Lords Sitting of 22 May 1996

Preamble
The House met at half-past two of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of St. Edmundsbury and Ipswich.): The LORD CHANCELLOR on the Woolsack.

Wisley Airfield
Lord Eden of Winton Lord Eden of Winton asked Her Majesty's Government:
What proposals they have received for development of the Wisley airfield site.
Baroness Trumpington: My Lords, my right honourable friend the Secretary of State for the Environment has received no firm proposals for development of the Wisley airfield site. The site is, however, one of several being investigated by Surrey County Council in their waste local plan as a possible site for a large-scale waste treatment and processing facility.
Lord Eden of Winton: My Lords, how is it possible for seemingly sensible people to put forward proposals for a large-scale industrial waste disposal processing plant on this site which would result in an industrial complex covering some 28 acres, with buildings 100 feet high, chimney-stacks more than 200 feet high, resultant heavy traffic, noise and widespread air pollution causing lasting damage to the long established, world renowned gardens of the Royal Horticultural Society on the other side of the road? Will my noble friend ensure that such a proposal never gets off the ground?
Baroness Trumpington: My Lords, I suggest that my noble friend cools it. As part of the local plan process, objections to Surrey's waste plan, including those to the inclusion of Wisley airfield in the list of potential sites, will be heard at a public local inquiry due to open on 5th November 1996. My right honourable friend sees no ground for his intervention in the plan at this time.
Lord Finsberg: My Lords, is my noble friend aware that I must declare an interest in this site in that as a DoE Minister I was taken to the ombudsman on the grounds of maladministration when I took a decision on the future of Wisley Airport in the early 1980s? However, at that time there was no question of any nonsensical development like this even being considered.
Baroness Trumpington: My Lords, I am interested in my noble friend's background to this whole situation. Under the Government's policy for green belts, industrial development of this nature is inappropriate in the green belt. There is a general presumption against inappropriate development except in very special circumstances.
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Your Lordships may be interested to know that when I lived in Cambridge I constantly had a sticker on the back of my car saying, "Keep Trumpington's Green Belt".
Lord Eden of Winton: My Lords, in the week of the Chelsea Flower Show, would it not be appropriate for my noble friend now to give categoric assurance that such a gross act of vandalism should not be allowed to take place?
Baroness Trumpington: My Lords, my noble friend again presumes that the matter has gone beyond a very early stage. One of the troubles with Surrey is that it is running out of existing landfill capacity. It has put forward a number of sites. Suitable sites outside the green belt are difficult to find because almost all open land is within the green belt and no major industrial sites are available for such use. However, I have already said that development of this nature is thoroughly inappropriate in a green belt.
The Countess of Mar: My Lords, is the noble Baroness the Minister aware that in the United States of America, which has plans for such incinerating plants, the requirement is that they do not produce more than 0.001 per cent. of dioxin, which is produced when plastics are burnt? Can she assure us that no plant in this country will be allowed to emit greater levels of dioxin? Can she reassure us that any incineration plants will have scrubbers in their chimneys so that any effluent will be prevented from escaping?
Baroness Trumpington: My Lords, very tempting! I am not terribly good on dioxins. However, I believe that the best I can do is to give the noble Countess the Government's view on waste. They published their White Paper, Making Waste Work, on 12th December. It includes targets to reduce the proportion of controlled waste going to landfill to 60 per cent., and to recover the value—for example, through waste-to-energy—of 40 per cent. of municipal waste by the year 2005. I commend the White Paper to the noble Countess.
Lord Williams of Elvel: My Lords, did I hear the noble Baroness aright when I understood her to say that development of this nature is "thoroughly inappropriate" in a green belt? If that is so, will she indicate that the Government take that view, and will she convey it to Surrey—whatever the disadvantages that the noble Baroness described—so that the noble Lord, Lord Eden, is satisfied?
Baroness Trumpington: My Lords, any planning application for development which is regarded as inappropriate in a green belt, and which the planning authority is minded to approve, must be treated as a departure from the development plan and referred to the Secretary of State. This gives him the opportunity to decide whether there are any issues which merit his intervention to call in the application for his determination.

Beef Industry: Vegetable Protein Exports
2.37 p.m.
Baroness Strange Baroness Strange asked Her Majesty's Government:
In view of the difficulties being experienced by the United Kingdom beef industry, whether they consider it appropriate that most of the distillers dark grains (a high protein vegetable feed) produced in Scotland is currently being exported to Finland.
The Earl of Courtown: My Lords, the decision on where to sell the material residues of the distilling process is a matter for the industry itself.
Baroness Strange: My Lords, I thank my noble friend the Minister for that fairly informative and fairly helpful reply. Does he not agree that in all fairness, if other countries ban the import of our beef, we should ban the export of Scottish vegetable protein with which most of our beef cattle are currently being safely fed? That is particularly so since, when winter comes, such cows as we have left will need protein vegetable food.
The Earl of Courtown: My Lords, my noble friend is right. Protein is of extreme importance during the winter months. There are other sources of protein such as peas, beans, soya bean and linseed. As concerns banning exports from this country, the European Union ban was imposed under Community law. Unilateral action by any individual member state is illegal.
Lord Mason of Barnsley: My Lords, will the Minister explain why America and Canada banned the import of British beef and to what extent those bans adversely affect the United Kingdom beef industry? Secondly, did we contest those decisions at the time?
The Earl of Courtown: My Lords, I cannot tell the noble Lord whether the decisions were contested at the time. However, the banning of British beef imports by America and Canada is a matter for those countries, although we might not like their decision.
The Earl of Balfour: My Lords, are Her Majesty's Government aware that the producers of brewers mash, distillers dark grains and what used to be called millers offal often achieve a better price if such produce is put aboard a ship for export rather than distributed to farmers in this country?
The Earl of Courtown: My Lords, perhaps it would be a good idea to give my noble friend Lord Balfour the figures relating to the export of distillers waste in 1995. The total production of distillers waste in this country was 207,000 tonnes. The total production of dark grains was 39,000 tonnes. That is the dried protein supplement which I believe is treated with molasses. The total export of waste was 8,000 tonnes. My noble friend Lady Strange mentioned Finland in her Question. I believe that only 190 tonnes of waste were exported to that country. We import waste from other countries amounting to 160,000 tonnes.
Baroness Mallalieu: My Lords, what steps have been taken so far, as indicated by the noble Earl's colleague
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in another place in the recent debate, and what progress has been made in relaxing the rules on set-aside so that beef cattle in the log jam on farms at the moment can be grazed on that land in the meantime?
The Earl of Courtown: My Lords, as the noble Baroness will know, many acres designated for set-aside are totally inappropriate for grazing by beef cattle. The animals might get fodder or gut fill out of it, but there is certainly no protein level from the green herbage growing there.
The other question concerned progress. I assume that the noble Baroness refers to the Statement made yesterday in another place by my right honourable friend the Prime Minister which was repeated in this House. My right honourable friend said of the proceedings aimed at lifting the ban:
"Those proceedings will begin this week … the application for these interim remedies should be heard within two to six weeks".
Baroness Mallalieu: My Lords, perhaps I may press the Minister in relation to the question I put initially. Contrary to my understanding of what was said in the debate in another place, am I right that no attempt is to be made by the Government to approach the Commission to relax the rules on set-aside for the hard pressed beef farmers?
The Earl of Courtown: My Lords, a number of options are available and we shall consider all those points. I shall pass on the noble Baroness's query to my right honourable friend.
Lord Mackie of Benshie: My Lords, is the Minister aware that many acres of set-aside are quite suitable for grazing?
The Earl of Courtown: My Lords, I thank the noble Lord for that information.
The Countess of Mar: My Lords, is the Minister aware that the Scottish beef industry is an excellent industry which produces the highest quality beef? It should be encouraged to continue producing high quality beef and to do that it needs protein. Is the Minister aware that grass contains protein, with a particularly high level in the spring? Is he further aware that some manufacturers still produce animal or mineral licks which contain urea which I gather is obtained from chicken manure? What are the Government doing about that?
The Earl of Courtown: My Lords, the noble Countess has asked a number of questions. One of them related to mineral licks which are used as a mineral supplement to rations. I gather that the urea used in some licks is generally chemically manufactured and that on occasion it is manufactured from chicken droppings. The licks are not derived from mammals.
On the Scottish beef industry, yes, it is an important part of Scottish agricultural business. It amounts to half a billion pounds per annum and makes up almost 30 per cent. of the value of Scottish agricultural output,

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with 160,000 jobs. When we look around butchers and supermarkets, we all know how often Aberdeen Angus beef is advertised.
Lord Carter: My Lords, is it any wonder that we have a problem with our balance of payments when we now import 160,000 tonnes of distillers waste into Scotland? The crucial question is: are the dark grains from the Scottish distillers waste a better product than the English and the brewers grains? If so, how can we get hold of them instead of sending them to Finland?
The Earl of Courtown: My Lords, the noble Lord, Lord Carter, makes an important point. As concerns distillers and brewers waste, I understand that 25 per cent. of distillers grains is dry matter, so there is quite a high moisture content. It is comparable to brewers grains. Dark grains, which are a dry substance to which, I believe, molasses are added, are used in rations for ruminants.
On the balance of payments, if my memory serves me correctly, I gather that distillers waste is not an expensive form of protein at £20 to £25 a tonne. The noble Lord will probably correct me on that, but I do not believe that it will have an enormous effect on our balance of payments.

Central Africa: Humanitarian Needs
2.46 p.m.
Lord Judd Lord Judd asked Her Majesty's Government:
What is their latest assessment of the humanitarian needs in the Great Lakes region of Africa with particular reference to Rwanda and Burundi.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, the situation is fragile. Rwanda is making progress, but the security situation in Burundi is deteriorating. Almost 2 million refugees remain in the region. Britain has committed more than £126 million to the region bilaterally and through the European Union since January 1993.
Lord Judd: My Lords, does the Minister agree that it is now essential for members of the Security Council to assist responsible leaders in the region to find a durable regional solution covering the destabilising effect of the refugee camps in Zaire, the repatriation of refugees or viable alternatives, the pursuit and punishment of those responsible for killings, adequate resources for the administration of justice and proper resources for reconstruction? In the meantime, can the Minister tell us what the Government are able to do to support the OAU and the former President Nyerere in his important mediation efforts in Burundi?
Baroness Chalker of Wallasey: My Lords, the noble Lord is right, it is a matter of considerable concern. We believe that the efforts of the former President Nyerere are extremely important and could be quite promising. With my right honourable friend the Foreign Secretary, I met former President Nyerere when he was here in
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London and I shall meet him and former President Carter next Monday to try to find ways forward, to reach a solution which deals with the refugees, with the pursuit and punishment of those who are guilty of genocide, to help to bring about justice and to ensure that resources are available where they can be used.
The noble Lord is right; the problems need a durable solution. That is why we have been working not only with the persons mentioned but also with the European Union's special envoy, Aldo Ajello, and the Tanzanian Foreign Minister, Mr. Kikwete. The issue is on our agenda almost daily at present while we try to find a solution. However, no one should underestimate how difficult it is, with all the different parties within the tribes, and with so much conflict, sometimes stirred up from outside either Burundi or Rwanda.
The Lord Bishop of Durham: My Lords, can the Minister tell us what action the Government are taking to secure control of arms going into Burundi? We should bear in mind the appalling suffering to civilian populations and the extent to which the Hutu militia groups and the Tutsi-dominated army are creating havoc in that country.
Baroness Chalker of Wallasey: My Lords, this is a very difficult issue. The arms that have been entering Burundi have been going through third countries, and we do not know their source. We have sought to help the United Nations over this matter. The OAU and the UN are seeking ways of using the deployment of OAU military observers so that they may help in trying to impede the process of arms supply from outside. We hope that other governments who may have influence on neighbouring countries but are so far not using that influence might be persuaded to do so. That would cut down the supply of arms to Burundi and the central African region.
Lord Rea: My Lords, following my noble friend's supplementary question, will the Minister give the House more details about the progress of bringing to justice the instigators of the genocide in Rwanda? Would that not be an important step in bringing stability to the whole region?
Baroness Chalker of Wallasey: My Lords, the noble Lord is right in one sense. However, this is a situation in which things are easier said than accomplished, as he already knows. This country has been one of the key contributors to United Nations human rights operations in the area. We have also helped with the question of training people to carry out the tribunals. Progress is gradually being made. The situation is such that many people do not understand that there can be an amnesty, but that they should go for the leaders who have perpetrated the troubles. While we shall continue to help in bringing about peace in this high priority sector, including justice and dealing with those who have been arrested, their own governments must also be determined to solve the problem. It cannot all be done by outsiders, however willing they may be.
Lord Elton: My Lords, is it not the case that the economic condition of the countries immediately concerned is such that any effort to resettle refugees must be financed from outside? Secondly, will my noble friend tell the House whether the condition of the judicial systems in the countries concerned is such that they are able to deliver the retribution for which noble Lords opposite ask without some judicial input from outside?
Baroness Chalker of Wallasey: My Lords, my noble friend is absolutely right about the parlous financial state of the countries concerned. It is interesting that in the year since January 1995 donors committed over £550 million towards Rwanda's programme of reconciliation and reconstruction. Some of that money is going towards trying to improve the justice system.
One of the difficulties is that, in a country that has lost all its leading personnel, there is very grave difficulty in absorbing the funds and the training to put them into practice. As a result of the lack of human resources, some who have been assigned to help are having to do a very basic training job before much progress can be made. However, we keep at it. A good deal of sound effort is going on to try to improve the situation, bad as it is.
Lord Redesdale: My Lords, is the Minister aware that on 12th May 100 displaced Tutsi were massacred by Hutus in Zaire; and according to a report by Médecins sans Frontières a further 3,000 displaced Tutsi in Zaire are at immediate risk? Is the United Nations doing anything to evacuate the Tutsi who are at risk?
Baroness Chalker of Wallasey: My Lords, I do not think the evacuation of one group of Tutsi in Zaire to another area will necessarily solve the problem. The United Nations has looked into what happened in Masisi. The area is now predominantly Hutu; there is no reason why those Hutus should be pushing the Zairian Tutsi out of the area. Certainly at the moment there is real difficulty. The UNHCR has been trying to reach a resolution as to where the Zairian Tutsi should go. That has not yet been accepted by the Government of Rwanda. Until it is there will he something of a stalemate. All this is also affected by the attitude of the Government of Zaire. That government, whose citizens they are, have done absolutely nothing to calm the situation.
The Earl of Sandwich: My Lords, in the interests of UN effectiveness, which I know the Government hold dear to their heart, as do many noble Lords, does the Minister agree with the conclusion of the Joint Evaluation on Emergency Assistance to Rwanda that the Department of Humanitarian Affairs (DHA) needs to be strengthened and properly funded if the UN is to do its work properly?
Baroness Chalker of Wallasey: My Lords, the DHA would be able to do even more than it is trying to do now were it to be so funded. We have argued that case with Mr. Akashi; I did so personally at the end of March. I hope that the United Nations sees the value of this organisation. It was set up to bring together the skills of the other agencies, but also to fill the gaps that
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were so evident in international crises from 1991 onwards. Yes, we do agree; but a way has to be found. As I said during our debate last week, that also means that those countries that are in arrears to the United Nations have to pay those arrears.
Lord Campbell of Alloway: My Lords, in this sad and rather hopeless situation of tribal attrition, what on earth is the United Kingdom supposed to do, or what more can it do? What on earth is it supposed that the United Nations could conceivably do? How is it proposed that the problem can be ameliorated?
Baroness Chalker of Wallasey: My Lords, my noble friend has a very real point. But if one improves conditions and teaches people who are willing to make peace how to progress from a situation which, two years ago, was simply a matter of blood-letting, one does see a learning process going on. We have certainly seen that among some of the leaders in Rwanda. In Burundi, where there are more than 13 different parties and incredibly difficult situations within the different tribes, we have not so far been able to make that progress. There is quite a large number of visitors going into Bujumbura to impress upon the government the importance of doing that. I shall be returning once more at the end of our summer Session here.
Lord Dubs: My Lords, a moment ago the Minister referred to some of the financial difficulties facing the DHA in Rwanda and Burundi. Is not the situation more critical than that? Will she comment on reports that all United Nations activities in the region are severely short of cash, to the point where many of the operations are in jeopardy?
Baroness Chalker of Wallasey: My Lords, it is not only a question of money, as I sought to say in answer to another noble Lord a few moments ago. There is a need for resources; but the pledges that we and others have made would certainly be of more effect if the human resource development in the countries concerned were greatly improved. There is a terrible problem of people not being able to use the facilities that would be willingly given by the donor community. Part of it is a result of the psychological overhang from the terrible killings in Rwanda and the continuing killings in Burundi. The one thing we have to do is make good use of everything that we put there. That is exactly what Aldo Ajello and others are examining in their work on the ground, with the backing of the OAU, the EU and the UN agencies.
Viscount Waverley: My Lords, will the Minister congratulate the Government on opening a mission in Kigali addressing the concerns of both Rwanda and Burundi? But will she recognise that it is the element of fear that needs to be addressed and that a form of integration must be encouraged between all participants in the region?
Baroness Chalker of Wallasey: My Lords, the opening of a mission in Kigali followed on the British Liaison Office, which I set up in Kigali in 1994 in order to bring help to people there. I must warn the noble

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Viscount that integration may sound a good thing, but it is not something that will happen either quickly or until a fair time has passed following the genocides of 1994 and all the other terrible happenings that have continued for so long in the region. That is why the Great Lakes conference that has been suggested, which we and our European partners wish to support, must examine not just peace and security, but stability over quite a long period. There needs to be planned action for quite a considerable time before people will even be prepared to live in the same village as those they know had a hand in perpetrating the atrocities of two years ago.
Baroness Park of Monmouth: My Lords, does my noble friend the Minister agree with me that her point about local human resources is extremely important? One of the problems must be the system of land tenure, which is very complex and can only be understood by the Hutu and Tutsi themselves. It is not easy to impose that from outside. Should not we recognise that there is a limit to the degree to which we can impose solutions?
Baroness Chalker of Wallasey: My Lords, I have never spoken of imposing solutions from outside. One of the things about which past President Nyerere is absolutely certain is that any imposition would probably worsen the current situation. My noble friend is absolutely right. There is the whole problem of land tenure and the tremendous competition for land. In both countries there are so many people per square kilometre of land that the pressure on land is worse there than it is certainly in any of the neighbouring countries. We can show the way; we will show the way. The Great Lakes conference, if it is properly prepared, could do a lot. But there has to be a willingness on the part of the leaders of the different communities in both countries, and indeed in Zaire too, to live peacefully side by side. Until that is there, I see little hope of putting an end to what is in fact a continuing tribal war.

Business of the House: Debates this Day
The Lord Privy Seal (Viscount Cranborne): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord Jenkins of Hillhead set down for today shall be limited to three hours and that in the name of the Lord Ezra to two-and-a-half hours.—(Viscount Cranborne.)
On Question, Motion agreed to.

Anglo-German Relations
3.1 p.m.
Lord Jenkins of Hillhead Lord Jenkins of Hillhead rose to call attention to Anglo-German relations; and to move for Papers.
The noble Lord said: My Lords, I tabled this Motion two or three weeks ago because of a fear that Britain's relations with Germany were on a deteriorating course. I need hardly say that nothing has happened in the past
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few days to diminish that fear. In the interval, apart from yesterday's excitements, we have had the successful Chirac state visit. President Chirac exhibited spontaneous good will, but he also left us in no doubt of the primacy for him of the Franco-German partnership and of the resolve of the two partners to stick to and achieve their European objectives.
I have watched with fascination for at least 20 years the deepening of that Franco-German partnership and Britain's gradual and unnecessary exclusion from it. Perhaps, indeed, as the only British President of the Commission so far—maybe the only British President ever—I saw during a crucial formative period more of the semi-inside of that partnership than has anyone else from this country.
It began well before my Brussels days, with a rather misty communion between de Gaulle and Adenauer. But by 1977 it had hardened into a genuinely close relationship at the top between those two utterly dissimilar but determined "best friends", Helmut Schmidt and Valèry Giscard d'Estaing. But beyond that possibly ephemeral personal closeness, its effects could be observed, spreading down like water seeping to the roots of a plant and thus being institutionalised and made more lasting.
Its strength was already such in those late 1970s years that I developed a tactic, in my European rather than British capacity, for beneficially exploiting it. If one of the two partners were standing out against a Commission proposal—it was most often the French but not invariably so—much the best tactic was not to try to win an argument across the Council table but to move round the table to the head of the other delegation within the partnership—it was most often the Germans—and say to him, "Can't you quietly get them to come off it?". It was surprising how often that worked. But it left a lot of room for reflection about the shape which Britain's semi-detachment was allowing Europe to assume.
It is worth contrasting that with the position immediately after the war, when Britain's contribution to German rehabilitation was incomparably greater than that of France. The British Zone, from Hamburg through the Ruhr to the Rhineland, was the powerhouse of German revival. The Hamburg based press and broadcasting stations, the Düsseldorf headquarters trade union and the post-Nazi education structure were greatly British influenced. A month ago I gave a lecture for the 50th anniversary of the refounding of the technical university in Berlin which had been relaunched in 1946 with a proclamation of remarkable academic liberalism by the British general commanding in the city. Undoubtedly, institutionally the British influence on what became the three-zone Western area and then the Federal Republic was greater almost than the American influence. I am very glad that two noble Lords who played a great part in those years—the noble Earl, Lord Longford, and the noble Lord, Lord Annan—are to speak later in the debate.
At that time the French were occupying only a couple of semi-rural provinces and were indeed poised uneasily on the edge of a reversion to a 1923 policy of

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suppression and even dismemberment. Once the Cold War set in, the Americans, of course, were crucial to German security. Adenauer, the first of the remarkable run of six—only six over 47 years—German Chancellor-statesmen, rather preferred the Americans to us, which was perhaps not surprising as he had been dismissed for incompetence when Oberbürgermeister of Cologne by a British brigadier.
In the third quarter of this century, throughout those 25 years, the influence on Anglo-German relations of the Königswinter conferences was very considerable and beneficial. There have been other bilateral imitations but, in my view, none has achieved the same role in fostering the free, sometimes argumentative but always unofficial, exchange of ideas not only between politicians but between commentators and academics as well. Partly as a result, even when Franco-German official relations became closer, the links between Germany and Britain—unofficial Anglo-German ones: habits of thought and methods of discussion—remained more intimate. That has been Königswinter's unique contribution. Typically, however, I am not sure that Königswinter retains its full vitality today. Throughout the last two or three decades, the Franco-German partnership has galloped ahead.
In 1962 de Gaulle went to Munich and before a vast crowd and to immense applause said in German, "You are a great people"—"Sie Sind ein grosses Volk". It may not have been very precise but, as a gesture of reconciliation, it was magnificent. It is strange that the imaginative gestures which have stuck have come from each of Germany's other principal Western allies but never from Britain. Kennedy's "Ich bin ein Berliner" was rather oddly phrased, but that did not destroy its impact on the audience, and it has certainly stuck. Such a gesture from Britain has long been lacking. I commend it to the next Prime Minister.
It is worth remembering that the suffering and degradation of the French, as indeed of the Dutch, under the Germans were greater than anything experienced by the British. And we have the moral compensation of it being our finest hour. The fact that we should nonetheless be the country in which wartime resentment appears most to linger is perverse. It is not only perverse, it is also damaging—primarily to us.
Chancellor Kohl is clearly today the most powerful statesman in Europe, mostly by virtue of Germany's strength, but also because of his commitment to an idea and his possession of leadership skills which enable him to rally support for that idea. No one with any knowledge of Helmut Kohl can doubt that the idea stems from his consciousness that he is the last leader from the generation of his countrymen who remember the war and the horrors of Nazi behaviour. That gives a special urgency to his determination fully to anchor Germany into an integrated Europe. It is a Europeanised Germany and not a German Europe that he wants. That is the reason he has got on so well with successive French Presidents, the heads of a nation which is historically dedicated to trying by one means or another to take the poison out of Germany and which now does so so brilliantly well through the partnership. I believe that that is the reason also why
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I recently heard Helmut Schmidt—another outstanding German Chancellor, but one who used to like Herr Kohl about as much as Sir Edward Heath likes the noble Baroness, Lady Thatcher—pay a remarkable tribute.
Yet the increasing British reaction to Chancellor Kohl in large parts of the press and on the Euro-nihilist wing of the Conservative Party—a wing which seems more and more to be taking over the main building—increasingly seems, at the worst, to treat him almost as a reincarnation of Hitler and, at the best, he is promoted to Jacques Delors' vacant place as Britain's necessary European scapegoat, at which those who might otherwise be subject to road rage can amuse themselves by throwing rotten eggs.
A happy contrast to that was the good sense spoken at last night's CBI dinner both by the president of the CBI and by the General Secretary of the TUC—people who have a great responsibility for the economic consequences of our policies. Sir Bryan Nicholson delivered a mighty rebuke to those who seem to have omitted to notice that the war with Germany is over.
But there are serious consequences and dangers. For instance, a large part of the alienation of the Conservative Party from Europe, which I greatly regret, stems from a failure in differing ways of two British Prime Ministers to establish an effective centre-right partnership with Kohl, the only other big country centre-right leader in the Community.
The growing neurosis in our attitude to Germany has also contributed to our weak and unsteady hand in dealing with the beef issue. As I said yesterday, I support the Government's objectives, but their tactics have been and are appalling. Mr. Hogg's gross mishandling of his agricultural colleagues from day one onwards has been almost unbelievable. The concern of the British Government seems to have been not to eradicate BSE; not to restore confidence; not even to help the farmers; but to whip up a quarrel with Europe as a smokescreen for gross neglect of the problem over the past 10 years and as yet another sop for the Euro-nihilists.
I hope and believe that we will get the derivatives ban lifted in a week or so. But that will be in spite of and not because of yesterday's threats. It will be done because of the good will of the Commission and under the powers that it can carry a proposition by a simple majority at the second go—powers which the present Government and many of their supporters would like taken away.
Then we go to the European Court, which is also perfectly reasonable, though it is perhaps unfortunate that the Home Secretary chose last Friday to describe it as a "menace" and its members as "potential tyrants". Then up to and at the end of the European Council in Florence we will withhold "normal co-operation". What does "normal co-operation" amount to? It does not amount to a very serious threat. By that means we hope to end what we have come near to portraying as a German-led European conspiracy. That Euro-centric view of evil has come to look very odd as it has emerged that, so far from the ban being a special Euro-dodge, the Americans and the Canadians have had a ban for eight years, the Australians for about the same time and the

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New Zealanders more intermittent. Are they all part of a Euro-conspiracy? If beef, as it may well do on present form, ever comes near to driving us out of the Union, should we for good measure and logical consistency resign from the Commonwealth and NATO also?
I fear that the mood of "romantic nationalism and churlish xenophobia"—to quote the chairman of the CBI last night once again—is liable to turn us into an ill-tempered old man, quarrelling with all his neighbours about dustbins, overhanging branches and parking in the road outside and as a result making himself more lonely and miserable and probably poor as well. I find too that Mr. Major's Statement bears all the unmistakable and rather pathetic signs of a weak man trying to use strong language.
The fact is that both from the short and the longer-term point of view our relations with Germany are as key and as central as they could be. They are crucial not only in themselves but also to our relations with our other principal allies and neighbours as well. There is no greater illusion than that we would improve our relations with the Americans by being more distant with Germany and the rest of the Union. Equally, Anglo-German relations provide much of the key to Anglo-French relations. That close partnership may sometimes seem awkward for us and occasionally may seem too close for the other 12 too. But if it were to collapse, with a reversion to the traditional hostility, it would be a disaster for Europe, Britain included, and for the world. Furthermore, there is no chance of Britain huffing and puffing it down from outside. If we want to make it less exclusive, our only proper, as well as our only practical, course is to behave to Germany—and indeed to France—more as they do to each other and less with the suspicion and non-cooperation which have become habitual to us.
The post-war German Government are not a particularly difficult government with which to get on. Taking the 42 years of the Federal Republic and the subsequent five years as a whole, they have a unique record of international responsibility, economic success and respect for liberal values and the supremacy of the rule of law. Their record has not been perfect of course. But if the question is posed as to which other country could push Germany off the gold medallist plinth as the consistently best-governed country in the Western world or outside it, it would be difficult to find an alternative candidate for the accolade. And that, even without the pre-1945 history, would be a formidable achievement. With that history the achievement is stupendous.
We will be very foolish, clumsy and shortsighted if we do not move quickly to restore our deteriorating relations with Germany. My Lords, I beg to move for Papers.
3.19 p.m.
Lord Campbell of Croy: My Lords, I should like to thank the noble Lord, Lord Jenkins, for his excellent introduction of this important subject. It has attracted many speakers to the debate so that each of us is restricted in time. I am myself very well aware of his long-term interest and participation in the subject. We
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together attended at least one of the Königswinter conferences in the 1960s. I am only sorry that he felt it necessary to express criticism in the form he did of present Ministers. Königswinter was a way of promoting better understanding between Britain and Germany. The conferences have been very successful and still continue.
My family suffered considerably in both world wars, in casualties, killed and wounded. More than a year after the end of the war in Europe, I was myself still confined to hospital, recovering from wounds. All this made me, with others, the more determined to support reconciliation and building good relations with Germany, to prevent the seeds of a future war being sown in Europe. To me, the Schuman Declaration in the summer of 1950 was a most significant and welcome event. It has proved to be a landmark. Germany and France had agreed to pool their coal and steel resources and industries. The two industries were basic parts of their economies in those days. The two countries would be working closely to together. It was hoped that the old enmity would be dissipated. The Coal and Steel Community was born and became the core of the EEC which later developed around it.
Your Lordships will understand why I was glad to be a member of the Cabinet in 1970, 1971 and 1972, much involved in the negotiations which led to the United Kingdom joining the EEC in January 1973, more particularly as I believe we missed our chance when plans were being made at the Messina Conference in the mid-1950s and because our entry was later vetoed by President de Gaulle early in 1963 after our strenuous and successful negotiations. Had we joined on those earlier occasions, we could have participated in formulating a common agricultural policy very different from the one existing at our accession. We could have influenced the creation and development of other Community policies and institutions.
It is relevant to bear this recent history in mind because many of the issues on which Britain and Germany now differ arise from problems within the European Union and proposals for its future. It is as well to remember that evolution of the European Union began with the determination of Germany and France to bury hatchets and work together in 1950, a year when Germany was starting again to become an independent country. That led to an important relationship between Germany and France which has been beneficial in its effects and should be respected.
A substantial factor in German relations with Britain and other European neighbours is its size. After reunification, Germany greatly exceeds each of the others in population. That would still be the situation whether the European Union existed or not and whether we were in it or not. Reunification has been an upheaval for West Germany, which already possessed efficient industries and a strong economy. It has had to digest a run-down, heavily polluted East Germany. Moreover, it was a brave decision to extend the deutschmark to the East. West Germany has had to strain and suffer during the painful period of reunification. When that period is over, Germany will be larger and stronger than ever.

