deal with increased future flows. Do the Government agree with that? What are they doing to secure that objective?
In conclusion, I want to emphasise that linkage to the regions and maximising their industrial and commercial potential should be an essential part of an integrated transport policy. We want to see regional services joining the high-speed link directly. They must be connected without having to enter the complex web of London's suburban railways. I repeat that it has to be planned from now and not left until the operation begins. Regional passengers should be given every facility to make full use of the high-speed link. After all, as taxpayers they have to pay for it, as I have already demonstrated.
The building of the route should provide for extensions of freight as well as expanding passenger traffic, notwithstanding complaints—echoed when the noble Lord, Lord Parkinson, made his speech—from the airlines in respect of short-haul flights, and the ferries that it will impact on their businesses. It is a trend that is already emerging in the propaganda from those sources.
The high-speed train should become an important element in attracting more customers to rail from road, thereby securing important environmental gains. Railtrack must also ensure that its track access charging regime will not deter this development. It must not be allowed to drive freight off the railways by rendering them uncompetitive with road, sea and air.
I believe it is right that the history should have been put on record, because it was wholly omitted from the Minister's speech. But, having said that, we wish the Bill well and hope that the project will be a great British success.
7.36 p.m.
Lord Thomson of Monifieth: My Lords, I begin with a declaration of interest. The line of rail passes through the parish of Charing in Kent, where I live. It also passes near Leeds Castle, and I am chairman of the charitable foundation responsible for preserving the castle as part of our national heritage. I have an interest too as a citizen of Britain and indeed of Europe who wants to see the high-speed line contribute to a modern 21st century network of European railways. The Channel Tunnel and the strategic rail network that ought to be associated with it is as important to Dundee as it is to Dover.
I was fascinated by the history given by the noble Lord, Lord Clinton-Davis, of the efforts to establish the line. I share much of his critique of the history of the past few years. But the trouble with history is that it all depends on where one begins. My noble friend Lady Seear reminded me that these Benches, which were purely Liberal Benches in those days, backed the building of the Channel Tunnel at the time that the Labour Government in which I was a Minister were

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cancelling the project. So we must all have a sense of perspective about these matters. But I join with the noble Lord, Lord Clinton-Davis in welcoming the Bill and in offering our best wishes to all those who will be associated with building the railway line.
I know nothing of the mysteries of the Committee of Selection. I fully endorse what the Minister said about the appointment as chairman of the committee of the noble Lord, Lord Ampthill, with his immense experience not only of your Lordships' House generally but of a Channel Tunnel hybrid Bill in the past. I was a little puzzled. There was, however, an earlier hybrid Bill associated with this project—the King's Cross Bill—which came to an abrupt end. I should have thought that there might be some overlap in the membership of the present Select Committee and the one which dealt with the King's Cross Bill because experience of that Bill must be relevant in a number of ways. I know, for instance, that the noble Lord, Lord Greenhill, was the very distinguished chairman of that committee.
I wish to focus particularly on the environmental impact of the line on my own part of Kent. I feel sure that when your Lordships' Select Committee comes to consider these matters it will, in the normal traditions of your Lordships' House, look at each issue with fresh eyes and not feel bound by the actions—or lack of action—of another place.
The Select Committee in the other place did excellent work, but there is still much work to be done. That is particularly true of the rejection in another place on the grounds of cost of a long tunnel to protect the Boxley Valley mentioned by the Minister. The rail link as now planned most commendably follows the existing transport corridors of the A.2/M.2 and then the M.20 for the majority of the route through Kent. But where it switches between the two it passes through the Boxley Valley which is generally accepted as an area of outstanding natural beauty.
Many of us, including Kent County Council, campaigned for a long tunnel under Blue Bell Hill and the Boxley Valley to provide maximum protection for that sensitive area. The Select Committee in another place decided that a short tunnel under Blue Bell Hill would be adequate and that cost would not justify a longer tunnel. I hope in due course that there may be second thoughts on that by the Select Committee which we can consider when the Bill comes back to your Lordships' House.
As a fall-back position the county council is now pressing for a lowering of the line to protect the beauty of Boxley Valley. That would greatly lessen the impact of the railway on the nationally designated North Downs area of outstanding natural beauty, the major section of the route where the line departs from the transport corridors. There are big issues attached to that in Kent. The sensitivity of the need to protect that green wedge is exemplified by the fact that, if development were to occur in the area, closing the green lung that now exists between the Medway towns and Maidstone, we would have an urban conurbation in Kent the size of Manchester—and all that in an area still proudly recognised as the Garden of England.
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While I hope that the issues relating to the Boxley Valley will be reconsidered, at least those who live directly in the valley enjoyed a visit from the Select Committee of another place. In Charing we were not so lucky. The Union Railway itself defined the six kilometres of the line that runs through the Charing parish as an area where the environmental impact of the railway has a Significant Effect of Particular Importance. I emphasise the words because they are now part of the jargon of building the railway line. It is a SEPI area, like Boxley, which is a special category. However, the Select Committee in another place was not able to include a visit in its programme. I hope therefore that your Lordships' Select Committee will feel able to go and study the situation on the ground.
There are two major concerns. The first is the height of an embankment in a particularly pleasant valley through the community of what is called Westwell Leacon; the second is the plan for a freight loop at Charing Heath, which I shall come to in a moment. For reasons which remain obscure to me after long study, the height of the embankment through what is a beautiful valley has been raised to over 10 metres while Kent County Council believes that it should be at least three metres lower. At its proposed height it will be a noisy eyesore over a large area of the North Downs. An unequivocal indication that the vertical alignment should be lowered significantly will be sought by Charing Parish Council in its petition to your Lordships' House. I feel sure that the case will be listened to sympathetically by the Select Committee.
That brings me to the freight loop at Charing Heath which takes out a good deal of land and raises wider issues regarding the validity of the Government's policy on the high-speed line carrying freight. On that issue, as I shall explain in a moment, I differ from the noble Lord, Lord Clinton-Davis, in his conclusions about the freight aspects of the high-speed line. Charing Parish Council received expert advice that the curve of the line is not adequate for carrying freight. That view was supported, albeit back in 1991, by one of the Government's technical advisers, Mr. G. R. Heath, of Maunsell, who concluded:
"The present proposals of the BR Rail Link are not suitable for freight".
The inevitable conclusion appears to be that, with the present curve, there can either be a high-speed passenger line without freight or a combined passenger and freight line with more limited speed—the usual Whitehall compromise of trying to get the best of both worlds. The local concern is that, once the Bill is passed and that consequence is realised, the curves may be amended by exceeding the present parliamentary limits of deviation in ways damaging to the environment and to local homes in Westwell Leacon.
I hope that the Minister, in due course, will give an assurance—perhaps not tonight, but later by letter—that that will not be the case. The worry is that there may subsequently be an order made under the Transport and Works Act, which is a possible procedure. I hope that assurances will be given that once decisions are taken in this respect, the environmental side will be sacrosanct.

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These are technical matters, and I am a layman. But they deserve the most careful probing by your Lordships' Select Committee. The Government's position is spectacularly ambiguous on the matter of the high-speed line carrying freight. The Minister, Mr. John Watts, said in the debate in another place on 25th April:
"It is a requirement for the link to be built in such a way that freight can run on the line, but it is not a requirement that it shall run on the line".— [Official Report, Commons, 25/4/96; col. 611.]
I do not know what your Lordships make of that remarkable statement. I wonder whether the freight option should be abandoned and the Government concentrate on the best possible high-speed passenger link. It would save a lot of land at Charing Heath, a great deal of disruption no doubt at Singlewell and elsewhere along the line. In that connection I hope that the Minister will be able to tell us the latest position regarding the proposals made by Central Railways for an alternative all-freight line through Kent. That may well be a more rational way to deal with the problem.
I want to raise one or two other points. The first concerns an aspect of the noise problem mentioned by the noble Lord, Lord Clinton-Davis. I am told that there are new electric locomotives which will help to reduce the noise but that they are sitting idly at Folkestone waiting to be introduced. I hope that the Minister can tell us what the problem is, when we can expect to see them running, and what they may do to help mitigate the noise factor.
There are then matters of compensation to be considered. I do not wish to waste time repeating what the noble Lord, Lord Clinton-Davis, said so succinctly. But I support the proposals made on an all-party basis in another place for an examination by the working party set up by the Government into the question of what might be called a more general blight as distinct from the forms of statutory blight that are subject to compensation. I hope that before the Bill passes from your Lordships' House, we will have the Government's's verdict on that. I agree with the noble Lord, Lord Clinton-Davis, and hope that it will be a positive verdict.
Finally, I turn to the concerns of farmers and landowners whose land will be required, not only for the line itself but also for the substantial construction operations that will take place. The majority of the land affected will not be required once the railways are running. Landowners and farmers should not lose land permanently when it is only required temporarily. The proper safeguards should be agreed before the Bill finally passes.
In my varied past, among various public appointments I have held, I was once chairman of the Crown Estate Commissioners. I can tell the Minister that the name of Crichel Down is engraved on the heart of anyone who ever served as a Crown Estate Commissioner. It led to the principled but very unfortunate resignation of the father of the noble Lord, Lord Crathorne, as Minister of Agriculture. I would not want the same thing to happen to any Minister associated with the high-speed line. I hope that the
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question of the return of land temporarily taken away for public purposes will be looked at very seriously by the Government.
7.50 p.m.
Lord Crook: My Lords, I have had some experience of trying to lay out railways to connect the Channel Tunnel—I refer to the previous attempt which ceased in the early 1970s—so I know the problems involved. I join in congratulating Union Railways on being able to produce a line that will do such little damage to property in terms of so few houses having to be demolished. Perhaps I may say in passing that the road construction business seems to be very much more extravagant in these matters than the railway has.
There has been a good deal of talk about the high speed connection between London and the Continent. However, what has not become apparent either from the document or from the Bill arises in a Written Answer which I have received from the noble Viscount confirming that the Channel Tunnel Rail Link is to be built to accept continental rolling stock—provided, I gather, that it does not want to stop at Ashford. That must have had a significant effect on cost. I congratulate all parties on the fact that they are prepared to make a good job of the railway rather than skimp on the costs.
Although the track gauge is the same here as in most of Western Europe—that is why the Eurostar trains can run happily from London through to either Paris or Brussels—continental rolling stock is both higher and wider than the rolling stock which we normally use in this country. Therefore, one needs higher bridges and bigger tunnels. That involves a good deal more expense. None of this is apparent from the Bill. It is all a matter of agreement between the Government and London and Continental Railways. However, in principle all parties could agree to change that so that the railway would be built to the British gauge in order to save money. I would feel a lot happier if the requirement to accept the continental gauge were to be properly set into the Bill so that a change of regime or a change of ideas would not upset this very important feature of the Channel Tunnel Rail Link.
I support the Government. I wish the Channel Tunnel Rail Link well. I trust it will be built in the way the Government have been contemplating.
7.53 p.m.
Lord Aldington: My Lords, I think I am the third resident of Kent to speak, as I believe the noble Lord, Lord Crook, has at some time been resident in Kent. I was glad to hear the noble Lord, Lord Thomson of Monifieth, standing up for Kent, with his knowledge of mid-Kent—from Leeds Castle and of Charing.
I differ sharply from the noble Lord, Lord Clinton-Davis, in his criticism of my noble friend's introduction of the Bill. I thought it was a model introduction. He impressed upon the House the national and historical significance of this great project which at last has come to this House in Bill form. Of course many of us would like to have seen it before. I was in favour of the Channel Tunnel in 1973–74. Who wrecked that? The