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Of course there is concern that it will become the dominating nation in Europe. That is not new. It has been in view, on the horizon, for more than 40 years. At some time the Soviet Empire would contract or crumble, and East Germany would join West. Some of the British media and public fear that this largest member of the EU will exert most of the pressure for close integration. Recently, however, there have been signs of some misgivings within Germany on this.
For a moment, I shall draw attention to a simple misunderstanding. The word "federal" means different things to different people. Constitutionally, Germany, now including East Germany, is a federal system consisting of provinces—the Länder—each with its own legislature and administration. On that scene, "federal" means to Germans decentralisation, devolution and even subsidiarity. That is entirely different from integration and central control, which many British people take "federal" to mean. What most British people seem to want is a European Union of nation states. I am one of those. Those would be states taking their own decisions on subjects on which there was no need for central co-ordination or control. Most British parliamentarians appear to have the same objective.
Germany has been advocating, or appearing to advocate, a different policy, of close integration and an early start of a single currency. German trade unions and other German bodies have recently expressed alarm at the severity of the measures within Germany needed to attain the convergence criteria for qualifying to take part at the proposed starting date of 1999.
Time, and increasingly the wide realisation of difficulties, may help to resolve today's issues. Other problems will no doubt arise in the future between our two countries and good British-German relations must depend still on positive efforts on both sides.
3.27 p.m.
Lord Marsh: My Lords, perhaps I may follow the noble Lord, Lord Campbell of Croy, in terms of defining the word "federalism". To avoid misunderstanding, I give the definition which I shall use in the course of my speech. I see "federalism" as a unified system which has a unified monetary system, which probably has a common currency and eventually perhaps a central bank, and which also has an agreed social policy and an agreed political purpose. That seems to be what people in the European Economic Community are aiming for, and I do not blame them for that.
I was slightly saddened by the reference of the noble Lord, Lord Jenkins, with a great deal of whose speech, to my surprise, I agreed—because we have now been on separate sides for about 30 years—to the deterioration of Anglo-German relationships. I do not believe that there has been a deterioration in Anglo-German relationships. That may be because I speak as a proud Anglo-Saxon and the noble Lord speaks as a Celt, but I do not make too much of that. The fact is that German paranoia and sense of guilt about the 12 horrendous years between 1933 and 1945 are already exaggerated and a baleful influence among a particular generation in
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Germany. It is not true that there is much anti-German feeling, certainly among the people I meet. The extent to which some Germans carry this burden, almost—I do not intend this to be offensive—wallowing in it, is not good for Germany and therefore cannot be good for Europe.
Anglo-German relations are dominated, as are Anglo-French relations, by a desire to see the United Kingdom firmly locked into the European Union. I do not see anything wrong with that. It makes a great deal of sense. A major step in that drive to political union is monetary union and a single currency. The other members of the European Union are not dependent on British participation in the EMU or a single currency. But those are the two essential ingredients to cement what will probably be the most extraordinary federation, if it comes to pass in full, that the world has ever seen, and we have experienced a number of federations. The former Soviet Union had its problems; in Yugoslavia, it was not all plain sailing; in Canada there is the question of Quebec. The situation is hardly perfect. Federations produce serious problems, and I believe this one would be very complex indeed.
So while the establishment of a European federation, which is, I believe, the aim, is not dependent on British participation, the logical nucleus of such a body would be France, Britain and Germany. Germany, however reluctantly—I believe that it would be very reluctant—would find itself primus inter pares in that triumvirate. I see no problem with that. In terms of geography, demography, economic power and history, Germany is the major power in Europe. It would make a lot of sense for the French and Germans to be the prime movers in trying to bring Britain into the Community as best they can. They know that there are very different views in this country.
I am surprised to find that there are so few Labour speakers today. Europe is predominantly Catholic and I am told that virtually, but with one Welsh exception, the entire Commission light candles every night for the election of a Labour Government as the development which will take the British into the Community. When the noble Baroness, Lady Blackstone, winds up, I hope that she will put them out of their misery and confirm that or reject it.
Equally, British economic prosperity is not dependent on membership of the EMU and to argue otherwise is to fly in the face of all the evidence. For the past 30 years both Labour and Conservative governments have presented the European debate as primarily about a series of economic arrangements to which only unbalanced xenophobes can seriously object. That was never the case and it is obviously not the case now. It is not an easy thing to say, but I believe that of all the countries in Europe involved in the last war, Britain's civil population emerged with less damage than anybody else. The Germans not only had, in common with France and Belgium, armies fighting across their countries and back again, but in addition Germany had the humiliation of becoming an international pariah. For those people, from the very beginning it was a political association of European states and a very close one,

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designed to prevent a recurrence of something which I do not believe will recur, largely because of the power of the Atlantic alliance rather than any European union.
It is now "make your mind up" time. We are on the eve of an election where the question, "Are we in or are we out?", will be a major issue. Any concessions which we will get, and any concessions we have got, are purely transitional. The key argument for joining will be the less than inspiring cry, "We can't afford not to join." That is fatuous on an issue of such size. This is a politically stable, relatively affluent market of 60 million people, 30 miles from the European mainland. A trade war in modern society would be a nonsense and it would not happen, not least because of a number of groups, such as Mercedes Benz, Audi, Renault and Citroen, and the French winegrowers and Italian cheesemakers, who might have views on the matter also. There is no time to list in this debate all the other reasons for staying outside but it is a perfectly sensible option if we so wish.
With the permission of the House I would like to quote the objective view of inward investors of Noriko Hama of the Mitsubishi Research Institute who is reported as saying,
"Like it or not, the world is a more seamless and borderless place".
The article in which those remarks appear goes on to say that the more Europe pushes towards further integration, the greater the risk of serious economic and political dislocation, which would be the biggest threat to such investment. Noriko Hama is then quoted as saying,
"Britain's inability to become wholly European may count as its greatest asset where inward investments from Japan are concerned".
I can give other quotes from the same area because, unlike "little Europeans", for the past 20 years I have earned most of my living outside this country. I have also been paid in several different currencies, I am pleased to say.
The Fabian Society's motto is, "The inevitability of gradualness." So far we have drifted along, slightly behind, but always in the general direction. We have had a few concessions to meet our domestic political problems but, by the very nature of the organisation, they are, and can only be, temporary. Britain is a significant element in European political, economic and defence issues. It is in our mutual interest that we remain good neighbours, but being a good neighbour does not necessarily mean that it is a good idea to share a bed. As a good Anglo-Saxon I believe that it is high time that we made a clear decision. I have no doubt at all that that decision should be maximum co-operation in matters affecting defence and trade, a strengthening and widening of NATO, and a polite but friendly rejection of the membership we are being offered.
3.36 p.m.
Baroness Seear: My Lords, over the centuries it has been a major, if not the major, concern of British foreign policy to make certain that there was no overweening power in Continental Europe. If one traces our history back through the centuries, that was a dominant factor long before the time of Napoleon, who, I suppose, is the
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example which springs most readily to the minds of most people. Today what is the equivalent of Napoleon in Continental Europe? Surely it is the German-French alliance inside the European Union.
We were all very pleased to welcome President Chirac last week, but I imagine that no one believes that, if he had to make a choice between his links with Germany and his relations with us, it would be the United Kingdom that he chose. That great central alliance and power in Europe is there as a dominant feature of today's politics. That is what we have to take into account when we are talking about our relations with Germany today, which I understand is the subject of today's debate rather than questions about monetary union and what is going on inside other areas of the European Union.
That desire to be part of the European Union and to see that its strength is balanced between what happens inside Europe and what happens outside is surely of major importance. We need to be certain that we can hold our position against that strong organisation. Let us remember that it is all the stronger because today it is Germany and not the United Kingdom that is the favourite friend of the United States. So it is the strength of Germany and France that we have to add to the considerable support of the United States which we have always been too inclined to assume would always be favourable towards us rather than to any other of the European countries. We need to ensure our position and there is no time to be lost in doing so.
As my noble friend Lord Jenkins made clear, Chancellor Kohl has always been a good friend to us and a very good European, wanting to see Germany linked to a strong European Union and not being a loose cannon in Europe, as it could so easily be. However, we must remember that Chancellor Kohl belongs to a generation which is passing away. There is another Germany, a younger generation, born after the Second World War. It is perhaps not so easy for Members of your Lordships' House who remember the Second World War well to realise that it is a different Germany now. We can exaggerate the dangers of that change, but we would be foolish not to recognise that there has been a change. Although many people in Germany continue to be as strongly pro-European and as strongly opposed to the revival of nationalism as those in the generation of Chancellor Kohl, it is true that there are others in Germany.
I do not want to follow those who have spoken excessively nervously about the revival of nationalism in Germany. A great deal has been done by the existing German Government to ensure that that revival is checked and reversed. However, those elements still remain. If we want to make our peace with Germany and want to return to being at the centre of the European Union, combining with Germany and France, now is the time to do it. We cannot leave it for another generation because we do not know what will happen. Of course, rationally, Germany should continue as at present, but the one thing above all else that we know in politics is that purely rational arguments never dominate. Emotional factors can so easily enter the equation.

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We do not know what the next generation will be like, so now is the time to make sure that our position is as it should be and that we, like other countries in Europe, are inside the Union and have a close and good relationship with the Federal Republic of Germany. We have established good relationships in the past, but we are now undoubtedly allowing them to slip away as voices in this country, which are given far too much publicity in the press both here and in Europe, undermine the work that has been done in the past. It may not be possible to make that change and to reverse the current situation if we leave it too long. Now is the time to do that.
It should not be too difficult because there are many forces on our side helping to make it easy to return to a good relationship with Germany. We have many German students in this country. They come here willingly and I am delighted that so many of our universities, both old and new, are developing joint schemes whereby students spend a year at a university in Continental Europe and become Europeans. It rubs off on them. They do not do it self-consciously; being European comes naturally to them as they study alongside fellow students from Germany and other countries in increasingly multinational universities. The right conditions exist for developing the kind of relationship that we should and could have with Germany if we set about it in the right way. However, egged on by many people who should know better, we seem to be rejecting that opportunity.
But what a price we pay for not having good relations with Germany. If we want an example of the high price that we are paying, let us look at what has happened with beef. As I understand it, when we first knew about our beef problems, we did not try informally to tell our colleagues in Europe about what had happened, our state of knowledge and the difficulties that we faced. We did not use the informal channels which are open to friends, but only to friends and to those who have had a good relationship over the years.
As my noble friend Lord Jenkins said, when he was President of the EEC and had difficulties with one or other country around the table, he could go along to the Germans apropos the French or to the French apropos the Germans and say, speaking of the other, "Get them off it. Get them to do what is needed to be done". But did we do that when we knew about our beef troubles and when we must have foreseen how great the difficulties would be? Did we have friends to whom we could say, "Look, we are in a hole. Can you help to get us out of it?"? Surely that is the way in which foreign policy should be conducted. If we had done that, would we now be having our current difficulties with the other countries in the EU, even though the Commission is on our side and has said that there should be a change in that policy? We do not have the friends. Although I do not like the phrase "cultivating friends" because it sounds as though one does it for what one can get out of them, the fact remains that we have not cultivated any friends. It is useful to have friends, to be able to use them informally and to be ready to be used informally by them.
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We have not done that and we are paying the price. That is just one example of the extreme folly of failing not only to develop, but to hold on to, our friendships. I say "hold on" because we had those friendships once. Those friendships are valuable and if we do not grasp them now, we may not be able to do so in the future.
3.45 p.m.
Lord Beloff: My Lords, the noble Lord, Lord Jenkins of Hillhead, to whom we owe this afternoon's debate, is well aware that I am a greater admirer of his literary talents than of his political judgment. The noble Lord's literary talents were most recently exemplified in his magnificent life of Gladstone. In the course of that biography, the noble Lord tells us of the events which led to Gladstone being called, "an old man in a hurry". Chancellor Kohl at the moment is a little younger than Gladstone was at the time of the Home Rule crisis, but the description might equally be applied to him. He is after all trying, as the noble Lord, Lord Marsh, pointed out, to create in Europe, including this country, a single European state—whether it be called "federal" or a "united states of Europe" is beside the point.
The interesting thing is not that Chancellor Kohl should be trying to do that—it is perfectly legitimate for the head of a great nation to have a foreign policy—but that he himself says—the noble Lord, Lord Jenkins, echoed this—that he is doing it not because he wants to dominate Europe but because he believes that the Germans themselves need to be contained in some way in a larger Europe.
The problem that worries me is why Chancellor Kohl should be so suspicious of his own countrymen. A few years ago when, as has just been pointed out, relations between this country and Germany were very good—I remember the early Königswinter Conferences—we would not have thought of questioning the new Germany's commitment to peace and democracy and to repairing some of the damage that it had done during those terrible years. On visiting Bonn a couple of times not all that long ago to represent the Anglo-Jewish community in a meeting between German Ministers, including the President, and representatives of the Jewish communities in Europe, I was impressed and moved by the steps that the German Government were taking to ensure that such events were never repeated on their soil.
So, one begins to wonder what has suddenly triggered that suspicion of the Germans by their own leadership and how seriously we should take it as an argument for creating a European superstate. Is it really necessary that that should come about in such a way? I can think of one reason—although it might not be the reason that would commend itself to Chancellor Kohl. We are told that one of the objectives of creating such a European state or federation is that it should have a common foreign policy, yet looking at recent events one country which has clearly stood out against the common foreign policies of the western countries in at least two instances is Germany. The problems which it has caused by its independent action in relation to the former Yugoslavia have often been discussed in this House.

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I should like to draw noble Lords' attention to another area—relations with Iran. Iran is probably the most dangerous country in the world at the moment. If it acquires nuclear weapons, that will be without question the case. The United States and Britain—our relations with the USA are much closer than the noble Baroness, Lady Seear, endeavoured to imply—and many other countries have done their best through economic pressure to try to bring an end to that appalling and aggressive regime.
Germany has stood out against that. It has preferred to keep its valuable commercial links, and it has gone even beyond that in, as now has become public, relations with the Iranian security services which pass beyond the bounds of decency and which of course have been a major obstacle to clearing up the appalling affair of Lockerbie.
It may be that Chancellor Kohl does not think that Germany, left on its own, is likely to pursue the foreign policies which would commend themselves to a Europe of nation states. But since he was in power, at least on the surface, during that period and presumably knew what his foreign ministry and intelligence agents were doing, it is hard to take that seriously. Is it that he sees some defect in the German national character? Does he believe that Germans are likely to run to extremes whenever some issue touches them deeply?
That is my impression of the beef crisis, to which inevitably we have been asked to turn our attention today. It is clear from what one reads of the Germans' reaction to this minimal danger to their health from healthy foods, including that produced in their own country, that if one touches some kind of a nerve in the German people, particularly if, after all, the Government are the Government who have persuaded them of those dangers, suddenly the Germans go off the deep end. That may be another reason for Chancellor Kohl's haste. It is a reason—in addition to those advanced by the noble Lord, Lord Marsh, with which I find myself in agreement—for saying that Chancellor Kohl is wrong; that it is possible to have friendship between Britain and France, France and Germany, Germany and Britain; that a Europe of co-operating nation states is still a possible goal and that Britain is right to insist upon it.
3.53 p.m.
The Earl of Longford: My Lords, the noble Lord, Lord Beloff, said that he admired enormously the literary gifts of the noble Lord, Lord Jenkins, but did not have the same high view of his political judgment. The noble Lord will of course forgive me for returning a similar compliment. I have undiluted admiration for him as an orator. He is a tub thumper, but the best sort of tub thumper. I wish we had more of them here, because it would liven things up. However, when it comes to political judgment, I should have thought that he would have to defer to the noble Lord, Lord Jenkins, who, after all, has held high positions. The noble Lord, Lord Beloff, has operated in the academic sphere.
When I listened to the noble Lord I remembered when I was Minister for Germany 100 years ago, or whenever it was. An eminent man whom I admired enormously
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said to me, "You know, my wife and I never liked the Germans. We once had a maid we were very fond of, but she was an exception". So I hope that the noble Lord, Lord Beloff, will make an exception on behalf of that German maid, or at least one other German person.
I shall return to the subject of the debate. I wish that the noble Lord, Lord Jenkins, had been Foreign Secretary in 1950, a time referred to, incidentally, by the noble Lord, Lord Campbell of Croy. At that time I was visiting Dr. Adenauer. I had the name of Minister for Germany, but I was visiting him as Minister of Civil Aviation. He overrated my importance, which was in fact small. It was at the time when he was forming the coal and steel pact with Mr. Schuman. He said to me, "Do go back to Mr. Bevin and plead with him to join". He did not realise that I cut no ice in that quarter. But that is what Dr. Adenauer was pleading for in 1950.
In fact at that time the official line taken by the Treasury in a famous memorandum was that to join Europe at that point would be to tie ourselves to a corpse. That takes us back some time. The House will forgive me if I use these few moments to reminisce because I was Minister for Germany. Looking around the Chamber I cannot see anyone else who held that position. I was not all that important. I was responsible nominally for 26,000 members of the Control Commission. I was Minister for Germany in 1947 and 1948. It was a traumatic period.
The crucial event in 1947 did not occur in my sphere, but at the Council of Foreign Ministers when the world broke into two halves. That was in December 1947. I was sitting there as an acolyte slightly behind Mr. Bevin's chair. I acted for him once when he was unwell. The atmosphere in 1947 might be best understood if I retail an anecdote. In December 1947 he took me to a dinner at the Russian Embassy being given for Mr. Molotov, the Russian Foreign Secretary. Mr. Molotov, Mr. Bevin and I were sitting there. Mr. Molotov, through an interpreter of course, courteously asked me, "Have you studied Karl Marx, Lord Pakenham", as I called myself at that time. Through the interpreter I said, "I am afraid that I have studied Karl Marx. I have lectured on him as a university teacher, but I am afraid I am not a Marxist".
Still courteously, Mr. Molotov said that it could hardly be expected that a good Marxist would be found in the House of Lords. Mr. Bevin knew the answer to that one. He answered back and said—I shall not try to copy his accent or form of speech—"The Members of the House of Lords are the only people in England who have the time to read Karl Marx". One might have thought that that would have settled Molotov. However, he was indomitable. He came back through the interpreter and said, "Mr. Bevin ought to study the works of Marx in the commentary of Hilferding". Again, Mr. Bevin, who I am sure had never heard of Hilferding, was undefeated. He said, "I have read Hilferding and I found him tedious". So that disposed of Mr. Molotov.
Noble Lords will not be surprised to hear that the conference broke up soon afterwards. It was not on a British initiative, but an American initiative. Mr. Bevin

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was rather reluctant. Once the conference had broken up he was active in promoting the Atlantic alliance. All that happened during my year. The policy was changing the whole time almost without my being able to know about it. The change was going on.
I was sent out to operate the Potsdam policy which treated Germany as a criminal country, but beneficent influences were at work. As time went on they gained a foothold. The noble Lord, Lord Jenkins, paid a tribute to the work of the education department. There were the Churches and also those who helped to organise the new German trade unions. In the end a great work was performed.
One does not know what would have happened had Russia not proved herself to be the enemy of the West. I said to one high Foreign Office official on one occasion, "You seem to be making plans for a pension scheme for the Control Commission for the next 25 years". He said, "I should be very sorry if I did not think we were going to be there that long". That was the atmosphere at the beginning: keep down the Germans for 25 years. However, as time went on all that disappeared.
I went out to Germany influenced by great men like the Bishop of Chichester, the late Victor Gollancz, and Dick Stokes, preaching a message of forgiveness. I told the near-starving children of Düsseldorf that they were right to be proud of being German. When I returned to the Foreign Office some high person said he hoped I would not mind if next time a public relations officer and also a new interpreter were attached to me. My message was to be redefined the next time I went to Germany. After I ceased to be Minister for Germany and became Minister of Civil Aviation a high Foreign Office official showed me a memorandum which began by saying that we could not hold back the Russians with one hand and hold down the Germans with the other.
I come to what I believe to be the right approach to Germany. I quote the last words that Dr. Adenauer said to me in 1948. I was accorded permission to go out to Germany to attend a conference on Europe at The Hague. The leader of the conference was Winston Churchill. Afterwards, I asked Dr. Adenauer whether he had spoken to Mr. Churchill. He said that he had not and that he had been told that Churchill had said that Germans were either at one's throat or one's feet and at the hour of his country's humiliation he would not impose himself upon him. Churchill went up to him and shook him by the hand and Adenauer never forgot it. Irrespective of party—whether it be Dick Stokes or now, the noble Lord, Lord Jenkins, or Winston Churchill—there is only one approach to the Germans: one should hold out the hand of friendship.
4.1 p.m.
Lord Harding of Petherton: My Lords, I am grateful to the noble Lord, Lord Jenkins of Hillhead, for initiating this debate. I apologise in advance to your Lordships for not speaking on such a high note as previous speakers. I agree entirely with my noble friend Lord Beloff, who made a brilliant analysis of the situation. I also agree with the noble Lord, Lord Marsh.
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I should like to speak about Anglo-German relations on the grounds of having served with the Army in Germany on three different occasions, albeit 28 years ago. However, I believe that the same situation exists now, although there are not quite as many British troops in Germany today. I first went to Germany in 1947. I and another newly-commissioned officer travelled by train from the Hook of Holland to Delmenhorst near Bremen to join my regiment, the 11th Hussars. I had never seen such devastation as I saw in every town and city through which I passed as a result of Allied bombing throughout the war. That has a significant bearing on the way in which the Germans look at war and conflict. Berlin, Hamburg, Cologne—all the cities—were virtually destroyed and flattened. No building was upright. Unless one saw it one would not believe it. That is why I believe the Germans are anxious to avoid any kind of war and Chancellor Kohl wants to anchor Germany to the rest of Europe in a very close federal state, or whatever it may be called. The German people are frightened of their past and frightened that some among them may behave in the same militaristic, xenophobic and nationalist way. We must try to convince them that they should not lose confidence. Germany is a nation state like any other in Europe and they should have more confidence in themselves.
Most of my National Service with the regiment was spent in Berlin, to which my squadron was sent soon after I arrived. The officers' mess was in an ordinary house in a street near the ex-German police barracks where the squadron was billeted. When I left to go to Oxford just before the airlift I well remember one of my German neighbours rushing into the street while we were loading up the jeeps to implore us not to go. She believed that the Allies were abandoning her and all Berliners to the Russians.
After Oxford, I became a management trainee with Imperial Tobacco. Nine months later the company and I discovered that I was not suited to that career. I was lucky enough to obtain a regular commission in the same regiment. I served in Germany for three periods, two with my own regiment and the third as a staff officer at divisional headquarters. On both occasions the regiment was stationed at Hohne. It was a big army camp three miles from the town of Bergen-Belsen. The site of the concentration camp was in woods about two or three miles away in the opposite direction. I went there once but did not take my wife. It was a horrible place. It is said that no birds sing there.
As armies in foreign countries do, we lived our own lives and were mostly divorced from the local population. That still happens in Germany. However, I met Germans in many walks of life. I had learnt German at school and could carry on some kind of conversation. I got to like many of them and admired their well-known qualities of order and discipline. I do not have those qualities to any degree and I admire those who possess them. I saw and talked to more Germans than many soldiers, as I was secretary of the regimental draghounds for two years. I had to spend many hours of my spare time seeing German farmers in the Alter valley, which has countryside like ours with fields of grass and hedges, and persuading them to allow us to

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ride with our hounds over their land. German land tenure at that time (and perhaps now) was very fragmented. Each farmer owned a field here and there, which meant that I had to see as many as a dozen farmers for one day's draghunting. Most of them were splendid, hardworking people, invariably friendly and cheerful. I do not remember receiving a single refusal once they realised what was being asked of them. It was obvious that they thought the English were mad but were too polite to say so. Their own draghunting took place in the forests over very small made-up jumps going in single file by seniority.
On one occasion another cavalry regiment had taken over the draghounds from us. The village concerned was Ahlden where King George I incarcerated his first wife, Sophia Dorothea in the local castle. Later he divorced her and married his second wife. The new secretary had not done his homework. When we arrived with our horses and hounds we were confronted by complete opposition. It appeared that the jägdmeister—the local man who oversaw the shooting, with whom I had dealt—had died. The new one, who was the landlord of the pub, was totally opposed to any draghunting. The noble Duke, the Duke of Norfolk—I have not seen him in his place today—was then Major-General Miles Fitzalan-Howard, our divisional commander—and a very good one. We wheeled him forward to negotiate. He managed to persuade the Germans to allow us to ride round the course without the hounds. The locals objected to the hounds because they believed that they would disturb the game. They did not object to the horses.
My noble friend Lord Beloff put it far better than I am able to. The problem is that Germans do not have confidence in themselves as a nation. They fear their own past and that the worst features of it will return. I firmly believe that they have nothing to fear at all. Their future and that of the rest of Europe would be far more secure if they looked upon themselves as a nation the same as any other European nation. The European Union would have a far better base and a far better future if they did so. Trying to develop a federal state of Europe—or whatever you call it—is a terrible mistake. Not only would that be a terrible mistake—as I think the noble Lord, Lord Marsh, implied, as did the noble Lord, Lord Beloff—but it would undoubtedly cause more friction and, in my opinion, would lead to political and economic disaster.
4.10 p.m.
Lord Annan: My Lords, many people have said today that our relations with Germany are excellent. But nothing in my view impedes good Anglo-German relations more than the British press. I do not speak simply of the tabloids; the quality press in this country has declined enormously. That press consists largely of the opinions of columnists. The news is slanted to deliver personal jibes rather than information. Indeed, the only newspapers in English here which I think are worthy of the name of serious newspapers seem to me to be the Financial Times and the New York Herald Tribune.
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What is alarming is the pervading anti-German tone of the press, whether it is the Daily Telegraph, which uses Euro-scepticism as a bludgeon against the Germans, or the Daily Express seeking to increase its circulation and thinking that the best way of doing this is by bashing Germany. Let us consider the Independent, which gives space to articles by Conor Cruise O'Brien. When the Wall came down, O'Brien suggested that it was only a question of a few years before a bust of Hitler would be seen in every German window. More recently he suggested that as Germany, like all European countries, was faced with an immense growth in the numbers of old-age pensioners, Germany would probably treat those old-age pensioners as it had treated the Jews and institute mass euthanasia. No one thought it odd that this self-righteous newspaper gave space to such nauseating rubbish.
The treatment of Chancellor Kohl and of his speech at Louvain is characteristic. Let me say at once that it was a clumsy speech. The Chancellor is not a man of exquisite finesse. But when he said that unless Europe united we might face another world war, the press deliberately misrepresented him and interpreted that as a threat, as if he were saying, "Unless you do as Germany orders, you will be attacked". No one who has followed German foreign policy since the days of Adenauer can possibly believe that that is what he meant. Indeed, even the writers of thrillers, bereft of Smersh and the KGB these days, have reverted to the days of that great classic, The Thirty-Nine Steps. Frederick Forsyth in his recent thriller suggests that we are perfectly right to fear a Fourth Reich.
Our commentators rarely ask what problems Germany faces; and they are of course immense problems. German policy has been governed from 1945 by remorse for the bestialities of Hitler's regime. That is why no country can compare with Germany's record of giving asylum to the dispossessed, even though this policy leads to the occasional skinhead attacks on foreign workers and may indeed be in part responsible for the policy—which, like the noble Lord, Lord Beloff, I deplore—towards Iran. The number of old-age pensioners is of course augmented by the increase in foreign workers. The problem that Germany faces is of course a grave one which we all face. Some 42 per cent. of the population of Germany will shortly be pensioners. In Ireland the figure is 27 per cent. The noble Earl, Lord Longford, will take comfort from the fact that the Pope's prohibition on birth control at any rate brings one blessing, and that is a balanced population in which there are enough young people to support—at any rate in theory—the old-age pensioners.
This long-term problem and the short-term problem of rebuilding what used to be the East German Republic—not to speak of recreating Berlin as the capital city of a unified Germany—are going to keep Germany preoccupied for years to come. But we in Britain still continue to ask: has Germany changed its nature and are the Germans a different people or will we once again be faced with a bullying authoritarian Germany determined to seize the hegemony of Europe?

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The state created by Bismarck died in 1945. In a sense the Weimar Republic was an extension of that state in which the Kaiser and the Chancellor ruled through a narrow-minded but highly efficient civil service, with little parliamentary input. Whatever else the Nazis did, they destroyed the old elites in Germany. The aristocratic general staff of the army and the old style conservative bureaucracy perished. The Germans call 1945 zero hour, meaning the end of an era—a black hole into which the past just disappeared. Historians here will agree that that never happens in history. However, the machinery of state changed in Germany, and in particular the decentralisation of powers to the Land governments bears little relationship to the Wilhelmine State.
The elites have also changed. There were always stories of Nazi party members still in positions of power, but de-Nazification was not cosmetic. In the British zone alone 350,000 Germans were excluded from office. Moreover, the discontents that engendered Nazism have passed and the vision of the world, the Weltanschauung, of Germany today has utterly changed. The Germans remember what Nazism was like and the hatred of Germany felt by the countries they occupied or fought in World War II. They know that that hatred has not totally subsided and is still latent. That is why they behave as they do towards other countries. They behave often with great tact, particularly towards the State of Israel. They also know—certainly in East Germany—what communism is like. The Stasi in East Germany was just as efficient as the Gestapo. It is little else but an insult for our journalists to suggest that German culture, and indeed human nature, have not changed.
There is one final point that I wish to make. Germany, like ourselves, is cutting public expenditure. Among the victims are exchange schemes for the young and foreign language courses. The Goethe Institute has been particularly badly hit and in our schools once again there is a downswing in the numbers learning German. One of the triumphs of the British Control Commission in Germany after the war was Robert Birley's determination to build—as he put it—bridges between the two countries through exchange visits, of which Wilton Park was the best known institution and Kõnigswinter was the successor. Let us not allow these initiatives to perish, for it was those initiatives of building bridges with Germany that have made our relations with that country (even now, with the beef crisis) and the feelings ordinary people have towards it more enlightened. It is that initiative of building bridges which makes our understanding of Germany and our feelings towards it more enlightened. We are better informed about that country than we are about any other country in Europe.
4.20 p.m.
Lord Lyell: My Lords, first, I thank the noble Lord, Lord Jenkins, for giving us this opportunity to discuss what I believe is a particularly important subject. Secondly, I want to declare an interest. I look across the Chamber and see the beaming face of the noble Lord, Lord Taylor of Gryfe. Alas, the noble Baroness,
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Lady Serota, is not in her place. From the all-party notices which appear, it can be seen that there is a free German class for Members of your Lordships' House. The noble Lord, Lord Taylor of Gryfe, and myself, being Scots and accountants, believe that that is far too good an opportunity to miss.
It is interesting that 42 years ago, at the college led so superbly by the headmaster, Robert Birley, who was mentioned by the noble Lord, Lord Annan, my noble friend Lord Forteviot and myself made our first faltering efforts to learn the German language. That has not necessarily led to my speaking in today's debate. I am still stumbling along trying to make some progress.
The noble Lord, Lord Taylor of Gryfe, and myself, being, as I said, Scots and accountants, have three watch words: to look, to learn and to listen. I looked at aspects of trade with Germany for the last year for which records are available. It is interesting that we had exports of £15 billion and imports of £18 billion. Therefore, the Germans are our second most important customer in that regard. Of course, the surplus is in Germany's favour, but there are many reasons for that.
The noble Lord, Lord Marsh, referred to aspects of trade. They are a key element of this debate. There are many other fascinating cultural, literary, scientific and sporting links with Germany into which I do not have time to delve. I see the noble Lord, Lord Taylor, gloating about what may happen in June but he can develop that matter when he speaks. I am sure that many noble Lords with experience of visible and invisible trade will be speaking in the next debate. However, a number of experts will also be speaking in this debate.
In relation to both visible and invisible trade with Germany, I wonder why the City of London is filling up with enormous German financial institutions. The Financial Times at least once a week contains massive advertisements in German for jobs with the Deutsche Bank, the Dresdner Bank and Landesbank. That very powerful and competent nation appears to believe that a great deal of talent exists here in London. It knows of our great tradition of "We can—and now".
As regards visible trade, I wonder why BASF, one of the major German chemical companies, and Bayer have very large production facilities here in this country. As the noble Lord, Lord Butterfield, will know, the pharmaceutical industry believes in very strong trade links between ourselves and Germany.
As an accountant I look at the enormous engineering, scientific and technological skills we have in this country. In Germany I compare Baden-Würtemberg and Swabia with Bavaria or Munich and Stuttgart. Seven or eight years ago I paid my first visit to the city of Stuttgart. It has great engineering traditions; for example, Bosch, Daimler Benz and Porsche. However, the entire city was very green. I am sure that the noble Lord, Lord Jenkins, will know that the other magnificent product of Stuttgart is its most delicious wine. It will take on anything that can be found in France. I know. I have sampled it; I am a great fan of it.
Munich has Messerschmitt Bõlkow Blohm, the large aerospace company, and BMW. That particular company has very close links with the British motor

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industry. Why is it that Professor Pischetsrieder, who runs BMW, has established such close links with Rover? Is it because he is an Anglophile, which he certainly is, or is it that he believes that it will be a very fruitful working relationship with the Rover and Land Rover groups? First, the Rover group has extremely good products and a good brand. Secondly, there are very good production facilities here. Thirdly, there is the question of costs. The noble Lord, Lord Marsh, referred to that matter. Fourthly, it is an excellent example of successful international co-operation between two nations. That is not just taken for granted. I ask your Lordships to consider what happened with the massive integrated get-together between Renault and Volvo—France and Sweden. That did not last long and was not successful. But the Rover and BMW project is successful and will go from strength to strength. Indeed, that is the thought of Professor Pischetsrieder.
Several speakers have referred to what the Germans call Rinderwahnsinn—BSE. I thought that it might be a major element in our exports of about £16 billion to Germany. But surprise, surprise! I discovered from the Ministry of Agriculture that in nine months of last year this country exported 776 tonnes of beef which is roughly 1,000 tonnes of beef per year. We exported something in the region of 60,000 tonnes to France. Therefore, is this massive war of words between representatives of this country and Germany in relation to beef anything more than a storm in a soup cup?
I promised the noble Lord, Lord Taylor, that I would obtain some literature, not the type referred to by the noble Lord, Lord Annan, although he mentioned also the Financial Times. However, the literature I have obtained is certainly at the same level and perhaps lower than the tabloids to which he referred. Those tabloids have been running a campaign against beef. They have been saying that BSE will cause all sorts of harm. But that has damaged deeply the German beef industry. Therefore, they cannot blame all their problems on us.
I enjoyed listening to the powerful speech of the noble Lord, Lord Jenkins. However, I wonder whether he is seeing ghosts where none exists. I believe that in five, six, or 10 years' time, BSE will turn out to be no more than a ripple in Anglo-German relations. But those five, six, or 10 years will leave a mark—and I mean no pun—on the beef industry in my own county of Angus, which is so well known to the noble Lord, Lord Mackie, as well as in Germany. However, on the basis of trade and all our other links, I believe that Anglo-German relations are strong and that they will become much stronger over the next 10, 20 or 30 years.
4.28 p.m.
Lord Mayhew: My Lords, I put my name down to speak in this debate with a single aim in view; namely, to try to persuade the noble Baroness, when she comes to reply, to explain the Statement made by the Prime Minister in the Commons yesterday. There has been very little talk of that; yet it has great relevance to the subject we are discussing.
I agree very much with the positive statements about Anglo-German relations that have been made. I have a long and quite intimate experience of Germany and the
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German people. But I have always felt—and I thought it was the Government's policy too—that unity in Europe must be built organically from the bottom up out of popular demand and out of experience of joint action on problems which must be solved jointly. That is what I thought. It can never be built from the top down, and I am profoundly suspicious of ideology and dogma in that matter. Indeed, bearing in mind the tides of European opinion today, the European Union might be wise to be content with, as I believe M. Santer said about the Commission, doing less and doing it better. That is my view.
If so, the action announced yesterday by the Prime Minister, if that is also the view of the Government, is a very strange way in which to proceed. We cannot tell exactly what the threats are and we cannot tell how they will work, if at all. We know that the Government do not propose to withhold their contributions to the budget and we know that they are not proposing to absent themselves from meetings. Where decisions are not taken by majority vote, our voting may be eccentric but it will not be significant. Presumably the one immediate threat is that the Government may veto decisions on which unanimity is required. Can the noble Baroness say whether that is in fact the position?
The implications of the situation are remarkable. Does it mean vetoing resolutions irrespective of the merits of the issue? Does it mean vetoing resolutions which might benefit Britain or which might benefit friends of Britain upon whom we shall rely to help us over the beef issue or to support our long-term objectives in Europe? It seems inconceivable that that could be the Government's intention. Otherwise, I suppose that the further threat is of sabotaging the September talks. Is that the Government's intention? I believe that we should know. It makes no sense to me at all and seems extremely foolish.
Unless the Minister can explain a little more the pros and cons of what the Prime Minister proposes, we are bound to wonder whether it is part of his European policy or whether it is designed to gain some degree of unity in the discredited party which he leads. I must say that that seems to me the most likely explanation. The polls suggest that electors believe that this is the worst government we have had since polls began. The electors would be right. The Prime Minister knows that he must do something and do it quickly. It seems that he has fallen back on the disreputable resource familiar to political leaders over and over again in history—namely, the resource of xenophobia. That enables him immediately and successfully to rally behind him all the xenophobic Members of Parliament and, no doubt, some of the xenophobic vote.
With the election coming, the Prime Minister might be said to be following the old Millwall football tactic: when losing at home, call down the hooligans from the terraces. Alternatively, as expressed in a more dignified manner by The Times today:
"By choosing confrontation, the Prime Minister has for the moment united the vast majority of his party".
Yes, he has indeed done so. But what a way to do it—to choose confrontation with our European neighbours. Unless the Minister can reassure us to the contrary, it