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noble Lord, Lord Clinton-Davis, seems to have forgotten his history. History to him is only a convenient tool for making sour remarks—the noble Lord made a nice speech otherwise—about my noble friend. He also has a rather strange position on U-turns. He seems to object to the Government having changed their mind. I am delighted. What does he do when he meets Mr. Blair and talks about Labour Party policy?
Lord Clinton-Davis: My Lords, I am not at all upset about the Government having changed their mind. My concern was that they took so long to do so.
Lord Aldington: My Lords, I am glad that the noble Lord has moved his position a little. I have to remind the House that the perfection of a project like this, with all the technical examination that is required, with all the consultation that is required for environmental protection and with all the political and financial points that have to be considered, is bound to take years. The fact that we are meeting the scheme that is really a mid-1990s scheme will in future history be an advantage. We can do things now that we might not have been able to do in 1989. So let us try to count our blessings and not look back at what might have been before.
I wish to speak for a few minutes as a resident of Kent. I realise the national importance of the scheme. I agree with the noble Lord, Lord Clinton-Davis, about the importance of the link to the regions. I have always been in favour of that. I am delighted at the arrangements made for better links at St. Pancras and so on. I am also delighted at the interest taken in the Midlands, in the north of England, in Scotland and in the west at the progress of the scheme.
In the course of this consultation and in the course of the work that has been done in building it all up, those of us who live in Kent and care deeply for its countryside, care deeply for its economic development and its ability to provide jobs and care deeply, too, for the close relationship of our county with France and Belgium should not miss an opportunity to pay a well deserved tribute to Kent County Council and its leaders past and present as well as to the Members of Parliament for their part in achieving this Bill and in achieving the full consultation that has led to it.
Kent County Council has more to say. I have read its petition and I hope that the Select Committee will listen carefully to what it has to say. It has given some practical advice about the Boxley Valley which I hope will be fully listened to. I agree with others that we should also pay a tribute to the painstaking and very skilled work carried out by Union Railways throughout all these years. I was a witness, at a number of consultation meetings which I chaired in mid-Kent and around Ashford, of its real willingness to listen to the people of Kent. It behaved in a model way.
I have one other thing to say about broad policy considerations in Kent. That is to emphasise the importance of the Kent structure plan, devised, created and maintained by Kent County Council. This new rail track that we are considering today fits perfectly into
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that structure plan. I believe that the whole of Kent, and, indeed, the whole of the United Kingdom, should be pleased that Kent County Council is of such a quality and has such ability in creating strategies and structure plans like this. I regret—there may be other occasions on which to say this—that the ideologues in Her Majesty's Government have taken a surgeon's knife to the northern part of Kent. It is regrettable that they should do it. But it is lucky that that surgeon's knife did not operate before the arrangements for the building up of this link.
This Bill seems to me to secure what Kent needs as well as the whole of the United Kingdom. The route is the best for international and domestic traffic. The spin-off benefits for the commuter are secured; the connections with London, the north and the west are provided for; rail freight expansion, with a consequent reduction in the number of large road vehicles, is made possible; and the Channel Tunnel itself has a real chance in the future of paying its way and more. I have to declare an interest in that I am a very small shareholder and I guess that it will be very small in the future. I should have perhaps declared an interest as a resident of Kent, but I believe that I am of an age that the actual enjoyment that I get and the advantages of the new railway will be very limited. But I hope that my children benefit much in future.
Kent has suffered, and will continue to suffer, much disturbance until all the uncertainty has been removed. But wisely and courageously inspired by its county council leaders, the great majority of the residents of Kent now accept that there is not only a national need for the tunnel and a new rail link but that advantages will accrue to them as well. What a change that is from seven years ago when 10,000 Kent citizens marched on London protesting against the tunnel and the link. For that change we should pay tribute to the political leaders in the county of Kent. However, much has had to be fought through to achieve this general acceptance and much smaller things need to be fought through and discussed. I hope that the Select Committee will follow the Select Committee of the other place-1 agree with the commendation given for its work—to limit environmental disturbance generally, but particularly noise disturbance, and to have effective and timely compensation arrangements for those whose homes or businesses are affected.
I have no doubt at all that the highest priority should be given by the House and the Select Committee to getting the Bill on the statute book. I am sure that the Bill will be further improved, but the priority is getting it on the statute book so that work can begin in 1997, as planned, for no one is going to see any benefit at all until the rail link and associated work are completed.
I have a few short, detailed points to make which I hope the noble Lord, Lord Ampthill, will find helpful. Some important undertakings were given by the promoters to the Commons Select Committee. Some important requests were also made by the Select Committee of the promoters. What is the status of those undertakings and requests? I would like to know that. I recognise that there must be a legal difference between an undertaking given and a clause in the Bill.

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I realise that some of these undertakings may not he suitable for inclusion in the Bill. I have an unhappy experience of an undertaking being given in a private railway Bill in another place which was later breached to the disadvantage of the residents of Ashford. I hope that in the future there will not be uncertainty about the validity of those undertakings because, under the aegis of the noble Lord, Lord Ampthill, when he was Chairman of Committees, I was persuaded to drop my protest. These undertakings cover some very sensitive areas, including the village of Harrietsham near where the noble Lord, Lord Thomson, lives and works.
The next point is the height of the rail track and the height of the road, which are relevant to noise. Wherever lowering is not possible, a bund is the next best safeguard. I hope that the Select Committee will pay attention to that because I have a feeling that, as a result of the long consideration given to the Boxley Valley problem, the best practical solution may well be lowering or a bund rather than tunnelling.
My next point of detail is the arrangements to limit disturbance by construction traffic, which I believe was a point made by the noble Lord opposite. They are particularly important in Kent to businesses as well as to residents.
I next come to a point touched on by my noble friend, which I believe is called "perceived blight". An inter-departmental working party has been set up to consider that problem. To whom does the working party report, and when? We would like to know because it is of the greatest importance to the people of Kent. It was announced in answer to a Parliamentary Question asked by my honourable friend Mr. Dunn on 16th March of this year.
The next matter is freight. There are different views about it. I believe that the paramount interest of Kent is to get lorries off the road, so I am in favour of freight on the new line and on the existing line. I realise that the new line may not be suitable for very heavy freight, but I believe that it is suitable for light and medium traffic. I also realise the problem as regards the size of the rolling stock which the noble Lord, Lord Crook, mentioned. I believe that there is a problem as regards the Saltwood tunnel if heavy continental rolling stock is put through on the existing line. He will know more about that than I do.
Finally, there is the difficult issue of compensation to those who suffer in their businesses or at home. Delay or unsympathetic haggling will inevitably damage the good will that has been gradually developed. I believe that good will is necessary if the work is to be completed on time. I am not advocating a bonanza, but I am asking for full and timely compensation to be paid and for those responsible to put in sufficient effort to achieve it.
Those are the points that I wish to make to your Lordships. I close by offering my best wishes to the Select Committee, particularly to its chairman, and declaring full confidence in him and his colleagues.
8.8 p.m.
Lord Kennet: My Lords, I begin by saying how delighted we are on these Benches to hear the well-deserved tribute by the noble Lord, Lord Aldington,
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to the county council of Kent which has been controlled, as we all know, by a Labour-Liberal coalition for the past four years. It is good to know that it is doing so well in this field as in many others.
Lord Aldington: My Lords, the noble Lord's history is not quite right. The period is two years.
Lord Kennet: My Lords, I accept the adjustment and offer my apologies.
In presenting this Bill the Minister spoke mostly about the route. I wish to speak about another, smaller aspect which the Minister mentioned, but quite cursorily—the possible effect of what is proposed on the grand old architecture at St. Pancras and King's Cross. St. Pancras is perhaps the second most important Victorian building in London after the building in which we sit. That is why I spotlisted it Grade I in 1967. The Bill removes the protection of listed building law from all buildings which are or might be concerned in the development of the proposed railway. That includes the train sheds at St. Pancras and King's Cross, and St. Pancras Chambers, otherwise known as the St. Pancras Hotel.
So our committee will want to look closely at what alternative protection will be possible. Planning and listed building law provides for public inquiries on the basis of which decisions are taken by the Secretaries of State. In the 19th century, before planning law existed, railway Bills went through which gave the proposed works final and absolute permission. There could be no further question, and I suppose it is that phenomenon which gave rise to the expression "railroading". And that inherited privilege, as it were, has continued right up to now, into the age of planning.
Indeed, a different version of the present Channel Tunnel rail project was introduced in Parliament a few years ago, and was withdrawn; that too exempted the proposed works from all planning or conservation permission. But public opinion and common sense have at last caught up, and have resulted in the recent Transport and Works Act, which provides for public inquiries pretty like normal planning and conservation law in the case of railway works. It is, in fact, a sensible modern response to the anachronism of the omnipotent 19th century private or hybrid Bill. When the CrossRail proposal comes back, I understand that it will be under the Transport and Works Act, which is as it should be. Perhaps the Minister will comment on that when he replies. However, the promoters of the present Bill do not invoke that Act. They and the Government have chosen to go by another route. They are in fact avoiding that Act, and one may legitimately guess that they fear the rigorous scrutiny of normal conservation law in some places and circumstances.
European law requires that a project of this size and scale must be accompanied by an environmental assessment. We should hope that the Committee will look closely at the documents which are submitted with the Bill under the general title of "environmental assessment" or "environmental statement" to see whether they comply with European law and whether they are of the same standard as would be expected in

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a normal planning inquiry. The documents are provided by the "designated undertaker", to use the appalling jargon of the case, and by consultants presumably paid by the designated undertaker. They are not outside or objective assessments. The real environmental assessment will have to be provided by our committee. In that respect, the committee stands in direct relation to European law, as I understand it.
The environmental statement produced in support of the Bill contains some quite unacceptable parts. The one that I am concerned with is this: it gives no account of the environmental impact of the intended design of the new station buildings at St. Pancras and King's Cross, but only an account of an out-of-date one, the so-called "reference" design, which was no more than a cockshy, and which we cannot assume will bear any particular resemblance to what will actually show up. The document also states that the final design will be,
"up to the standard of Liverpool Street".
Well, that is not really a very high standard. The great shopping centre which has been inserted into the Victorian train sheds there breaks up the unity of those elaborate iron vaults. The vaults at St. Pancras and King's Cross are quite a lot more important, spacious and beautiful than those at Liverpool Street. Anything like that intrusion would be a true disaster in those two buildings. Our committee must insist that what is intended for the station designs should be published. Our committee should make its own judgment, carefully taking advice.
To sum up, the Bill before us exempts this great project from public inquiry under planning and listed building law. It deliberately avoids public inquiry under the Transport and Works Act, and it is not accompanied by an external environmental assessment. The committee of this House has a most arduous task before it. The Government will, of course, back the present hybrid Bill. They have a large financial stake in the project. It is right that all the decisions should therefore be taken in, and by, Parliament as the court of last instance, corresponding to the role of the Secretary of State under normal planning and listed building law. Since all the normal public inquiry procedures are being evaded, Parliament will have to attend to all the submissions and petitions as carefully as would a normal public inquiry—Parliament in the person of its Select Committee—and it will have to demand from the promoters the environmental assessment that is required by European law, or else do it itself.
We must all wish the committee and the noble Lord, Lord Ampthill, well in that arduous and patient work.
8.17 p.m.
Lord Howie of Troon: My Lords, I begin by surprising my noble friend Lord Kennet because he and I have quite often in this House and elsewhere differed on environmental matters for the simple reason that he
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is a man of considerable sensitivity and he regards me as a barbarian. To a certain extent, he is right in that respect, but I endorse totally—
Lord Kennet: My Lords, I am afraid that I did not hear what my noble friend said. Did he say that I regard him as a Malthusian or a Marlburian?
Lord Howie of Troon: My Lords, I said "a barbarian". Was I right? I do not think that I am a Malthusian although I have tried my best.
I endorse every word spoken by my noble friend. It would be outrageous if the architectural glories of St. Pancras and King's Cross were sacrificed in this matter. It will be extremely difficult to provide a modern extension to St. Pancras which is as fitting as is the extension to Waterloo Station, about which I have certain reservations, but I shall not go into them now.
I welcome the Bill. However, my reservations about it go back quite some time. I think that the proposed railway line is in the wrong place and that this has been unduly delayed. As I have said in the House on a number of occasions, I think that British Rail's preferred route was much better than this one. However, I shall not go into that now because it is all in the past. We must deal with the proposal that is now before us. Indeed, now that we have it and now that some decision has been taken, it is to be welcomed. I do not want to get involved in the politics of this, as did the noble Lord, Lord Clinton-Davis, and the noble Lord, Lord Aldington, who is just leaving us. I will stick entirely to technical matters. (The noble Lord can go, because I will not say any more about him, except to say that I am glad to see him here.)
I welcome the Bill because it appears that, in the fullness of time, we may have something that will be a substantial feat of civil engineering and will give greater realism and authority to the Channel Tunnel as the main route between London and the Continent and, in due course, with any luck, between other regions of the United Kingdom and Continental Europe.
I raise one technical matter on the Bill which I hope the committee will investigate. At this point, the Minister can relax. He need not listen, because I do not expect him to reply to it at the end of the debate. My comments are directed entirely to the noble Lord, Lord Ampthill, and his committee, not the Minister. The Select Committee in another place considered the question of ground-borne noise and vibration in the tunnels to the north and east of London. It is agreed by all that those tunnels have to be designed in such a way as to mitigate the effects of these vibrations on the houses and their occupants located above the tunnels. That is a crucial design question. The local authorities in the vicinity of these two tunnels were alarmed that under the conditions in the Bill they would not be consulted about the detailed design of the rail link in the tunnels. In paragraph 100 of the report of the Select Committee of another place it is said:
"'… the reduction of groundbome noise and vibration is inherently a property of the track design, and since those are not components identified in [schedule 6], it appears to us that the local authorities can be presented at the approval of the works stage with a scheme that is incapable of any further improvement'".

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Therefore, a detailed scheme is to be presented to them as a fait accompli in respect of which in the earlier stages they have had no satisfactory input.
I do not know whether the local authorities intend to present any further evidence to the committee. They presented evidence to the committee in another place on noise and vibration and methods of designing the tunnel. For the information of the noble Lord, Lord Ampthill, that evidence was discussed on days 42, 43 and 45 of the oral hearings. I do not know to what extent the noble Lord can refer to these, but I hope that he can at least glance at them. He will know the position because he is a very experienced parliamentarian.
There are several solutions to the design problems. The promoters propose that the rail track in the tunnels should be supported on resilient mountings; that is, something like rubber pads under the rail track itself. That is a perfectly reasonable solution. However, the promoters argued that if the local authorities' requirements for noise and vibration standards were to be met as measured in decibels—with which I will not trouble the House because all of them appear in the evidence—a floating track slab might be needed. This is stated in paragraph 105 of the report. Whereas under the promoters' proposals the rubber pads are under the rail track itself, with a floating slab the rail track is supported on a concrete slab which forms a kind of bridge. It is that concrete slab which is supported on resilient bearings on the soffit of the tunnel. Technical problems may arise. Sometimes a slight adjustment to the shape of the tunnel is required. It will certainly be more costly than the other proposal. Nonetheless, the local authorities believe that that will provide a better noise and vibration standard and so less annoyance to inhabitants and ratepayers.
Either of those solutions will work. I believe that the floating slab is a better solution, but I do not advocate one or the other. I am alarmed by what the Select Committee of another place says in paragraph 107:
"Specifically, we cannot in any way recommend the use of an entirely unproven technology like floating track slab for tunnels in London".
Not only is that an extraordinary conclusion for the committee to reach, but I believe that it is mistaken. It may even be wrong. That statement cannot be left unchallenged, if only because the floating slab technique to avoid noise and vibration was first used by British Railways (as it then was) underneath the Barbican concert hall 30 years ago. That technique was proven 30 years ago. For the committee of another place to describe this technique as unproven is pushing it a bit or "coming" it a bit, if I may use the vernacular. It cannot be left on the record that a 30 year-old technique is entirely unproven.
I have the greatest regard for colleagues in another place, but they are not always right. The floating track may solve a serious problem and should not be disregarded. Yesterday I was sent a copy of a letter from a consulting engineer experienced in these matters. He has been engaged in railway construction in places as far afield as Hong Kong. He has said that floating slabs are fully proven in service both for metro and express lines. The speed of the train is not particularly relevant.
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That appeared to be the committee's guideline in this matter. What is critical to the design is the load. For Channel Tunnel trains the load will not be extraordinary. It will be slightly greater than that to which we are accustomed but not extraordinarily so.
I hope that this project is successful, but I do not want it to proceed on the basis that a proven design solution is regarded as inadequate. I hope that the committee of this House will bear these comments in mind in considering the Bill. I like to see things built, and I have spent most of my life trying to get things built. I go on about it in this House perhaps at tedious length. I hope to see this railway line built even if it is in the wrong place. I do not mind that too much. I want it even if it is in the wrong place. I wish the Bill a fair wind and I wish the construction of the railway line a speedy conclusion.
8.30 p.m.
Lord Cavendish of Furness: My Lords, I should be sorry to think that the noble Lord, Lord Howie, lost anyone's interest with the floating slabs. I only regret that I cannot contribute to the floating slab debate.
I should like to start by congratulating my noble friend the Minister on the clear and eloquent way in which he introduced the Bill. This is a colossally exciting project and I have no reservation about the main thrust of the Bill. Indeed, as one of those who has taken advantage of the Channel Tunnel I join those who will be impatient to see it on the statute book as quickly as possible. I join other noble Lords in wishing the Bill well and also the committee under the chairmanship of the noble Lord, Lord Ampthill, in the weeks and months ahead.
So as not to waste your Lordships' time, I shall move quickly from placing on record my sincere enthusiasm for this measure to dwelling rather sadly on its defects, as I see them. In doing so, I must at once declare an interest. I am a commissioner of English Heritage, and as such, was party to a decision to petition your Lordships in respect of various concerns it had arising from this Bill as currently drafted.
Those concerns, which I entirely share, relate to the inadequate provisions which have been made to safeguard the remarkable complex of historic buildings which survives at St. Pancras and the railway lands which lie behind the station. Those comprise the finest surviving area of Victorian townscape in London and a site of national importance in terms of its listed buildings and industrial archaeology.
I, like many others, was delighted that St. Pancras was selected as the terminus of the CTRL in January 1994, as it provided a permanent solution to the long-term preservation of the station buildings which arguably form the most important railway complex in Britain, a point made by the noble Lord, Lord Kennet. I, too, accepted, albeit reluctantly, that, given the national strategic importance of the project, in this particular instance a case could be made for the disapplication of normal listed building and planning controls, provided alternative safeguards were put in place.

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In reaching that conclusion, I was reassured by the environmental appraisal prepared for the then British Railways Board by Union Railways, and subsequently published by the Government, when they announced their decision on the CTRL route and terminus in January 1994. This stated that:
"Five listed buildings would be at risk of demolition and landtake. Demolition is the least favoured option and current plans are to resite or re-use these buildings, where possible. The water tower and gasholders (grade II) are assumed to be reinstated elsewhere in the King's Cross area".
Unfortunately it appears that those earlier commitments to the re-use of those unique structures are now being disregarded. That surely should not be allowed.
The water point is a modest, but unique, structure designed in Gothic style to complement St. Pancras. It is listed grade II, which means it warrants every effort being made to preserve it. No attempt has been made, as far as I know, by Union Railways, or LCR to re-use it, even though that would be entirely straightforward. I am told that the costs of its dismantling and re-erection would be about £350,000, half the cost of re-erecting Yonsea Farm in Kent, for instance, where the principle of dismantling and re-erecting various listed buildings was established by the Select Committee on the Bill in another place. It is difficult to understand why listed buildings at the London end of the route should receive less favourable treatment.
Surely that delightful little building could simply be incorporated into the overall proposals for the new terminus as a kiosk, cafe or waiting room, or even as an operational building. I understand that English Heritage has investigated a solution to show how it could be re-used adjacent to the railway at the rear of St. Pancras churchyard for a variety of possible uses, and that that has the support of Camden Council. Its conversion and fitting out costs could be offset against a Heritage Lottery bid which is in preparation for the churchyard as a whole, as well as SRB funding for the regeneration of the railway lands, to which the Government have committed £37 million.
The triplet gasholders at St. Pancras with their inter-bracing are spectacular examples of Victorian engineering. They are a major listed London landmark of very considerable architectural and industrial archaeological interest. I revisited them only today. They are very remarkable.
It is the great circles of classical columns and lattice work beams which are the gasholders' main architectural interest. And it would be perfectly possible to re-erect them as the framework around a really visionary world-class building of the 21st century. Ideally, such new buildings would allow for the incorporation of the beautifully engineered guide-rails and should be of a scale that preserved the higher levels of the construction as a silhouette against the skyline.
I have in mind my noble friend's concern for regeneration. So what better icon for the regeneration of the whole of the St. Pancras area than a new building arising from within one of the most glorious monuments of the past. In the context of the development of the
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railway lands as a whole (estimated at £1.5 billion), the cost at about £3.5 million would be modest and the potential advantages enormous. Why do we not see what our most gifted architects can do with them? The Sports Council has identified a real need for recreational facilities at St. Pancras, one of the most deprived inner city areas of London, and English Heritage has proved that they could be converted to cater for these needs. If so, then Sports Lottery funding is an obvious way forward.
Conservation is all about adapting the best buildings from the past to meet new needs. Where better for the Government to point the way than at St. Pancras, by insisting on the re-use of both the gasholders and waterpoint in the planning and heritage minimum requirements?
Finally, I am gravely concerned at the inadequate safeguards in the Bill for St. Pancras Chambers. The chambers is a grade I listed building. I give much credit to the noble Lord, Lord Kennet, for spot-listing it when he did. It is arguably one of the most important railway buildings in the world. Under the recent restoration programme it received about £10 million of public money plus £250,000 in grant aid from English Heritage for the restoration of external details, and another £50,000 for the consolidation and restoration of some of the splendid interior murals.
At present under the planning and heritage minimum requirements, LCR has only to undertake to keep the building weathertight and waterproof. There is no commitment on it, despite what my noble friend the Minister said, to bring the building back into use or to dispose of it on the open market, without reserve, if it fails to do so. English Heritage believes that there is a high risk that unless the chambers are brought back into an appropriate use a listed building of this size and splendour will deteriorate rapidly if unoccupied for a further period of eight or nine years. I share that view.
I am sure that my noble friend the Minister will agree that St. Pancras Chambers is one of the nation's architectural treasures, and that the gasholders and waterpoint are unique, and irreplaceable parts of our heritage. Can we please have an assurance that the safeguards being sought by English Heritage and other petitioners in respect of these wonderful buildings will be added to the planning and heritage minimum requirements?
I very well appreciate that much of government is about trying to reconcile conflicting aspirations. It would seem likely to me that governments are uncomfortable when they are called upon to make decisions that involve aesthetic judgment. That is not really surprising; the machinery of government hardly lends itself to such a process. Whatever the reasons, the record of successive governments in this field is not entirely reassuring.
There is a story that as late as 1951 the MoD, or its predecessor, applied to have Stonehenge removed on the grounds, I believe, that it was in the way of manoeuvres. As regards London monuments there have been some real tragedies. The destruction of the Victorian Coal Exchange is now recognised as being a terrible mistake