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seems to me an historic example of a political leader putting the unity of his party before the interests of a nation.
4.33 p.m.
The Earl of Onslow: My Lords, I am a Euro-fanatic. I love Europe, I love its civilisation and I read much of its history. However, I see the present method by which it runs our affairs as a complete disaster: a ridiculously protectionist agricultural system which pays rich men to do nothing; the subsidy of poisonous tobacco to third-world countries; a fisheries policy designed to destroy the fish stocks in the North Sea; combined with a desire to overregulate everything that can be overregulated from the size of buses to what kind of oak trees we can plant. These alone show that the present arrangements are a disaster and that they must be reformed, in the old liberal sense, root and branch. When my father died in 1971, the first practical thing that I did when I came to your Lordships' House was to vote enthusiastically for the accession treaty. I regret to say that I could now no longer do so.
For most of modern history—and by "modern history" I mean since the Reformation—Anglo-German relations have been excellent. We have only to think of Prince Eugene, Frederick the Great, Marshal Blucher, the Hanoverian dynasty and the Saxe-Coburgs. As the noble Lord, Lord Jenkins of Hillhead, will know, Gladstone showed great sympathy to Prussia when the Duc de Gramont, with whimsical irresponsibility, encouraged by an hysterical French public and a bossy empress, declared war upon her in 1870.
Bismarck and Disraeli's statesmanship and co-operation saved European peace at the Congress of Berlin. On the other hand, France, from Richelieu's cynical bribing of Gustavus Adolphus to break Wallenstein's siege of Stralsund to Blücher's exhaustion of his entire French vocabulary on meeting Wellington at La Belle Alliance with the immortal words "Quelle affaire", which is all that he could say at the end of the battle, has invaded Germany 30 times in 200 years. Not surprisingly, that produced a Germany which was, by the end of the 19th century, insensitive and vulgar.
After the defeat of that strutting and aggressive vulgarity in 1918—we must remember that, at that time, the world as it had been known for a thousand years from the Rhine to Vladivostok had collapsed into chaos and disorder—something happened in Germany: she constitutionally elected by proportional representation with 43 per cent. of the vote a vegetarian who banned foxhunting. No, I am not talking about a liberal democratic county councillor; I am talking about one of the two most evil men that the world has ever seen. I do not have to exaggerate, nor is it possible, his wickedness nor to outline the wickednesses to which he led Germany. But it is also impossible to exaggerate the superb behaviour of Germany since the war. She has set a shining example of contrition and retribution and has demonstrated the great Lutheran benefits of hard work
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and good behaviour. She has justly been completely forgiven but, as my noble friend Lord Beloff said, I do not think that she believes it herself.
France, with a certain "Richelieuian" cynicism, thinks that, with a superior French intellect and a German angst, she herself can govern Europe. Chancellor Kohl, I regret to say, seems to encourage that attitude. That is not the way forward. It would be much better to look at the concept of the Council of Europe as practised by those great Foreign Secretaries, Castlereagh, Metternich and Talleyrand. That concept demonstrated how governments of different political complexions could work for the general peace and progress of Europe: a Europe with which we could trade, with which we could be friends, to which we could travel and, above all, in which we would not boss each other about.
So my plea to Germany is this. Forget your guilt as others have forgotten theirs. Remember with pride your contributions to painting, industry, architecture, chemistry and philosophy, let alone music and the Reformation. Even remember the great von Moltke is reputed only to have smiled twice: first when he was told that his mother-in-law was dead; and, secondly, when he was told that Metz was impregnable. Incidentally, he also translated The History of the Decline and Fall of the Roman Empire by Edward Gibbon into German.
The attitude that Germany is adopting at present causes Euro-stress. We should encourage her to adopt the attitudes that I propose because, then, Euro-stress will be less. Unless we have less Euro-stress, the whole arrangement will collapse into recrimination. Europe has forgotten war: it is not going to happen. Louvois will never again sack the Palatinate; Murat's reserve cavalry will never again pursue the beaten Prussians across the Landgraffenburg; von Bredow will never again lead another death ride of Mars la Tours, nor von Kluck turn before Paris; nor will Sepp Dietrich lead a dying lunge of exhausted Panzers through the Ardennes. Europe and Germany must realise that we have all grown out of the habit of war. Then and only then will we truly be at ease with ourselves and be able to get on with a true, genuine and useful co-operation of European states.
4.40 p.m.
Lord Taylor of Gryfe: My Lords, first, I must declare an interest. I receive a monthly cheque from the Deutsche Bank as my pension. However, my association with Germany is much lengthier. I went to Germany originally as a youngster and joined the Young Socialists (Sozialistische Arbeiter Jugend) in the last days of the Weimar Republic. Despite our propaganda and our marching up and down, we failed to prevent the ultimate tragedy of Nazis coming to power.
I returned to Germany during the Nazi period to organise the illegal escape of some leading Socialists who at that time had to be escorted over the border; and I returned once more to Germany at the end of the war as an official of the United Nations relief organisation, UNRRA, in the rebuilding and reconstruction of the defeated Germany.

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We had learned a great deal from the experience of the previous post-war period. We had squeezed the Germans by the Versailles Treaty and that, coupled with the Depression of the 1930s, meant that Germany suffered seriously and Nazism was the consequence. In the post-war period of 1945, we had the benefit of the Marshall Plan, but we had also recognised that in order to defeat the new tyranny of communism from Russia we had to help rebuild a democratic Germany.
In the period from 1945, Germany has had a remarkable recovery. It is not only an economic recovery. Germany has established its credentials as a good European partner and as a generous contributor to the international community. The absorption of the DDR five years ago was a remarkable achievement and a remarkably stabilising influence on the structure of Europe.
Germany inherited a broken-down economy. The wage rates in the DDR were 35 per cent. of those in West Germany; they are now 74 per cent. of the rates. Pensions were 40 per cent. of the rate in West Germany; they are now 70 per cent. That is a remarkable economic transformation and a vast contribution to stability in Europe.
From Yugoslavia alone the Germans have taken in over 400,000 refugees. In this House we have been much concerned with debating immigration and refugees. The contribution of the Germans by absorbing refugees is quite remarkable. I am sure that when the noble Baroness replies to the debate she will acknowledge the contribution that Germany has made in overseas aid. Something like 361 billion deutschmarks have been contributed by the Germans to overseas aid.
In contributing to the revival of the economies of Eastern Europe, each individual German, man, woman and child, has contributed 360 deutschmarks for reconstruction in Eastern Europe. The equivalent figure for the United States is 36 deutschmarks. That represents 1 billion deutschmarks and is 45 billion more than the remainder of the Western European countries. That indicates that Germany is not a great monster thirsting for power but a prosperous economy contributing to the overall stability of Europe; and for that we are indebted.
Reference has been made to the acknowledgement of guilt in connection with the treatment of the Jewish community during the time of Hitler. The Germans passed a law which provided that they would meet the claims of Jews who had been persecuted during the time of Hitler. Under this legislation 4.4 million claims were submitted, and 99.9 per cent. of the claims of the Jewish people have now been met. When one considers that those claims are being met by a generation which does not remember the persecution of the Jews, it indicates that Germany has acknowledged at least some of the debt of those awful years.
In the debate inevitably we have talked about Europe. There is a danger, in particular as a result of the beef crisis, that there will be an anti-European campaign as part of the election. Some Members of Parliament will certainly use that xenophobia to create a false patriotism in order to save their seat. However, we in this country
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seem to imagine that we are the only people who treasure our traditions: that we are the only people who cherish our culture. Other countries are just as proud of their institutions and cultures; and they are able to co-operate together in a European community.
Someone wrote in the Economist this week that,
"in a global economy of independent elements individual voices have to sing in harmony if they are to command an audience".
I believe that it is our duty to sing in harmony with Europe. Those who do not accept the implications of Internet, international communications and the need for greater communities should walk into Whitehall and listen to the young people with backpacks speaking German, French and various European languages. They are Europeans. Many of us still think of Europe as being "out there". But we are part of Europe. We must accept and rejoice that we are part of Europe.
4.48 p.m.
The Earl of Clanwilliam: My Lords, we must all be grateful to the noble Lord, Lord Jenkins, for introducing the debate, in particular with his knowledge of the problem. I was struck by his reference to the allied military government in the post-war years. It is perhaps ironic that it was the allied military government who established the Länder which are the basis of Federal Germany today.
Noble Lords on all sides of the Chamber have touched on the history of our association with Germany since the war. However, I believe that we are discussing the future. Our future association with Germany is inextricably linked with European monetary union—the only issue which drives Germany and this country apart.
Historically, Germany has been perceived in an historic role of expansionism, hidden perhaps in the clothes of protection from its own follies. Expansionism is not unique, but it may be somewhat out of fashion. Was it Bismarck who said that it did not matter who ruled France, a monarch or a president, so long as Germany controlled the economy? Is that not still the ambition today?
We are in close association with Germany. We have close ties with it commercially, in trade and with our Armed Forces. Our sailors work and train together. We heard from the First Sea Lord, Admiral Sir John Slater, at a meeting the other day that there is friendly rivalry tinged, I believe, with the memories of previous naval occasions. We have problems with the Euro fighter all because of the Germans' inability to share the costs. As President Chirac kindly and generously acknowledged, our military, naval and air forces are probably the most effective units in Europe. I believe it is the judgment of our military leaders that the Atlantic alliance is of paramount importance, while the rest of us in the United Kingdom certainly do not want an inward-looking Europe.
European monetary union reflects the urge to establish monetary control, regardless of the achievement of political cohesion. Indeed, the plan is to establish political cohesion, force majeure, by enforcing some federal system. The noble Lord, Lord Marsh, described it. But if we are to go down the road of the

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Länder, we will have to divide ourselves into Wessex, Mercia and Anglia and go back to the old days. That is not on, so we cannot have that form of federalism.
Relations are governed by perceptions. While the noble Lord, Lord Annan, excused Chancellor Kohl for his remarks about war, nevertheless it is offensive in both uses of the word and seems to evidence a sense of paranoia about Germany and its own ambitions.
Indeed, one has to ask: if there is to be a war, who will start it? Such talk does not contribute to sensible debate or to confidence in Germany's good faith. It is propounded that political union will follow monetary union as night follows day. That is not so and we have heard from my noble friends Lord Beloff and Lord Dacre how such a policy has been doomed to failure time and time again in Europe.
Our relations with Germany would be remarkably improved if the Germans could understand such reservations as are held sincerely by ourselves, not only by many, if not a majority, in this country but also in many other countries throughout Europe. For such a policy to mature, there must be an overwhelming desire on the part of voters for a change. The polls show that that is not so. A majority of one is not enough. As we know, a majority of one can allow an elected parliament to survive to the next election, and, as we shall shortly show, through one parliament to the next.
But EMU, on the other hand, is immutable and can only result in coercion of fiscal policies and social unrest. It is something that the Germans do not seem to accept. They appear to ignore it while they press on with their old concept of a Europe dominated by a monetary system. It is perhaps too late for them to turn back voluntarily. My fear is that this plan will be forced upon the peoples of Europe and that will be a greater danger to peace in terms of internal revolutions than we can at present imagine.
Our good will towards Germany is unlimited, but if the Germans persist, we can only watch from the sidelines in despair as they drive the juggernaut through. Far better that our reservations be considered and not ignored by them.
4.54 p.m.
The Earl of Sandwich: My Lords, I speak from a few personal experiences rather than from the breadth of expertise shown by other noble Lords. I can, however, declare a special interest. Today would have been my father's 90th birthday and I have therefore looked to him for guidance. He was a prominent anti-Market campaigner, but also very pro-German and one of the first ex-service MPs to visit Germany at the end of the war. He remained in contact with German parliamentarians and regularly attended Kõnigswinter. I was privileged to join him and Richard Crossman on a memorable East German visit in the bleak mid-1950s, becoming perhaps the first and last English boy to have received an ovation from the East German parliament, the Volkskammer. I inherited from both my parents a fondness for Germany and German music. I went on to
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study German at Eton and Cambridge and then worked for several months in a publishing house in Munich. I felt then and feel now a citizen of Europe.
One result of all this was that I reacted strongly against my father's anti-Market sympathies. But anti-Market is not anti-Europe. I always respected the distinction he made between nations and community, between Europe and its constituent parts. That, of course, is at the heart of today's debate. While there are doubtless a few extreme chauvinists left, even in this House, those who oppose the EU in principle are often nostalgically concerned to preserve a national identity which no longer exists, at least not in the form they remember or would like to perpetuate. For this reason it is sad to see in the BSE crisis a glimpse of the old nationalism we have left behind. I tend to agree with the noble Lord, Lord Mayhew, that this may even be detectable in the Prime Minister's Statement yesterday, though I believe that it belongs more to public relations than to his conviction.
We heard again this week that the Germans are concerned for their health. And so they should be; and so should we be. But there is no point in our moaning that the Germans are taking this crisis too seriously when we know that our own government scientists put out the health warning in the first place. Surely we must recognise that we need steadily to improve standards in the whole of Europe and not to complain, as I heard a Minister complain on Monday, that we had come to expect more solidarity from our European partners.
Germany, in fact, has come to represent high standards of excellence in many fields. So has this country, but many of us prefer to buy VWs and BMWs because of their reliability and track record or to pay a little more for the likes of Mosel or Gewürztraminer because of their high quality. The same is true of health and hygiene. Perhaps we will have to pay a little more for standards in this country. Of course, the Germans have their own problems, especially in the east, in reconciling standards. But we have to come to terms with the fact that some of our beaches and some of our methods of animal food processing may have fallen below reasonable standards. I have a personal problem with drinking water, where I think that the Commission may have pushed us too far. But that is the whole point of Europe. We have the advantage and opportunity of making comparisons among friends and allies. Of course, these are all sensitive matters, but we must beware of reacting too swiftly to informed criticism, which can easily be misread and can lead to prejudice.
I am one of those who feels that Germany deserves a little more respect and understanding than it currently receives from this country, especially since reunification. As the noble Lord, Lord Annan, said, some of the tabloid comments are little short of insulting, though I doubt that the Germans take them too seriously; and they should not. But I wonder whether the Minister has any suggestions for improving our educational knowledge of Germany, perhaps through the Foreign and Commonwealth Office or the British Council, in addition to the schemes and many cultural exchanges which exist. I regret that more of us are not speaking German, as the noble Lord, Lord Lyell, said,

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or visiting Germany's wonderful attractions compared with those of other countries. My theory is that we think that the Germans are too like us. When on holiday, we search for something more mysterious and different. Yet there is plenty of mystery and interest to be found over there. Like the term "British", which for some reason is not applied to this debate, "German" is a generic cover for a variety of different regional and minority cultures.
It is just because we have so much in common with Germany that we are able to work together so constructively in many fields. Many noble Lords have experience of industry, the Army and diplomacy. In my subject area of overseas aid there is a lot of collaboration going on between government and non-government agencies based in our two countries. Not long ago I wrote a report on church aid agencies in Germany and the UK for Christian Aid. There are hundreds of aid programmes throughout the world where ecumenical resources are now shared and many decisions are taken jointly. The central Asian region and Eastern Europe are areas where the German churches' experience is also proving invaluable.
I hope that the ODA will further develop its excellent relations with the BMZ, the German Development Ministry, which has in itself been a valuable example of co-ordinated European foreign policy. The gradual and controversial involvement of the German military in humanitarian assistance has been an important new element in European defence and aid co-operation. One plea I would make to the Minister is to study the ministry's attitude to non-governmental organisations more closely. Germany has been very generous with funds for organisations, both in volume and as a proportion of its gross national product.
The Government are quite reticent about relations with Germany. I am sure that in overseas aid and trade there has been something close to harmonisation, and it may be time for us to acknowledge that more publicly. Federalism in the sense in which Chancellor Kohl uses it, as the noble Lord, Lord Campbell, pointed out, is all about using the ingredients in the pudding, not about the pudding itself.
On that culinary note I will close with just one word from Bavaria which could by itself help to remove any current difficulties and prejudices, though I recognise that it may also be divisive. Its power, its Vorsprung, must never be underestimated, and I hope that even in their present plight our farmers and consumers will give it the place of honour it deserves. I commend it to the Prime Minister for lunch. It is, of course, die Weisswurst—the Bavarian white sausage.
5.2 p.m.
Lord Pearson of Rannoch: My Lords, inevitably much of our debate has covered our relationship with Europe, which Germany seems to want to be much the same thing as our relationship with Germany. There really is not much doubt about the sort of meaning that Herr Kohl and his party put upon the word "federal". In April 1992, for example, he said that the Maastricht Treaty had laid the foundation-stone to realise the dream of the founders of the European Communities, which
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was to create a United States of Europe. That is a dream which many of us believe he clearly holds today. It is that sort of federalism which is not what most of us in the United Kingdom want. We want a Europe of nation states, as other noble Lords have mentioned. But the drive to full European integration is now such that many of us seriously believe that we should be better off outside the European Union altogether.
Here we really must start to distinguish between the damage which we suffer from membership of the European Union and the benefit we derive from access to its single market. The noble Lord, Lord Marsh, mentioned the views of Mrs. Noriko Hama of Mitsubishi; I would mention similar views held by Mrs. Haruko Fukuda, the deputy chairman of Nikko Europe, who says that our inward investment comes to us because we speak English, we have attractive corporation tax, good labour relations, low inflation and—yes, my Lords—access to the single market.
So the question becomes: would we lose that access if we left the European Union but stayed in the European Economic Area, for example like Norway, which is booming, or were even to be out altogether like Switzerland, which now exports three-and-a-half times more per capita to the European Union than we do, even ignoring her banking side?
The next question becomes: would our European competitors really gang up on us if we left the Union but wanted to keep our access to the market upon which overseas investment into this country depends? I submit that they would not do so. They would be prevented from ganging up against us by the GATT, which we signed collectively as members of the European Union but also individually as sovereign states. And the foreign exchange markets would soon show them the error of their ways if they cut off their noses to spite their faces and jeopardised their massive trade surplus with us.
If the beef saga has done anything, it has woken up the British people as to how powerless their Government have become to defend our national interest in Brussels. That leads some of us—an ever-increasing number—to believe that the Treaty of Rome must therefore be radically revised, and if it cannot be radically revised, we should leave it.
I remind your Lordships that the treaty ordains that our agriculture, environment, transport, European culture and relationship with the single market are subject to the qualified majority vote. It is worth spelling out what the terms of that qualified majority vote are. There are 87 such votes among the 15 member states: 62 are required to carry a motion and 26 to block one. We have only 10. So, for example, British buses are in trouble because only Sweden, with 4 votes, and Ireland with 3 votes, support us against a directive which is designed to make them uncompetitive internationally. That gives us only 17 votes, not enough to block the directive. There are many other examples of similar cases where the qualified majority vote cannot help us to protect our commercial interest.
Likewise, the 62 votes necessary to change the ruinous common agricultural policy are unlikely to be available because France, with 10 votes, Italy (10),

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Spain (8), Belgium (5), Greece (5), Netherlands (5), Portugal (5), Denmark (3) and Ireland (3) will not agree, or are most unlikely to agree, to forgo its largess, which is largely conferred by Germany with 10 votes, Sweden with 4 and ourselves with 10. The treasonable common fisheries policy is even more entrenched because unanimity in the Council of Ministers is required to change it; and neither Spain nor Holland is likely to agree to do so.
Much store is set in modern European politics on the word "widening" or "enlargement". But if the common agricultural policy cannot be revised, the Community cannot afford to admit new members unless they are allowed to join on varying terms or through the variable geometry referred to by my right honourable friend the Home Secretary on Friday. To pretend otherwise seems to me to be rather cruel to the countries that wish to get in.
In view of the firmer stance taken by my right honourable friend the Prime Minister yesterday, I put it to my noble friend on the Front Bench that we shall soon have a golden opportunity to put all this right—because our European competitors will need our consent to delay their timetable for monetary union. It must be obvious now that the countries of Europe are not going to meet the convergence criteria. We have the word of Herr Nõlling in The Times yesterday as the latest example of doubt in that regard.
So we could allow our European competitors to play with what I regard as the dangerous toy of monetary union at their end of the nursery, but only if they give us all our toys back to play with at our end of the nursery. If they do not agree, we really should go and join the grown-ups.
5.10 p.m.
Lord Thomson of Monifieth: My Lords, to put it mildly, this is a timely debate. As my noble friend Lord Jenkins confessed in his opening remarks, we put down this Motion a week or two ago because we felt it right to devote part of our precious debating time to our relations with Germany, at a time when we believed that great damage was being done to Britain's national interest by the xenophobic attitude of parts of the Tory press and Tory party. We did not foresee the dramatic worsening of the beef crisis that took place this week with the blocking minority of European Union vets preventing progress being made towards lifting the ban and the consequent rush of blood to the Prime Minister's head in the other place yesterday. That, I am happy to say, has not added xenophobia to the tone of your Lordships' debate, as one would expect, but it has certainly added to the xenophobic tone of the press today. When noble Lords see tonight's Evening Standard, they will find that that particular infection has crossed the Channel and the press on the mainland of Europe are equally hysterical about Britain's position at the moment.
As for the beef crisis which has intruded on our debate today, it seems to me that what I regard as the perverse judgment of the European vets at their meeting
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on Monday shows every sign of being overturned in a week or two by the normal processes of the European Union. I do not feel that it was wise of the Prime Minister to aggravate mad cow disease by engaging in a dose of mad politician disease. We understand—nobody better than those of us who have served in Brussels—the sense of frustration that he and the Government feel. But patience rather than petulance would have been the wiser course for the Prime Minister to have taken.
I prefer to look back to the time when the Prime Minister first took office. I remind noble Lords that he said how proud he was that the very first speech that he made outside the United Kingdom was when he was with Chancellor Kohl in Bonn. In that speech he made his famous commitment:
"I want us to be where we belong—at the very heart of Europe, working with our partners in building the future".
Sadly, since then Chancellor Kohl has been allowed to replace Jacques Delors as the prime scapegoat in the demonology of the Eurosceptics. As the noble Lord, Lord Annan, said, Chancellor Kohl, who is perhaps not the greatest orator in the world, has had his speeches very badly distorted by sections of the British press. Personally, I was rather touched by what he said on the steps of No. 10 Downing Street after his last meeting with the Prime Minister. He made the disarming confession, which a number of us may share, that he had been moved as a 17 year-old by the rhetoric of Sir Winston Churchill at Zurich calling for a united states of Europe. But, he said, as a European, he knows that Europe and America are different. He said:
"We're still British and French and Germans and Swedes. It's not the same as being from Texas, or Minnesota, or Oregon, or New York".
He added:
"Never in my life have I been a supporter of a European superstate".
It is important to put the true views of the German Chancellor on the record.
The truth is that after the crimes of Nazism and the horrors of the Holocaust, the West has been singularly fortunate in the character and quality of the post-war German Chancellors. I mention Adenauer, Brandt and Helmut Schmidt. I well remember Helmut Schmidt making the speech of the day at a Labour Party Conference when the Labour Party was going through the same Eurosceptic traumas as the Conservative Party are presently suffering. In German leaders we have enjoyed a succession of great Europeans. We could have done with more of them in this country. For it is great Europeans rather than great nationalists that the world needs for the next century.
The current anti-German hysteria owes a great deal to the legacy of the instinctive anti-Germanism of the noble Baroness, Lady Thatcher. My non-parliamentary colleague, Professor Alan Watson, has recently written a fascinating chapter on the relations between the former Prime Minister and Chancellor Kohl. It includes her extraordinary remark when celebrating the 40th anniversary of Anglo-German friendship through the Kõnigswinter Conferences, referred to by a number of noble Lords. She mentioned to some of the most

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distinguished Germans there that it would be another 40 years before anybody in this country would trust Germany.
We all respect the noble Baroness's conviction politics, even when we disagree with them, but there is no doubt at all that in relation to Germany they have been disastrous. The present Prime Minister bravely tried to make a fresh start when he took over, but the tide of jingoism in his own ranks has been too much for him.
There has been some mention of the psychology of the Germans and their sense of insecurity. I am always rather puzzled by what I regard as the curious lack of self-confidence in this country which lies behind the patriotic bluster about Germany and indeed about closer European integration generally. We did not lack self-confidence when we had to stand alone in the Second World War. We did not show any lack of self-confidence when Prime Minister Churchill gave his own vision of a united states of Europe or when he proposed a British-French union. I listened with great interest to the noble Lords, Lord Taylor and Lord Annan, who said that after the war we played a leading part in shaping the new democratic structures which rose out of the ashes of Nazism. After all, we had plenty of constitutional expertise in planning federations throughout the Commonwealth. There were never any hang-ups about the "f'-word in the Empire. It seems curious that we are so deeply hypnotised by it today. Indeed, we were a good deal more successful in the post-war years in contributing to modernising German government and German trade unions than we were in modernising our own institutions.
The debate has come down to the question of the best way for Britain to conduct her European foreign policy during the early years of the next century. The noble Earl, Lord Onslow, said that Europe has forgotten wars. Tell that to the citizens of former Yugoslavia!
The noble Lord, Lord Beloff, and other noble Lords suggested that the right way to go forward would be to return to a Europe of co-operating nation states. I prefer the advice given to us by my noble friend Lady Seear. I believe that the only serious way forward for Britain is to be a leading and influential participant in the multilateral alliance of the European Union. France and the other members of the European Union need Britain firmly inside the Union as an active participant to balance the population and economic strength of a united Germany. The balance of power in Europe, so long the concern of British diplomacy, as my noble friend Lady Seear said, now has to be managed inside the institutions of the Union.
The noble Earl, Lord Onslow, mentioned the classic concept of the Concert of Europe of our Victorian predecessors, whom he greatly admired, and rightly so in the circumstances of the time. But the Concert of Europe now takes place inside the Council of Ministers.
The Government have for the moment set themselves on a new policy of non-cooperation in the European Union—we await some details from the Minister to the questions asked by my noble friend Lord Mayhew. We can only hope that on both sides (on our side with the
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policy of non-cooperation and on the side of our partners with their ban on British beef) there may be the swiftest possible reconciliation of these matters before the Government find themselves further down the slippery slope so warmly recommended to them by the noble Lord, Lord Pearson of Rannoch, a moment or two ago.
Of course, we can opt out of the European Union in due course. We can do it either totally or by salami-style slices of opt-outs. But the result would be to leave us as an offshore island off the mainland of Europe—indeed, as an offshore island of Ireland when it came to it.
The truth is that the Franco-German reconciliation is at the heart of Europe today. It is not going to break up and they and those around them will go ahead on one timetable or another and create a single currency, create economic monetary union and create a closer integration. The question is whether we are going to be a major influential participant in that or simply stand on the sidelines having to react to decisions taken by others that will greatly affect us. That will be a pathetic option for a great country like Britain that still has a great deal to give the world.
5.20 p.m.
Baroness Blackstone: My Lords, like other speakers, I am grateful to the noble Lord, Lord Jenkins of Hillhead, for introducing this debate. But I must apologise for arriving a little late. I was caught in the most horrendous traffic jam, though I just about managed to refrain from road rage.
I welcome the debate both because of its topicality and importance and because of the personal interest in and affection that I feel for Germany, having spent time there learning German when I was at school. Indeed, one of the greatest disappointments of my life was my failure to win a travel scholarship to go to the University of Heidelberg, something I believe the Minister achieved.
Germany occupies a vital position in the world. It is easily the largest and most economically powerful country in the Community. Unsurprisingly, it is now considered by the United States Government and most of their senior advisers to be the most important European ally—a point made by the noble Baroness, Lady Seear. Its geographical position and economic power make it the most influential West European country in Eastern Europe—the former Soviet Union. It has chosen to build on its strength in relation to those countries through its investment policies.
While Germany is not currently a permanent member of the Security Council of the United Nations, any discussion of enlargement of the permanent membership—and there has been plenty—invariably includes Germany as a major contender for inclusion. The German constitution currently precludes the deployment of the German armed forces in conflicts outside Germany. But that may change, just as there may be changes at the United Nations. Meanwhile, Germany is a powerful member of NATO and a major contributor to it as well as to the cost of conflicts such as the Gulf War.