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and there still exists deep and bitter resentment over the needless tearing down of Euston Arch. Those are just two examples.
The great project which is the subject of the Bill is hugely exciting. It is one that is worthy of a civilised age and it is one that should reflect credit on this Government. There is a seamlessness in the way in which each generation draws on the vision and experience of the past. Without the vision and experience of those who have gone before we would not even be discussing this Bill. How wretchedly diminished we would be if the Bill were to become law without robust protection being afforded to those exceptional monuments at St. Pancras. I urge my noble friend and the noble Lords who will serve on the Select Committee to reflect on those concerns.
8.40 p.m.
Viscount Sidmouth: My Lords, in declaring an interest I must say that I have been a long-term believer in the need for a cross-Channel rail link not only as an important element in a European transport system but also as a physical and psychological link between this country and Europe. In other words, I am glad that the Continent is no longer "isolated", to coin a phrase.
Earlier today a Statement was repeated in this House which appeared to indicate an atmosphere of distrust and a lack of fellow feeling in this country for the European concept. I shall not go into the ins and outs of what was said, but it is clear that there is and always has been a strong undercurrent against Eurotunnel, for example, from the public, where it stems from xenophobia, and from the political side, where motives are probably rooted in constitutional and financial considerations. However, it should he pointed out that the Channel Tunnel was a project which arose from the building of the Common Market. That concept still has a strong following in this country, as was evident from the consensus between the parties during our debate.
At a different level, I believe that when the Eurotunnel scheme was selected there was a body of opinion, including the Ministry of Transport, which would have preferred a drive-through tunnel or a bridge. But both those alternatives were ruled out by technical problems. The effect was that the tunnel as built had a dual role as a road and rail undertaking and both sides of the project needed a different infrastructure.
The road element, which is the Shuttle and its related activities, depends on the road access. On both sides of the Channel an appropriate network was built up. On the British side that included extensions and improvements to the M.2 and M.20. That work was put in hand in time to be ready for the tunnel's opening and was of course paid for from taxation money.
The Bill which we are considering today relates to the rail infrastructure. Of course the French, with their greater faith in railways, planned and installed a high speed passenger system giving access to Paris, with points south and east, and to Brussels, with future connections to the north, plugging in to the rapidly developing high speed network in Europe. On this side of the Channel a fair amount was spent on improving
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an old existing route and only today are we considering a planned direct high speed link. Not only the speed but the additional capacity will be greatly needed long before it is ready.
All that can be said in favour of the delay is that, contrary to what was said by the noble Lord, Lord Thomson of Monifieth, it has gradually led to an improvement in the selected route. It is certainly a great deal better than the original route proposed some years ago with the original British Rail single tunnel scheme.
It has been suggested that the Bill's provisions for financial help from public funds to a privatised concern is to be criticised. Certainly the issue of privatisation is contentious. Having once been responsible for operating a railway, albeit a small one, I can recall the benefits of having an integrated business. I find it hard to see the gain in dividing British Rail into a number of small units. That is not necessary for competition because there is plenty of that from other modes of transport.
The result of the Bill, which is quite a neat one, might be a useful combination for a joint enterprise between private management and the use of some public funds. Certainly as regards the competitive side of transport the advantage lies with the big battalions in private hands. One thinks of the results published today by British Airways which show what can be done in such circumstances and with such management.
However that may be, the nominated undertakers, as the Bill makes clear, will be involved in a competitive situation. I believe it is right that they should be given some physical clout and be spared as far as possible the situation which Eurotunnel faced of being, in effect, bankrupt before it could begin operations. Union Railways will at least have a cashflow from Eurostar and every incentive to turn that into a positive cashflow as soon as possible.
I share the view that has run through the debate that as regards the objects of the Bill there is consensus. I hope that the Bill passes through its remaining stages in Parliament and is put into operation as soon as possible.
8.50 p.m.
Lord Astor of Hever: My Lords, as a Kent resident I support the Bill. I have many reasons for doing so but I shall mention only two, the first being an undeniably selfish one. Until the new line is open, Channel Tunnel trains leave Waterloo on the existing track through Tonbridge and Ashford where they compete with commuter trains as far as Sevenoaks, which is my station. As there are four tracks on that line only as far as Orpington, delays are inevitable and, in my experience, frequent for those the noble Lord, Lord Clinton-Davies, described as the "beleaguered commuters".
I shall benefit from a new line, but so too will thousands of other Kent residents. The train journey from London to the furthest reaches of Kent is one of the worst in the country. It now takes one-and-a-quarter hours to reach Ashford, a journey of some 50 miles. Yet one can travel the 180 miles to York in less than two

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hours. Once the link is open, as my noble friend the Minister said, the journey time to Ashford will be a mere 40 minutes.
My support for the Bill is also influenced by our export trade requirements. The UK is peripheral geographically. Therefore, the Channel Tunnel is of particular significance in overcoming that disability. There has been substantial inward investment to this country and export manufacturing companies need fast, reliable and low-cost freight transit to Europe. That will be provided by the new link and most regions should be integrated fully into the European freight network.
The new line will lead also to a massive transfer of freight from road to rail, to the benefit of Kent residents. Unfortunately, I disagree with what the noble Lord, Lord Thomson, said about the freight issue. I agree entirely with the views of my noble friend Lord Aldington. I am advised that the new link will have the capacity for passenger and freight trains.
The noble Lord, Lord Thomson, mentioned also Central Railways which, I understand, is planning a brand new railway all the way from Redhill to Tonbridge, Ashford and Folkestone. I fear that that will cause enormous environmental damage in Kent.
I look forward to much greater use being made of the "piggy-back" concept where standard lorry trailers are carried on rail wagons. That is an exciting concept. I understand that there is a potential diversion of 400,000 trailers to rail over the medium term on a route running from the Channel Tunnel to Glasgow with links to the Irish seaports via Holyhead, Merseyside, Heysham and Stranraer. It must be right to get lorries and trailers off the road. I look forward to the end of this year when Railtrack will have completed its detailed study of the critical structures—for example, bridges and tunnels—and will have financing in place.
While I support the Bill, I have two specific concerns. The first relates to Clause 1(3)(b) which allows the promoter to deviate upwards by up to 3 metres from the centre line of the works shown on the deposited plans. Such flexibility is unnecessary with modern surveying and engineering techniques and although I understand that LCR may wish to amend the vertical alignment in certain locations to achieve a higher speed or a more cost-effective design, it should not do so to the detriment of residents or the environment.
My second concern relates to the importance of fully co-ordinating the rail link construction and the widening of the A.2/M.2 which is dealt with in the Bill. That is a vital issue for the many thousands of commuters, holidaymakers and Kent residents who will not only face the construction upheaval of the rail link but also the considerable disruption involved in widening one of the two main road corridors between the capital and the Continent. Obviously it makes sense to try to co-ordinate the work so that we have one period of grief rather than, for example, the roadworks being completed only to be followed by further disruption at the commencement of the work on the rail link, or vice versa. I should be grateful for reassurance on those two points from my noble friend.
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Finally, I must declare an interest. As an unpaid governor of Cobham Hall School I have a responsibility to help to protect the beautiful Grade I listed house and grounds where the proposed route runs on the surface along the northern boundary. My noble friend Lord Darnley is also a governor. His family, with a little help from that genius Repton, created the outstanding park. That historic landscape is arguably the most important environmental issue outside London of the whole route, particularly bearing in mind the restrictive covenants granted by the government in 1961 which empower the National Trust to veto any development which it believes will damage the landscape.
The school will be petitioning against parts of the Bill, and I should like to emphasise two crucial points relating to security. First, the proposal to take extra land from the park in order to provide a new bridleway far too close to the school must be looked at again. After the Dunblane tragedy, noble Lords will be well aware of the need to minimise access to schools, and particularly girls' schools.
Secondly, despite the matter being raised on numerous occasions with Union Rail, no assurances have been given that security will be maintained during the construction period to protect the girls and the school buildings. Having said that, the school fully supports the rail link which, with Ebbsfleet station nearby, will create exciting opportunities in terms of access to the Continent and much greater contact with London.
8.57 p.m.
Lord Monkswell: My Lords, I feel that it is only right at the beginning of my remarks that I should declare an interest. My interest is that I am a citizen of two fair cities in this land, Manchester and London, and I speak from that perspective.
This evening we are debating a Bill which is about building a very small section of the trans-European rail network. In the early days of railways, the Russian Tsar put a ruler on the map between St. Petersburg and Vladivostok. He put his thumb on the ruler to keep it steady and drew a pencil line between the two. His pencil went over the thumb and that is the way the railway was built. I do not argue that we should build railways now as they were built then, but that gives an indication of some of the differences which now pertain.
This new link in the trans-European rail network must be seen primarily as a link between major European cities. I was rather concerned to hear the Minister say that it would provide a reduction in commuter time for people in Kent and so on coming into London. I wonder whether that is a sensible way in which to approach this project.
In the 19th century, Britain obtained a steel backbone that links Glasgow, Liverpool, Manchester, Birmingham and London—the major manufacturing urban conurbations of our land. What we now call the west coast main line was unfortunately built cheaply. It has too many curves and rough sections and the speed of transit is too low. It must be upgraded and modernised.

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That reminds me of when the M.1 was constructed. I am not sure how many noble Lords are familiar with the M.1 but near Luton it describes a bit of a dog leg; that is, a fairly tight curve. I can remember talking to someone who used to work for the Jaguar motor company. That company raced E-type Jaguars at Le Mans in the 1950s. The cars were driven from Coventry to London and then over to Le Mans on the roads. When the drivers drove down the M.1 the only time they had to touch the brakes was when they negotiated the corner near Luton that I have described. That tells us something about modern motorway standards. For various other reasons we restrict the speed on motorways to 70 miles an hour and therefore that dog leg on the M.1 does not have a significant effect. However, it would have had a significant effect for the drivers of E-type Jaguars travelling at 130, 140 or 150 miles an hour.
Not only do we need to improve and modernise the steel backbone that is so important to our whole national life, but we also need to extend that backbone to German, French, Italian and Spanish cities. We need to have that fast rail link between the major cities in this country and the major cities on the Continent. Therefore there is a lot riding on this Bill. I am glad that we have the opportunity in this debate to influence the Select Committee and to ask it to ensure that certain criteria are met when it considers the detail of the Bill. First, we need to advise the Select Committee that one of the key aspects of this Channel Tunnel Rail Link is that it should be a high speed rail link and a permanent way for high speed in the 21st century. It also needs to have smooth and well designed links to the west coast main line. I was glad to hear the Minister say in his opening remarks that that was a feature of the Bill. The Select Committee will have to consider the Bill closely to ensure that the fine words of the Minister are met in reality. I have to emphasise again that high speed will be of the essence.
When I started my remarks I questioned why London commuters should see a reduction in their journey times because of the building of what I would hope would be a high speed rail link. I wonder what is the justification for that. I have heard on the grapevine that some supporters of the Conservative Party will do nicely out of the new stations at Ebbsfleet and Ashford. The Minister looks askance. I am glad that he does so because that suggests that he does not agree with that rumour which has been circulating. Why do we need intermediate stops on what should be a high speed rail link between major conurbations? I pose that as a question. I hope that the Select Committee will consider that and ensure that while there may be stations on the line that might be used on occasion, there will be no restrictions on the traffic passing down that line which requires it to stop at those stations.
I wish to recount another little tale about our current railway system. Stockport is about five miles from the centre of Manchester. Every train that leaves Manchester heading for London stops at Stockport station. I asked officials why that train always stopped at Stockport, and I was advised that when the railway was built in the middle of the 19th century, as a
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condition of the railway going through Stockport there was a requirement that every train had to stop there. I hope that sort of situation will not apply as regards this Channel Tunnel Rail Link. It would be absolute nonsense for that sort of restriction to apply in the 21st century. I hope that the Select Committee will consider what I have said in this debate. I hope that it will take on board points that other noble Lords have made and arrive, we hope, at the right judgment that will serve this country well in the 21st century.
9.5 p.m.
Lord Pender: My Lords, this Bill should be broadly welcomed. The Channel Tunnel Rail Link has had a long route march since conception in 1972. The vicissitudes encountered along the way would have broken those not of the hardest resolve. There is one aspect that I should like to comment on; that is the M.2 widening scheme. The A.2/M.2 trunk road forms the strategic highway link between London, the Medway towns, north Kent and Dover. This is my "home road". I live five miles off the A.2 and eight miles from Dover. I am another Kentish peer. The M.2 is a two-lane dual carriageway road opened to traffic in 1963.
The busiest sections currently carry in excess of 60,000 vehicles per day, with a high proportion of goods vehicles. The traffic flow is already substantially greater than the design standard for the existing motorway and is forecast to increase by about 70 per cent. by the year 2015. During peak periods Junctions 2 and 3 of the motorway become overloaded. As a result vehicles wishing to leave the motorway at these junctions have to queue on the exit slip road. That is hazardous and creates a potential for accidents. What is proposed?—the widening of the A.2 from dual three lanes to dual four lanes between Cobham junction and Junction 1 of the M.2; widening of the M.2 between Junctions 1 and 3 from dual two lanes to dual four lanes; and further improvements at Junctions 2 and 3. Most of the M.2 widening will be achieved by constructing a new London-bound carriageway alongside the existing road. The existing road will be modified to provide a new coast-bound carriageway. The scheme will require the construction of a new motor road bridge across the River Medway just upstream from the existing bridge. The new bridge will carry London-bound traffic and the existing bridge will be modified to carry the widened coast-bound carriageway. These proposals have been forthcoming following close consultation with Kent County Council and numerous other bodies.
Kent County Council has consistently supported the CTRL and welcomes the M.2 widening from Junction 1 to Junction 4. I am not sure whether I have a declarable interest in that my wife is a county councillor of 15 years standing. Kent County Council is aware of the particularly difficult period for those affected by the section of the CTRL that parallels the M.2 widening proposals between Junction 1 and Junction 3. In addition, there are two new road bridges to be constructed over the River Medway. It is absolutely imperative that these two schemes be closely integrated. That requires the two schemes to be funded and built