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In those circumstances, Anglo-German relations are of the utmost importance and any deterioration in that relationship would be a cause for serious concern. It is, however, through our membership of the European Union that our relationship with Germany takes on greater significance, as a number of other speakers have indicated. And I have no intention of discussing the beef crisis other than strongly to endorse what the noble Lord, Lord Thomson of Monifieth, said regarding the value of "patience rather than petulance".
Before turning to Europe I should like to say something about the economic position of Germany, which has not been covered in this debate as much as I thought it might have been but which is very relevant both to our bilateral economic and trade relations and to future developments in the European Union.
It ill becomes members of the party opposite to crow about recent German economic difficulties. In their 17 years in power the Conservative Government can hardly claim to have made a resounding success of their handling of the economy. I will concede that they have achieved low levels of inflation in recent years, though at considerable cost to employment. But, if low inflation is to be the beacon of economic success to which we turn, the Germans have a better record than the United Kingdom throughout the period and still have a lower level than the UK today. Moreover, in spite of recent difficulties, German output is still considerably higher than that of the UK, so that on average standards of living are 15 per cent. higher for a citizen of Germany than for someone living in Britain.
In spite of the fact that growth in Germany was only at 1.9 per cent. last year and is predicted by most analysts to be rather lower this year, few doubt that the German economy will recover—for not only is Germany the largest European economy; it is also the strongest, in spite of current difficulties. Criticisms can of course be made of rigidities in the German labour market and the high cost of the social welfare system. However, high levels of investment in German industry and one of the best trained workforces in Europe have helped to sustain the underlying strength of its economy.
Predictions about levels of German exports this year, even from the usually rather gloomy Bundesbank, are positive and even last year Germany's substantial visible trade surplus had returned to pre-unification levels. My noble friend Lord Taylor of Gryfe referred to unification and its importance in building stability in Europe as a whole. Given the enormous bills that were involved in unification, in which West Germany reunited with a country of 15 million people with hardly a piece of industry or machinery in it which was not obsolete, it is not surprising that the German economy took a big knock. If its service sector expands, as many Germans now realise must happen, unemployment will fall and higher growth will follow.
While some members of the Conservative Party and some sections of the Tory press take pleasure in exaggerating the economic decline of Germany, German institutions remain strong enough to buy British companies in both the manufacturing and service
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sectors. No one taking part in this debate could have forgotten, even if the noble Lord, Lord Lyell, had not reminded them, that quite recently BMW took over Rover—the last major British-owned car company in the UK—and the Deutsche Bank bought Morgan Grenfell, to give but two examples. Indeed, Britain is the most important destination for foreign investment by German companies.
Nor are economic troubles in Germany in our long-term interest. For all the talk about the importance of the Far East to UK exports, our exports to the rapidly growing countries of the Pacific Rim, after growing for some years, still only amounted to 5.9 per cent. of the total last year compared with 57 per cent. to the European Union, of which 13.1 per cent. was to Germany alone. Germany is our most important trading partner, topping the table for both imports and exports, and more important even than the USA. Incidentally, Germany is also France's biggest export market.
So low growth and unemployment in Germany invariably affect us adversely, given the significance of our trade relationship. Clearly Germany's economic situation matters a great deal in the wider European context. If it is unable to meet the Maastricht criteria within the timetable, economic monetary union is unlikely to happen. However, Chancellor Kohl's determination to move ahead to greater integration, including a single currency, is indisputable. As we saw yesterday, a package of social and economic reforms has been introduced in Germany to try to ensure that it meets those criteria. Speculation that it will not looks a little premature and is just another sign of wishful thinking by the British Government and their supporters.
Other speakers referred to Chancellor Kohl's speech in Belgium a couple of months ago when he suggested that,
"the question of war and peace in the 21st century really hinges on the progress of European integration".
That is a bit plonking perhaps, but did it really justify the torrent of hostile comment in this country, led by the former Cabinet Minister John Redwood, who accused Herr Kohl of "looking backwards" and "living in the past"?
The implication of some of the cruder attacks was that Germany was threatening us with war if we refused to comply with further integration. In fact what Chancellor Kohl was expressing was what all those great German Chancellors to whom the noble Lord, Lord Thomson of Monifieth, referred, from Adenauer on, and indeed the founding fathers of the European Union and many others have always believed. As the noble Lord, Lord Jenkins, and other speakers have pointed out, what today's German leaders fear is that the size and strength of a unified Germany will breed resentment in Britain and the rest of Europe. Binding Germany into a more integrated Europe is central to their strategy for dissipating such resentment. Paradoxically, in this country it seems to have done the reverse, at least among the Conservative Right-wing. Perhaps I may ask the Minister whether the Government accept the reality of German power and the potential benefits of Germany being locked into a partnership

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with the rest of the European Union on current terms. Will she also dissociate herself from the remarks of her right honourable friend Mr. Redwood?
The enlargement of the European Union will shift the centre of Europe to the east, with Germany at the heart of Europe geographically, politically and economically. The countries of Eastern Europe frequently look to Germany, as their nearest Western neighbour and the Western European country with by far the closest economic ties, for support on NATO membership and meeting the conditions of joining the European Union. In this respect enlargement can only enhance Germany's influence.
Beyond Europe, the Foreign Secretary has floated the idea of a revised Atlantic community. I suspect that one of the motives on the Government's part is to placate the Euro-sceptics in their midst. The Minister may say otherwise. But whatever the motives, Germany would be at the heart of such a community. No American administration is likely to see it otherwise.
If this analysis is correct, Germany must be central to British foreign policy. We need to work hard to foster good relations. It should not be difficult. Herr Kinkel, the German Foreign Minister, recently made clear the importance he attaches to good relations with us and in particular to Britain playing a central role in Europe. He picked out the need for Britain to play a leading part in shaping European foreign and defence policy. If we are to rise to this challenge, a more positive stance in Europe and a more realistic one on such matters as majority voting will be needed.
There are bound to be disagreements from time to time. But when they occur, as most recently on BSE, the orgy of Hun bashing indulged in by sections of the British press is inexcusable, as the noble Lord, Lord Annan, and the noble Earl, Lord Sandwich, have already said. I recently sat next to the German Ambassador at dinner, who had been justifiably shocked by the virulence of these attacks. It is bad enough from tabloid journalists. But when Tory MPs make tasteless remarks about Germans getting "too big for their jackboots", it is even worse and can only encourage xenophobia and anti-German sentiments. Some of the vulgar stereotyping that takes place is regrettably based on envy and the failure to come to terms with our own relative economic failure and national decline. Some people, I fear, have still not quite forgiven the defeated Germans for their economic success since the Second World War.
I hope the younger generation will see things differently and that more of them will spend time in Germany, as I was lucky enough to do. When I was there not only did I learn to appreciate Weisswiirst but also Weisswiirst mit Kartoffelsalat and Sauerkraut. These exchanges must go on. As the noble Lord, Lord Mayhew, rightly said, we have to build on relationships from below and not just from above. While we may be unable to speak their language, they speak ours. There are rich educational and cultural ties. As the noble Baroness, Lady Seear, mentioned, more and more German students now spend time studying in Britain. There is then a strong base on which we can build a
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constructive relationship with Germany. If we fail to build that relationship, we will only hasten our national and international decline.
5.35 p.m.
Baroness Chalker of Wallasey: My Lords, I am grateful to the noble Lord, Lord Jenkins of Hillhead, for raising the important subject of Anglo-German, or as I prefer to say British-German, relations in the House today. Some of your Lordships will recall that at the end of a debate earlier this year when we were discussing mainly European Union matters I felt moved to speak firmly about the very negative attitude towards Germany that had been expressed. I find that those who set out to stir up people's negative attitudes do themselves and our country harm. Along with the noble Lord, Lord Annan, who spoke of the British media in such forceful terms, I think it is high time that we started looking at what we stand for and what we want and stop pulling other people apart for what seems to be the sake of it.
I feel so deeply about this issue because I went to Germany as a young student in 1961. I was in Berlin when the wall went up and I was evacuated back to Britain. Because I have seen Germany through these past 30 or so years perhaps I can take a little more pride in the things that have gone right, a good deal of it, as the noble Lord, Lord Jenkins of Hillhead, said, as a result of the tremendous help the United Kingdom gave Germany in the post-war years. We have nothing to reproach ourselves for in having done that and everything to be pleased about. It is a pity that at certain times we did not take the same lessons ourselves in our efforts to help Germany over some of her difficult developments. Therefore, I welcome this opportunity to review the state of our usual bilateral relationship with such an important partner in Europe.
I was rather disappointed at times by what the noble Lord, Lord Jenkins of Hillhead, said. However, I shall put that on one side because I know that he wants our relationship with Germany to improve and our relationships within Europe to be good. My noble friend Lord Campbell of Croy judged the relations very accurately in what he said in his contribution. He paid tribute, although not in quite so many words, to the so-called "quiet alliance" between the United Kingdom and Germany which continues to function as well as ever. I was surprised that the noble Lord, Lord Jenkins of Hillhead, spoke of the Chirac state visit but did not mention the annual British-German summit which took place as recently as 29th April in London. There the Prime Minister and Chancellor Kohl had useful and wide-ranging talks on a number of issues, many of which have been raised in your Lordships' debate today.
Their summit, like its predecessors, was the culmination of a series of meetings between Ministers of Foreign Affairs, Ministers of Finance, Ministers of Trade, Ministers concerned with the economy, Ministers of Defence and also Ministers of Overseas Development. Herr Spranger and I meet on a very regular basis and find that the meetings, which enable

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us to discuss detailed policy, are an essential part of our working together in the European Union. I know that the meetings my colleagues hold with their opposite numbers are similarly helpful. That goes on, unsung maybe; but it is nevertheless vitally important for the kind of relationships which we should have with our leading partner in the European Union.
The talks of my right honourable friend the Prime Minister focused very much on the future development of the European Union. The debate tonight should be, and is, about British-German relations, but perhaps I may say a word or two about European Union and then leave the subject alone, for it is one that we debate with great frequency in this House. I believe that Germany deserves the time that I have left to speak tonight.
When we were talking about the future development of the European Union with our German colleagues, it was quite clear that they share our views on subsidiarity. They share our views on the importance of employment and are indeed quite jealous of the position that we now hold, with one of the highest rates of adult employment of any major country in Europe. They also share our views on the enlargement of the European Union.
We can agree that the UK and Germany will continue to work together closely in all areas in order to make advances. That goes on all the time, but one would not have thought it at times from listening to the debate this evening. We all recognise that the German Government are much more enthusiastic about EMU than we are, but our summit on 29th April was a welcome further opportunity for the Prime Minister and Chancellor Kohl, as friends, to discuss the UK position and the German position.
That summit brought out the closeness of UK and German views on defence issues, too. The discussion covered the adaptation of NATO structures and the whole question of NATO enlargement and how it can be in the interests of both countries and in the interests of Europe and a wider peace. Therefore, I believe it is clear that defence co-operation with Germany is not only deep but wide-ranging. For his part, Chancellor Kohl underlined the importance that he attaches to Germany's relations with the United Kingdom, to the UK's role in Europe and also to his excellent personal relationship with the Prime Minister, which continues.
These meetings, along with the frequent and intensive contacts that I have already mentioned which regularly take place at all levels between British and German Ministers and between other politicians and officials, serve to demonstrate the strength of the ties that bind our two nations and the breadth of agreement that we enjoy on a wide range of issues. That is right. It is important and it must continue. It is something to which all of us involved, not only in the field of foreign affairs but in the reality of Europe and the future of this country, must pay due attention.
I have noticed how critically the commercial relationship between the United Kingdom and Germany has been built up by the BDI, which is the
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German equivalent of the CBI, through contacts which have been made by the Anglo-German Industrial Foundation and through numerous contacts between trade organisations in both countries working together through chambers of commerce and the Handelskammer. There is a major network of relationships in trade and commerce. Now, with the growing investment by Germans in the City of London, we see a whole new financial network building up. That is right and proper: it is European, it is positive and it is good for Britain and Germany.
In 1994 the United Kingdom exported goods to the value of £17.7 billion to Germany and imported £22.7 billion-worth. If we compare this to the figures for 1973, when trade in both directions totalled only £2.2 billion, it is clear how this aspect of our British-German relationship has blossomed in the intervening years. Germany is the UK's largest market worldwide for visible trade. The bilateral investment, which has been referred to several times, is impressive.
I understand that there are now over 900 United Kingdom firms with a presence in Germany, and over 1,500 German firms, employing some 137,000 workers, have investments in the United Kingdom. Like Britain, Germany is a firm believer in open markets and a liberal international trading environment. We work closely together wherever we can in the European Union and the World Trade Organisation to pursue these common objectives. That is the way in which we can help not only our own countries but the overall improvement of trade on a worldwide basis.
However, the British-German relationship does not rest solely on trade and contacts between governments. That is why a number of your Lordships have underlined the importance of contacts and friendships between ordinary people which are equally, if not more, important. There are dozens of town-twinnings with Germany. Next year it will be the 50th anniversary of the twinning arrangements with Germany. There are about 8,000 Germans studying at UK universities but, sadly, not as many British students in Germany: there are only about 2,500. At school level there are no central statistics. Sadly, German is not a language which is much used these days in schools as it was perhaps in my day. I believe that that has something to do with the excellent teaching of English in German schools and the determination of every young German to speak English at every opportunity. There are about 20,000 school children involved in school exchanges each year.
I was very interested in the reference to Sir Robert Birley's Youth Bridge. It may interest noble Lords to know that the Anglo-German Association has started the Jugendbrücke again and it is working extremely well. We want to arrange more exchanges between young people, because where the exchanges are well built they are foundations which will prevent the problems which some people fear ever occurring again.

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Another reference was made by the noble Lord, Lord Jenkins of Hillhead, to the KÖnigswinter Conference, which has been taking place every year since 1950. Some would say that I am a little biased having attended the conference on and off for the past 20 years. I pay tribute not only to the founders but to people like Sir Frank Roberts and so many others who have gone on insisting that people from all walks of life, leading their own communities in their countries, should come together on an annual basis. It is a conference funded by both governments and business, where politicians, public servants, academics and others with an interest in British-German relations get together for stimulating discussions about issues of importance in both countries. I agree with the noble Lord, Lord Jenkins of Hillhead, that the conference has changed over the years, but it is none the worse for that. Some excellent discussions took place again this year in Cambridge.
Despite this close and solid relationship, it is a sad fact that there are negative stereotypes and prejudices which are sometimes played up by the press. That does not apply only to what is written about German people, although, as the noble Lord, Lord Marsh, said, they seem to suffer in our media more than most. We have to do our best to counter this negative phenomenon. At the summit in 1994 the Prime Minister and the Chancellor agreed to a range of co-operative projects designed to improve the understanding of the UK in Germany and of Germany in the UK.
The noble Earl, Lord Sandwich, asked me about raising the awareness of Germany, perhaps through the Foreign Office and the British Council. I am pleased to say that the progress of the 1994 initiative is the result of intense co-operation between the Foreign Office, the Auswärtiges Amt, the German Federal Information Office and the UK Central Bureau for Educational Visits and Exchanges. For almost a year now a German links officer has been working at the central bureau. She has put UK and German schools in touch with each other, and that is the beginning of a healthy new partnership. The directory of British-German co-operation has already been published and widely distributed both in this country and in Germany. I can commend it as a source of great information for anyone interested in doing business with Germany.
There were a number of references about the future of this country within the Community and to this country's relationship with Germany and that between France and Germany. We very much welcome the good relationship between France and Germany. We believe that it is vital for the stability of Europe. However, a good German-French relationship is not incompatible with good UK-French relations or good UK-German relations—and nor should it ever be so. We are not in competition with each other, as seems to be thought in some journals. Indeed, with both Chancellor Kohl and President Chirac here in the past three weeks, we have had more good opportunities to bring together the views of all three countries. As well as trying to cultivate good bilateral relations, we are actively looking for areas in
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which we can co-operate on a trilateral basis because we believe that that is fundamentally important for the success of the European Union.
One good example of that is the UK's recent decision to collaborate with France and Germany in the development of the new multi-role armoured vehicle. That in turn will facilitate the involvement of this country in the Franco-German Armaments Agency and although nobody wants our co-operation to relate only to armaments, it is a good sign of sensible co-operation which can really work.
The noble Baronesses, Lady Seear and Lady Blackstone, both mentioned the United States and the relationship of the United States with Germany or with others in Europe. All three countries in Europe want a vigorous transatlantic partnership. It is essential for all three countries that we have that if we are to achieve good, sound foreign policy objectives. One of our top priorities is to sustain and enhance that.
My right honourable friend the Foreign Secretary has decided to set up a new UK/US/German trilateral forum of parliamentarians from the three countries. I am certain that that will become quadrilateral in time because there is always the other dimension with France to be considered. There is no doubt that the initiative, with the support of the German Government and US Congressional leaders, which was announced by my right honourable friend the Prime Minister and Chancellor Kohl last month is a very important further step in our relations. It will take off with the first meeting towards the end of June in this country. On that occasion, we shall focus on the problems of welfare reform in western democracies. Other subjects will be considered at further meetings.
My noble friend Lord Beloff mentioned German relations with Iran. We are absolutely certain that the Germans share our concerns about Iran and the objective of bringing about an improvement in Iranian behaviour. All the evidence suggests that they have the same view of the situation as we have and as my noble friend expressed it.
In talking about the wider relationship, the noble Lord, Lord Mayhew, challenged me in forthright terms to explain exactly what the Prime Minister's Statement yesterday will mean in practice. I recommend that the noble Lord reads yesterday's Hansard of the exchanges with my noble friend the Lord Privy Seal. If the noble Lord is not satisfied by that, perhaps I can advise him that we shall raise the question of lifting the ban on beef derivatives at all Councils and, if necessary, we shall ask for special Councils. There is a very good and sound reason for that: the ban is not based on scientific evidence. Furthermore, the ban is harming not only British industry but as long as it exists it will harm German industry, French industry and the beef industry in general. That is why it is right that the matter should be raised on every possible occasion.
Of course, if others are totally intransigent, we shall be prepared to block measures requiring unanimity. That has been done to us on many occasions. We do not like doing it; we hope that it will not be necessary; we hope that we shall resolve the matter quickly, but it is

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absolutely right that we stand up for British farmers and the British meat industry. Given that others would not agree—despite our attempts to get them to agree during the past six or seven weeks—that was the option that we had to take and my right honourable friend rightly took it.
Perhaps I may advise the noble Baroness, Lady Seear, that we have co-operated previously on BSE. I shall write to the noble Baroness with details of the number of visits between scientists and the number of discussions between parliamentarians that have happened not just this year but in previous years. It is not true to say that we have not tried; we have, but we have not succeeded, so we shall try to find another way forward.
Many other points have been raised, but in the last minute that is now available to me perhaps I may say simply that if some of your Lordships think that I have painted too positive a picture of British-German relations, I am sorry but I think that it is right to look forward. I think that the future holds many positive opportunities for Britain in Europe, alongside our partners, Germany and France. This is not the easiest time to make such a statement from the Dispatch Box, but I do believe that, although our geography, history and constitutional experiences are different—in some ways, even our thinking is different—we are both mature democracies and we are both prepared to look to the ways in which we can capitalise on the benefits that we can gain from our close relationship.
Britain and Germany are, and will remain, key players in setting out how Europe will develop over the coming years. It is not just a question of the institutions of the Union, but of the Union's relationship and our two countries' relationships with the rest of Europe, especially with Russia and its former allies. Together, we want to see a strong Europe and a free Europe. We are both concerned about the dangers of instability and about competitiveness at home in the face of challenges from outside Europe. We are concerned about the need for a Europe which is deregulated internally and which adheres strictly to the principle of subsidiarity; about the need for financial discipline in the budget; about the need for a cohesive common foreign and security policy; and about the need for a strong and viable NATO.
Britain and Germany have come a long way since the dark years immediately following the Second World War. We are working together in more ways than I have been able to explain to your Lordships in these 20 minutes. The noble Earl, Lord Longford, was absolutely right: we did hold out the hand of friendship after the Second World War. Some of us are continually seeking to make sure that that handshake is firm and that those relations are based on understanding. I hope that that will long continue.
5.57 p.m.
Lord Jenkins of Hillhead: My Lords, I thank the noble Baroness for her reply. She always gives us a good answer and she certainly did this evening. The noble Baroness also always manages to combine what
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I regard as her basic liberal, internationalist convictions with her loyalty to the Government in a very engaging and acceptable way.
I do not greatly believe in second-bite speeches and I shall not engage in any argument, particularly as I must apologise to the House for running two minutes over time in my opening speech. One of the things that eight-and-a-half years in your Lordships' House has taught me—much more than the standard 39 years in the other place—is the advantage of brief speeches and of sticking to the time limit. Therefore, I shall expiate my sin of this afternoon by taking hardly any time at all now and making only a few brief comments.
I thank all those who have participated in the debate. I was very much struck by the speeches of the noble Lord, Lord Campbell of Croy, the noble Earl, Lord Sandwich, and the noble Lord, Lord Annan.
The noble Lord, Lord Marsh, made a speech of striking eloquence. I did not agree with his conclusion, but that did not obtrude too much on the speech because it rather reminded me of speeches by the late Mr. Richard Crossman: you could never quite tell until the end which side he would come down on. I thought that the noble Lord underestimated the existence of a problem with Anglo-German relations. The noble Lord knows quite a lot about Japan; I am not sure that he knows quite so much about Germany. I think that the noble Lord, Lord Annan, who knows a great deal more, recognised that there is a problem.
The speeches that have been made by your Lordships this afternoon will have assisted somewhat in assuaging that problem. It is remarkable that we have managed to have a debate which has been so little dominated by the beef crisis. That shows your Lordships' capacity for taking a wider view.
I do not delude myself into believing that these words will be read in every Weinstübe in Germany, but I believe that they will be read by a limited number of influential people and that, on balance, they will have a substantial effect. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Royal Assent
6 p.m.
The Deputy Speaker (Viscount St. Davids): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:

Non-Domestic Rating (Information) Act,

Reserve Forces Act,

National Health Service (Residual Liabilities) Act,

Police Act,

Industrial Tribunals Act,

Employment Rights Act.

Commonwealth Development Corporation Bill
Brought from the Commons; read a first time, and to be printed.

Overseas Trade
6.2 p.m.
Lord Ezra Lord Ezra rose to call attention to Britain's overseas trade and its significance for the economy; and to move for Papers.
The noble Lord said: My Lords, there is no doubt about the importance of overseas trade to the British economy. Taking our gross visible exports alone, they represent something like 20 per cent. of GDP and a substantial amount is also represented by the invisible side. Over the years there have been many successes in both visible and invisible exports.
I initiate the debate at this time because it is just over 10 years since the report of the Select Committee on Overseas Trade was issued. It was perhaps one of the most important reports of a Select Committee in recent years. The committee was presided over very effectively by the noble Lord, Lord Aldington. He has asked me to say that, regrettably, he is unable to participate in the debate this evening. I am delighted that, apart from myself, two members of that committee, the noble Lords, Lord Boardman and Lord Selsdon, will participate this evening. I am grateful to all other noble Lords who are to participate. In particular, I look forward with much anticipation to the maiden speech of the noble Lord, Lord Blyth of Rowington.
The report drew attention to the fact that for the first time we were running into a deficit on visible trade. Because of the possible implications of a continuation of that deficit, the committee made a careful review of the situation. It interviewed a large number of witnesses and made a number of recommendations. Somewhat to the surprise of those who participated in the committee—which came to a unanimous conclusion and represented all sides of the House—the report was severely criticised by senior Ministers as soon as it appeared. The first criticisms were made even before it appeared. The Treasury took the view that we were wasting our time and there was no need to worry about the trade balance because over the years it would be a self-correcting exercise. Those who are interested in that rather detached view of life should turn to paragraphs 69 and 70 of the report where that view is set out. The committee did not share it.
Unfortunately, the concerns of the committee have been justified by subsequent events, in that, although there have been fluctuations between one year and another, there has been a negative balance on visible account every year since 1983. In 1985 it was £3 billion and in 1995 it was over £11 billion, in spite of a continuing contribution from North Sea oil. Incidentally, the committee got it wrong. It believed that North Sea oil would not be contributing at that stage. Unfortunately, it has however been proved right that in spite of the contribution of North Sea oil the adverse balance is as high as it is. There has also been a positive contribution from invisibles, thus reducing the net overall imbalance on current account to just over £6 billion. The figures for January and February suggest that this situation is likely to continue for the time being. The Office for National Statistics states that
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the latest estimate of trend, based on the February figures, suggests that the visible deficit is widening. The NatWest Bank Economic Review for May 1996— I inform the noble Lord, Lord Boardman, that I read it regularly—forecasts a widening of the current account deficit in 1997 and 1998 compared with 1996.
It is a rather sobering thought that, in spite of the considerable efforts, the visible gap is widening. After the positive contributions of oil and invisibles, we are left with a net deficit which, at any rate for the time being, appears to be widening. Of course, there have been many achievements by particular companies in particular sectors. The extent to which sales teams from Britain visit all parts of the world is most impressive. The Government's White Papers in 1994 and 1995 on competitiveness illustrate the considerable gains in productivity in British industry. These have been remarkable gains, and many companies are far more efficient than they were. Unfortunately, that has to be seen against a much reduced industrial base. The 1995 report indicates that the share of manufacturing in terms of GDP has fallen from 34 per cent. to 20 per cent. since 1970. It has also fallen in other countries, but ours is one of the steepest falls in Western Europe and indeed the developed world.
It is worth contemplating what we may do to try to correct these trends, reinforce the successes already achieved and expand our overseas operations in such a way as to narrow the gap, which has been with us for many years and could be with us for many more years unless action is taken to deal with it. The report in 1985 indicated a number of measures which the committee considered should be taken. In my opinion, if those measures had been taken seriously we would not be in quite the situation that we face today. I refer to two in particular: investment and macro-economic policy.
Our investment levels, although high, have unfortunately compared badly for a number of years with those of our main competitors in the rest of the world. Regrettably, the recent trend, far from improving, has deteriorated further. The Economic Indicators Research Paper of 1st May 1996, which is issued by the House of Commons Library—I wish to be quite clear about the text from which I quote—indicates that in 1995 total gross capital formation dropped by 0.7 per cent. compared with 1994 and was 11.5 per cent. lower than the peak of 1989. Both in the private and public sectors investment has been falling. While some improvement is expected in 1996 and 1997, the pace will remain slow.
What is required is a framework to stimulate a greater rate of investment. It is that to which I now turn. It raises the question of macro-economic policy. Government economic policy at present is concentrated on holding down inflation, with which we all agree, by using the interest rate mechanism as the main weapon to achieve it. The unfortunate result of using that weapon is a level of interest rates which is higher than that of our major competitors. For example, if one looks at Britain's main competitors in Western Europe, interest rates vary between 2 and 4 per cent., whereas here the rate is 6 per cent.
At the same time the Government are pursuing a relaxed fiscal policy, monetary and fiscal policies being their two economic weapons. We have a strong policy for keeping up interest rates to deal with inflation but at the same time relaxed fiscal policy, for reasons which I have no doubt the other side of the House will be able to explain better than we can, to reduce taxes, as was done in the last Budget, and, despite the Chancellor's warnings, there is strong pressure for that to be done in the next Budget.
The result of that juxtaposition of policies of course is to give signals which lead, on the one hand, to a reduction in the level of investment, inhibited by higher interest rates, and therefore of export capability and import substitution capability, while, on the other hand, there is a stimulus of consumer spending by giving people more money to dispose of. So we find ourselves moving into a situation in which we are probably doing the reverse of what we should be doing. What we should be doing is increasing investment and exports, and until those increases have been achieved, not stimulating consumer demand, because consumer demand stimulated at a time when investment is relatively low, and when our export proportions are also relatively low compared with imports, merely means that the extra consumer demand will be met by a higher level of imports. Then we shall be back in the situation in which we were in the late 1980s, with all those unfortunate consequences. That has to be avoided.
In 1993, and to some degree in 1994, we achieved the virtuous position of having what looked like export-led and investment-led growth. Unfortunately it lasted for a short time only. It is the application of the macro-economic policies to which I have referred which contributed to the problem that we now face.
I have tried to take a view over the 10 years since the 1985 report was produced. I have, I hope, paid tribute to the great successes we have achieved in our export trade, both visibles and invisibles. I am certain that we possess the skills, abilities and resources to get right the relationship between exports and imports, but we have not yet achieved that. I believe that a large measure of that is due to the fact that we have not yet adopted the right mix of macro-economic policies. I shall be interested to hear what the Minister has to say on that when he replies.
6.13 p.m.
Lord Boardman: My Lords, I am grateful to the noble Lord, Lord Ezra, for introducing this debate on such an important subject. Like him, I look forward to hearing the maiden speech of my noble friend Lord Blyth of Rowington. As the noble Lord, Lord Ezra, said, he and I served, with others, on the Select Committee in 1984–85. We came to a number of conclusions. Some were right, and some time has shown to be less right. Perhaps I may deal with those in a moment.
The noble Lord concentrated this evening on the figures since 1984–85. I ask him to be wary of many of the statistics that are produced, which are summed up in
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a balance sheet and current account and then displayed around the place to recommend every change in policy that should ever be made.
It is correct that in 1984 the adverse visible balance was said to be about £3.8 billion. That was later changed to £5.3 billion. Today, on a similar basis, it is something like £11.5 billion. I ask the noble Lord to look at the details of those figures. In 1994, which is the last full year for which figures are available, the balance on current account was £2 billion, which is substantially less. Those are the only figures of which I have the details, because the figures for 1995 are not fully available.
In that figure we had deficits from the EU of £7 billion and from EFTA of £9 billion. I shall return to that point. There were positive surpluses from the USA, Africa, Australia, Canada, South Africa and a number of other countries. I was intrigued as to why EFTA should be showing a £9 billion deficit. Of that, £7.3 billion comes from Switzerland. I could not believe that we had bought that number of cuckoo clocks or Swiss chocolate to account for that figure. It seems that the bulk of the deficit is the result of travel. Travel represents an enormous part of the deficits that we have with France, Spain and other places. Travel represents a large item in the current account balance.
On the other side, our investment income has a healthy surplus of £11 billion. There was one figure which intrigued me. It is what is called transfers made without a quid pro quo. When one looks at that figure one sees that there is a deficit of about £5 billion—I am sorry to give all these figures—for things such as institutions of the Economic Community. There are transfers in the form of aid to non-OECD countries and such things. These figures—£5 billion here and £7 billion there—make the balance on the current account shrink into insignificance, yet the implication in using the figures, as the noble Lord, Lord Ezra, did, is to suggest that we are not making enough widgets or are buying too much from abroad.
Those are factors, and the figures are a warning. However, we should not take those figures without looking behind them to see what are the real components of the deficit about which we are talking. All kinds of other figures come into the totals in various forms. In view of the time available, and with my lack of knowledge, I shall not refer to the details. The European Investment Bank and the European Atomic Energy Authority appear in the balance of payments. Then we have capital transactions.
When we buy a few jumbo jets, we pay a great deal of money. They last for 20 years or whatever it is. They will be revenue-producing for a long time. In the commercial world one puts the capital investment in the jumbo on one side and shows depreciation year by year on the balance sheet. That is not so in government

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accounts. However many million it is, it goes straight down as cash out, and the revenue and benefit from that money does not appear in that year's accounts.
Lord Ezra: My Lords, I shall be brief. I should like to remind the noble Lord that I was referring primarily to the visible account. He seems to be concentrating on the invisibles.
Lord Boardman: My Lords, I am concentrating on them both. They are both involved. The jumbo to which I referred is a very visible purchase. The same applies to a great deal of plant and machinery purchased from abroad, which is expected to have a long life.
When one looks at the cash balance, whether it is a deficit or a surplus, that probably indicates a trend. We should be alert and not by any means ignore it. I accept that, as the noble Lord said, we should watch to see the way any trends are going. We should also look behind the figures to see whether they result from far more people going skiing in Switzerland rather than far more people buying widgets from Germany and not selling them anything in return, or whatever the case may be.
I have looked at the 1985 Select Committee report. I had the honour to be a member with the noble Lord, Lord Ezra, and my noble friend Lord Selsdon. Some of the conclusions are wrong. We said that oil would probably run out by 1980. Thank goodness it has not, and will not do so for a long time ahead, I hope. However, it contributes less to the economy than it did in 1985.
We also referred in the report to the national attitude. As we said, that was having an adverse effect on our trade. I believe that the national attitude is much better now, but this is an area where much progress can still be made. Much of that progress involves education. Improvements in educating young people are needed to enable them to develop an aptitude for manufacturing and not just to enter it unskilled. A great deal is being done in that field but much more still needs to be done. There is also a national attitude towards manufacturing which I find disappointing in that people become excited if their son or nephew obtains a management job in the City but not so excited if he obtains a similar management job in—I was going to say British Rail workshops, but that does not exist now—a manufacturing business. We do not attach enough pride to the achievements of those who play an important part in manufacturing. I hope that we can do more in that field.
We referred in the report to competitiveness. There have been great improvements over the past 10 years in the competitiveness of British industry. Our industrial relations were at a low ebb at the end of the 1970s and the beginning of the 1980s. We now have excellent industrial relations and great credit is due to both sides of industry—if I can still use that term—for what they have achieved, and are achieving in that field. We referred to productivity in the report. Productivity in this country has grown faster since 1980 than that of any other country in the G7. That is no small achievement. The noble Lord referred to lack of investment, but our investment has been rising in an extremely satisfactory
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way. I believe that our investment in plant and machinery has been increasing at a rate of something like 10 per cent. per annum, certainly in recent years.
We referred in the report to the problems of interest rates and taxes. The noble Lord said that interest rates and taxation were both two sides of the same coin. It is an argument which I hope he will reflect on when we debate EMU in this House. He will perhaps consider that argument relevant in that context in separating control of fiscal policy from the control of monetary policy.
Export promotion was another subject which we made much of in the Select Committee. We are doing a great job in this area. We have an outlay of about £200 million a year on export promotion. Business Links—on which I hope my noble and learned friend will comment—is doing much to help in this field. We have made considerable achievements but we must not be complacent about them. We export more per head than Japan or the USA. That is something which does not seem to be generally recognised. If one told someone in the street that we export more per head than the Japanese, he would think that one was telling tales. However, it happens to be true and it is an important truth. We attract 40 per cent. of Japanese investment in Europe and 40 per cent. of the USA's investment in Europe. That is a success story; the task is to make it even better.
6.24 p.m.
Lord Peston: My Lords, I welcome the fact that the noble Lord, Lord Ezra, has introduced this debate. I say that with all the sincerity I can muster. We have to have such debates but I, for one, cannot think of anything new to say. However, I hope that other noble Lords will do so. In welcoming the noble Lord, Lord Blyth of Rowington, I am certain that he will have something new to say; it is his chance to say something we have not heard before. I look forward very much to hearing that. If one cannot say anything new, one may as well recycle something that is old, and that is what I shall do for the next few minutes.
Let me start with the general question of why trade is important. We have the classic Ricardian theory we were taught as students that we are better off as a result of specialisation and competition and that we gain from variety. What is interesting about the modern trading world is how different it is from the Ricardian world. In the Ricardian world one imported some things and exported others. What is absolutely astonishing about contemporary modern world trade is that we import and export precisely the same things. Equally, we trade overwhelmingly with countries which are similar to ourselves. Ricardo would have been puzzled by both those phenomena.
Having said that, what we were taught, and what I still strongly believe, is that trade is intrinsic to the welfare of an advanced industrialised country; that we benefit from free trade; and that one of the great glories of the post-war world has been the massive rise in international trade relative to GDP. I believe that each

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enhances the other but what is remarkable is the extraordinary rise in international trade. That is something that I, and I think all of us, welcome.
Our country, typically at one time ran a trade surplus, plus an invisible surplus, which financed a deficit in raw materials and things of that kind. However, in the past 10 years that has changed and we run a visible trade deficit. We run the transfers deficit to which the noble Lord, Lord Boardman, referred, but we have an investment income surplus. I agree that we should always be careful about figures, but that for 1994 is most peculiar. The investment income figure increased tenfold. There is something unbelievable about that figure. The obvious explanation is that our foreign assets are denominated in foreign currency terms, that the fall in the value of sterling will make it look as if our investment income is that much higher but that it does not represent any real growth in any valuable sense. However, we ought to be careful about that.
Wearing my academic hat, what is interesting is that I have taught all my career that one cannot run a balance of payments deficit indefinitely. However, we have been running a deficit for 10 years which is about as indefinite as one can imagine. Again, wearing my economist hat, I say it cannot go on. But it seems to be going on, and that is a puzzle. There is also the fact that the effective sterling exchange rate has been falling in value continuously for the past 15 years. We have been devaluing at about the rate of 2.5 per cent. per annum. There is obviously a connection but, with the pound floating, we do not have a balance of payments crisis. Whether that is a good or a bad thing we shall debate again one day when I hope the economists among us will get a chance to discuss EMU rather than leaving it in the hands of those who think it is a political matter. The only way I shall ever get into the debate is if we can somehow debate it as an economics matter.
I am totally in agreement with the noble Lord, Lord Ezra, in the belief that trade matters—I do not think any of us disagree—in a macro-economic sense. If we expand the economy too rapidly we shall pull in exports of manufactures in which case either the balance of payments will become adverse in a totally uncontrollable way or the inflation rate will get out of control. Echoing the views of the noble Lord, Lord Ezra, on macro-economic policy, with which I agree, I find it startling that despite the low inflation rate and the fact that GDP is growing at less than its underlying rate, the Bank of England is already panicking about inflation. I do not have a high view of the Bank of England, and never have, but its present macro-economic stance is extraordinary.
I now turn to what I consider the central issue. I say this again with an air of puzzlement and not really with a view to scoring political points off the Government. Without doubt there has been a distinct improvement in the rate of rise of manufacturing productivity. In my judgment we have somewhat closed the gap in productivity terms with our main competitors. The Government have favoured business in every way they can. They have attacked the trade unions: one may wish to use a less pejorative term. They have certainly freed
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labour markets. Again, on the plus side, our share of world trade has stopped falling. I have spent a lot of time thinking through this issue without finding any answers. The puzzle is why we have not done better in terms of total output which, if we are that much more competitive, should be much larger and, secondly, why we have not improved our trade account. I disagree with the noble Lord, Lord Boardman. I believe that the problem must lie with investment. The noble Lord said, I think, that the investment position is satisfactory. I must beg to disagree. The ratio of manufacturing investment to manufacturing output is now higher in broad terms than it was when this Government came to power. I am not criticising the Government. In view of all they have done the ratio should have risen drastically. Manufacturing capacity should be that much higher. We, in your Lordships' House, should not be moaning to the extent we are.
I can hypothesise but I just do not know why investment is not higher. Those of our friends from abroad who have acquired stakes in British industry have a high propensity to invest. What that says about our own management and boards of directors is almost too horrible to contemplate. The answer must clearly lie with management; I include boards of directors and not merely hands-on management. There is something wrong in that area.
I agree with my honourable and right honourable friends in the other place who stress strongly the need to improve the quality of the labour force, training and so on. One wants to see that happen. I remain of the opinion that that will help, but it will not solve the problem of what it is that frightens senior British management. There must be something. I am coming very close here to abandoning economics and suggesting that they may need psycho-therapeutic help rather than anything else.
I reiterate that I am not attacking the Government in this area. In a sense, given their approach, they have done all they can. They have asked industry to respond and in my judgment—I am sorry that I must disagree with the noble Lord, Lord Boardman, because we agree on so many other things—industry has not responded satisfactorily.
I turn now to Europe. Trade, wherever it is, is valuable. Not long ago, I took part in a debate on South America. I learnt a great deal from just taking part in that debate. It is an area about which we hope to hear more. We must, however, realise how overwhelmingly important the European Community is to our trade. It represents more than half of our exports and more than half of our imports. We run a deficit with it but, as the noble Lord, Lord Boardman, pointed out, we run more of a deficit with the non-EU part of Europe. There are those who tell us that we should be part of North America. But our trade with that region is now quite small. Therefore those—happily, they are not taking part in our debate—who emphasise the need to distance ourselves from Europe or even leave the Community altogether (I cannot find any other words for them) are insane. Our economic commitment is, and must be, to Europe.

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I have a further black note to raise about what the future holds for the country. However, it is a black note which should have a happy ending. I look forward very much to the speech of the noble Lord, Lord Blyth, because he is in the pharmaceutical sector. That is one area in which we have had enormous success.
Essentially, in advanced countries such as ours—and despite all the talk, we are still one of the major producers of the world—we engage in innovation, and it is on that which our future depends. We live by exporting the innovative products in which our national genius is embodied. We sell those products abroad. But gradually foreign countries copy those products. They simplify what we do and standardise it. They have lower wage costs and produce a similar and perhaps even slightly better product. We cannot then compete; we must innovate again.
My final conclusion is one I have put to your Lordships before. We are on a kind of innovative treadmill. If you want to stay rich and ahead of the game, you must find a new success every year. It is never over; you can never relax. That is why I still welcome the fact that your Lordships debate these matters. I thank the noble Lord, Lord Ezra, for giving us the opportunity to do so today.
6.35 p.m.
Lord Blyth of Rowington: My Lords, I thank everyone for their welcome and I thank the noble Lord, Lord Ezra, for initiating this debate: your Lordships will shortly understand why. I was introduced to this House in October last year and only now am I rising to speak. I could claim pressure of work or overseas travel and so on. In fairness, there is a large measure of blue funk involved. It is not high Tory electric blue but more of a feeble periwinkle. But I do have a bit of experience at this exporting game—and game it can be—which I thought I might share with your Lordships. I hope that your Lordships will forgive the intertwined personal history.
For the first dozen years of my business career, in the 1960s and early 1970s, I worked exclusively for American companies; and American companies at that time were in their heyday as exporters. Their export success was based on strong domestic demand, manufacturing efficiency, outstanding marketing—in my view—competitive pricing and, at the time, a very competitive currency.
By the time I was running a British company with strong export potential in the late 1970s—Lucas Aerospace—life on the other side of the fence was rather less comfortable. Our main domestic customer, Rolls-Royce, was still recovering from its 1971 bankruptcy. Labour relations consumed 20 per cent. to 30 per cent. of my management time, and the dollar was at 2.40 to the pound.
To put that in industrial perspective, it took nearly five years of 12 per cent. per annum productivity increases in that company before we took the export content of the business to over 50 per cent. of sales—and that when the UK market represented less than 10 per cent. of the world market.
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As head of defence sales at the Ministry of Defence in the 1980s, I started the negotiations and eventually won the agreement of Saudi Arabia on the highly valuable Al Yamamah programme. Our main product, the Tornado, was not the cheapest on offer to the Saudis—it is probable that the French Mirage 2000 was—but the Tornado was competitive with the rival American aircraft in performance and price and it outperformed the Mirage 2000 in its strike capability. More important, we had enormous political and industrial determination to get the order. That determination ran from the Prime Minister all the way to the assembly line at Warton.
At Boots, where I am now chief executive, I have responsibility for a fair-sized over the counter pharmaceutical business with two-thirds of its sales overseas, and that percentage is growing rapidly. Pharmaceuticals, of course, as has been mentioned, are second only to oil in their export value to this country—a £2 billion trade surplus in 1995. The industry sustains more than 300,000 jobs.
What lessons have I learned from all this that I can share with your Lordships? First, exports are a vital spur to domestic competitiveness. Secondly, the search for competitive advantage is all-important. The imposition or importation of social policies or working practices that reduce competitiveness should be eschewed. Thirdly, a competitively priced currency is as important as competitively priced products. Even the Germans and the Japanese are discovering that fact. Finally, organisations—indeed, countries—need to be export-focused to succeed. Their marketing has to be of a quality that allows genuine advantage to be gained from genuine competitiveness.
If we have any doubt about that, we should look to the tiger economies of the Pacific Rim. There lies the real competition. Moreover, taking the point made by the noble Lord, Lord Ezra, on investment, generally speaking, the hurdle rates applied by organisations in those countries are dramatically lower than those applied in the West. This country has been a great exporting nation for 200 years. It has not always provided the ideal climate for its exporters. Its present success—and we are successful in industries like pharmaceuticals and aerospace—has to be nurtured.
To that end, we must cease to regard membership of the European Union as any sort of long-term protection for our exporters. It seems to me that the route to commercial impotence is obsession with a sterile debate over the rules in one trading bloc while missing the importance of maintaining competitiveness in the world-wide marketplace. Governments of whatever hue must understand this and legislate accordingly. Most importantly of all, perhaps, exports will not thrive in a culture of ministerial—be it domestic or European—interference, but in one of lightly applied support.
6.41 p.m.
Lord Desai: My Lords, it is my pleasure and privilege on behalf of the whole House to congratulate the noble Lord, Lord Blyth of Rowington, on his excellent maiden speech. I am sure that all noble Lords

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will agree with me when I say that the noble Lord has shown us the depth of his wide experience in the real economy. In a surprisingly short speech, the noble Lord covered a variety of issues about which we are all concerned. I sincerely hope that he will come again and again to the House to give us his views. He will indeed be welcome.
I must also thank the noble Lord, Lord Ezra, for introducing the debate. I am very much in the same situation as my noble friend Lord Peston. As both he and I have never done anything in the real economy, we can only stick to academic issues. Therefore, I shall address myself to the questions that my noble friend raised.
There is an interesting comment to make on the matter. Yes, it is true that the UK has a visible trade deficit and, indeed, has had one for some time now. It is also true that invisibles correct that deficit slightly because we do very well in that respect. However, the question arises: how can any country carry on with such a deficit for a long time? I believe that we should—and I am sure that my noble friend Lord Peston will agree with me—look at the capital imports. Any country which finds itself with a deficit on current account must be importing capital. There is no other way that you can square the accounts.
One way of understanding what has happened to the British economy is to recognise that the discovery of North Sea oil was a major event. Indeed, if it had not happened, the adjustments would have been much more painful on the balance of payments side. They would also have occurred much more quickly. We would not have been able to afford to run such balance of trade deficits. North Sea oil gave us a certain crock of gold in the sense that, as noble Lords may remember, sterling was over-valued in the early 1980s. That deepened some of the crises that we have had in British manufacturing industry. Some of the manufacturing industry was just not viable; it was just not profitable. There is no way that it could have survived except, by very large subsidies which, I must say, we did not pay.
The next time a Select Committee is set up on overseas trade, I hope that it will take an overall view of capital and trade. I say that because our exchange rate may become non-competitive, as the noble Lord, Lord Blyth, said, which would affect industry considerably. No matter how competitive an industry is, it has to go through the exchange rate loophole to be able to sell. That is an important point.
However, there was a substantial increase in the capital assets of the UK economy. That enabled us to import much more than we would have otherwise have been able to. That is one of the rather obscure but important points, and it is something which has not quite been taken on board in our debates. If one looks at the position of the UK and the USA in the 1980s in terms of foreign assets, it will be seen that the United States, while running its deficits, changed from being a net creditor country to a net debtor country. The reserve position is much stronger in the UK because North Sea oil represented a substantial addition to our wealth. In a
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sense, it has been both a blessing and a burden. Having said that, I believe that we should put all those aspects together at some stage.
I have another point to make, although it is not a matter that I have gone into in great detail. In the light of what the noble Lord, Lord Blyth, and my noble friend Lord Peston said, I believe that we should look at the industries in which we have a positive balance. We should have a positive balance in those industries which are research and development intensive; in other words, those which are innovation intensive. It does not much matter if we run a deficit in the production of more traditional products because those products will be made better in East Asia and we will not be able to compete. I have in mind pharmaceuticals, aerospace or, indeed, defence equipment, and so on. We should be able to say that those are the sectors in which our future lies. We ought to ensure that those industries have appropriate financial support.
I should mention the important point about hurdle rates to which the noble Lord, Lord Blyth, referred. It is one of the great mysteries of the British economy that businesses face extremely high hurdle rates when they make their investment plans. The only reason for that is, perhaps, the peculiar nature of the lenders—that is, broadly speaking, the financial institutions, including the pension funds and, indeed, the insurance companies which buy equities, as well as banks. Those involved in such work tell me that, despite the very efficient way in which the City operates worldwide, there is the problem that hurdle rates faced by British businessmen are rather high. It is not an insurmountable problem; it is, perhaps, a matter of another sort of innovation. It will have to come from the market; we cannot dictate that. However, I am surprised that we have not seen the kind of innovation which would make it possible for British businesses to have such money.
As regards investment in venture capital, I am told that there are very good institutions investing in really innovative developments in biotechnology. Indeed, we have good venture capital available. But in the middle, the small to medium-sized industries which are involved in the regular production and export business face rather high hurdle rates. That is not because our domestic interest rate is so high—a point which I will come to later if I have the time—it is due to something in the financial structure. For example, it is either the cautiousness of those who operate pension funds or other investors or, indeed, the caution of banks. Whatever it is, it turns out that we fix extremely high hurdle rates with very short pay-off periods. If you have a very short pay-off period, you will not be able to pursue certain kinds of innovative strategies which will ensure you achieve long-running success. As I said, a future Select Committee should consider not only trade but also capital and finance together because they are interrelated.
Perhaps I may briefly refer to investment and macroeconomic policy. I, too, am puzzled that the recorded investment GDP ratios have not improved much and are rather flat. At the same time, I am surprised that compared with other countries which invest more, the British growth rate is not that much

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lower. If one compares UK investment with Japanese investment and the growth rate of their economies—the evidence appears in a report by the Commission on Social Justice chaired by my noble friend Lord Borrie—the UK seems to be doing better than most other countries. As it were, it "gets more bang for the buck". I am not altogether sure why that happens, but it is true that while the UK should invest more—I do not deny that—it is also true that the productivity of investment in the UK is high. Whether that is because of the foreign direct investment that we obtain or domestic investment, I do not know.
In conclusion, I entirely agree with the noble Lord, Lord Ezra, about the fiscal and monetary mix. During the 1980s profitability in British manufacture was restored. In the late 1980s it slipped again. The British economy is paying a couple of percentage points of interest rates above the German rates. That is because the markets do not believe that the British Chancellor of the Exchequer will be fiscally responsible. I grant that the situation has been good lately. However, if one has fiscal irresponsibility one has to pay high interest rates in the money market. That is the simple answer. Let us hope that we achieve the other mix: a tight fiscal policy and a loose monetary policy.
6.52 p.m.
Lord Selsdon: My Lords, I am proud to be speaking on these Benches along with my noble friend Lord Blyth of Rowington. He is a modest man, but two words sum him up. He is fearless and tenacious. I have known him in trade for many years. If there were more people like him, we would not have a balance of payments problem—as I doubt that we shall have in the future. His addition to these Benches gives me a little encouragement. I have always felt that trade comes before economics. I can understand why economists are continually puzzled about trade.
The noble Lord, Lord Ezra, will remember that the eminent Select Committee wondered whether it really mattered if we did not export manufactures. I believe that at that time Her Majesty's Government had 236 economists, of whom one-third were of East European origin. One economist of East European origin explained that we need not manufacture any more because everything else would compensate; and that we got it wrong about oil running out. We did not do so, because the price of oil is now at the same level as in 1972. Therefore, to a certain extent, in value terms oil has run out. The dollar has fallen. Oil is no longer important. It is interesting to note that sometimes the British can get it right.
We used to fight the French over sugar. We used to fight other people over coffee, the second commodity. We never fought anyone over oil, although the Middle East and the Arab world were quite convinced that all wars out there were over oil. Your Lordships will know that 1994 was a quite remarkable year when we got it completely right. For the first time ever, oil was placed on the back burner as the leading trading commodity in the world.
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What replaced oil? It was something at which the British are rather good. The commodity is called semiconductors, or microchips. The trade worldwide in microchips now exceeds OPEC oil sales. That area of information technology, of finding a niche market, is one at which we are extraordinarily good. But these opportunities usually arise by accident rather than design and almost all trade issues are accidental—as a result of the next person you meet, or the opportunity gained in a specific country.
Perhaps I may job backwards a little and then look forwards. We experienced several major changes of which we were not aware until long after the event. Obviously, the loss of, or withdrawal from, an empire led us to believe that we were no longer loved anywhere in the world and that we must somehow concentrate on areas in our own backyard called ECSC or EEC, where we were not loved. Historically, they were mainly our enemies and regarded us as major competitors. We failed to look at other parts of the world. We failed to consider that our manufacturing was based on a home market and the home market was a world-wide market. We forgot too, that investment from abroad was often the factor that stimulated our economies.
Some of us were brought up to believe that we would be bust if the automotive industry went up the spout and that everything related to motor manufacture, or to Coventry and Birmingham. When well known British brand names of cars disappeared, we thought that we would never make cars again. We were surprised when suddenly again we were not only a net exporter of motor cars, but the growth of our exports was extraordinarily good.
As has been pointed out in previous debates, in the area of automotive technology, which relates to motor racing, a sport in which my father spent most of his life, we have advanced technology. Eighty per cent. of all racing cars and equipment are produced in this country and small engineering businesses are in the forefront of design.
However, our life does not revolve around the motor car. Nor does it revolve around this phrase "balance of payments" or exports. I have long believed that the word "export" is dead. It is trade—national, international or wheresoever it can be accomplished.
However, we have no role unless it is a world-wide role. We cannot live on trading with a domestic and an EC market. What is the point of trying to compete head on in the manufacture and sale of products to people who make them? It is a point made by the noble Lord, Lord Peston. We are trading each other's product. Surely it is wiser to seek to sell to those countries which do not make the items that we make. But we have also made a mistake. As regards manufacturing, we have a deficit of £11 billion. However, if we remove trade to the developing world our deficit soars to perhaps £16 billion. Most of our manufacturing exports are to countries which do not manufacture the product and wish to develop an industry.
I seek to turn one or two concepts on their head. For a long time we did not want people from this country to invest abroad. We had the dollar premium; we tried to

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stop them. We failed to recognise the relationship between trade and capital investment, as the noble Lord, Lord Desai, pointed out. If we are attracting so much capital investment into this country, we ourselves should be considering substantial capital investment abroad. Whereas historically investment followed trade, I believe that now, to a certain extent, trade follows investment.
As I travel around the world, I am regularly surprised when a foreign Minister making a presentation at a British week points out that the British are the second biggest investors in his country. Wherever I go, we are the biggest investors. We are all surprised by that. Where does the money come from? It is not necessarily our money, but it is someone's money. It comes through us, and to some extent it will stick to us.
I do not believe that the word "invisible" matters any more. However, unless we are fearless and tenacious, we shall ignore perhaps three-quarters of the markets of the world. Who are the fearless and tenacious people? They are not in British industry. Frankly, I believe that some of them are called Ministers. Ministers charge off around the world taking with them many industrialists. Those industrialists are not interested in the country they are visiting; they are interested in going with the Minister. That in itself is good because they take courage from being in gangs. Ministers of great stature travel the world. The stature of the Ministers is increased—and more often than not the Ministers find their girth, too, increases substantially due to these visits.
Ministers in this Government have done an excellent job world-wide, as everyone acknowledges. The support that the Government have given to trade is as good as that given by any country in the world, and that was not the case when the report was published in 1984. I believe the value for money is good. There are a few complications because, as the Government fail to recognise, in trade continuity is important. Thus, while of our Select Committee most of us are still alive, over those 10 years there have been over 40 ministerial changes in the Department of Trade and Industry. Also the reshuffles down the line mean that there is no continuity of knowledge and experience of markets. There are also 17 different agencies and departments involved in export promotion where some form of co-ordination or coming together might be better.
If we think back to the Scott inquiry, we are aware of some of the failings within government and the inability to communicate. We were told that recommendations would come from the Department of Trade and Industry and I look forward to receiving them shortly. We also heard that the DTI had identified 80 target markets around the world that were to be presented to industry. I am afraid that none of us knows which they are: they are a state secret at the moment and we should like to know the priorities.
We must identify and, with no fear but with great tenacity, choose areas of the world and the industrial sectors where we know we are good or where we can be good. Therein lies the problem. It has been said, to use an awful phrase, that "the British are so wet you
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could shoot a snipe off them". In many of the emerging or re-emerging markets of the world, we who were the first are now the last. It is the weakness of our own industry that causes the problems, not of the invisibles, not of the service sectors. It is depressing for an industrialist who may charge his time out at £250 a day to read in the newspapers today that lawyers are being paid £750,000 a year. Regrettably, the quality in industry has fallen, our industrial base has been eroded. We no longer have the scale and capacity that we had before. But something is happening: it is the globalisation of industry where no longer is the word "British" of critical importance. We do not know where people source. We look at a manufactured import and we do not know how much of it is imported quality, how much exported. Those issues could be addressed.
The figures are useless. I do not think there is a role for economists. It is a matter for traders and businessmen and we should give them a kick up the backside.
7.2 p.m.
Lord Haskel: My Lords, like the noble Lord, Lord Selsdon, it is not my intention to enter into a debate with the eminent economists on these Benches regarding the figures. I am not sure that the figures are soundly based. With the liberalisation of world trade and the globalisation of finance and technology, business must view the old style boundaries as out of date. International trade is less a matter of national boundaries and more a matter of markets with different cultures. Businesses have to adapt their products and services to cultural needs and demands rather than to those needs and demands designated by national boundaries.
To secure our share of those markets, not only selling but also overseas investment is often essential. However, like my noble friend Lord Peston, I wonder on what our decisions are based. For instance, we invest more in Australia, with a population of 16 million and a low rate of growth, than in all of South-East Asia, with a population of 2.5 billion and a high rate of growth. So it is certainly important to explore our overseas trade frequently and I am most grateful to the noble Lord, Lord Ezra, for giving us this opportunity to do so again.
I say that it is important to explore the subject again since the first debate in which the Minister took part after his appointment was about foreign trade. It was on 10th July last year. During that debate I was able to say one or two kind things about the export promotion services provided by his department. However, since then problems seem to have arisen. Although the joint directorate works well in delivering the co-ordinated overseas trade services of the DTI and the Foreign and Commonwealth Office, other departments such as defence and agriculture, fisheries and food seem to be operating outside this co-ordinated effort. I wonder whether the Minister could tell us something about that.
Also, last July we spoke enthusiastically about the efforts of the export promoters. Indeed, market plans have apparently been written for each market of the 80 markets to which the noble Lord, Lord Selsdon, referred. However, the contents have been kept secret

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from industry. Certainly we need to keep the information from our competitors, but at least our salesmen in the field need to know the strategy. Perhaps the future lies in separating the actual trade promotion work from the Minister's department. Nevertheless, the British Overseas Trade Board has played an important role in drawing on the experience of business and it has helped to improve the professionalism of overseas government staff.
I am sure that that is helped by the welcome efforts of the Institute of Export to introduce a Professionalism in World Trade qualification. It is right to introduce it into the DTI and it sits well with the Investors in People project. I congratulate the Minister on following the lead of the Labour Party in this regard. Will there be a similar approach in the Foreign and Commonwealth Office? Foreign service staff have a key role to play in our world trade. Their increased professionalism can only be an advantage. I too welcome the fact that overseas missions are continuing, and the Minister himself has clocked up quite a few air miles. Those efforts, good as they are, are now unfortunately not good enough because business has become more competitive in overseas markets.
What can we do to secure our place in world trade'? The advantages of the 1992 devaluation have run out of steam. Both the Chancellor and the Shadow Chancellor have ruled out further devaluation. I sympathise with the frustration of my noble friend Lord Peston, but I suggest that there are three areas on which we can concentrate: modern manufacturing, information networks and the European Union.
Like the noble Lord, Lord Ezra, I too continue to be worried about our low share of world trade in manufacturing. I worry less about declining employment in manufacturing because it is partly due to labour-saving technologies. Indeed, much of what we sell overseas is precisely those labour-saving technologies—either the technology or the results from it.
But no longer can we just copy the lean production methods of the well-run Japanese companies. We have to move on with a new manufacturing strategy. It is becoming apparent that we can benefit by adding to what we have learnt about lean production in order to make highly customised products with the cost advantages of mass production but with very short lead times and a much greater element of service packaged with the product.
Therefore, as well as identifying selling opportunities, it is important for our overseas trade posts to be aware of the needs and activities of those forward-looking companies in order to assist them. Clearly, the work requires the professionalism about which I spoke earlier, plus excellent communications and information sharing which can only be achieved with modern information technology.
That brings me to the information networks. The networks will not only provide the excellent communications and information sharing which our companies require to be effective in world trade, but a whole new international business is being created.
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"Move bytes not atoms" seems to be the catch phrase for the new trade. We are already seeing it in operation. Music, magazines and newspapers are not only being distributed on discs, tape and paper but also via IT. Radically different ways of seeking business, servicing customers and delivering value are being created every day using this new technology.
As forward looking as ever, your Lordships' Select Committee on Science and Technology is currently examining the information superhighway, and I have the privilege of sitting on that committee. I hope that our report will be as seminal as the Aldington Report. Witness after witness is calling for leadership by the Government. We are told that this kind of world trade is raising all kinds of problems relating to copyright, intellectual property, encryption and the need for a legal framework.
Some said that the regulatory structure is a barrier to progress. The CBI identified the fragmentation of responsibility for information policy among government departments as a problem. Another witness said that there is a need to ensure that the Government exhibit and promote best practice with their own staff. However, witnesses are also telling us that we are good at IT. Countries, like companies, as the noble Lord, Lord Blyth, told us, must be clear about their sources of competitive advantage and act to develop and protect them.
Britain has competitive advantages in information and communications technology—not only because of our excellent telecoms and IT companies, but also because of our cultural infrastructure which provides the product that is communicated; namely, our capabilities in the arts and media, our language and our natural inventiveness and creativity.
We can ensure our place in this kind of world trade if we can achieve a critical mass earlier than our competitors. The DTI has an important leadership role to play here by encouraging our participation, recognising the problems and moving fast to plan a framework to deal with the problems and to get them agreed internationally. At present, all the running is being made by the US Government, clearly to help their industries dominate this sector of world trade. I look forward to hearing the Minister's views on this matter.
My last point relates to Europe. I entirely agree with my noble friend Lord Peston. I do not know how many noble Lords were present for the previous debate on Germany. I found some of the remarks made about our trade with the European Union most worrying. Many business people see the Government as putting our relations with Europe in peril purely to satisfy political needs.
More business is now being done on the basis of long-term relationships. It takes a lot of time, money and effort to build up those relationships to make them work. If Britain is unsure about its attitude to Europe, then Continental firms will be reluctant to put the necessary time, money and effort into building up those relationships with us in case there is a change in our policy towards Europe. The uncertainty is not doing us any good and is probably losing us business.

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I suppose the real test of our position in world trade is whether our economy qualifies for the conditions to join the proposed European monetary union. Putting aside for one moment the rights and wrongs of joining, our ability to qualify is a powerful objective for our economy.
7.13 p.m.
Viscount Chelmsford: My Lords, I begin with an apology. A long-standing engagement means that I shall not be able to stay to the end of this debate. I shall certainly read the balance of the debate with interest tomorrow morning. It has been a very interesting one so far. Secondly, may I say how glad I am that tonight I am not talking about information technology since I am following the noble Lord, Lord Haskel. There has recently been a step change in the Government's attitude towards information technology and we are on the move in that direction.
I am not an economist; I am a trader. I spent 40 years fighting for invisibles in the general insurance industry, to which I shall refer. Perhaps I may begin by getting rid of some statistics. Between 1990 and 1994, the general insurance industry produced almost £20 billion in balance of payments for the United Kingdom. Within the financial services area only the banks did better.
Overseas earnings for 1994 break down quite interestingly between the insurance companies, at just over £2 billion; Lloyd's, at just over £¾ billion; and brokers at a little over £1 billion. I refer to profit coming in. The total is £3.925 billion. Incidentally, almost 50 per cent. of that comes back as overseas dividends, mostly on behalf of insurance companies' overseas offices. The balance is overseas money, profit and commission, coming into the United Kingdom. Our best year ever in the insurance industry was 1993, when we brought in £4.814 billion.
Examining the period between 1980 and 1994 and using constant prices, we find that the annual output per insurance employee grew at an average of some 4.8 per cent. (just about double the national average of 2.4 per cent.). Today, almost 2 per cent. of UK employees are connected in some way or other with the insurance industry.
It is interesting to note that although today there are no UK-flagged ships and not that many UK-owned ships either, in 1993 (the last year to which my statistics relate) the UK remained the world's largest marine insurer, with 28 per cent. of world premium income. Obviously most of that comes from abroad, so it is highly invisibles oriented. Interestingly, we had 28 per cent. Next in the league table was Japan, with 13 per cent.
In addition, 1993 was a good year in aviation. Again, the UK had the largest single share—38 per cent.—of world premium income. The next largest was the USA with 25 per cent.
That success was achieved despite formidable factors which these days act against the UK. We are, after all, a small country. Looking at total premium income, the world is led by the USA with premium income,
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including its very significant domestic element, at 564 billion dollars. Japan is only just behind. Germany is third, with 116 billion dollars. The UK is fourth, with £111 billion. Taking into consideration our land masses, population and so on, the UK does remarkably well to remain fourth.
We taught the world complex insurances; and now the world competes against us. That is one of the factors against us. We have to cope with very many offshore financial centres, which are also tax havens to a greater or lesser degree: Bermuda, Barbados, the Cayman Islands, the Channel Islands, even part of Dublin, the Isle of Man, Singapore and, I dare say, others. In 1993 Bermuda alone wrote just under 18 billion dollars premium income. That is as much as 15 per cent. of the UK's total overseas premium income. Those are some of the factors with which we have to cope.
Success has also been achieved—so far, at any rate—despite our mistakes in two major areas. Our financial and management skills have let us down. That is perhaps the "kick up the backside" mentioned by my noble friend Lord Selsdon. We discovered about Continental catastrophe reserving at least 20 years too late. It is the market's fault, not the fault of the Government or anybody else; it is the insurance industry's own fault. We now realise that these reserves, which are to some extent hidden, are used by Continental insurance companies to enhance their assets as securities against borrowing for takeovers. UK insurers today look considerably weak compared to Continental or US insurance companies. London's power now depends on too much foreign capital. We bring the profits into London but increasing amounts go out in the form of dividends. UK-owned insurance company capitalisation is very weak indeed compared to Continental and US companies.
That must have counted in the recent proposal for the merger between the Royal and the Sun Alliance, which will make it 48 per cent. larger than the Commercial Union, the current leading UK general insurance company. But it will still leave the combined Royal-Sun Alliance only 75 per cent. the size of the Prudential, our large life insurance company, and, astonishingly, even after the merger, only 25 per cent. the size of the Allianz. That is the difference between German and British capitalisation.
What of the future? We need and must have strategic financial know-how. That is essential in both global underwriters and global brokers. We certainly need new blood from outside disciplines within our management. That process has begun but more is needed.
Innovation is needed like never before and it is getting harder. That is the innovative treadmill, mentioned by the noble Lord, Lord Peston, which we tread on at this particular time in the insurance industry. Even when we find the innovation, retaining it for an appreciable time is becoming harder, as other people have the skills to catch up with us more quickly.
We need new insurance products. Indeed we have some. The market is currently working on new financial insurance products and doing quite well with them, so far as I can understand it.