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concurrently—not consecutively, which would extend the disruption and blight. Can my noble friend the Minister give some assurance on this point?
The Bill comes to us following 11 months in another place and with more than 1,000 petitions considered. The Select Committee has 293 petitions to contend with. Let us hope—it is, indeed, a plea—that it takes no notice of those petitions outside the limit of deviation. The Bill needs a fair wind. The House of Commons has been the tortoise. Let this House be the hare and speed the Bill to the statute book.
9.10 p.m.
Lord Sefton of Garston: My Lords, as I listened earlier to the debate, I felt like saying, "Hooray for Kent". It seems to have a loud voice in this Chamber. I wish it well. However, there are other places in this country apart from Kent. The noble Lord, Lord Monkswell, said that the Bill is supposed to improve communications between Europe and this country. I come from the North, as some noble Lords will no doubt know. I have always pursued the idea that, compared with the remainder of the country, the South East of England is a prosperous area. It is very congested as anyone who travels on the transport system will agree. It is congested because of its activities.
I have always considered that factor from the viewpoint of Merseyside. It created a strangulation on the proper development of the whole country, because one has to travel through that congestion to get to Europe. Therefore, I welcome the Channel Tunnel and, as a firm supporter of Europe, I strongly welcome the Bill. I give it a fair wind.
However, there are other issues to consider arising from the Bill. It is the third time that I can remember engaging in a debate on important and large-scale developments in the South-East. I sat on the committee considering the Jubilee Line development, and attempted to persuade that committee and this House to consider the consequences for the national interest of building the Jubilee Line. By national interest, I do not simply refer to the provinces; I include London. I pointed out that the development of the Jubilee Line was not a priority for London Transport. It was only third in order of priority. London Transport wanted to consider some of the other needs for London. I wonder whether the people travelling on the Northern Line and other lines of London Transport now wish that the Jubilee Line had not been completed. All the investment which should have gone to other lines went to the Jubilee Line.
There is another lesson to be learnt. Why was the Jubilee Line built? It was built to assist the private sector in its foolish enterprise in Docklands, in Canary Wharf.
Ebbsfleet has been mentioned. The Minister looked aghast when a noble Lord suggested that that proposal had something to do with the Tory Party. I shall not suggest that. However, I shall suggest that that development came about because a private enterprise firm was keen to get rid of land and sell it for development; and no one will deny that.
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I am concerned that there is no proper link. Let me correct the noble Lord, Lord Monkswell. He did not hear from the Minister that the Bill proposed an improvement. He would have heard from the Minister that, outside the Bill, permission would be applied for to build the link that I want. It is not in this Bill, and I am concerned about the briefing document. Perhaps the Minister can tell us when we will have a Bill for it. The longer the link is left without being built, the longer we are left in limbo in regard to communication with the Continent; the more development continues in the South East, the worse will be the situation for Liverpool, Manchester and Scotland. The private sector will go where the profit is greatest, so it will go again to the South-East. It is essential for us to have the link. I pleaded for it at least 10 years ago and begged that something should be done.
On another occasion, an extension was planned in a Bill for the London Docklands Light Railway. I asked the committee at the time to examine the consequences on the rest of the community and our economy. My suggestion was defeated in this House; we did not consider it.
I was pleased to hear the noble Lord, Lord Clinton-Davis, express his concern about the rest of the country and the Bill's consequences for it. That does not prevent us both supporting the Bill, but it means that there is doubt about the Bill's consequences on the rest of the country, not only for direct communications but also for development. A limited amount of development, especially economic development, can be carried out in the country. If it takes place in the South-East because that area is nearest the tunnel, it will not take place elsewhere. A glaring example of that is the two Docklands corporations established by Mr. Heseltine, who called himself the Minister for Merseyside. Docklands in London is chock-a-block, it is so full that the ordinary people who used to live on the site have not been properly looked after. All the yuppees have gone there, the offices are there, with Canary Wharf and now more are being encouraged to go there. That is London.
Now let us look at Liverpool. We have one government office with, I think, 700 people when there were supposed to be 1,300. There are wide open spaces. An article in the Guardian on Monday described Liverpool as having had a vision of building a city before it had the problems of the 1960s. The article described what happened to Liverpool and it said, at the end: "We should not ask what happened to Liverpool people. The way we have allowed that city to go down tells us something about ourselves because we refused to move some of the activities from the South-East which did not need to be there out to the rest of the country". That is our problem, we do not consider matters from the viewpoint of the national interest.
On what grounds could anyone suggest that MI5 should be at Vauxhall Bridge? What is it doing? Spying on the Russians? Are all the spies coming down here? Is this where MI6 should be? Of course not, it has no need to be here, it could have been in Birmingham or

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the north of England. Why in this country do we concentrate on having modern communications systems in the South-East?
Perhaps I may conclude with a story. I was chairman of the economic planning council in the North-West and we had a meeting with Ministers. We said to them: "What we will do is to send a letter out to all the industrialists in London and Manchester asking them to come along and tell us what is wrong with industry". We did that and received a letter from Manchester and one from London. The letter from Manchester was posted that night and delivered to us the following day. As for the letter from London, it was five days before it was posted. It takes weeks for documents to get from one office to another in London. The whole of the Civil Service could be outside London with communication by modern technology, saving money and improving the rest of the country. That would leave plenty of empty office space so that the private sector could do what it wants to do in the South-East. It is a simple solution, but it needs someone with a sense of purpose to consider how we distribute our resources. Fundamentally, resources are jobs.
I was glad to hear the noble Lord, Lord Clinton-Davis, mention the regions. Other speakers mentioned the necessity for ensuring that the regions share in the prosperity that we are all supposed to achieve from the tunnel link and the mighty vision. I was pleased to hear that. Now let us get down to facts. It is no use asking this government to do anything about planning for the good of the nation. They will not do it. They have had plenty of opportunities.
There will not be any more opportunities; very shortly there will be a change of government. I am glad about that. Now we shall know what the noble Lord, Lord Clinton-Davis, and his colleagues will do; namely, set up what I was tempted to ask this Chamber for tonight. I was tempted to table a Motion to instruct the committee to take into consideration the possible consequences of the tunnel on the rest of our economy. I did that once before in relation to another Bill, and it was turned down. I intended to do that tonight, but I thought it would be a waste of time. So I express my hope that, when the new Labour Administration comes in, it will set up a body to look sensibly and practically at the whole question of the national economy, and find out in particular how the South East is starving the rest of the country of resources that it badly needs.
9.20 p.m.
Lord Mountevans: My Lords, I declare a non-financial interest as honorary secretary of the all party West Coast Main Line Group. As such, I am delighted to support a Bill which finally links one of our great assets, the Channel Tunnel, with another, the railways of Britain, in a state-of-the-art manner. My only regret is that it has taken so long to get this far.
Back in 1984 we were debating whether there should be a fixed link to the Continent and, if so, what form it should take. Some of us were in favour of a tunnel, added to a high-speed link. Subsequently we settled for the former. It is now up and running, and I agree with
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those many noble Lords who have paid tribute to it tonight. Some years later we had before us both a proposal for a terminal at King's Cross and what I shall call the BR Cunard Trafalgar-led proposal for a high-speed link. Had we followed that option then, or even had the present option before us then, we might also have had everything in place by 1998—only the year after next. Tonight's proposal, on the other hand, will not be completed until the year 2003 at the earliest, and perhaps not even until 2007.
Either way, one has to assume speedy Royal Assent; detailed design work; progress with local authority planning and other statutory body consents; and last, but not least, the raising of finance. One cannot overlook the slippage on the Jubilee Line extension which arose as a result of problems in getting the finance in place.
I welcome the Bill, however much I regret the timescale. I should welcome it the more if our Select Committee could ensure decent and prompt access from the link to the West Coast main line to give the true network benefits that many of us have sought this evening. I very much hope that such a link will be available when the Channel Tunnel rail link itself is opened. I urge the committee to pursue that point.
I also welcome the fact that the Government will be paying grant to the CTRL project in return for benefits accruing to the domestic traveller. That is another idea that was floated in this Chamber as long ago as 1984. But it is one which in the future will throw up a problem in connection with the franchising of the existing domestic train operator—Southeastern Train Company, or SETCO for short. I understand that the franchise for SETCO is being offered on a 15-year basis in order to encourage the successful bidder to renew some existing stock by 1999 and to replace all the old first generation slam-door stock by its life-expired date of 2005.
My problem is this. Does the bidder go for stock with the high-speed capability required by the new route, for which government grant is being paid to secure paths? Or does it go for a dual mode vehicle capable also of running on existing routes? Noble Lords who have used Eurostar will know how relatively weak its performance is once the train emerges this side of the Channel Tunnel. I see a three-fold problem here: the length of the franchise; the purely technical problem of traction; and that of potential conflict between London and Continental and the franchisee of SETCO. That seems to me to be compounded by the fact that Clauses 16 to 21 of the Bill disapply the powers of the rail regulator, which surely could pose problems in the resolution of conflicts between the high-speed link operator and other operators.
Lesser concerns include decent road and underground access to St. Pancras International, a concern that is familiar to those of us who were involved in the King's Cross Bill and indeed in the Bill enabling us to construct Waterloo International. I am also concerned about the viability of Stratford. I hope that the viability of Stratford is not allowed to penalise or damage the viability of the link as a whole. Despite those matters, I feel that Union Rail's proposal is a worthy one. I hope that it will be completed as speedily as possible.
9.25 p.m.
Lord Berkeley: My Lords, I declare an interest in Eurotunnel and I am grateful for the many messages of support over the years which noble Lords have given to the project. It is much appreciated. Having worked on the Channel Tunnel for nigh on 15 years, I saw at close quarters the excellent and assiduous work done by the noble Lord, Lord Ampthill, in chairing the Select Committee on the Channel Tunnel Bill. It gave me great pleasure to hear that he is proposed as the chairman of the Select Committee on this Bill. It might be said that he has waited patiently for far too long for this Bill to arrive.
As my noble friend Lord Clinton-Davis said, the regional links are extremely important. It gave me great pleasure to read that London and Continental will propose a proper double track rail link across the top of St. Pancras for frequent services from the Midlands and the north west. As the noble Lord, Lord Sefton, said, it is vitally important in connecting to Stratford and Paris. Noble Lords may remember that the Channel Tunnel Rail Link was a trans-Europe network priority and later on the west coast main line was added as a priority project. But they were not connected except by one emergency line. So it could be said that London and Continental has done what the Government failed to do; namely, connect two strategic links across the top of London. Certainly, I welcome that greatly.
I am somewhat concerned about when the project will start and therefore when it will finish. Clause 10 of the Bill says that the Channel Tunnel Rail Link must start within 10 years. If we allow five years for construction, it may be up to 15 years from now. It may be a coincidence but that compares very well with the west coast main line where the franchising director told a meeting in this House quite recently that the upgrading would take about 14 years to complete. So we are talking about the year 2010, or 2011 if it all goes badly. I hope that I am wrong and mistaken. Perhaps the Minister will be able to correct me later on that point.
I want to discuss one specific matter about the construction of the project before I turn to operational matters. As my noble friend Lord Clinton-Davis said, King's Cross lands is one of the concerns. I do not want to trespass on the responsibilities of the Select Committee, but it appears that the Government are attempting to thwart the will of the Select Committee in another place. I believe that the Select Committee of this House should be aware of that.
At present there are a number of thriving cement, concrete and aggregate batching businesses in that area which supply the needs of the local building industry in central and northern London for concrete which is usually distributed by concrete-mixer lorries. The materials come from many parts of the country by rail, saving an estimated 30,000 lorry journeys a year—if they came in by road that would be the number of lorry journeys. It is equivalent to about 120 heavy lorry journeys per day saved by bringing in this material by rail.
In the original plans for the rail link, those businesses were to be displaced, since they were located on the routes of the various rail lines in the area and there was
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no proposal from the promoters to offer them an alternative site, although there is an enormous area around King's Cross available for development, which I believe is there to help fund the rail link.
Those businesses therefore petitioned the Select Committee in another place, but the operator, Mainline Freight, did not do so since it was then part of British Rail. The Select Committee reported in their favour and in relation to the Tarmac petition said,
"We require the Promoters to make arrangements to relocate with modern equipment the Tarmac concrete batching plant in a suitable place in the North of the railway lands".
In response to the petition from Castle Cement, Pioneer Willment and Tarmac Quarry Products, it said,
"we were encouraged by the proposals put forward by the promoter that the businesses might remain in place where they are currently or nearby. We support these arrangements".
The Government's response to the Select Committee on that recommendation was also reasonably positive when they said:
"the Promoters will construct a rail siding with discharge facilities on the western boundary of the King's Cross Railway Lands and make land available in the north-west of the Railway Lands for the relocation of the firms if relocation proves necessary. The terms of the firms' occupation and decisions as to which firm occupies what part are expected to be the subject of further negotiations; these will include Mainline Freight, the intended holder of the long-term leasehold interest".
The petitioners were thus reasonably happy in the belief that the Government would negotiate in a positive manner to implement those recommendations. But only 11 days after that government response to the Select Committee, on the day before Mainline Freight was sold to Wisconsin—now called North-West and South Railways—the directors of Mainline Freight, British Rail and the Secretary of State for Transport signed what was called an "overarching agreement" which included, in part, Mainline Freight's future activities at King's Cross.
That meant that the promoter—the Government—could decide the location of rail freight facilities; there was no right for Mainline Freight to object to the period of notice—in other words, it could be 24 hours; the promoters could insist on the businesses moving to an interim site, but there was no guarantee of finding that site or of adequate capacity there. There was no responsibility on the promoters to find a site at all within the King's Cross lands, and the promoter can interrupt rail deliveries to any of the sites, which is not a lot of use when one is running a rail delivery business. Lastly, there was no long-term security anywhere on the King's Cross lands.
What do the parties to the agreement have in common? Mainline Freight, the British Railways Board and the Secretary of State (who is the promoter) are all government controlled. That agreement was signed the day before the Wisconsin handover, which had already been delayed. I understand why Wisconsin signed and accepted the agreement, but with the proviso that it reserved the right to sue the former directors—the government employees—of Mainline Freight for not looking after the interests of their company.