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We have perhaps too many computer networks in different phases of development owned by different people. That is an error. We should try to bring them together. In fact, we have avoided in the insurance market the rows that characterised the attempts to improve the Stock Exchange, but we have done so by seeking consensus. Unfortunately, consensus means that development goes far too slowly for the good of the industry.
We must remember, of course, that if we succeed and improve our networking, good communication cuts both ways. It also allows our competitors to take away our business if they can. We need level tax playing fields, at least with our major international competitors.
We need a strong programme of training and continuous professional development. Indeed, that has already begun and it has begun well. But both training and CPD must stay a market priority to ensure that we have top quality executives.
The UK is a small island. Notwithstanding its North Sea oil it has no natural resources. We have always had to live by our wits. Drake's successors today no longer burn Spanish ships. They go to Madrid and South America to fight for the insurance of them. But people remain the UK's most important asset and nowhere is that more true than in the insurance industry.
7.22 p.m.
Viscount Waverley: My Lords, it is a pleasure to speak in the debate initiated by the noble Lord, Lord Ezra, this evening. I have been reminded by a colleague just how effective the noble Lord is as chairman of a Select Committee in enabling the most complicated of all issues to be understood by all the participants.
The countries that thrive have sustained export growth. The United Kingdom does well, but I feel that we are only touching the surface of opportunities. The noble Lord, Lord Boardman, is quite right when he compares our performance with the Japanese. The President of the Institute of Export, Mr. Davis, was right to say during lunch today that never has the need for exporting been greater. Certainly, exporters need beware. Weakening growth in Europe has seen exports drop, with little sign of recovery.
But there are notable exceptions. Last Friday, for example, I had the opportunity to hear first-hand of British American Tobacco's advance into the Central Asian market, centred in Tashkent. That is British entrepreneurship at its best and is backed up with an investment of 270 million dollars. There are not many new frontiers left, but Central Asia is certainly one.
We must realise that time and again countries would like to consider the UK when seeking suppliers or a business partner. But, oddly, while historically being a trading nation, we are generally not as committed to an export culture as we should be—aggressive in our approach—to take up the challenge. The difference lies in that, while in an age gone by British companies could expect the marketplace to call on them for good, now we must get out there, speak their language and set up distribution and after-sales channels.
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I appreciate that the Government can only do so much to encourage the process. But there are areas where more can be done. For example, I have little doubt that British capital equipment and technology exports would dramatically increase with more favourable export financing to second and third world markets. Many contracts are lost to British companies as a result of more beneficial terms by the likes of Hermes, Saatchi, Eximbank USA and Eximbank Japan. Does the Minister agree with me that a thorough reappraisal of the ECGD could be an enormous stimulus to British exports? I have heard it said that a Brazilian Minister, when asked what the United Kingdom must do to have greater access to the Brazilian market—in other words, what is the impediment?—answered ECGD. What is the Government's strategy towards the Export Credit Guarantee Department? What arguments does the Treasury produce for not taking a more flexible approach? What are the underlying criteria?
I recognise that the NCM is outside the Government's control, but it is a key player in short-term cover. Does the DTI sit down with it to consider what needs to be done to help British companies?
Let me say a quick word about export intelligence. Intelligence is crucial and we have the mechanism to supply it. But I believe that we are squandering the opportunity. The process by which information from our posts is gathered and disseminated for distribution is far from satisfactory. The information needs to be more available and be of a more exact nature, with specifications and general leads allowing for more pinpointed dissemination.
That having been said, it is clear that our heads of missions are much more trade oriented. Our foreign policy must, in large part, facilitate British export growth. But the relationship between the DTI and the Foreign Office perplexes me. What is the degree of interchange between the two departments? How is it decided which department fills commercial posts?
Another area on which the Minister might possibly comment is future plans to utilise the Internet. I understand that the Americans have what they call "Tradenet". The Minister is well aware of my desire to see an all-encompassing database of British companies, with information of a detailed nature describing goods or services offered by the UK.
Finally, I have two questions about business links. Are the greater majority on target to be self-financing? What will happen to those that are not?
In conclusion, I recognise that the Trade and Industry Select Committee is in place, but more attention should be paid to the export field.
7.28 p.m.
Viscount Torrington: My Lords, I echo the gratitude expressed to the noble Lord, Lord Ezra, for introducing the debate. He gave at the beginning of his speech an excellent tour d'horizon of the factors affecting our balance of payments. I am fascinated by the kind of "sub-debate" that has developed over how phantom investment has nevertheless produced a real return. I must say that if two eminent economists and a senior

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banker cannot sort out the matter, I do not suppose that the rest of us can. It strikes me that if one wants an income of £10 a year, it is called clever to invest £50 rather than £100. It is called good business. Maybe—just maybe—it means that we British still know how to turn a quick buck fairly efficiently.
As the sixth speaker after the maiden speaker, I am not supposed to pay tribute to the speech of the noble Lord, Lord Blyth of Rowington. However, he told us so well what are the crucial elements in good foreign trade. There is always one person in these debates who goes off at a slight tangent on a rather narrow subject. That lot probably falls on me tonight. I wish to talk about British trade in the Middle East.
Since the discovery of oil in the region, the Middle East, as we all know, has been an area of very considerable importance in the context of Britain's overseas trade. But our principal trading partners in that area are far from easy customers to deal with and our relations with them seem to go through a series of difficult patches.
The natural growth of our trade in the Middle East region has, in recent years, been disrupted by two or three traumatic events. The first was the fall of the Shah which ended the long phase of economic expansion in Iran and brought to a virtual end Britain's lucrative trade in military hardware, industrial and consumer goods and oilfield equipment. The Hillman Hunters which used to terrorise the streets of Tehran under the name of Peykhans, I am told are now a somewhat faded memory.
With the arrival of the fundamentalist clerics, the West began to see Iraq as the last bastion against the religious bigotry of the new rulers of Iran, culminating in our tacit support for Saddam Hussein's military build-up. We saw the enemy of our enemy as our friend and we were not too picky about that friend's general philosophy. Suffice to say, Saddam in a sense served our purposes by keeping the potentially dangerous new Iran preoccupied with a nasty and bloody little war. Unfortunately, our erstwhile friend won that war and got ideas above his station which, as we all know, ultimately led to the Gulf War.
But what happened in terms of trade? We loyally supported our American allies and went to war against an important trading partner. Yes, of course, we did so on behalf of another, albeit rather smaller but nevertheless fairly important trading partner, Kuwait. But the result? Well, when the scrap was over, Britain suddenly found that while there was masses of work to do in rebuilding Kuwait, America had taken the place over. The US Corps of Engineers was the arbiter of who got what contracts, and guess who got most of them. Certainly not the British.
And what happened to Iraq? It was simply shut, closed, and had the door bolted by the UN. Meantime we console ourselves that we supported and maintained excellent relations with the richest country in the region, Saudi Arabia. They are staunch friends, the Saudis. Or are they? I sometimes wonder. Every time a British television company makes a film about current affairs or human rights in Saudi Arabia, thousands of British
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jobs hang in the balance and, with apologies to my noble friend Lord Blyth, the aerospace industry bites its nails to the quick. Yes, Saudi Arabia is a good trading partner, provided the level of moral scrutiny we apply to it is not too much deeper than that which we applied to Iraq before it invaded Kuwait.
The point is that we make a hopeless mess of moral judgments about these countries. They have very different ethics and values, however western they may or may not appear on the surface. So why are we so determined to moralise about Iraq? Yes, its ruler is, to our way of thinking, a textbook dictator, an autocrat, a despot, a dinosaur. He has done things to the marsh Arabs and the Kurds and other opponents of his rule which would be intolerable in our society. Ideally, we should do nothing to prolong his reign and all we can to end it. What we are actually doing, or rather have been doing, is to try to starve his own people into doing it for us.
There are thousands of perfectly decent Iraqis who, in a normal country, would be opinion formers and leaders. But Iraq is not a normal country and to the beleaguered middle class Iraqi just keeping his family fed comes a long way ahead of manning the barricades against Saddam.
I have visited Baghdad in the past few weeks and, if anything, I got the impression that life seems to have improved a little over the past 12 months. I simply do not believe that the sanctions policy will succeed, especially now that the UN has permitted oil to be traded for medicine and food. We have in fact dropped sanctions on the only items the shortage of which might ultimately have brought Saddam down. Iraq is nearly self-sufficient in all other basics. But that in itself is really Iraq's main problem.
Iraq should be, and is, I think, learning a very significant lesson from the whole sanctions business which is particularly important for future trading relations. In recent decades Iraq has thrown out foreign business and taken total control of its oil industry, agriculture, manufacturing and distribution. There are virtually no foreign investors in Iraq today: no multinationals with installations or petrochemical plants or fertilizer factories; no desert resort operators; nobody with any stake in its economy. The result is that, in spite of the fact that Iraq holds a sizeable percentage of the planet's oil reserves, the world has been able to lock the door on Iraq and virtually forget its very existence for several years.
If Iraq had not been so economically isolationist and nationalistic, all the usual multinational suspects would have had their tentacles spread through the Iraqi economy and it would have been impossible to impose the sort of sanctions which exist today. The multinationals would have lobbied unmercifully in Washington and Whitehall. They would not have had to bother in Paris because I see that the French opened a trade mission there around three weeks ago and I suspect have not been paying much attention to sanctions throughout the peace. I think Iraq now understands the message that economic isolation does not pay. I am sure that it will act to open up its economy

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when sanctions finally go. Those best placed to take advantage of the opening up should be Iraq's old trading partners. Most middle-aged Iraqis—and even a number of younger ones—were British educated, at least to University level, and look on Britain as almost the mother country. It should be to Britain that Iraq looks but, alas, Baghdad is even now full of French, Russians, Koreans and all sorts of nationalities—anything but Brits.
I hold no torch whatever for Saddam Hussein. But in this competition the UN is now the unwilling and vacillating starter for a race in which every other runner but Britain is already straining at the tapes. Will we yet again lose before we start?
I wondered at the outset whether I should declare an interest as I can see a host of business opportunities in Iraq. I cannot do so because I am not allowed by my Government to have any current interest in Iraqi trade. Few, if any, of our European or eastern competitors seem to feel themselves bound by similar niceties. And if and when the US changes its views, I suspect that, as with Kuwait, the British will be flattened in the rush as the 7th Cavalry of American business goes in.
I suspect that it may well be the sense of shared adversity brought about by sanctions which is one of the main pillars of Saddam's rule. For my money I would rather Britain tried to bring an end to Iraq's economic isolation and encourage it back into the world community than sustain the sanctions which reinforce that isolation. British overseas trade can only benefit from it.
7.37 p.m.
Baroness Hooper: My Lords, I add my thanks to the noble Lord, Lord Ezra, for introducing this debate. Overseas trade for us is vital, important and significant. Our economy has always been based on the fact that we are a trading nation.
I have been fascinated by the debate and believe that the general theme has been well addressed, particularly by my noble friend Lord Blyth in his excellent maiden speech. So perhaps I may follow the lead of my noble friend Lord Torrington and concentrate my remarks on a specific area—in my case, our trade with Latin America. In doing so I am happy that I can comply with the request of the noble Lord, Lord Peston, for more information about Latin America.
I believe that this is an area where there is great potential for improving our commercial and trading links. Historically we have had strong links with many Latin American countries and there is still an amazing amount of goodwill there for the British. But it is fair to say that until recently not only have many countries in that region had closed and chaotic economies with unbelievable inflation rates and bureaucratic centralised systems but, in addition, because of the non-democratic forms of government generally, that our political and other links were also damaged.
Now the picture is entirely different. Tough economic measures are beginning to bear fruit and democracies have emerged which show every sign of remaining stable. Political links are such that scarcely a week goes
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by without a visiting Minister or group of parliamentarians from one Latin American country or another coming to visit us in this Parliament. Now we also see the formation and development of major trading blocs such as NAFTA, the North American Free Trade Area, at the northern end of the scale and MERCOSUR in the southern cone. Indeed, there is a revamping of the Andean pact countries. I was interested to see that the four basic member countries of MERCOSUR—Brazil, Argentina, Paraguay and Uruguay—have in the past couple of weeks worked out a special agreement with Chile, making it a special associate member of MERCOSUR, and talks and negotiations are under way with Venezuela. That is an interesting development.
Apart from those involved in the privatisations, in which many British companies have participated, far too many British businessmen are unaware of the changes that have occurred throughout Latin America. Like my noble friend Lord Torrington, I returned last week from an overseas trade mission. I was asked to lead the trade mission to Argentina, having been on a similar mission last November. In spite of the fact that the United Kingdom is the second biggest investor in Argentina—it is also the second biggest investor in Mexico and Venezuela—it may surprise people to know that the trade balance between the United Kingdom and Argentina is in Argentina's favour. Last year UK imports from Argentina amounted to £253 million; exports to Argentina amounted to £233 million. We are not too far apart and I believe that the gap will be closed.
Last year in Argentina 14 trade missions were sponsored by the DTI. Those represented chambers of commerce and specific organisations. The one I went with last week was the Latin American Trade Advisory Group, which itself is sponsored by the DTI. It looks as if this year there will be an even greater number of such trade missions than last year. The commercial section of our embassy in Buenos Aires has been very busy indeed. It provides good support to our visiting businessmen, particularly to the first-timers. It is a good example of co-operation between the DTI and the Foreign Office. In saying that, I echo what was said by my noble friend Lord Selsdon.
My experience of the two missions to which I referred, the most recent having been organised by LATAG, was that each was composed of between 20 and 24 representatives of small and medium sized businesses. They come from a variety of sectors, from, on my last trip, the manufacturers of closed circuit television inspection equipment for sewers and boreholes to the manufacturers of foetal monitoring equipment and, very appropriately for Argentina, the manufacturers of industrial food freezing and chilling equipment for meat, fish, fruit and other processing industries. They seem to have met with varying degrees of success. They may have established local agents, local joint venture partners or taken some preliminary steps to setting up local offices.
It is what results in the long term from these first tentative steps that is important. We need to know whether these trade missions are successful in the long term. I urge my noble friend the Minister to consider implementing some method of monitoring the results

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not only of ministerial missions but also the many chamber of commerce and other missions which are funded in part by the DTI.
It may be that targeting particular sectors would be a solution. Two such sectors have been referred to in the course of the debate, in both of which I have an interest. One is the pharmaceutical industry and the other is education. The reforms to the education system in Argentina, which has a decentralising approach following very closely on the reforms in this country, mean that the manufacturers of British educational equipment have quite an opening there. In addition, Argentina requires the teaching of foreign languages, a favourite theme of mine. Argentina has insisted that in every school in Argentina English will be taught. That provides many opportunities.
Reference has been made to our membership of the European Union. I believe that we fall down in taking advantage of many of the European Union programmes aimed at stimulating trade with Latin America. There are certainly in place special agreements between the European Union and the MERCOSUR countries and the European Union and NAFTA, apart from a number of bilateral arrangements. There is no doubt that the British companies involved in these projects are very few. I would urge my noble friend the Minister to ensure in every way possible that the United Kingdom plays more of a leading role in this respect.
7.46 p.m.
Lord McNally: My Lords, I approached this debate with some trepidation for two reasons. First, I am a graduate in economics of the University of London but, alas, I spent more time in student politics than studying Ricardo. The thought of following two of the university's economic divas in this debate was quite frightening. However, I am encouraged by what I thought was both the humility and the Angst of the noble Lords, Lord Peston and Lord Desai, qualities not usually associated with academic economists.
My other fear was that the whole debate would turn into some kind of Euro-brawl. Most of the Euro-phobes seem to be absent. Perhaps they are blancoing their webbing after the Prime Minister's call to arms yesterday. In both debates today we have managed to concentrate on the topics in hand rather than indulge in old skirmishes.
I have always been fascinated by the way both our Houses treat trade policy. Trade has probably split more parties and caused more wars than even religion. In the four years I spent in the other place there was one full-scale debate on the broad thrust of trade policy. Perhaps it was wise to avoid such philosophy.
We are all grateful to my noble friend Lord Ezra for initiating and provoking a debate of quality. At heart, like perhaps the noble Lord, Lord Peston, I am free trade man, but I am also a European—a European on the basis that if you are a free trader it is common sense to trade with your nearest neighbours. Those are not incompatible aims. The approach I take—and to be fair, it is also that taken by the Government—is to see our
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membership as promoting an outward-looking Europe rather than a fortress Europe. I hope there will continue to be a cross-party approach to using our influence within the Community.
A number of noble Lords have mentioned other areas such as Latin America, the Middle East and South Africa. Those areas deserve our attention and the interest of our entrepreneurs. I have never understood the idea that some kind of secret clause in the Treaty of Rome prevents our going to the Pacific Rim, Latin America or wherever. What the Community offers is a very sound and secure trading base. I do not want to delay the House with too many statistics, but 80 million Germans bought British goods to the value of £17.7 billion compared with £16.9 billion-worth purchased by 240 million Americans. France spent £13.7 billion on British goods, which is almost as much as that spent by the entire Commonwealth. Holland, with only 15 million people, took exports worth £9.7 billion from Britain, which is more than that taken by the six Asian tigers, plus China, Indonesia and the Philippines. We sold more to Sweden than to the whole of Latin America from Mexico to Cape Horn. I give those statistics not to hammer home some pro-European message but simply to get over the basic fact that our big market at the moment, and for the foreseeable future, is Europe. It makes sense in planning any trade policy to make sure that that European policy is sound as well.
Like many noble Lords, I have contacts with representatives of Commonwealth governments, Latin American governments, and those of the Middle East and Asia. What has always intrigued me is their message that they want us to use our influence in Europe. They see that as an important role for Britain in promoting trade and an outward-looking Europe. I say to the noble Lord, Lord Blyth—I believe the point was echoed by the noble Baroness, Lady Hooper—that I would like to see British industry using more of the opportunities that Europe creates as regards trade. I pay tribute to Sir Leon Brittan who has conducted Europe's trade policies with great vigour and imagination. He has resisted the protectionist fortress Europe arguments within the Community. Europe has put in place a range of agreements which are now there to be exploited. As regards the North American markets, the Madrid summit with President Clinton heralded the opportunity for new co-operation. The summit with 24 heads of government in Bangkok in March reached similar accord as regards South East Asia.
As I said before, I believe that there is no need for a Euro-brawl on these issues. Let us see the European market as the strong base that it is and then look at how we can explore and exploit other opportunities in the world. I was once an adviser to a Labour Government which asserted their right to trade with the world. I understand that it is not always practical to make too many moral judgments as regards trade policies because one gets into all kinds of difficulties, as the noble Viscount, Lord Torrington, indicated. However, I do not believe that one can totally absolve oneself from moral judgments. I was pleased to hear the other day the noble Baroness, Lady Miller of Hendon, asserting the

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Government's strong policy about exporting instruments of torture. There is not an absolute in trade. We have to have limitations on these matters.
Conversely, I see trade policy underpinning sound political movements in the world. The noble Baroness, Lady Hooper, referred to the growth of democracy in Latin America. We consider our attitude towards eastern Europe and the Middle East peace process. We also look at the peace process for South Africa. In those areas trade can play a very important part in underpinning such processes and in making them last.
Governments should not be too humble about their role in trade policy and not penny-wise, either. I would like assets such as the training of overseas students, the BBC World Service and the staffing of British missions to be fully kept up. Ministers should go abroad on trade missions. Last year one newspaper wrote about the rise of sleaze in political life. It pointed out that Mr. Richard Needham had travelled abroad more than any other Minister. Surprise, surprise! He was the Trade Minister. Was it expected that he should carry out his business from a telephone box at the end of Whitehall? Ministers should be very bold in this matter. I am very pleased that the Deputy Prime Minister is in China at the moment with a large trade delegation. We have to encourage that kind of development and do so boldly.
I saw a television documentary a week or so ago about renovating an old steamer on the lake in Berlin. It was not the point that the film was making but it came over that the engine of the steamer had been made in Glasgow. There is always a tendency for nostalgia in trade debates; to recall the good old days when everything was Clyde-built or Sheffield-made and cotton was king. The noble Lord, Lord Peston, put his finger on the matter when he said that what we really face is the innovative treadmill. That does not always refer to the new industries; it can mean looking at other opportunities.
One Michael Caine-type statistic which attracted me is that the United States earns more from its film and television exports than it does from its aerospace exports. It has always struck me that film and television is a base that we should develop in exporting to the world, especially as we have the English language to build on.
The simple lesson as regards tonight's debate is that the choice has never been Europe or the open sea; it is to use the strength of Europe to fulfil Britain's historic and age-old skills at exporting to the world. If governments of whatever complexion invest in the skills and ingenuity of the British people and take a global attitude to trade, then we shall prosper.
7.59 p.m.
The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie): My Lords, I am grateful to the noble Lord, Lord Ezra, for initiating this debate. In the tradition of this House, it seemed to me to be a debate that was inquiring and intellectually curious. The contributions made were based on a solid rock of either expertise or experience. I also congratulate my noble friend Lord Blyth on his maiden
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speech. It seemed to me that, within a very short compass, he managed to include comment of great value to your Lordships and in a very short space of time. I very much hope that he will continue to contribute to debates in your Lordships' House. His long and distinguished career in industry, his service as head of defence sales at the Ministry of Defence, and his chairmanship of the Advisory Panel on the Citizen's Charter, mean that he has much to contribute. I am grateful for his contribution this evening.
I welcome the opportunity for this debate. This country has a tremendous history as a trading nation. The noble Lord, Lord McNally, may rightly comment that we should not simply look back to the past, but the legacy of that great history is still with us. The UK earns around a quarter of its GDP from trade and our day-to-day lives would be unimaginable without it. We must therefore keep a close watch on how we are doing, as this debate indicates.
Let me take two views of the trade situation, one long term—over the past 25 years—and one medium term—over the past 10 years. From 1970 to 1995, the G7 countries have accounted for a remarkably stable half share of world exports. Over the same period, rankings of G7 countries by share have been constant—the UK in fifth place behind the US, Germany, Japan and France. The UK has lost share of world fade, dropping gradually from around 6 per cent. to around 5 per cent. Out of the G7, Japan has shown the clearest improvement in share, from 6 per cent. to 9 per cent. The other country to suffer a decline is Canada, with a share drop of 5 to 4 per cent.
Over the medium term, the picture is less gloomy. Since the mid 1980s our share has stabilised. We have found that this can be explained in part by higher than average growth in our traditional overseas markets. However, it also reflects the improvements in our overall competitiveness that we saw during the 1980s, to which my noble friend Lord Blyth rightly drew attention.
It is good news that we have halted that decline. Our aim must now be to see how we can reverse it. We in government have an obvious role to play. We need to continue to make every effort to break down those barriers which stop UK companies from making the most of markets abroad. Systems of tariffs and regulations can damage the prospects of the most effective and experienced operators. We shall be working hard through the multilateral trading system based on the World Trade Organisation to drive that forward. We need to build on the achievements of the Uruguay Round and press for a new multilateral negotiation round to be launched before the end of the decade. Our ultimate goal, as recently expounded by my right honourable friend the President of the Board of Trade in his widely applauded speech "20:20 Vision", is global free trade by 2020.
We also have to seek to ensure that we can bring about the maximum degree of UK participation in that global free trade. The primary responsibility for that, once we have broken down regulations and trade barriers, must rest with UK business. To try to

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second-guess the expertise of business is not a past mistake that we intend to repeat. However, that does not mean that government should not be involved. On the contrary, since the last general election we have followed an aggressive policy of supporting, equipping and assisting our businesses to make a greater export effort. As the noble Lord, Lord McNally, pointed out, there is no more visible example of that than the presence of the Deputy Prime Minister in China at this very moment with our largest-ever trade mission to that country.
Beyond those highly visible activities of trade missions, to which I shall return later as I have been asked a number of questions, perhaps I may point out that any individual company seeking to export can plug itself into the full range of export services that the Government have to offer, for example, companies can get advice from our export promoters—skilled exporters seconded to the Government from the private sector for that purpose. I hope that those who have had contact with them will agree that it has been a remarkably successful innovation. Companies can get advice from DTI country desks with their expert knowledge of particular overseas markets. They can use information collected by the Foreign Office's network of overseas post. Perhaps I may advise the noble Lord, Lord Haskel, and others that the Foreign Office now devotes as much as one-third of its resources to overseas commercial work. Businesses, particularly first-time exporters, do not need to visit the markets; they can obtain information from either the DTI or the FCO. They should be able to have access to all those services through their local Business Links.
I appreciate that there is some concern that we should continue to be as expert as we possibly can be, within both my department and the Foreign and Commonwealth Office. For that reason, I certainly welcome the involvement of the Institute of Export in the development of the professionalism in trade qualification. A decision on the awarding body for the qualification will be taken shortly. I am afraid that I cannot say more than that at present. However, the Foreign and Commonwealth Office is already a major player in the interchange programme of developing skills by experience in other posts relating to trade promotion. Although there is a regular interchange at present, I hope that it will expand yet further.
The importance of information networks is also readily understood. Running the information society initiative as we do, we recently had a DTI export challenge to trade associations which gave awards to trade association proposals using the Internet to promote exports. I hope that that will meet with noble Lords' approval.
There is, of course, no point in pouring considerable sums of the taxpayers' money into promoting exports if that does not yield results. Some, if not all, of your Lordships may be aware of the recent National Audit Office report which looked into our services to exporters. As one might expect from the NAO, it analysed our work carefully and found areas in which it considered that we could improve our performance.
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However, the main message of the report was exceptionally encouraging. Perhaps I may quote just one statistic. Its analysis of our work in the key South-East Asian market found that some £4.5 million in public expenditure had helped to generate export business worth £345 million. Furthermore, that effort resulted in some 500 new entrants to the market. I hope that your Lordships will agree that that represents excellent value.
Beginning with the noble Lords, Lord Ezra and Lord Peston, a number of broader macro-economic points were made. I shall try to address some of them, but I should say first that I have been pleased that this debate has not attempted to address exports exclusively. I fear that sometimes even in 1996 there is something of a tendency to do that. We need to look at our export effort in the very clear context outlined by my noble friend Lord Boardman. We should consider not only our outward investment, but our inward investment. One fascinating statistic which, curiously, is seldom deployed is the fact that those companies that we have attracted to the United Kingdom as inward investors are now responsible for some 40 per cent. of our exports. To pick up a point raised by the noble Lord, Lord McNally, I would guess that if we were to look at that figure in the context of the European Union, the proportion might be significantly higher than 40 per cent.
I listened with interest to the criticisms and comments made about investment. In typical fashion, the noble Lord, Lord Desai, analysed the possible problems of the high hurdle rates which appeared to be encountered in the United Kingdom. I should simply like to add a point without coming to any clear conclusion. It is interesting that while those inward-investing companies in the United Kingdom account for only 1 per cent. of total UK enterprises, they represent something like 32 per cent. of our capital expenditure. It is difficult to analyse the figures with any great certainty, for the following reason. Noble Lords may recall that in the second White Paper on competitiveness we concluded, basing our information on an OECD source, that business sector investment in machinery and equipment as a proportion of GDP had been similar to other members of the G7, apart from Japan, since 1980. Manufacturing invested a similar proportion of its output to Germany and the United States over the last complete economic cycle. There are a number of figures which indicate that we are maintaining our level of investment.
The example of my noble friend Lord Boardman of the purchase of a fleet of Boeings and how that would enter into the balance of payments, compared with the services that might be earned over the next 20 years, was an extremely interesting one. I was grateful to my noble friend Lord Chelmsford for his expert appreciation of our position in relation to insurance. However, one wonders whether the division that we have traditionally followed of visibles and invisibles remains as helpful as we have accepted it to be. Perhaps we should analyse the following situation more carefully. When we enjoy a significant flow of inward investment by Siemens, Samsung and the like, at first the companies tend to bring in capital goods as they set

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up their factories. As the example of Nissan indicates, later they begin to develop their own domestic (in our terms) supply chains. Those are matters which are probably better dealt with in a debate on inward investment at a later time.
The issue of the visible deficit was raised on a number of occasions. The visible deficit of something under £0.6 billion in November and December widened to £1.4 billion in January and £1.5 billion in February of this year. I stand back in the presence of the economists on the Benches opposite, but I believe it is generally accepted, correctly so, that that widening was attributable to a general slow-down in the economic growth of our major trading partners, resulting in a slower growth of our exports. Clearly, that is a matter that must be watched carefully. However, 1994 and 1995 have seen the lowest visible deficits since 1987.
It is correct that market plans are not revealed to one and all in their entirety for the very good reason that they are primarily working documents which are subject to continual review and adjustment. They are not appropriate for straightforward publication, but they are made available to industry through our area advisory groups. We accept that there is a case for making them more widely available. Summaries have been made available through Business Links, and more readily available on request. This is a rolling process. Summaries are produced as individual plans are revised.
My noble friend Lord Selsdon indicated that he was unaware of the 80 markets. I can give that information to him, although I shall not do so at the moment. If he wishes to know how we rate any particular country or company at any time I am more than willing to provide him with that information.
The noble Viscount, Lord Waverley, asked about ECGD cover. If he analyses what has happened in recent years I believe he will appreciate that our cover for key markets has increased substantially. In particular, over the past four years ECGD has come back with cover for over 25 markets, often faster than other countries' export credit agencies. I believe that our rates are now much more competitive. Over the past four years political risk rates have been reduced by approximately 25 per cent. I understand that they are now generally comparable with those of most of our G7 rivals.
Both my noble friends Lord Torrington and Lady Hooper referred to specific markets and areas of the world. I am very pleased that they have done so. In reply to my noble friend Lord Torrington, while the Iraq sanctions are in place we are bound to abide by them. However, my noble friend can be assured that the Government are very much alive to his point about the need to ensure that British companies are properly positioned to compete when those sanctions are lifted, as we all hope they will be, when a satisfactory state of affairs is arrived at.
I am most grateful to my noble friend Lady Hooper for leading a trade mission to Latin America. I have just come back from the Middle East, but next month I shall visit Brazil and Argentina. She makes a very good point about the importance of follow-up. If we do not follow up the exercise may be a waste of public money. I go
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back briefly to the NAO report. That appears to indicate that the type of activity that we are undertaking, where follow-up is an essential part of planning, reveals that, while we do not have it exactly right, it is undoubtedly an integral part of the strategy that we are following.
I am conscious that this evening some noble Lords who usually contribute to such debates are not present because there is a rival attraction at Canning House where my right honourable friend the Foreign Secretary is reporting on his recent trip to Latin America. However, in my right honourable friend's remarks at Canning House this evening, he will announce that we are proposing to hold a major conference on Latin America in January or very early next year, as my noble friend Lord Montgomery has repeatedly requested. We will wish to highlight the position of the United Kingdom as a gateway to Europe and to draw attention to trade and investment in Latin America. There are undoubtedly opportunities in that part of the world, and I am grateful to all those who have appreciated how important that is.
If I have failed to respond to particular points I hope that I shall be forgiven. I am grateful to all noble Lords who have contributed to the debate this evening. We see this as an important partnership between the Government and the private sector, with a common purpose. We do not seek to dictate but hope to assist and support. I hope that we can conclude the debate on an optimistic note. Over the past year the export effort has been sustained and is growing. It is not simply to be noted in terms of the number of missions, although the NAO report believed that they were an extremely worthwhile way to go forward. I believe that my noble friend Lord Selsdon, a little unkindly, indicated that Ministers who led such missions suffered the danger of a widening girth. I thought that that was a little on the personal side. However, knowing his expertise on this subject, I welcome his contribution otherwise.
The figures for some of our key markets look very encouraging. The Netherlands has been mentioned. The value of our exports to the Netherlands increased by 25 per cent. last year. The equivalent figure for Japan was 27 per cent. and for Indonesia 44 per cent. It has been a worldwide exercise and effort. I am grateful that there should be such encouragement on all sides of the House for the national effort now under way.
8.19 p.m.
Lord Ezra: My Lords, I should like to thank all noble Lords who have participated in the debate which has been a wide-ranging one, as the Minister said in his response. We have ranged through major issues of policy to particular sectors, covered so admirably by the noble Lord, Lord Blyth, in his maiden speech, to particular markets, and to the wider significance of exports, spoken to by my noble friend Lord McNally. I hope that we have given the Government a great deal of food for thought. Our aim is to help and stimulate. I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

Party Wall Bill [H.L.]
8.20 p.m.
The Earl of Lytton: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(The Earl of Lytton.)
On Question, Motion agreed to.
House in Committee accordingly.
[The DEPUTY CHAIRMAN OF COMMITTEES (LORD MURTON OF LINDISFARNE) in the Chair.]
Clause 1 [New building on line of junction]:
The Earl of Lytton The Earl of Lytton moved Amendment No. 1:
Page 1, line 10, leave out ("wall) or the external wall of a building") and insert ("wall or the external wall of a building)").
The noble Earl said: Perhaps I may explain that the large number of amendments on the Marshalled List arises primarily because of the need to modernise the language of the Bill and to correct drafting errors. The intention remains, as always, that the Bill will follow as closely as possible the London building Acts which are its role model and the precedents and practice which have been established for inner London over a long period of time.
I must pay a brief tribute to the efforts of the DoE and its officials and lawyers and to parliamentary counsel who drafted the amendments. I thank them all most sincerely for their patience and attention to detail. I am also thankful, as ever, for the expertise and assistance of the working party, and, in particular, to Mr. John Anstey who heads it. The period since Second Reading is related directly to the time and effort devoted to the Bill. Finally, I must declare an interest as a chartered surveyor with some involvement in party wall matters, although not very great at the moment, and since Second Reading I have been made an honorary member of the Pyramus and Thisbe Club, which is an association of party wall surveyors and others interested in party wall matters. So I declare also that non-pecuniary interest.
With Amendment No. 1, I should like to speak to a number of other amendments. They are slightly different from the groupings on the list, in the sense that I should like to pull into the first group Amendment No. 22, which at the moment is grouped with Amendment No. 3, and Amendment No. 78, which is grouped with Amendment No. 17. So with Amendment No. 1 I am speaking also to Amendments Nos. 2, 6, 7, 11, 12, 15, 16, 18, 22, 23, 27, 29, 32, 33, 39, 40, 51, 54, 65, 70, 76, 78, 79 and 80.
Lord Graham of Edmonton: Would you kindly repeat that?
The Earl of Lytton: I shall gladly provide the noble Lord with my spare list if he would like it. All the amendments are minor drafting amendments to correct and improve the form of the Bill or amount to no more than textual amendments requiring the insertion of
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different words. Some of them are due merely to errors which have crept into the text, while others improve the sense.
Amendment No. 1, for instance, is a bracket in the wrong place. The amendment serves to replace it in the position originally intended. Amendment No. 2 removes the definite article where it should be the indefinite article. Nothing hangs on the amendments. They merely restore the text to what was originally intended and clarify it without altering the effect. I beg to move.
The Earl of Kinnoull: I congratulate the noble Earl on his dexterity in speaking to so many amendments so briefly and on the great care and attention that he and his advisers have clearly given to the Bill which on Second Reading was generally agreed to be a useful and valuable Bill. I am sure we all very much welcome the presence of the Opposition Chief Whip at our debate.
I am also delighted to learn that the noble Earl has been selected as a member of the Pyramus and Thisbe club—the Mecca of the party wall experts—and has been recognised in that distinguished company. To move 102 amendments to a Private Member's Bill must be almost a parliamentary record. I am sure that he will handle the formidable task of moving all these amendments with dexterity and speed.
Some of us will have been a little confused to have received yesterday a brief from the Law Society questioning the Bill's very purpose. I am glad that, on reflection, following a meeting, the Law Society has withdrawn its brief. No doubt the noble Earl will be in touch with it before the Bill's next stage to iron out any specific worries it may have.
Lord Lucas: I agree with the noble Earl that these amendments are all minor. As he said, there has been close liaison between the noble Earl and officials in my department. We are content that the amendments improve the drafting of the original Bill.
When the Bill was given its Second Reading, the noble Earl said that he would need to move a number of amendments to remove textual errors. These amendments are welcomed in that they achieve that objective. All the amendments tabled by the noble Earl have government support. I do not propose to speak to further amendments unless I have a specific point to make.
The Earl of Lytton: I am grateful to the Minister for his comments. I say again how appreciative I and the Bill's promoters are for his department's help. I am extremely grateful to the noble Earl, Lord Kinnoull, for his support. The Law Society's views have been made known to me. I am glad to know that there may be a

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degree of acceptance of some of the Bill's provisions. I can confirm that it is my intention to meet the Law Society to iron out any remaining difficulties that there may be.
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 2:
Page 1, line 13, leave out ("the") and insert ("a").
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 3:
Page 1, line 14, leave out ("serve notice of his desire on the adjoining owner describing") and insert (", at least one month before he intends the building work to start, serve on any adjoining owner a notice which indicates his desire to build and describes").
The noble Earl said: With this amendment I shall speak also to another extensive group of amendments comprising Amendments Nos. 4,30, 31, 34, 35, 36, 42, 45, 46, 55, 57, 67, 72, 75, 81, 83, 84, 85, 86, 87, 88 and 90.
I apologise to the noble Lord, Lord Graham of Edmonton, for that roll-call. I needed to make clear with which amendments we are involved. These are broadly technical amendments, all similar to one another, concerning time limits and the service of notice. They are all merely a re-ordering of the wording of the Bill as it now stands. They restore the original intentions of the Bill's promoters and improve and clarify what is intended.
A general provision about serving notices in Amendment No. 90 refers to notice in writing being unnecessary. I shall return to that point at the appropriate time. I beg to move.
On Question, amendment agreed to.
8.30 p.m.
The Earl of Lytton The Earl of Lytton moved Amendment No. 4:
Page 1, line 16, leave out ("the adjoining owner consents in writing") and insert ("an adjoining owner serves on the building owner a notice indicating his consent").
The noble Earl said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 5:
Page 1, line 22, leave out ("having") and insert ("in such proportion as has").
The noble Earl said: This amendment is simply a rewording to make it clear how the question of the proportion of costs being split between parties is to be addressed. Again, the original sense of the Bill is unaltered. I beg to move.
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendments Nos. 6 and 7:
Page 1, line 26, leave out ("the") and insert ("an").
Page 1, line 27, leave out ("in writing") and insert ("under this subsection").
The noble Earl said: I have already spoken to these amendments together with Amendment No. 1. I beg to move Amendments Nos. 6 and 7 en bloc.
On Question, amendments agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 8:
Page 2, line 4, at end insert—
("and consent under this subsection is consent by a notice served within the period of fourteen days beginning with the day on which the notice described in subsection (2) is served.").
The noble Earl said: In moving Amendment No. 8 I wish to speak also to Amendments Nos. 9 and 10. Amendment No. 8 removes an area of possible doubt by making it clearer how the recipient of a notice of proposed works can consent to the proposals referred to in the notice. The recipient must respond by a notice and within a time frame, but there is no special form of notice. That is what the Bill's promoters intend and the amendment removes uncertainty. It should also be noted that the Bill defaults to dispute procedures, so if the response from the adjoining owner is equivocal or late, that owner is protected. Late agreement is, of course, always possible under the procedures to be set in place by this Bill.
Amendment No. 9 is a technical amendment, again to remove doubt about what is intended. It does so by inserting a timescale. The sense of the clause as printed is retained apart from this.
With regard to Amendment No. 10, this again is technical. It merely clarifies the timescale already set out in the Bill in which a building owner may carry out works following the service of notice, but the overall effect remains unchanged. I beg to move.
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendments Nos. 9 to 12:
Page 2, line 6, leave out ("serve notice of his desire on the adjoining owner describing") and insert (", at least one month before he intends the building work to start, serve on any adjoining owner a notice which indicates his desire to build and describes").
Page 2, line 9, leave out from ("with") to ("place") in line 11 and insert ("subsection (4) or (5) he shall have the right, at any time in the period which—

(a) begins one month after the day on which the notice mentioned in the subsection concerned was served, and

(b) ends twelve months after that day,

to").
Page 2, line 12, leave out ("foundation") and insert ("foundations").
Page 2, line 13, leave out ("to") and insert ("for").
The noble Earl said: I have already spoken to Amendments Nos. 9, 10, 11 and 12 in connection with Amendments Nos. 1 and 8. I beg to move Amendments Nos. 9 to 12 en bloc.
On Question, amendments agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 13:
Page 2, line 14, leave out from ("wall") to end of line 17 and insert ("wholly on his own land in accordance with subsection (4) or (5) he shall do so at his own expense and shall compensate any adjoining owner and any adjoining occupier for any damage to his property occasioned by—

(a) the building of the wall;

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(b) the placing of any footings or foundations placed in accordance with subsection (6).").

The noble Earl said: This is a technical amendment which tightens up the wording of the Bill. As a result of this amendment it will be clearer what causes of damage can lead to compensation. The amendment is entirely consistent with the intention of the Bill and with that of the Bill's promoters. I beg to move.
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 14:
Page 2, line 19, leave out ("the") and insert ("any").
The noble Earl said: In moving Amendment No. 14 I wish to speak also to Amendments Nos. 47, 48, 49, 50 and 82. All these amendments replace the word "the" with "any". The intention is to make the application of the relevant provisions more inclusive. There is good reason for this as there can be several adjacent owners and occupiers in an urban environment. The practice of the London building Acts is that they all have the protection of that legislation in inner London. For the purposes of a public Act of Parliament that has to be spelt out more clearly. Amendment No. 82, in referring to the singular to augment the plural in this Bill, is of a similar nature to cover situations where only one surveyor is making the decision—for instance, the third surveyor appointed by the surveyors for either party. I beg to move.
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 15:
Page 2, line 20, leave out ("the provisions of").
The noble Earl said: I have already spoken to this amendment in the context of Amendment No. 1. I beg to move.
On Question, amendment agreed to.
Clause 1, as amended, agreed to.
Clause 2 [Repair etc. of party wall: rights of owner]:
The Earl of Lytton The Earl of Lytton moved Amendment No. 16:
Page 2, line 24, leave out ("The") and insert ("A").
The noble Earl said: I have already spoken to this with Amendment No. 1. I beg to move.
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 17:
Page 2, leave out lines 25 to 28 and insert—
("(a) to underpin, thicken or raise a party structure, a party fence wall, or an external wall which belongs to the building owner and is built against a party structure or party fence wall;
(ab) to make good, repair, or demolish and rebuild, a party structure or party fence wall in a case where such work is necessary on account of defect or want of repair of the structure or wall;").
The noble Earl said: In moving Amendment No. 17 I wish to speak to Amendments Nos. 19, 37, 41, 44, 53, 58, 59, 60, 61, 62, 63, 64, 66, 68, 69 and 77. I apologise for reading out another long list. All these amendments revolve around the same substantive issue. They are all drafting amendments. The original wording included in
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several instances more than one concept in a single sentence. This derived from the 1930s legislation of the London building Acts. On legal advice and to accord with modern drafting, I am told that these should be separated. This has meant some amalgamation and some re-ordering and sub-division within clauses. Amendment No. 19, for instance, is now amalgamated with the relevant part of Clause 2 by Amendment No. 17, and Amendment No. 41 clarifies that the act of excavation alone can trigger the need for a notice under the 3 metre and 6 metre rules of proximity.
There are also some minor changes which improve and clarify what the Bill is intended to mean. For instance, Amendment No. 64 refers to work authorised by the Bill, whether or not it was the subject of notice in the first place. That is important in terms of bringing into consideration things that have been forgotten or left out. It is what already happens under the London building Acts but it is not expressly provided for. It is appropriate when dealing with this Bill to bring in a provision making it absolutely clear what is intended.
I am advised that this is an area where the wording generally of the London building Acts is not ad idem with modem drafting. As a result of that there are some deficiencies. In accepting the rewording on the advice of parliamentary counsel, I stress that the intention, as ever, is to convey the same sense and meaning to the relevant clauses as has been established in the practice and precedent of the 1930 and 1939 Acts. It is important that I stress that. I should like to make it clear that no substantial change is intended by these amendments. I am satisfied, as are the promoters, that this safeguard has been achieved. I beg to move.
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendments Nos. 18 and 19:
Page 2, line 30, leave out ("is not in conformity") and insert ("does not conform").
Page 2, line 38, leave out from beginning to end of line 5 on page 3.
The noble Earl said: I have spoken to Amendment No. 18 with Amendment No. 1. I have spoken to Amendment No. 19 with Amendment No. 17. I beg to move Amendments Nos. 18 and 19 en bloc.
On Question, amendments agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 20:
Page 3, line 10, leave out ("wall") and insert ("structure").
The noble Earl said: This is a minor technical amendment which is to make it clear that we are dealing with a structure that is most likely to be a wall but may also be something in the nature of an arch, column or beam and may on occasions be a floor. The word "wall" was an incorrect inclusion in the original wording of the Bill, for which I can only take responsibility. The amendment seeks to remedy that. I beg to move.
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 21:
Page 3, line 11, leave out from ("of') to end of line 20 and insert ("any adjoining owner;").
The noble Earl said: In moving this amendment, I shall speak also to Amendments Nos. 24 and 28. Amendment No. 21 serves to clarify, first, that it is intended to cover any adjoining owner, because, of course, there can be more than one; and secondly, it removes paragraphs (e)(i) and (ii) and (f) because provisions to the same effect are incorporated with Amendment No. 28.
Members of the Committee could be forgiven for expressing some concern about the way in which the text has been shuffled round here but, although the appearance is of a substantive amendment, the effect is mainly to move the relevant words to the end of Clause 2. That is tidier and will be more readily understood as a piece of legislation.
There is also a minor new provision in the sense that subsection (2E) of Amendment No. 28, which deals with parapets, relates to the technicality of making party walls comply with good building practice. With that explanation, I beg to move.
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendments Nos. 22 to 24:
Page 3, line 21, leave out from ("purpose") to end of line 24 and insert ("(which may be or include the purpose of inserting a damp proof course);").
Page 3, line 25, after first ("wall,") insert ("party").
Page 3, line 28, leave out from ("wall") to end of line 31 and insert ("or for any other purpose;").
On Question, amendments agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 25:
Page 3, line 32, leave out from ("demolish") to end of line 37 and insert ("parts of any wall or building of an adjoining owner overhanging the land of the building owner or overhanging a party wall, to the extent that it is necessary to cut away or demolish the parts to enable a vertical wall to be erected or raised against the wall or building of the adjoining owner;").
The noble Earl said: This is a simple drafting amendment which restates more clearly what was originally intended. I beg to move.
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment' No. 26:
Page 3, line 37, at end insert—
("(hh) to cut into the wall of an adjoining owner's building in order to insert a flashing or other weather-proofing of a wall erected against that wall;").
The noble Earl said: This is a new provision not previously in the Bill and I shall take a little time to explain it to the Committee.
Essentially, it provides for the safeguarding of abutting buildings by allowing a flashing to be installed between the two and thus provide adequate weathering of the abutment. That follows from what I said in connection with Amendment No. 28, to which I spoke when I moved Amendment No. 21 about good building practice.
The working party advising me on the Bill felt that this type of work was a commonly encountered requirement and that specific reference to it was necessary and desirable. But in all other respects it is a strictly technical point. I beg to move.
8.45 p.m.
The Earl of Kinnoull: My Lords, perhaps I may give the noble Earl a short rest from his excellent work. As he explained, Clause 2 gives owners certain rights of repair and this is a new right. When one reads the amendment, it states:
"to cut into the wall of an adjoining owner's building in order to insert a flashing or other weather-proofing of a wall erected against that wall".
But it does not say anything about the protection which the adjoining owner has. The cutting into and inserting the flashing provides a better deal for his wall. I wonder whether the noble Earl believes that that is necessary or whether good practice covers that point.
The Earl of Lytton: I believe that it is unnecessary, in the sense that we are dealing with a wall in which two property owners have a clear vested interest. The Bill provides for a mechanism whereby the owner who is the person proposing works must tell his neighbour what it is that he proposes to do. That gives the neighbour full rights to look at what is proposed and to satisfy himself that the proposed work is being done correctly.
The provision in the London Building Acts did not refer specifically to the cutting in of flashings. Therefore, although that has not created any problems, it is important that now we are revisiting this legislation to apply it to the whole country, that that should be put on the face of the Bill and made quite clear.
What the noble Earl said about certain rights being given to building owners is true. But rights are given to both owners because they both have a clear, joint stake in what is happening to the wall. By its very nature, it is a wall through which the legal boundary passes so that a piece of it is on one side and another piece on the other side. That is quantifiably different from a wall which is on a property owner's own land for which he may need co-operation to gain access. This amendment deals with a situation which occurs in many properties throughout the country. I hope that I have answered all the points which the noble Earl raised. He nods and I am glad to see that. I commend the amendment.
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendments No. 27 to 29:
Page 3, line 48, leave out second ("the") and insert ("an").
Page 4, line 2, at end insert—
("(2A) Where work mentioned in paragraph (a) of subsection (2) is not necessary on account of defect or want of repair of the structure or wall concerned, the right falling within that paragraph is exercisable—

(a) subject to making good all damage occasioned by the work to the adjoining premises or to their internal furnishings and decorations; and

(b) where the work is to a party structure or external wall, subject to carrying any relevant flues and chimney stacks up to such a height and in such materials as may be agreed between the building owner and the adjoining owner concerned or, in the event of dispute, determined in accordance with section 10;

and relevant flues and chimney stacks are those which belong to an adjoining owner and either form part of or rest on or against the party structure or external wall.

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(2B) The right falling within subsection (2)(e) is exercisable subject to—

(a) making good all damage occasioned by the work to the adjoining premises or to their internal furnishings and decorations; and

(b) carrying any relevant flues and chimney stacks up to such a height and in such materials as may be agreed between the building owner and the adjoining owner concerned or, in the event of dispute, determined in accordance with section 10;

and relevant flues and chimney stacks are those which belong to an adjoining owner and either form part of or rest on or against the party structure.
(2C) Any right falling within subsection (2)(f), (g) or (h) is exercisable subject to making good all damage occasioned by the work to the adjoining premises or to their internal furnishings and decorations.
(2D) The right falling within subsection (2)(hh) is exercisable subject to making good all damage occasioned by the work to the wall of the adjoining owner's building.
(2E) The right falling within subsection (2)(1) is exercisable subject to—

(a) reconstructing any parapet or replacing an existing parapet with another one; or

(b) constructing a parapet where one is needed but did not exist before.").

Page 4, line 4, leave out ("commencement of this Act") and insert ("day on which this Act was passed").
On Question, amendments agreed to.
Clause 2, as amended, agreed to.
Clause 3 [Party structure notices]:
The Earl of Lytton The Earl of Lytton moved Amendments Nos. 30 to 32:
Page 4, line 8, leave out ("the adjoining owner notice in writing") and insert ("any adjoining owner a notice").
Page 4, line 21, leave out ("twelve months of service of the notice") and insert ("the period of twelve months beginning with the day on which the notice is served").
Page 4, line 26, leave out ("owner") and insert ("owners").
On Question, amendments agreed to.
Clause 3, as amended, agreed to.
Clause 4 [Counter notices]:
The Earl of Lytton The Earl of Lytton moved Amendments Nos. 33 to 35:
Page 4, line 31, leave out ("The") and insert ("An").
Page 4, line 32, leave out ("in writing").
Page 5, line 5, leave out ("one month of the service of the party structure notice") and insert ("the period of one month beginning with the day on which the party structure notice is served").
On Question, amendments agreed to.
Clause 4, as amended, agreed to.
Clause 5 [Disputes arising under sections 3 and 4]:
The Earl of Lytton The Earl of Lytton moved Amendment No. 36:
Page 5, line 15, leave out from ("not") to ("he") in line 16 and insert ("serve a notice indicating his consent to it within the period of fourteen days beginning with the day on which the party structure notice or counter notice was served,").
On Question, amendment agreed to.
Clause 5, as amended, agreed to.
Clause 6 [Adjacent excavation and construction]:
The Earl of Lytton The Earl of Lytton moved Amendment No. 37:
Page 5, line 19, leave out from beginning to ("may") in line 37 and insert—
("(1) This section applies where—

(a) a building owner proposes to excavate, or excavate for and erect a building or structure, within a distance of three metres measured horizontally from any part of a building or structure of an adjoining owner; and

(b) any part of the proposed excavation, building or structure will within those three metres extend to a lower level than the level of the bottom of the foundations of the building or structure of the adjoining owner.

(1A) This section also applies where—

(a) a building owner proposes to excavate, or excavate for and erect a building or structure, within a distance of six metres measured horizontally from any part of a building or structure of an adjoining owner; and

(b) any part of the proposed excavation, building or structure will within those six metres meet a plane drawn downwards in the direction of the excavation, building or structure of the building owner at an angle of forty-five degrees to the horizontal from the line formed by the intersection of the plane of the level of the bottom of the foundations of the building or structure of the adjoining owner with the plane of the external face of the external wall of the building or structure of the adjoining owner.

(1B) The building owner").
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 38:
Page 5, line 39, after ("building") insert (" or structure").
The noble Earl said: In moving this amendment, I should like to speak also to Amendment No. 43. These are minor drafting amendments in relation to the inclusion of structures, including a reference to structures which are not necessarily buildings. That would include such things as, for example, lift shafts and arches. It is an important consideration which the Bill's promoters consider a prudent amendment to the legislation. I hope that the Committee will agree. I beg to move.
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendments Nos. 39 to 47:
Page 5, line 41, leave out ("prescribed in subsection (1)") and insert ("mentioned in subsections (1) and (1A)").
Page 5, line 44, leave out ("to which subsection (1)") and insert ("where this section").
Page 5, line 45, after ("to") insert ("excavate, or excavate for and").
Page 5, line 46, leave out ("notice in writing of his proposals") and insert ("a notice indicating his proposals and").
Page 6, line 2, after ("building") insert ("or structure").
Page 6, line 4, leave out from ("showing") to end of line 6 and insert ("—

(a) the site and depth of any excavation the building owner proposes to make;

(b) if he proposes to erect a building or structure, its site.").

Page 6, line 8, leave out ("express his consent to it in writing within fourteen days") and insert ("serve a notice indicating his consent to it within the period of fourteen days beginning with the day on which the notice referred to in subsection (3) was served,").

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Page 6, line 13, leave out ("twelve months after the notice has been") and insert ("the period of twelve months beginning with the day on which the notice was").
Page 6, line 20, leave out ("the") and insert ("any").
On Question, amendments agreed to.
Clause 6, as amended, agreed to.
Clause 7 [Compensation, etc.]:
The Earl of Lytton The Earl of Lytton moved Amendments Nos. 48 to 51:
Page 6, line 25, leave out ("the adjoining owner or to the") and insert ("any adjoining owner or to any").
Page 6, line 26, leave out ("the") and insert ("any").
Page 6, line 33, leave out second ("the") and insert ("any").
Page 6, line 35, leave out ("the") and insert ("an").
On Question, amendments agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 52:
Page 6, line 41, leave out from first ("in") to end of line 44 and insert ("accordance with section 10;
and no deviation shall be made from those plans, sections and particulars except such as may be agreed between the owners (or surveyors acting on their behalf) or in the event of dispute determined in accordance with section 10.").
The noble Earl said: The above amendment goes beyond superficial change and makes it clear that surveyors can agree deviations—as, indeed, they most often do—rather than the owners agreeing between themselves, certainly on the more complicated cases. The amendment simply restates what already happens in practice in inner London. In a way, the position is analogous to the kind of amendment to a planning consent that in planning law would be agreed to by a planning officer under delegated powers without specifically going back to his committee. It would serve to speed up and streamline procedures if matters could be dealt with in that way. I beg to move.
On Question, amendment agreed to.
Clause 7, as amended, agreed to.
Clause 8 [Rights of entry]:
The Earl of Lytton The Earl of Lytton moved Amendments No. 53 to 55:
Page 7, leave out lines 4 and 5 and insert—
("(3) No land or premises may be entered by any person under subsection (1) unless the building owner serves on the owner and the occupier of the land or premises—").
Page 7, line 6, leave out ("his") and insert ("the").
Page 7, line 8, leave out ("fourteen days' notice of his intention to enter") and insert ("such notice of the intention to enter as complies with subsection (4)").
On Question, amendments agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 56:
Page 7, line 8, at end insert—
("(4) Notice complies with this subsection if it is served in a period of not less than fourteen days ending with the day of the proposed entry.
(5) A surveyor appointed or selected under section 10 may during usual working hours enter and remain on any land or premises for the purpose of carrying out the object for which he is appointed or selected.
942
(6) No land or premises may he entered by a surveyor under subsection (5) unless the building owner who is a party to the dispute concerned serves on the owner and the occupier of the land or premises—

(a) in case of emergency, such notice of the intention to enter as may be reasonably practicable;

(b) in any other case, such notice of the intention to enter as complies with subsection (4).").

The noble Earl said: This amendment provides an extended framework for entry, following notice, on the property of others. There is a vital component here in that surveyors are given rights of entry pursuant to notice, not just the property owners. That is essential if surveyors are to draw up schedules of condition and the adjoining owner's property is to be fully protected by an assessment of necessary precautionary measures.
Although access for surveyors is not specifically included in the equivalent provisions of the London building Acts, it is in fact what happens in any event as a matter of course in inner London. The amendment does no more than put that provision on the face of the Bill. I beg to move.
The Earl of Kinnoull: Clause 8 deals with the rights of entry and allows the,
"building owner, his servants, agents and workmen",
to enter property during "usual working hours", subject to 14 days' notice. The contents of Amendment No. 56 describe precisely the same powers of entry, as I understand it. There is no definition of surveyor in the Bill. Therefore, surely he could either be deemed as an agent or, indeed, he could be added to the list in subsection (1) which would then cover the purpose of the amendment. It would also reduce the size of the Bill.
The Earl of Lytton: The acoustics are a little poor in this part of the Chamber and, therefore, I am not sure that I correctly heard everything that the noble Earl said. All I can say in defence of the way that the amendment is worded is that the legislation has been scrutinised extremely carefully by the department's legal officers and parliamentary counsel. The amendment was felt to be the best method to deal with the matter.
As with many such matters, it is possible that the provisions of the Bill could be recombined in different ways. It is a matter of style in order to achieve the best clarity of what is intended for the reader of the Bill when, as I hope, it becomes an Act of Parliament in due course. I do not wish to take issue with the promoters or, indeed, with the legal advice on the stylistic approach involved. I do not feel that I am qualified to do so.
However, the amendment would provide a specific arrangement for surveyors, in addition to that of property owners. It could indeed be amalgamated elsewhere. If the noble Earl feels very strongly about the matter, I am sure that we could discuss it to ascertain what could be done. Nevertheless, with that explanation, I hope that the noble Earl will accept from me that this is probably the best and clearest way to deal with the matter. I hope that I have answered his point.
On Question, amendment agreed to.
Clause 8, as amended, agreed to.

943
Clause 9 agreed to.
Clause 10 [Resolution of disputes]:
The Earl of Lytton The Earl of Lytton moved Amendments Nos. 57 to 68:
Page 7, leave out line 27 and insert—
("(b) neglects to act for a period of ten days beginning with the day on which either party serves a request on him;").
Page 7, line 31, leave out subsection (4) and insert—
("(4) If either party to the dispute—

(a) refuses to appoint a surveyor under subsection (1)(b), or

(b) neglects to appoint a surveyor under subsection (1)(b) for a period of ten days beginning with the day on which the other party serves a request on him,

the other party may make the appointment on his behalf.").
Page 7, line 41, at end insert ("or (5)").
Page 7, line 42, leave out from ("refuses") to ("and") in line 44 and insert ("to act effectively, the surveyor of the other party may proceed to act ex parte").
Page 7, line 45, at end insert—
("(6A) If a surveyor—

(a) appointed under paragraph (b) of subsection (1) by a party to the dispute; or

(b) appointed under subsection (4) or (5),

neglects to act effectively for a period of ten days beginning with the day on which either party or the surveyor of the other party serves a request on him, the surveyor of the other party may proceed to act ex pane in respect of the subject matter of the request and anything so done by him shall be as effectual as if he had been an agreed surveyor.").
Page 8, line 1, leave out from ("under") to end of line 4 and insert ("subsection (1)(b) by a party to the dispute refuses to select a third surveyor under subsection (1) or (8), or neglects to do so for a period of ten days beginning with the day on which the other surveyor serves a request on him—").
Page 8, line 11, leave out subsection (8) and insert—
("(8) If a third surveyor selected under subsection (1)(b)—

(a) refuses to act;

(b) neglects to act for a period of ten days beginning with the day on which either party or the surveyor appointed by either party serves a request on him; or

(c) dies, or becomes or deems himself incapable of acting, before the dispute is settled,

the other two of the three surveyors shall forthwith select another surveyor in his place with the same power and authority.").
Page 8, line 18, leave out from ("any") to end of line 20 and insert ("matter—

(a) which is connected with any work to which this Act relates, and

(b) which is in dispute between the building owner and the adjoining owner.").

Page 8, line 29, leave out ("Providing that") and insert ("but").
Page 8, line 40, leave out subsections (13) and (14) and insert—
("(13) Where the surveyors appointed by the parties make an award the surveyors shall serve it forthwith on the parties.
(14) Where an award is made by the third surveyor—

(a) he shall, after payment of the costs of the award, serve it forthwith on the parties or their appointed surveyors; and

(b) if it is served on their appointed surveyors, they shall serve it forthwith on the parties.").

Page 9, line 1, leave out from ("may") to ("appeal") in line 2 and insert (", within the period of fourteen days beginning with the day on which an award made under this section is served on him,").
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Page 9, leave out lines 4 to 6 and insert—

("(a) rescind the award or modify it in such manner as the court thinks fit; and

(b) make such order as to costs as the court thinks fit.").

On Question, amendments agreed to.
Clause 10, as amended, agreed to.
Clause 11 [Expenses]:
The Earl of Lytton The Earl of Lytton moved Amendments Nos. 69 and 70:
Page 9, line 11, leave out subsections (3) to (6) and insert—
("(2A) An expense mentioned in section 1(3)(b) shall be defrayed as there mentioned.
(2B) Where work is carried out in exercise of the right mentioned in section 2(2)(a), and the work is necessary on account of defect or want of repair of the structure or wall concerned, the expenses shall be defrayed by the building owner and the adjoining owner in such proportion as has regard to—

(a) the use which the owners respectively make or may make of the structure or wall concerned; and

(b) responsibility for the defect or want of repair concerned, if more than one owner makes use of the structure or wall concerned.

(2C) Where work is carried out in exercise of the right mentioned in section 2(2)(ab) the expenses shall be defrayed by the building owner and the adjoining owner in such proportion as has regard to—

(a) the use which the owners respectively make or may make of the structure or wall concerned; and

(b) responsibility for the defect or want of repair concerned, if more than one owner makes use of the structure or wall concerned.

(2D) Where the adjoining premises are laid open in exercise of the right mentioned in section 2(2)(e) a fair allowance in respect of disturbance and inconvenience shall be paid by the building owner to the adjoining owner or occupier.").
Page 9, line 25, leave out ("2(1)(1)") and insert ("2(2)(1)").
On Question, amendments agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 71:
Page 9, line 32, at end insert—
("(7A) Where the building owner is required to make good damage under this Act the adjoining owner has a right to require that the expenses of such making good be determined in accordance with section 10 and paid to him in lieu of the carrying out of work to make the damage good.
(7B) Where—

(a) works are carried out, and

(b) some of the works are carried out at the request of the adjoining owner or in pursuance of a requirement made by him,

he shall defray the expenses of carrying out the works requested or required by him.").
The noble Earl said: The above is a technical amendment which provides greater clarity on the matter of making good and, in particular, provides for a cash settlement if that is requested as an alternative. The amendment is set out in two parts. New subsection (7A) is in fact established practice under the London building Acts but is not specifically provided for. It is a matter of practice which has grown up over the years. This part of the amendment would make that explicit and put it on the face of the Bill.
New subsection (7B) makes it clear that an adjoining owner may be liable to pay the costs of carrying out the works that he requires the building owner to undertake

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on his behalf. That is already provided for under the London building Acts. The amendment merely alters the wording of the Bill without altering the effect.
I should like to make it clear that we are talking about works which an adjoining owner wishes the building owner to carry out and which are over and above and additional to the works which are necessary as part and parcel of the building owner's work. That is why there is a provision for the liability to pay the costs. I beg to move.
On Question, amendment agreed to.
9 p.m.
The Earl of Lytton The Earl of Lytton moved Amendments Nos. 72 to 74:
Page 9, line 40, leave out ("vouchers within two months") and insert ("invoices and other supporting documents within the period of two months beginning with the day").
Page 9, line 43, leave out ("additional").
Page 10, line 1, leave out from ("out") to ("at") in line 2 and insert ("that work; and for this purpose he shall be taken to have incurred expenses calculated by reference to what the cost of the work would be if it were carried out").
The noble Earl said: Amendment No. 72 is a minor drafting amendment to which I have already spoken with Amendment No. 3. Amendment No. 73 simply removes a word which is superfluous. Amendment No. 74 clarifies what was intended originally in the Bill.
The Bill as printed did not clearly set out how the future use of party wall works by one party which had been solely paid for by another was to be treated. I should stress that it is always optional, at the time of doing works, for the adjoining owner to join in the cost if he wishes so to do and to benefit fully from the facility provided thereafter without any extra cost. But he cannot at a later date have a free ride at someone else's expense, that other person having paid all the costs of the wall. The amendment simply makes that clear and is in conformity with the London Building Acts as they apply to inner London. I beg to move.
On Question, amendments agreed to.
Clause 11, as amended, agreed to.
Clause 12 [Security for expenses]:
The Earl of Lytton The Earl of Lytton moved Amendments Nos. 75 to 78:
Page 10, line 3, leave out ("by notice in writing require") and insert ("serve a notice requiring").
Page 10, line 6, leave out ("the provisions of").
Page 10, line 8, leave out from beginning to ("building") in line 10 and insert—
("Where—
(a) in the exercise of the rights conferred by this Act an adjoining owner requires the").
Page 10, line 13, at beginning insert ("an adjoining owner").
The noble Earl said: I spoke to Amendments Nos. 75 to 78 with Amendments Nos. 1, 3 and 17. I beg to move.
On Question, amendments agreed to.
The Earl of Lytton The Earl of Lytton moved Amendments Nos. 79 to 82:
Page 10, line 15, leave out ("in writing").
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Page 10, line 17, leave out ("the provisions of").
Page 10, line 18, leave out from ("within") to ("or") in line 19 and insert ("the period of one month beginning with—
(a) the day on which a notice is served under subsection (2)").
Page 10, line 20, at end insert ("surveyor or").
The noble Earl said: I have spoken to all of these amendments with Amendments Nos. 1, 3 and 14. I beg to move.
On Question, amendments agreed to.
Clause 12, as amended, agreed to.
Clause 13 [Account for work carried out]:
The Earl of Lytton The Earl of Lytton moved Amendments Nos. 83 to 87:
Page 10, line 25, leave out ("two months") and insert ("the period of two months beginning with the day").
Page 10, line 28, leave out ("deliver to") and insert ("serve on").
Page 10, line 36, leave out ("one month of delivery") and insert ("the period of one month beginning with the day of service").
Page 10, line 37, leave out ("give notice in writing to the building owner") and insert ("serve on the building owner a notice").
Page 10, line 40, leave out ("the said month the adjoining owner does not give") and insert ("that period of one month the adjoining owner does not serve").
The noble Earl said: These amendments were spoken to in the context of Amendment No. 3. I beg to move.
On Question, amendments agreed to.
Clause 13, as amended, agreed to.
Clause 14 [Settlement of account]:
The Earl of Lytton The Earl of Lytton moved Amendment No. 88:
Page 10, line 43, leave out ("delivered") and insert ("served").
The noble Earl said: I dealt with this amendment in conjunction with Amendment No. 3. I beg to move.
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 89:
Page 10, line 44, leave out ("and in default may he recovered as a debt").
The noble Earl said: In moving Amendment No. 89 I speak also to Amendments Nos. 91 and 92. Together they constitute a relatively significant change to the Bill, the purpose being to replicate so far as possible the available sanctions under the London Building Acts. I am obliged to parliamentary counsel for the extremely neat way in which his drafting has sidestepped a potential problem area in terms of procuring efficient and effective means of enforcement.
Amendment No. 89 appears at first to be a substantive amendment. In fact the last phrase of Clause 14(1), which the amendment deletes, is consolidated in the new clause after Clause 16 with which I shall deal under Amendment No. 92.
Amendment No. 91 substitutes a new clause for Clause 16 and Schedule 1. In so doing, it removes the facility of criminal proceedings for recovery of debt arising under the various payment provisions of the Bill. The wording is also altered and consolidated and incorporates the second and third of the three offences referred to under the first schedule. Those now appear in the subsections (1) and (2) proposed by the amendment.
The criminal sanction under the London Building Acts is a rarely used provision. However, on occasions in extreme instances, it has been found that some provision of the kind is necessary. The drafting picks this up in the civil rather than the criminal context.
Amendment No. 92 picks up the deletion in Amendment No. 89 of the civil sanction originally set out in Clause 15 and the deletion of the criminal sanction by Amendment No. 91. It consolidates both in the revised facility of a civil remedy by summary procedure for recovery as a debt. That streamlines, consolidates, and makes uniform the provisions in that respect. I believe that this is as near as one can get to the original intention of the Bill and the operation of the London Building Acts without a criminal sanction. I am advised that it would be inappropriate in an essentially civil matter to have the criminal sanction. It is a matter of private debt. The promoters of the Bill accept the solution as a very close match to the original provisions of the London Building Acts. I beg to move.
The Earl of Kinnoull: Perhaps I may ask the noble Earl to clarify Amendment No. 91. By removing Schedule 1, he removes "building owner". In Amendment No. 91 he substitutes "an occupier of land". That seems strange. The noble Earl may wish to write to me on the point because it may be complicated to explain.
Under Schedule 1 the building owner has to make good or compensate for any damage that he may occasion to the property of an adjoining occupier. That is not mentioned in the new amendment. I wonder why.
The Earl of Lytton: As regards building owners, the matter comes under the general definition with which I shall deal when I reach Amendment No. 96. I apologise, I missed the noble Earl's second point.
The Earl of Kinnoull: Under Schedule 1 there is a reference to a building owner having to make good or compensate the adjoining owner. It is not mentioned in Amendment No. 89.
The Earl of Lytton: There is a general provision in the Bill for dealing with compensation to adjoining owners. It might take me a little time now to find and explain the nitty-gritty, so perhaps I may write to the noble Earl after this stage, with his agreement, and set it out for him. That would probably be more accurate than searching through my papers now. If the noble Earl will accept my assurance that there is adequate provision for compensation in the Bill, I commend the amendment.
Lord Lucas: Officials in my department have liaised closely with officials in the Home Office and the Lord Chancellor's Department concerning the amendments. Given the anxiety expressed in Parliament about the burdens imposed on the criminal justice system by the creation of new criminal offences, the Government agree that it would not be appropriate to exact criminal sanctions where damages can be recovered through the
948
civil courts. We therefore welcome the amendments, which confirm that and also reduce the level of fines to reflect the severity of the offence.
On Question, amendment agreed to.
Clause 14, as amended, agreed to.
Clause 15 [Service]:
The Earl of Lytton The Earl of Lytton moved Amendment No. 90:
Leave out Clause 15 and insert the following new Clause—
SERVICE OF NOTICES ETC
(".—(1) A notice or other document required or authorised to be served under this Act may be served on a person—

(a) by delivering it to him in person;

(b) by sending it by post to him at his usual or last-known residence or place of business in the United Kingdom; or

(c) in the case of a body corporate, by delivering it to the secretary or clerk of the body corporate at its registered or principal office or sending it by post to the secretary or clerk of that body corporate at that office.