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I believe that the petitioners' requirements could be seen to be perfectly reasonable. They were happy to move and to pay for one move. Since then, correspondence between the promoters and the petitioners and the contents of that overarching agreement seem to indicate that the Government are holding back from implementing the spirit, let alone the letter, of the Select Committee report and their response to it.
It is true that the documentation allows the Government to give the petitioners what they require, but there is no indication of commitment. Furthermore, although the land offered—but none of the other requirements—is adequate now, that land is likely to be significantly reduced if London and Continental applies to add additional tracks to connect into the north London line to get a two-track connection by a Transport and Works Act order. Will the Government still agree to relocate the petitioners on the same basis if some of their land is taken in several years' time by a Transport and Works Act order?
I believe that the Government have forfeited the trust of the petitioners, who are still seeking a positive and reasonable outcome to enable them to remain in business. They support the rail link obviously and sought to reach reasonable agreement on the issues key to their continuing viable operation. But those must be binding commitments to the continuity of operation in the short, medium and long term—adequate capacity of sidings and other facilities and reimbursement of the cost to move, apart from the first move.
Why are the Government doing that? It is extraordinary to witness the apparent lack of concern shown by the Government for the long-term success of rail freight at King's Cross for the supply of concrete materials. We have heard many assurances of their commitment to rail freight but there appears to be one overriding exception to this when more money can be made out of property—office, retail or expensive housing.
However, there is one fly in the ointment. The promoters have given an undertaking that all construction materials required for the construction of the rail link will be brought in by rail, wherever that is possible. If the promoter closes down or even interrupts the operation of this rail terminal, the concrete will have to come by road. No doubt many of the local authorities around there might have a few comments to make on that.
If the promoters are forced to close down the rail supplied concrete facilities after construction is complete, that will be a travesty of the principle of the assurances given to the Select Committee in another place. I am sure that the committee and the petitioners will take note of these government actions when seeking ever-more watertight assurances for what they want.
I turn now to operations. It behoves us all to seek a situation whereby London and Continental and other operators can operate with the maximum flexibility to provide a service to customers in Kent, across London, to and from the regions and from all these places across the Channel to adjacent member states. I wish we could
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get away from the rather insulting words "domestic and international" when we refer to stations. Perhaps "intercommunity" would be better. I rather hope that there will not be this differentiation in the future.
I wish to raise two matters to do with operations. The first concerns the safety approval procedure. In the rail privatisation debate on 8th May I described delays in Railtrack approving safety cases for new rolling stock. The Minister said that it was the responsibility of the vehicle manufacturer and owner to demonstrate safe operation. I hope that he may be able to tell us what the operator and Railtrack are supposed to do in this matter.
I turn to my second point. It is my understanding that the Channel Tunnel Rail Link will be an equivalent track authority with, so far as I can see, similar responsibilities, which include safety. If anyone wishes to operate a train on both types of track, as the noble Lord, Lord Mountevans, asked earlier, will he have to get a safety case from two separate authorities, thereby costing him double the amount and taking double the time? I doubt whether many operators will bother. London and Continental is also an operator. I think it is called a semi-vertically integrated franchise, which is a rather nice expression. Unlike Railtrack, it will have the ability to give itself safety approval for its trains while refusing a competitor. I am sure that it is much too professional to do that—the people I have met certainly are—but, as the system is set up, an unscrupulous successor could do that. Surely that is another argument for having the safety standards and approval of both Railtrack and the rail link as one separate and independent organisation.
Lastly, I wish to turn to frontier controls for through passenger trains. These trains start north of London this year and, as we have heard, London and Continental is proposing frequent services from the west coast main line, via Stratford, to Paris. At present no domestic passengers may be carried on international trains. We are told that that is a requirement of the frontier control people, but let us just examine why. I define "frontier control" as Customs, immigration, security and MAFF. The authorities trumpet about drugs being caught at Dover. I was told that 90 per cent. of drugs caught in this country are caught at Dover but it is usually as a result of tip-offs. It is just convenient for the authorities.
Some noble Lords may have come on the Eurostar to Waterloo. One notices that immigration procedures are carried out on the train. It takes two people. If it is done at Waterloo, it takes 17 people. That is why they always do one train every day at Waterloo—so that they can have 15 extra people on duty. It is a great job creation scheme. All these people require expensive facilities through the Channel Tunnel. At one stage they asked for the freight shuttles to be separated from the lorry drivers when taken across the Channel because the frontier control people did not want to be sitting with the lorry drivers for 25 minutes. Frankly, that is tough. Eurostar has a separate compartment for them to rest and there are two gaols on board with meat hooks on which the handcuffs can be placed.
Ebbsfleet, Stratford and St. Pancras are all being built with segregated international, inter-community and domestic platforms, probably at a cost exceeding

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£100 million. That is a complete waste of money, but when one gets north of London the situation becomes even worse. Originally, I believe that Eurostar trains going north of London were going to have separate platforms, but that was found to be impossible. Then they were to have moveable barriers to allow only international travellers on the train. Now, I believe that there is to be only one door opening, so they cannot be expecting many passengers when the train stops at Peterborough, York or Crewe. That cannot go on. It has been a nice, cosy relationship between government departments and government-owned railways until now. London and Continental has now arrived and it is rightly beginning to question things. I understand that it is thinking of converting the mobile gaol and the immigration staff rest compartment into private compartments for revenue-earning business use, and that is great. I understand that it wants to add national passengers.
I know that there will be a problem with the west coast and east coast main line franchisees because they may oppose it. In my view that is tough: it is up to the franchising director to sort it out. Of course, we need Customs, immigration, security and MAFF, but we need to try to resolve this matter so that they work to the benefit of the customers and do so on the train between Ashford and Lille. That will enable all these extra facilities to go and national passengers to travel on international trains.
Many of these subjects, I am sure, will be discussed at later stages of the Bill. I conclude by adding my congratulations to the staff of Union Railways who, I believe, have acted in a most comprehensive and sensitive manner in developing this project. They have worked extremely hard. I support this Bill and I wish it a safe and secure passage through this House.
9.42 p.m.
The Earl of Darnley: My Lords, I am an enthusiastic supporter of a high speed rail link between Cheriton and London. Ever since the decision was taken to build a tunnel on its own, a modern and efficient railway link to London and a main rail network beyond, has been inevitable. In 1987, much of the debate centred on what share of the cross-Channel passenger and freight traffic the shuttle service could capture from the ferries. Not much attention was paid to how many of the large number of passengers flying daily between London and Paris and Brussels could be converted to through rail services. Equally, diverting freight from the road-ferry mode to through liner freight trains took second place to discussion on the number of lorries that could be diverted on to the shuttle at Cheriton and away from their familiar ferries at Dover.
In a remarkably short space of time Eurostar has become an enormous success, capturing a sizeable share of the airline traffic between London and Paris. The new owners have announced plans to expand the service greatly. Freight had a slower start, but a number of trains do pursue a circuitous route around London to link up eventually with the main lines to the north and west of the country.
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The problem faced by both passenger and freight through services is that whereas much of our rail network is modern and laid out for fast running, the South Eastern Railway was designed to lower standards and with commuters in mind. It is already congested; spare capacity is scarce and the running of international freight trains poses operational difficulties. Lack of rail capacity in Kent will restrict the traffic that can use the tunnel and will do nothing to persuade freight to turn to rail for its long-haul cargoes, which is a major objective of many transport and environmental policies. This new rail link will make possible a full-blown inter-city passenger service between London, Paris and Brussels and will open up the possibility of direct services to other centres on the Continent. It will be designed to carry freight and by its very existence it will also free up capacity on existing lines for freight trains. Best of all, by terminating at St. Pancras, it will enable direct connections to be made to other mainlines in the north and west of the country.
At this point, I must declare an interest in that I have a family connection with the area of land at Cobham Park and Ashenbank Wood which lies on the proposed route of the high-speed rail link. Indeed, it is my intention to petition the Select Committee of this House to seek to reduce the impact of the new railway on the environment and the historical importance of the site.
I hasten to say that I do not criticise the designated route of the railway. On the contrary, it is infinitely preferable to increase the size of an existing traffic corridor by routing the railway alongside existing main roads rather than create a new one out of virgin countryside. The proposed Ebbsfleet station will be much welcomed in north-west Kent. It is an area that is hungry for investment and jobs and it suffers from what can only be described as an inadequate rail service to London.
Inevitably, a major infrastructure project, however welcome and however much needed, cannot be created without some cost to the environment. It is that aspect that concerns me. I mentioned earlier my association with the Cobham section of the railway. That is arguably the most environmentally and historically sensitive part of the entire route outside London. Excellent research has been done for the environmental statement and the baseline condition has been well documented. Cobham Hall, a Grade 1 Elizabethan mansion, stands no more than half a mile from the proposed route of the railway and will be protected from it by its pleasure gardens and the remains of its park, which are listed Grade 2 starred by English Heritage. Ashenbank Wood is a site of special scientific interest, and a Roman villa nearby is an ancient monument. In addition, the whole area falls within an area of outstanding natural beauty.
There is no doubt that the damaging consequences of building the railway could be largely eliminated if it were to be placed in a bored tunnel at this point. That view is shared by the borough council and all those who are concerned with preserving the importance of the site. There would also seem to be topographical and

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geological reasons to support that course of action which, until now, has been ruled out on the grounds of cost.
Instead, a great deal of work has been done by Union Railways on ways of mitigating the effects of this major civil engineering project both during the construction phase and thereafter. Union Railways has been most sympathetic to the concerns of those affected, but has been hampered in the first instance by not being able to commit finance; and, secondly, because much of the engineering design has yet to be completed.
My concern, which I know will be shared by others all along the route, is that the Bill will receive Royal Assent before proper undertakings can be put in place to protect the environment. That not only involves the costing of the various options, but a clear commitment that when the time comes the finance will be available.
I welcome this most exciting infrastructure project, but I must make a plea that decisions affecting the environment are not made on grounds of cost alone, as once destroyed, our heritage is gone for ever.
9.48 p.m.
Viscount Goschen: My Lords, I firmly believe that we have had what can only be described as a splendid and well-informed debate on the Bill. I do not think that I have ever had the pleasure of sitting through the Second Reading of a Bill on which there has been such an extraordinary degree of consensus about the value of what we are doing although a number of points of detail have, of course, been raised. Some of those points are probably matters for the Select Committee to consider; others raise more general concerns. I shall certainly do my best to discuss those. I shall follow that with a very careful reading of Hansard tomorrow. As I am replying to a three-hour debate and may miss some points, I shall write to noble Lords where necessary.
The quality and thoroughness of this debate illustrate the work that has already gone into the preparation of the Bill. I particularly welcome the speech of the noble Lord, Lord Clinton-Davis. His support was qualified almost immediately by a party political broadcast and what my noble friend Lord Aldington described as a selective memory test on the issue of Channel tunnels and what had happened over the past few years.
The first major issue is the length of time taken to bring this project to its present stage. I agree with my noble friend Lord Aldington that we now have a very mature, fully worked out plan that has been prepared in the most extraordinary detail. It brings major benefits to this country and to the travelling public—not just transport benefits, which are considerable, but infrastructure and regeneration benefits. That is important and must be the basis on which we consider the project.
The project was never intended to be completed at the same time as the Channel Tunnel. The need for it arises from a future, not current, need for more railway capacity between London and the Channel Tunnel. The noble Viscount, Lord Sidmouth, and possibly the noble Lord, Lord Clinton-Davis, referred to the way in which the link had been taken forward in France. In France the
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TGV Nord was always planned to be ready at the same time as the Channel Tunnel. Moreover, the TGV runs through flat and sparsely populated northern France. I believe everyone recognises that that is much easier to plan than a railway that runs through the rolling Kent countryside, urban Essex and London. Of course, we might all have hoped that progress would be quicker. However, the proposals first advanced for the link would probably not have been capable of winning public approval, and rightly so. The route would have run through densely populated south east London and there would have been no offsetting benefits. The scheme eventually chosen for inclusion in the Bill had to juggle a wide range of interests, including the transport value of the link, the opportunity to catalyse the economic regeneration of the Thames Gateway, and the important need to secure those benefits, while successfully limiting the impact on the environment.
The history lesson continued. Various versions were put forward from different corners of the House. I enjoyed the conversion of the noble Lord, Lord Clinton-Davis, as the champion of private enterprise, on the rail link to St. Pancras. Of course, I accept that now, but it is important to bear in mind the success of the PFI and the fact that this project is being brought forward as a flagship PFI project.
A comparison has been made between the proposal made now and the proposal in 1990 rejected by my noble friend, Lord Parkinson. I believe that there are four key reasons why the present deal is so much better than that rejected by my noble friend, the then Secretary of State. First, the route is much more environmentally sensitive than the earlier proposals, with about 25 per cent. now in tunnel and about 85 per cent. either in tunnel or in existing major transport corridors. Secondly, in terms of economic regeneration, the stations at Stratford and Ebbsfleet in particular contrast with little or no regeneration in the 1990 route. The noble Lord, Lord Monkswell, was concerned about the stations. He flung out a few references to accusations, which I will not go into at this stage. If the noble Lord believes them he is also accusing his honourable friends in another place of corruption and various matters which I know he would not do. When the noble Lord, Lord Monkswell, refers to those rumours I am sure that he does not believe them either.
The new route is operationally and commercially superior to the earlier proposals. We now have a well structured contract with a private sector promoter which minimises the risks to the taxpayer.
There was discussion on the question of public money going into the rail link but not into the Channel Tunnel. The link could not be built without public sector support unlike the tunnel itself which Eurotunnel and the banks were confident from the outset could be built without public money support. Public sector support for the rail link is justified, not just needed. CTRL will deliver huge benefits to the public, including vastly improved international and domestic services. I do not see why the noble Lord, Lord Berkeley, should be upset by the word "international". It means "between countries", and that is probably the situation.

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The link will also stimulate regeneration, as we have heard, in the Thames gateway and East London around Ebbsfleet, Stratford and beyond. So there is no mileage to be had in the U-turn scheme of things. My noble friend Lord Parkinson, the then Secretary of State for Transport, did not rule out a government contribution in principle, and that is worth bearing in mind.
My noble friend Lord Astor was right to draw attention to the benefits of the link for the residents of Kent, and the reduction in journey times, which are so marked. That is in contrast to the noble Lord, Lord Monkswell, who felt that because there was an advantage that must automatically take away from the other advantages of the scheme. The two are not mutually exclusive. There are many benefits from the link. I do not believe they are mutually exclusive.
We discussed the important issue of freight. There was something of a division between the Liberal Benches and those of the Labour Party. I am surprised that the noble Lord, Lord Clinton-Davis, judged that the interests of freight had in some way been overlooked. I do not believe that to be the case. As I said in my opening remarks, the CTRL will have a freight capability. The Bill already provides for two freight loops and a link to the freight inspection site at Dollands Moor. What is more, there are clear undertakings that they will be built.
The key point is that the link will also substantially increase overall rail capacity to the tunnel. The benefits will be to London and to industrial and commercial centres elsewhere where a great deal of actual and potential demand for international freight traffic occurs.
We had some contributions, not least from the noble Lord, Lord Sefton of Garston, in his characteristically forthright and explanatory style, about the issue of regional links and why it is important to ensure that the CTRL connects properly to the rest of the country. There is nothing between us on that. At one stage I thought the noble Lord was encouraging me to move the Channel tunnel up north. Even the power of this Government would not be able to run to that. I doubt whether he will find that idea even in the somewhat far-fetched proposals often put forward by the party opposite. Nonetheless, I recognise, and agree with him entirely, about the importance of ensuring that the benefits from this link flow throughout the country, and indeed they will.
We have already heard about the linkage that will occur in London: easier connections to the West Coast main line. That was a point picked up by the noble Lords, Lord Clinton-Davis, Lord Berkeley, and others, and was generally widely welcomed.
The issue of blight and compensation was raised by a number of noble Lords, not least my noble friend Lord Aldington. It is an important issue whenever one is considering a major piece of transport infrastructure. It is, of necessity, a complex issue. It might help if I took just a few moments to explain what is being done. First, the rail link route has been selected carefully, as we have heard, including the sensitive use
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of tunnelling so that few homes have to be taken. In fact there is an average of one home being taken for every mile of route, which is an extraordinary figure.
For homes that are required to be taken for the rail link, voluntary purchase by Union Railways is available from now at the request of the owner. The terms are the unblighted value of the property as if the CTRL project did not exist, plus all fees, disturbance and home loss payments. The majority of affected homes have already been purchased. Any homes required for the building of the rail link which have not been acquired voluntarily by the time of Royal Assent will be subject to compulsory purchase at that time on the same terms. As regards the residential owner-occupiers whose properties are close to the surface sections of the rail link which are not taken, a discretionary purchase scheme is operated by Union Railways.
The Select Committee in the other place was satisfied with the treatment of those with properties taken or seriously affected by the rail link. Its concern was the blight which petitioners claimed spread further from the rail link which we term "generalised blight". That is the subject of the Government's review, as I mentioned in opening the debate, and I shall comment on that briefly in a moment.
As regards those adjacent to the railway, noise insulation will be available when the criteria for the national noise insulation regulations for railways are met. In addition, the discretionary purchase scheme will continue until a year after opening the rail link. Thereafter, under the statutory provisions for injurious effect, compensation will be paid for loss of property values arising from physical effects of the rail link such as noise. Those arrangements are modelled on the procedures used for roads. There is no question of those affected by the rail link being treated less favourably than those affected by reflective road schemes.
The noble Lord, Lord Clinton-Davis, mentioned the PCA report, the ombudsman and so forth. We have already rehearsed those arguments at Question Time and so forth, and therefore I hope the noble Lord will be satisfied if I direct my remarks to the review and its timing. However, if he requires a fuller explanation I can of course give one.
The Select Committee in another place requested the review that we have discussed. The Government have agreed the terms of reference of the review, which were publicised on 18th March. More than 130 organisations with an interest in compensation and blight issues have been contacted with a view to presenting evidence to the review. A discussion paper setting out the key issues which the working group wishes to see addressed in evidence will be published soon. We have promised that copies of the document will be placed in the Library of the House. Promises have also been made that a progress report on the review will be published in the autumn. That is probably as exact as I can be at the moment.
My noble friend Lord Aldington raised the issue of compensation for business. That is a complex issue which depends on the amount of land that is taken, whether it is necessary for the business to move out,

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whether part of the whole of the land is taken, and so forth. Comprehensive and complex safeguards are built in and I shall be happy to write to my noble friend with the detail of those. Indeed, I shall place a copy in the Library for other noble Lords who are interested in the subject.
The noble Lord, Lord Thomson of Monifieth, raised the issue of the Boxley tunnel. Some of the issues can be classified as general and some are for consideration by the Select Committee. However, it was helpful that the noble Lord raised those issues. The Boxley Valley was considered by the Select Committee in another place and the tunnel was rejected. It is notable that Kent County Council is not seeking the tunnel through the Boxley Valley in its petition to your Lordships' House. Others may seek a tunnel but the county council does not and it is worth bearing that in mind.
The noble Lord, Lord Thomson, also asked about the provisions of the Bill compared with the Transport and Works Act and the way in which the two relate. The development agreement regulates London and Continental to build the CTRL on the lands identified in the Bill. There is no question of using the Transport and Works Act to change the route. I can say that clearly to the noble Lord and I hope that that provides him with the information that he seeks.
My noble friend Lord Aldington asked about the status of the various undertakings that have been given. The Government have given a clear undertaking that requirements will be placed on London and Continental. Accordingly, the development agreement with LCR requires it to honour the undertakings and assurances given during the passage of the Bill. To assist in what might be an otherwise complicated process, a register of all the assurances and undertakings given is being kept. I understand that so far there are about 400 entries.
The noble Lord, Lord Crook, raised the issue of the gauge. As he rightly said, a number of Written Answers have set down in some detail the facts in relation to many of the questions surrounding that. Suffice it to say that there is a requirement in the development agreement—the contract between LCR and the Government—that LCR must build the link to a continental gauge capable of taking the largest freight trains. Therefore, there is no need for any provision to be written on the face of the Bill.
My noble friends Lord Astor and Lord Pender were concerned about the interrelationship between the road widening scheme of the A.2/M.2 and the CTRL. An absolute future guarantee of the start of new road projects can never be given because of reasons of government budgeting. Nevertheless, the Government recognise the advantages of the co-ordinated planning of the CTRL and the road-widening scheme and construction within the same time-scale. Indeed, it was in order to maximise the opportunities for those benefits that the A.2/M.2 widening scheme was included in the CTRL Bill. I hope that that explanation is of use to my noble friends.
The noble Lord, Lord Clinton-Davis, raised the issue of CrossRail. As my right honourable friend the Secretary of State for Transport indicated in a Statement
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in another place on 27th February, we expect CrossRail to come after the Jubilee Line extension, Thameslink 2000 and the CTRL. We believe that that is a sensible sequence. I am sure that it is widely recognised that we cannot undertake all those major new rail projects at the same time and that there must be priorities.
The noble Lord, Lord Thomson, asked about the Class 92 locomotives and why they are taking so long to be introduced into service. They are the most complex locomotives ever developed in the UK and additional work on the track circuits has been required to ensure that they operate safely. I have some other information about that which may interest the noble Lord. Suffice it to say that they will not run on the link until it is built.
Heritage issues have been a central area of concern in the debate today. My noble friend Lord Cavendish was quite right to draw attention to all the important heritage issues which pertain to the Bill and notably those in connection with St. Pancras and the gasholders. Indeed, the noble Lord, Lord Kennet, contributed at some length to that discussion.
There was mention of the disapplication of the planning legislation. Although Clause 12 and Schedule 7 selectively disapply the relevant provisions of the Planning (Listed Buildings and Conservation Areas) Act 1990 and the Ancient Monuments and Archaeological Areas Act 1979 for works required to construct the CTRL, I can give an assurance that there is no intention whatever to ride roughshod over legitimate heritage interests. On the contrary, to replace the safeguards in disapplied legislation, the Government have been negotiating with English Heritage and local authorities on agreements as regards listed buildings and buildings in conservation areas. They have also negotiated with English Heritage in relation to agreements on ancient monuments. Those agreements are tailored to the particular requirements of the project.
In recognition of the special nature of St. Pancras terminus and its setting, in close co-operation with English Heritage and the local planning authority, the London Borough of Camden, we have developed a series of planning and heritage minimum requirements specifically for St. Pancras. My noble friend Lord Cavendish was good enough to recognise that the Government have made considerable efforts to put in appropriate safeguards, although he still feels that changes should be made. I am sure that such issues will be discussed when the matter comes before the Select Committee.
The minimum requirements target the features of the building which must be preserved and determine the way in which its heritage setting should be conserved and enhanced. That includes requirements relating to traffic control to minimise impact on listed buildings, their setting and the conservation area of St. Pancras. The chambers themselves constitute an exceptionally important building, as denoted by their Grade I listing. Both the chambers and the adjoining train shed are recognised historic landmarks of national importance. Those facts are recognised by the special arrangements that have been made. The buildings are to be regularly monitored and kept in a safe, secure, weather tight and

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waterproof condition, externally and internally. In addition there are detailed requirements as to the works which can be carried out inter alia to the train shed, booking hall, ticket office and the German gymnasium.
The gasholders were referred to by my noble friend. English Heritage accepts that the gasholders will inevitably be displaced by the CTRL works. That is my understanding. Discussions with English Heritage and the London Borough of Camden on the subject are ongoing and I hope will lead to an agreement soon. We need to await the outcome of current discussions about the priority which the gasholders should have among the range of St. Pancras heritage projects.
My noble friends Lord Darnley and Lord Astor referred to Cobham Park and mentioned that there are petitions on that subject. The issues surrounding this area were extensively discussed in the Select Committee in another place and the request that the route be put in a tunnel in this area was rejected by the Select Committee. Since then, however, Union Railways has participated in a joint study with local consultees, which include both the county and the borough councils, on additional mitigation options and additional community amenity measures for this area. A study has recently been published by officials, and Union Railways Limited has given it serious consideration.
My noble friend Lord Astor was concerned about the upward limits of deviation. I can reassure him that this is a standard provision in railway Bills and is needed for a variety of technical reasons, for example as regards the accuracy of the mapping base. In many locations undertakings have been given to limit the upward deviation where there are physical constraints to be negotiated. If there are further locations where a stricter limit than three metres is desirable, those could of course be put to the Select Committee for consideration.
The noble Lord, Lord Berkeley, asked a number of questions. He was concerned about the King's Cross concrete batching plants. He gave us the background on that. The noble Lord helpfully quoted from the Government's response to the Select Committee of 13th February on this point, and he has saved me from doing so. He must have seen my brief before I did. That response sums up the Government's position. As was made clear during the debate for Report/Third Reading in another place on 25th April, there has been no change in the Government's position. The Government will comply fully with the undertaking given to the Select Committee. I hope that gives the noble Lord some reassurance.
As regards the position of main line freight, as the noble Lord said, an over arching agreement has been entered into which provides for a long-term lease to be granted for the existing site occupied by the three companies concerned, and a new site is to be made available under the undertaking given to the Select Committee. That lease, which is consistent with the Government's undertaking to the Select Committee, is currently under discussion between the parties concerned and will be granted soon. I know that one of the companies involved has raised a concern about the
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possibility of temporary relocation, if that proves necessary. I appreciate that the upheaval of moving the plant of those companies twice would be extremely undesirable. To the extent that relocation cannot be avoided if the longer-term site is not available when the current premises have to be vacated, an interim location may be necessary. However, in the unlikely event that that circumstance arises, my department and the CTRL promoters will take all reasonable steps to ensure that any interim arrangements do not prejudice the long-term position of those businesses or the provision of a rail facility at King's Cross.
The noble Lord asked about the freight services and safety. I am sure that he knows the answer to that question as well as I. However, I shall repeat the question for the benefit of other noble Lords. The question was: if freight operators wish to run trains on both the Railtrack network and on the Channel Tunnel rail link, will they need to get separate authority to do so, and as a consequence produce separate safety cases? The design of the link and the safety measures employed are such that potential freight operators will need to seek separate authority. However, that may not mean producing a separate safety case although any safety case would need to satisfy both Railtrack and LCR. That is, of course, entirely logical given the different technical standards on CTRL and the existing Railtrack network. I should press on in the 26th minute of my response. If the noble Lord, Lord Berkeley, is not satisfied, I shall be delighted to write to him further on that.
As I said in my opening remarks, we believe that the committee has a substantial task ahead. However, the Government's clear advice is that the committee should not seek any changes to the route outside the Bill's powers.
That rehearses all that I said in my opening remarks. However, I believe that it is worth saying again, although it is the Government's advice and it is for the Select Committee to decide.
We have had an extremely wide-ranging and important debate about all the issues surrounding the rail link. We can conclude that the link will bring major benefits to this country, more international and domestic train capacity, faster journey times, and a welcome regeneration for areas which badly need it. It is certainly an embodiment of the principle and spirit of the PFI, exemplifying the private and public sector relationship at its best.
The Bill will open up a new era in rail travel. I believe that that was the sentiment of the House this evening. We wish the Bill a good passage, and I commend it to your Lordships' House.
On Question, Bill read a second time, and committed to a Select Committee.

Channel Tunnel Rail Link Bill
10.17 p.m.
Viscount Goschen: My Lords, I beg to move the Motion standing in my name on the Order Paper.

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Moved, That, as proposed by the Committee of Selection, the following Lords be named of the Select Committee on the Bill—

L. Ampthill (Chairman),

L. Brougham and Vaux,

L. Cadman,

L. Inchyra,

L. Methuen,

L. Milner of Leeds,

L. Shaw of Northstead.

That four be the quorum of the Committee;
That the Committee have power to adjourn from place to place and that, if the Committee think fit, such places may include points in England, France and Belgium along the present and proposed railway routes between the Channel Tunnel and the termini of scheduled passenger trains using the Channel Tunnel;
That the evidence taken before the Committee be printed from time to time and, if the Committee think fit, be delivered out;
That the Committee do meet at half-past ten o'clock on Monday, 3rd June.—(Viscount Goschen.)
On Question, Motion agreed to.

Marriage Ceremony (Prescribed Words) Bill
10.18 p.m.
The Lord Bishop of Southwark: My Lords, I beg to move that the Bill be now read a second time,
The Bill is important in that it aims to allow for alternative forms of the prescribed words that are used in marriage ceremonies. I am grateful that Her Majesty's Government have signified that they have no objections to this Bill, the provisions of which are a logical consequence of one of the recommendations in the I990 White Paper Registration—proposals for change.
Your Lordships are familiar with the changes that have taken place in the liturgies of the Church of England over the past few decades. That process of liturgical revision, much of which has centred on the type of language that is used, has also taken place in the Roman Catholic and Free Churches. This Bill aims to bring into line with that process of revision those words which must be used within the marriage ceremonies other than those of the Church of England or the forms of usage of the Jewish community and the Society of Friends.
At the present time the specified words of declaration are,
"I do solemnly declare that I know not of any lawful impediment why I, AB, may not be joined in matrimony to CD",
and the specified words of contract are,
"I call upon these persons here present to witness that I. AB, do take thee, CD. to he my lawful wedded wife (or husband)",
or, if the marriage is solemnised in the presence of an authorised person without the presence of the registrar,
"I, AB, do take thee. CD, to be my wedded wife (or husband)".
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The style, vocabulary and grammatical construction of these forms of words are increasingly found to be discordant with the rest of the rites now used in the Roman Catholic and Free Churches. In addition, they are seen to be alien to the natural mode of expression of the couple who must repeat them laboriously after the officient. An additional effect of this form of words for the declaration is that it appears to endow this part of the rite with greater weight than the altogether more important formula for the exchange of contract.
The Roman Catholics and the Free Churches consider themselves discriminated against in this regard in comparison with the Church of England, the Church in Wales, the Quakers and the Jews and in comparison with the churches in Scotland none of which is required to incorporate these formulae in their rites. The Church of England and the Ecumenical Joint Liturgical Group are fully in support of the removal of this discrimination.
The effect of the Bill will be to provide two alternative formulae to the existing words of declaration. The first modernises the statement so as to read:
"I declare that I know of no legal reason why I may not be joined in marriage to"—
the person concerned. The second takes the form of a question and answer, reading, "I am", in response to the question:
"Are you free lawfully to marry AB?".
This second form is particularly favoured by the Roman Catholics as it matches other questions and answers in their marriage rite. The Bill also provides that the shorter form of words of contract in the Act may be used, whether or not a registrar is present. The only change of wording is to substitute "you" for "thee". The Bill does not, of course, replace the existing statutory words; it simply provides alternative formulae.
Finally, I point to the fact that, although the primary purpose of the Bill is to permit alternative words in a marriage solemnised in a church, it also enables the alternative words to be used in a marriage in a register office and in certain other forms of civil ceremony, including marriages in approved premises under the Marriage Act 1994.
I hope that the House will give its support to the Bill which will tidy up something which is, on the one hand, minor but in the context of a ceremony, an irritating anachronism.
Moved, That the Bill be now read a second time.— (The Lord Bishop of Southwark.)
10.22 p.m.
Lord Morris of Castle Morris: My Lords, as the wholly inadequate substitute for my noble friend Lord Graham of Edmonton, whose name appears upon the Speakers' List, may I say that the House will be grateful to the right reverend Prelate the Bishop of Southwark for introducing this Private Member's Bill.
First, perhaps I may say that I speak entirely for myself since, to use the words of the Bill,
"alternative words of declaration and contract",

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is not, to my knowledge, an issue on which the Labour Party has yet adopted a fixed and declared policy position. I must also declare an interest as a vice-president of the Prayer Book Society, which exists to save and defend harmless the Book of Common Prayer against all the assaults of its enemies. However, I think I may say without fear of successful contradiction that the noble compilation of Cranmer and others stands in no particular or peculiar peril from the modest proposal contained in the Bill before us tonight.
The changes proposed in Clause 1 as an addition to Section 44(3) of the Marriage Act 1949 are not unreasonable in themselves but, as the author of the First Epistle to the Corinthians puts it in Chapter 6, verse 12 (and I quote him or her):
"all things are lawful unto me, but all things are not expedient".
May I ask the right reverend Prelate how great was the swell of unrest and protest against the words of the Marriage Act 1949 which made it necessary to bring in this Private Member's Bill? Was there any research? For example, was there a full survey of the registrars to ask their opinions? How were the views of the consumers of the service established and obtained?
Since this Bill, as is customary in another place, passed through all its stages without exciting very much discussion, I should be grateful if the right reverend Prelate could say a little more by way of explication about the benefits which the changes would bring and to whom those benefits would principally accrue, and what perils and dangers would await us all, in this world and the next, if by any chance, through the sundry and manifold changes of the world, the Bill were unfortunate enough not to secure its Second Reading here tonight?
10.25 p.m.
The Earl of Courtown: My Lords, I congratulate the right reverend Prelate the Bishop of Southwark on securing the introduction of the Bill, which has been considered and passed to this House from another place. I congratulate him also on the explanation he gave, which certainly helped with some of the queries I had in relation to the Bill. It was instructive to hear the noble Lord, Lord Morris of Castle Morris, in his beautiful use of English, raise queries on the Bill.
As the House heard, the purpose of the Bill is to introduce greater choice for people who are getting married by allowing the use of more modern language in the marriage ceremony for those couples who want it. As the right reverend Prelate said, the 1990 White Paper, Registration: Proposals for Change, recognised that there was a case for providing modern-day language alternatives which had substantially the same effect as the contracting and declaratory words prescribed in the Marriage Act 1949. The proposals in this Bill have broadly the same purpose.
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The noble Lord, Lord Morris of Castle Morris, had a number of queries concerning the Bill, one of which related to its benefits. The benefits for his countrymen are that they will be able to be married in their own language and in their own chapels.
I have listened with interest to what has been said. I congratulate the Churches Main Committee on the work it carried out, and once again congratulate the right reverend Prelate the Bishop of Southwark on his work.
10.26 p.m.
The Lord Bishop of Southwark: My Lords, I am grateful to the noble Earl for his encouraging words, the kindness of his remarks about the Churches Main Committee and the explanation of this Bill. I am grateful to the noble Lord, Lord Morris of Castle Morris, for his animated intervention and his series of questions. I could expect nothing less from a vice-president of the Prayer Book Society, even at this late hour.
As I indicated in my speech, there has been a full discussion on this matter, with a Green Paper, but also in preparation for the White Paper, including the proposal that the words should be modernised. No single objection was raised. I cannot give an answer as to whether the registrars were fully consulted on what the score was at the end. I doubt whether anyone can.
I also indicated—and it is important that I repeat this for a vice-president of the Prayer Book Society—that the traditional Prayer Book words will not be replaced but an alternative will be provided. I do not know what the perils and dangers may be for those in this world and the next. I have never made a study of either the furniture of Heaven or the temperature of Hell, so I do not know those things.
Since we are in the business of quoting from St. Paul, I shall simply say: yes, he did say those words about certain things being expedient, but the same author in the same book said: "I would rather speak five words with understanding than ten thousand words in an unfamiliar tongue." So to those who are being married with these words, in these days, I rather think the tongue will be more familiar if the alternative words are used. Those matchless words of Cranmer are slightly out of date for the modern couple. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Reserve Forces Bill [H.L.]
Returned from the Commons agreed to with a privilege amendment; the amendment considered and agreed to.
House adjourned at twenty nine minutes past ten o'clock.