(2) In the case of a notice or other document required or authorised to be served under this Act on a person as owner of premises, it may alternatively be served by—

(a) addressing it "the owner" of the premises (naming them), and

(b) delivering it to a person on the premises or, if no person to whom it can be delivered is found there, fixing it to a conspicuous part of the premises.").

The noble Earl said: This is a general revision of the wording relating to the service of notice. It brings the 1930s legislation into line with modern drafting. I have already spoken to the amendment in connection with Amendment No. 3. I beg to move.
On Question, amendment agreed to.
Clause 15, as amended, agreed to.
Clause 16 [Offences and fines]:
The Earl of Lytton The Earl of Lytton moved Amendment No. 91:
Leave out Clause 16 and insert the following new Clause—
OFFENCES
("(1) If—

(a) an occupier of land or premises refuses to permit a person to do anything which he is entitled to do with regard to the land or premises under section 8(1) or (5); and

(b) the occupier knows or has reasonable cause to believe that the person is so entitled,

the occupier is guilty of an offence.
(2) If—

(a) a person hinders or obstructs a person in attempting to do anything which he is entitled to do with regard to land or premises under section 8(1) or (5); and

(b) the first-mentioned person knows or has reasonable cause to believe that the other person is so entitled,

the first-mentioned person is guilty of an offence.
(3) A person guilty of an offence under subsection (1) or (2) is liable on summary conviction to a fine of an amount not exceeding level 3 on the standard scale.").
The noble Earl said: I have already spoken to this amendment with Amendment No. 89. Under Amendment No. 91, compensation can now be requested instead of making good. I do not know whether this goes some way towards answering the noble Earl, Lord Kinnoull. I beg to move.
On Question, amendment agreed to.
Clause 16, as amended, agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 92:
After Clause 16, insert the following new clause—
RECOVERY OF SUMS
("Any sum payable in pursuance of this Act (otherwise than by way of fine) shall be recoverable summarily as a civil debt.").
The noble Earl said: I dealt with this new clause with Amendment No. 89. It provides as much protection as modern legislation can afford to adjoining owners for the recovery of sums that become due under the Bill. I beg to move.
On Question, amendment agreed to.
Clause 17 [Exemptions]:
The Earl of Lytton The Earl of Lytton moved Amendment No. 93:
Leave out Clause 17 and insert the following new Clause—
EXCEPTION IN CASE OF TEMPLES ETC
(".—(1) This Act shall not apply to land which is situated in inner London and in which there is an interest belonging to—

(a) the Honourable Society of the Inner Temple,

(b) the Honourable Society of the Middle Temple,

(c) the Honourable Society of Lincoln's Inn, or

(d) the Honourable Society of Gray's Inn.

(2) The reference in subsection (1) to inner London is to Greater London other than the outer London boroughs.").
The noble Earl said: In moving Amendment No. 93, I wish also to speak to Amendment No. 94. The two amendments are grouped together because they both deal with exemptions and make significant alterations to the Bill. However, they are consistent with the original intention as regards the exemptions to the Inns of Court, the Temples and the Crown. Discussions have been held with representatives of Her Majesty, the Duchy of Cornwall, government departments and the Inns of Court.
The effect of Amendment No. 93 is to preserve existing exemptions in respect of the Inns and Temples properties which are located in inner London where they already have exemption under the London building Acts but without adding any new exemptions in respect of land outside the inner London area.
Subsection (2) of the new clause is new and arises out of the reference to "inner London", for which I understand there is no statutory definition, despite the long history of the London building Acts. The provisions relate to Greater London less the outer London boroughs in order to deal with the residue of inner London.
Amendment No. 94 exempts land occupied by Her Majesty and the Prince of Wales in a personal capacity. Operational land and buildings not so occupied—for example, government buildings or premises occupied for administrative purposes of the Crown—will, however, be caught by the provisions of the Bill. The old wording of the Bill is also sub-divided for greater clarity.
At Second Reading the noble Lord, Lord Dubs, raised a query about this matter. I hope that this clarification of the exemptions will answer the concerns that he expressed. I beg to move.
The Earl of Kinnoull: I warmly congratulate the noble Earl on his powers of persuasion in getting the Inns of Court outside London, government buildings in particular and Crown land included in the net. I am quite sure that were the noble Lord, Lord Dubs, present he, too, would be delighted.
9.15 p.m.
Lord Lucas: We are content that the first amendment seeks to preserve the existing exemptions afforded in inner London to the Inns of Court and Temples by the London building Acts.
With regard to Crown exemption, the general rule of constitutional law is that an Act of Parliament does not bind the Crown unless and to the extent specified in the Act.
The Government's policy is to ensure that government departments and other public offices are not given Crown exemption where that is not thought necessary. Accordingly, I welcome the second amendment in that it achieves that objective while not binding the Crown in a private capacity or by virtue of its interests in the Royal duchies.
Lord Graham of Edmonton: I had intended to wait until Amendment No. 94 had been moved before saying what I know the noble Lord, Lord Dubs, would expect. He asked me to say in his absence how grateful he is that the points he made were taken on board. I have been referred to more than once in a sedentary position; I just thought I would rise to say those words so that the Committee can see that I am an upstanding chap!
The Earl of Lytton: I am extremely grateful to the noble Lord the opposition Chief Whip for that intervention. I am glad that the concerns of his noble colleague have been met.
Turning to the point made by the noble Earl, Lord Kinnoull, about my powers of persuasion, I do not feel that I have any role in this other than to try to act as an honest broker in regard to what I believe is an important and beneficial piece of legislation. I sincerely believe that the Bill will produce net benefits, streamlining and a reduction in friction.
I am greatly indebted to others for having used their powers of persuasion to convince the Inns of Court, government departments and the various Crown offices that the Bill is worth while and will be of benefit to them as well. The fact that they have recognised that is another indicator of the fundamental utility of the Bill. I commend the amendment to the Committee.
On Question, amendment agreed to.
Clause 17, as amended, agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 94:
After Clause 17, insert the following new clause—

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THE CROWN
(" .—(1) This Act shall apply to land in which there is—

(a) an interest belonging to Her Majesty in right of the Crown,

(b) an interest belonging to a government department, or

(c) an interest held in trust for Her Majesty for the purposes of any such department.

(2) This Act shall apply to—

(a) land which is vested in, but not occupied by, Her Majesty in right of the Duchy of Lancaster;

(b) land which is vested in, but not occupied by, the possessor for the time being of the Duchy of Cornwall.").

The noble Earl said: I have already spoken to this amendment inserting the new clause in connection with Amendment No. 93. I therefore beg to move Amendment No. 94.
On Question, amendment agreed to.
Clause 18 [Interpretation]:
The Earl of Lytton The Earl of Lytton moved Amendment No. 95:
Page 12, leave out lines 37 and 38.
The noble Earl said: This is a drafting amendment consequent upon the revised procedures for repeal under Amendment No. 98. There is accordingly no need to define the two Acts referred to in Clause 18 and the amendment deletes the reference. I hope that will be sufficient explanation for the Committee. I beg to move.
Lord Lucas: Schedule 2 to the Bill, which Amendment No. 98 replaces, repealed some parts of the building Act. Following representations received by officials in my department from interested parties, we are content that this should be removed.
As the noble Earl said, the powers introduced by Amendment No. 98 may appear wide but are restricted to private and local Acts, and I am content that they are necessary. They will be used only where researches confirm that they are necessary and after discussion with the appropriate parties.
The Earl of Lytton: I thank the Minister for those remarks. I commend Amendment No. 95.
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 96:
Page 13, line 5, leave out from (""owner"") to end of line 11 and insert ("includes—

(a) a person in receipt of, or entitled to receive, the whole or part of the rents or profits of land;

(b) a person in possession of land, otherwise than as a mortgagee or as a tenant from year to year or for a lesser term or as a tenant at will;

(c) a purchaser of an interest in land under a contract for purchase or under an agreement for a lease, otherwise than under an agreement for a tenancy from year to year or for a lesser term.").

The noble Earl said: In speaking to this amendment, I shall also speak to Amendment No. 97.
Following legal scrutiny, it became apparent that the definition of "owner" in the Bill was defective and that a clearer definition needed to be incorporated. This amendment does no more than seek to remedy that. It does
952
so in a manner consistent with the original intention of the Bill. Amendment No. 97 simply removes the words rendered superfluous by Amendment No. 96. I beg to move.
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 97:
Page 13, line 33, leave out subsections (2) and (3).
The noble Earl said: I have already spoken to this with Amendment No. 96. I beg to move.
On Question, amendment agreed to.
Clause 18, as amended, agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 98:
After Clause 18, insert the following new clause—
OTHER STATUTORY PROVISIONS
(".—(1) The Secretary of State may by order amend or repeal any provision of a private or local Act passed before or in the same session as this Act, if it appears to him necessary or expedient to do so in consequence of this Act.
(2) An order under subsection (1) may—

(a) contain such savings or transitional provisions as the Secretary of State thinks fit;

(b) make different provision for different purposes.

(3) The power to make an order under subsection (1) shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.").
The noble Earl said: In moving this amendment I shall speak also about Schedule 2. I touched on this new clause when I spoke to Amendment No. 95. This is a substantial amendment which inserts a complete new clause dealing with repeals and amendments to private and local Acts of Parliament.
During discussions with lawyers it became apparent that nobody quite knew how many local Acts might refer to the London building Acts or contain similar provisions of their own which would necessitate repeal when this Bill becomes law. It is thought that there are very few of them but the eventuality has to be covered. This amendment would give greater flexibility in dealing with that specific problem.
Schedule 2 is rendered unnecessary because the new clause supersedes its provisions. I beg to move.
The Earl of Kinnoull: I have not given notice of my question to my noble friend the Minister but I should like to raise two points on this amendment.
First, there may well be a proud local Act which works very well and it would seem from this amendment that the Minister can reduce its potency and even wipe it out by going through certain parliamentary procedures. Would there be proper notice given to the people concerned with the local area? I believe that there is a Manchester Act which is little used in this area, but there is that Act. That is already outside the London area and could be affected.
Secondly, new subsection (2)(b) states that an order may:
"make different provision for different purposes".

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Could the Minister give some example which would add to the clarity of those words?
Lord Lucas: I beg pardon of the Committee for having given my comments on this amendment with Amendment No. 95. I must have been confused by the grouping list. However, I shall repeat what I said earlier.
The powers in Amendment No. 98 are wide but we feel that they are necessary, not least to deal with the London building Acts, but also to deal with other local Acts which exist for other parts of the country, because we intend to introduce a national practice which will apply nationally and not be subject to local variation. I shall write to my noble friend Lord Kinnoull about the exact wording of this clause and I hope that I shall be able to give him some comfort on exactly why the phrase that he mentioned is necessary.
However, as I said previously, we confirm that this clause will be used only where research has confirmed that its use is necessary and after discussion with appropriate parties; that is to say, we shall not take action without talking fully through the implications of that action with everyone who might be concerned.
The Earl of Lytton: I am grateful for the Minister's explanation. Perhaps I may add to that by saying to the noble Earl, Lord Kinnoull, that it is important to realise that, although this appears to be a very sweeping power, it deals with local Acts. So it is not a question of any wider general right of appeal. He mentioned Manchester. There is also thought to be a local Act for Bristol which might be affected. It will be a matter of carrying out a trawl to establish how many of these measures are affected and whether the provisions are being incorporated into currently applicable legislation.
With the benefit of those words and the Minister's explanation, I commend the amendment to the Committee.
On Question, amendment agreed to.
Clause 19 [Repeals]:
On Question, Whether Clause 19 shall stand part of the Bill?
The Earl of Lytton: Clause 19 is rendered unnecessary by Amendment No. 98, to which the Committee has just agreed. It means that repeals or amendments will be made by order rather than in a schedule to the Bill. For reasons which I explained, neither the schedule nor its enabling clause is of any further effect and I am happy that they be deleted.
Clause 19 negatived.
Clause 20 [Short title, commencement and extent]:
The Earl of Lytton The Earl of Lytton moved Amendment No. 99:
Page 13, line 43, after ("Wall") insert ("etc.").
The noble Earl said: This amendment to the short title is necessary because, strictly speaking, Clause 6 does not refer to party walls as such; it refers to excavation and construction within certain degrees of proximity to an adjoining owner's building. However, it has been long accepted practice in Inner London and under the London Building Acts that excavation and construction
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adjacent to another property necessitates notice. That is now covered by the "etc." which will appear in the short title.
The proximity test is an important safeguard for construction and it is equally important that the title of the Bill reflects the scope of what is contained within its pages. I beg to move.
On Question, amendment agreed to.
The Earl of Lytton The Earl of Lytton moved Amendment No. 100:
Page 13, line 44, leave out from ("force") to end of line 46 and insert ("in accordance with provision made by the Secretary of State by order made by statutory instrument.
(2A) An order under subsection (2) may—

(a) contain such savings or transitional provisions as the Secretary of State thinks fit;

(b) make different provision for different purposes.").

The noble Earl said: Amendment No. 100 deals with commencement. It enables a more considered approach to be adopted in providing an opportunity for discussion with professional bodies and others regarding transitional arrangements.
It is important that building owners with work in progress when the Bill comes into force have the necessary time to adapt and that the introduction of the new measures for England and Wales should be as smooth as possible. It would be a terrible shame if measures with such an honourable and efficient reputation and heritage in the London Building Acts were not brought in as smooth and as trouble-free a fashion as possible. I beg to move.
Lord Lucas: Should this Bill receive Royal Assent, officials will discuss with appropriate bodies the need for any savings and transitional provisions. They will also give consideration to the date on which the Bill will take effect.
As the noble Earl, Lord Lytton, said, that will allow a more considered approach to be adopted which will take into account the views of professional bodies. We are content that the amendment achieves that objective.
The Earl of Lytton: I thank the Minister for that response and commend the amendment to the Committee.
On Question, amendment agreed to.
Clause 20, as amended, agreed to.
Schedule 1 [Offences and Fines]:
On Question, Whether Schedule 1 shall be the first schedule to the Bill.
The Earl of Lytton: As I explained in the context of Amendment No. 89, Schedule No. 1 is now unnecessary. It therefore does not need to be included in the Bill.
Schedule 1 negatived.
Schedule 2 [Repeals]:
On Question, Whether Schedule 2 shall be the second schedule to the Bill?
The Earl of Lytton: This second schedule is also rendered unnecessary, as I explained in the context of Amendment No. 98.
Schedule 2 negatived.
House resumed: Bill reported with amendments.

Noise Bill
9.29 p.m.
Baroness Gardner of Parkes: My Lords, I beg to move that this Bill be now read a second time. In doing so, I should like to take the opportunity to congratulate my honourable friend Mr. Harry Greenway on his work in guiding the Bill through its stages in another place.
It may be helpful if, before describing the Bill in detail, I set out some of the background to it. I am sure that many of your Lordships will be aware of the growing concerns relating to the problem of environmental noise. The number of complaints of noise from domestic premises to local authorities in England and Wales continues to rise steadily. They account for more than two-thirds of all noise complaints made to local authorities. In 1993–94, the total stood at 131,153 complaints, which represents more than a threefold increase in the past decade. Of additional concern is the fact that less that 0.3 per cent. of those complaints led to a conviction.
This is not just a question of steeply rising complaints. Domestic noise, particularly at night, can lead not only to the disruption of everyday life through lost sleep and illness, but also directly to tragic cases of murder and suicide.
At present, the main responsibility for dealing with noise complaints rests with local authorities, using the statutory nuisance controls under Part III of the Environmental Protection Act 1990. That can involve a time-consuming process which can be unsatisfactory both for the complainant and indeed the local authority. I am sure that we all know personally of cases to which this applies.
Concerns about the way in which the system was working—or rather not working—led to the establishment by the Department of the Environment of a review of the effectiveness of neighbour noise controls. The report of the working party made a number of recommendations, including the possibility of the introduction of a specific offence of making excessive noise at night and clarification of the powers of local authorities to seize noise-making equipment. This Bill takes up these important issues.
Excessive noise can be distressing for those who are being disturbed, particularly during the night hours. The Bill aims to address excessive noise during those hours and to deal with complaints in a speedy manner. However, in aiming to provide a more efficient service, the different requirements of local areas must be recognised. It is right, therefore, that local authorities should be able to adopt the powers where they believe it will be of benefit to the local residents.
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I shall now turn to a more detailed examination of the provisions of the Bill. Clause 1 is relatively straightforward, providing that local authorities shall choose to adopt the new offence. Where the local authority decides to adopt the new offence it will be required to advertise its decision in a local newspaper. That will help to ensure that local people are made aware of their authority's decision.
There was much discussion in another place about the adoptive nature of the new offence. My honourable friend the Minister undertook that a review of the workings and take-up of the new offence would be carried out after two years. He also said that the Government would accept an amendment to provide a reserve power for the Secretary of State. This would allow him to require the introduction of the new offence, should that be appropriate in the light of the review. I shall be considering this matter further before bringing forward a proposal.
Clause 2 requires those authorities which have adopted the new offence to investigate complaints which relate to excessive noise from a dwelling during the hours of 11 p.m. to 7 a.m. The Bill defines these as "night hours". Local authorities already have a duty to investigate complaints relating to possible statutory nuisances. However, this clause provides, in those areas where the powers are adopted, that the local authority has to investigate complaints about excessive noise from dwellings at night. As part of the investigation, the officer will initially make an assessment of whether the noise exceeds, or is likely to exceed, the permitted level. He may then serve a warning notice in respect of the noise—I shall come back to that later—and decide whether to measure the noise.
Clause 2 enables the local authority to deal with complaints where the affected dwelling is in its area, but the noise coming from the dwelling could be heard in another local authority area. I believe that that is quite a valuable point because so often boroughs tend to view themselves as complete entities. People can be adversely affected on borough boundaries. That will ensure that the complaint can be dealt with as though both authorities were in the complainant's local authority area.
Clause 3 deals with the service of a warning notice. Where an officer of the local authority has made a decision to serve a warning notice, it is clearly most desirable for that notice to be served on the person responsible for the noise. However, we must realise that it will not always be possible to find that person. That could be due to something as basic as the door remaining firmly shut or else it may be that no one is willing to admit responsibility.
Recognising the potential difficulties in the service of a warning notice, it can be served on the premises from which the noise is being emitted where it is not possible to serve it on the person responsible. The warning notice cannot come into force less than 10 minutes from the time of service and it remains in force until the end of that night period, that is, the following 7 a.m.
Clause 4 details the new night noise offence. In a situation where a warning notice has been served and the noise from the offending dwelling has continued

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above the permitted level—and this is a major problem in many cases now—the person responsible for the noise under this Bill is guilty of an offence. Where a person is found guilty of an offence that person can be fined up to level 3 on the standard scale, which is currently set at £1,000. I would like to emphasise to your Lordships at this juncture that there is a defence for a person charged with an offence to show that there was,
"a reasonable excuse for the act, default or sufferance".
This would ensure that, for example, where the person who would be liable for the offence was not present at the time the noise occurred, he or she would have the ability to make his or her defence to the courts. It could also be a possible defence in cases where the noise came about because essential works were having to be carried out to the property. This is an important safeguard.
Clauses 5 and 6 enable the Secretary of State to establish the permitted noise level and approve devices for the measurement of the noise. This is the first time that a definitive level will be set for the assessment of neighbourhood noise complaints. One of the major benefits of using an objective standard against which the noise can be assessed, is that it will help to provide a simpler route for the speedy assessment of complaints about excessive noise at night.
To assist in the assurance of regularity in the assessment of noise at night, Clause 6 provides for the approval of noise-measuring equipment. Approval of noise-measuring devices by the Secretary of State will ensure that they are capable of carrying out the measurement procedure as defined and providing evidence to prove that an offence has occurred.
That leads me to Clause 7 which provides for documentary evidence of an offence under Clause 4. Included in this is a requirement that the measurement of the noise has been carried out in accordance with any procedure which might be defined and with an approved measuring device.
Clause 8 provides for a fixed penalty scheme. Where an offence has been committed under Clause 4, the local authority may serve a fixed penalty notice on the person responsible for the noise. The level of the fixed penalty is initially set at £100. I should like to emphasise that the fixed penalty is just one option for dealing with offences under this legislation. Local authorities will be able to prosecute offenders where they believe that would be a more effective option.
Clause 9 is supplementary to Clause 8, allowing the form of fixed penalty notice to be specified by order. Where a fixed penalty notice has been served on breach of a warning notice, the local authority cannot serve another fixed penalty for a further breach. In such circumstances, however, the person may be convicted of the further offence. This clause also enables the Secretary of State to amend the level of fixed penalty.
I shall now move on to the other major area of the Bill—the power to seize noise-making equipment. Clause 10 and the schedule allow local authorities to seize noise-making equipment where it is believed that the equipment is used in the commission of an offence.
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Where required, a Justice of the Peace may issue a warrant allowing entry to the premises, if necessary by force.
As a Justice of the Peace, now on the supplementary list, perhaps I may say that it is important that local authorities know where to locate their local Justices of the Peace and when they are available. Frequently, local authorities have the addresses of people who are never available at the weekend or on public holidays although those are often the times when most offences are committed.
The power of seizure will also be available for use where a local authority considers noise to be a statutory nuisance under Part III of the Environmental Protection Act 1990 and it decides that seizure is the best option to secure abatement of the noise. The schedule provides for the retention and return of noise-making equipment and allows a court to order forfeiture of the equipment. It provides safeguards for third-party rights in noise-making equipment, so that equipment can be reclaimed where appropriate.
The remaining clauses of the Bill are technical. Clause 11 provides definitions and an order-making power. Clause 12 provides protection from personal liability for local authority members, officers and any person authorised to take action on behalf of the local authority. Clause 13 relates to financial matters. Clause 14 provides the short title, deals with commencement and extends the provisions of the Bill to Northern Ireland.
This Bill aims to deal with what can be the most disturbing and distressing types of noise. It will provide local authorities with an additional power to deal with complaints about noise at night. This will he in addition to the existing statutory nuisance controls which will remain available to all local authorities at all hours of the day and night.
I should emphasise that the aim of the Bill is not to encourage killjoys. I do not wish to stop people having a party to celebrate a 21st birthday or a wedding anniversary, for example. Nevertheless, I think that there is a need to strengthen the law. Although most people are tolerant of a single event it is the persistent noise from some adjoining properties which is often just too much for people to tolerate. Indeed, looking across at the noble Lord, Lord Graham, perhaps I may mention the Pink Elephant. I am sure that he will not have forgotten that nightclub, although I understand that it has long since gone.
Lord Graham of Edmonton: It was at Southgate, on the Circus.
Baroness Gardner of Parkes: My Lords, yes, and it was a constant source of complaint. People could not live within any range of it. The noble Lord and I happened both to be associated with the area at the time.
I believe that this Bill is a major step forward in dealing with what is one of the most common pollutants in our society today—and something with which so

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many people can identify. The Bill is a great step forward in dealing with complaints and I commend it to the House.
Moved, That the Bill be now read a second time.— (Baroness Gardner of Parkes.)
The Earl of Balfour: My Lords, with the leave of your Lordships, I should like to take this opportunity to raise one point. Unless a noise intensity measurement is written on to the face of the Bill, I think that it will be very difficult to enforce.
Noise is often measured in decibels or the 10th part of a bel. A bel (spelt with one 1, by the way) is a measure for comparing intensity of noise, electric currents, etc., based on a logarithmic scale.
9.43 p.m.
Baroness Hamwee: My Lords, I start by thanking the noble Baroness, Lady Gardner of Parkes, for her explanation of the Bill. It occurs to me that I should declare two interests. First, I am a member of a local authority. Secondly, professionally, I and my firm act for a great many musicians who create the subject matter of the Bill, although I am sure that very few of them set out to cause offence.
In expressing concern about the Bill, I am not saying that noise is not a huge problem. I entirely agree that it is, but I do not believe that the Bill will be quite the panacea that some of the speeches in another place seemed to indicate. I understand that noise can drive people to distraction—literally, in some cases. I shall confine myself to one anecdote, although I cannot resist commenting that, when looking at the noble Lord, Lord Graham, I have never thought of pink elephants. A new vision appears.
I have a vivid mental image of what must have occurred over a bank holiday weekend, following which one of my colleagues, a very senior lawyer, came into the office and said that he had been approached by a neighbour, a High Court judge, holding a hammer and asked whether he would support a step ladder while the judge took the hammer to a ringing alarm. That is the kind of distraction to which upright members of society can be driven. I assume that ringing alarms fall outside the Bill since they are outside premises. There are other measures to deal with them, which I believe are cumbersome and probably inadequate.
My concern is whether the Bill will prove to be a workable measure. I was glad to hear the comments of the noble Baroness about the need for local discretion. I would be concerned if the provisions became mandatory. If so, I believe that that should arise only if the local authority had discretion as to the level of service to be provided. Many local authorities have anti-noise patrols and take decisions about the resources to be devoted to the service and the need to be met. Understandably, they provide the service on certain days of the week—the weekend—or times of the year. For example, the second and third quarters of the year tend to provoke more complaints because of outside parties and barbecues, which are matters that fall outside the
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Bill. I mention matters that fall outside the Bill because they indicate the breadth of the problem and the difficulty of dealing with just one sector of it. I believe that the need for investment in the service must be measured by local authorities against other needs. It is a matter for each local authority to assess.
I have indicated my concern about what is covered by the Bill, not least because of the problems caused by other sources of noise. An insufficiently comprehensive Bill may lead to the law and law-enforcers being brought into disrepute. Perhaps the noble Baroness in her reply can give an indication of the "nuisances" to be covered by the Bill, in particular whether the vibration or beat from music, which is often a source of real irritation, albeit at a relatively low sound level, falls within the Bill. I believe that it comes within the Environmental Protection Act.
I wonder whether the noble Baroness can also comment on the connection between the level of noise which constitutes an offence and ambient noise levels, which the noble Earl has already raised. If the level is 35 dB(A)—which I understand is the level that has been debated and is the WHO guideline—in urban areas it may well be that existing levels exceed it. Further, I understand that it will be necessary to establish that the noise which is the subject of the potential offence exceeds the background noise by at least 10 decibels. I should be glad to receive information about background noise in an area where there are many overhead flights. For example, in west London the noise created by aircraft flying into Heathrow can be considerable during both night and day. I should be grateful to receive confirmation that that is not part of the ambient noise; in other words, that the noise is measured against the gap between aircraft, not against an aircraft. Comment has also been made that, where there is low background noise, noise of less than 35 dB(A) may create a disturbance.
Perhaps I may read one comment made by the environmental health officer of a London borough, who pointed out:
"In the case of persistent noise nuisance, a true background level is bound to be difficult to determine since the offender is unlikely to oblige the local authority by turning off the noise to enable the background noise level to be measured".
That summarises well some of the concerns of the officers who will have to operate the Bill. The measurement must of course be technically unimpeachable. It is that type of comment which makes me wonder whether that will be possible.
I have been struck also by comments about the duality of the enforcement system. These provisions running alongside statutory nuisance measures may, I am told, lead to increased administrative effort, as both may have to be followed in case one procedure is not effective. I hope that that is an unwarranted fear.
I believe that local authorities will have to work with the police in enforcing these provisions. That is of course at a time when the Home Office review of police core activities recommends moving away from police involvement in local authority enforcement. I wonder

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whether the noble Baroness can tell us—I appreciate that she may be unable to do so—whether the police have made any comments about the Bill.
This is an area close to home for the noble Baroness, but has she received any comments from the Magistrates' Association? I ask that in the context of the level of the fixed penalty. I agree with the views of another place that the original proposal of £40 was rather low, but I wonder about £100. Perhaps from her own experience the noble Baroness can say whether that is likely to lead to more people opting for a court hearing, and the costs, delays, and so on that that will provoke. I shall be interested to know whether the magistrates have any comments.
Finally, if the fixed penalties are to go to the Secretary of State, as the Bill provides, one must ask why. If it is unobjectionable for the Secretary of State to collect the penalties, then I do not see that it is unobjectionable for the local authority to collect them. Enforcement and the penalty should be decoupled to avoid financial incentives.
I am aware that I have come out with a string of concerns. I call them concerns rather than criticisms because I do not want to pitch them so high as to appear to be entirely unwelcoming. I welcome the provisions relating to the seizure of equipment. I am sorry that I cannot he unreservedly enthusiastic about the Bill, because I am unenthusiastic about the problem of noise which the Bill seeks to address.
9.58 p.m.
Lord Graham of Edmonton: My Lords, I begin, as is customary on this side of the House, by congratulating the noble Baroness, Lady Gardner of Parkes. This may not be "Gardeners' Question Time", but it is an appropriate time to ask some questions. I start, as others did, by welcoming the initiative of her honourable friend in another place, Harry Greenway, whose parliamentary activities are well known to me. One can see from reading the reports that he has been most assiduous.
I see that four and a half hours were devoted to the Second Reading in another place. The Bill was discussed for a further eight and a half hours in Committee and four hours were spent on Report. There were 17 hours of discussion in all. That indicates, as the record shows, that many Members of Parliament wanted to contribute to the debate. They all brought to it, as do the noble Baronesses, Lady Gardner of Parkes and Lady Hamwee, and myself, experience at the sharp end from listening to constituents who have undoubtedly suffered. The noble Baroness, Lady Gardner of Parkes, said that local authorities had received 130 complaints.
Baroness Gardner of Parkes: My Lords, 130,000.
Lord Graham of Edmonton: My Lords, that is right. The figure is rising. There are probably at least that many complaints that have not been reported because much fear is engendered in communities by people who are blatantly noisy, sometimes threatening and often violent. People sometimes keep quiet and do not complain in those circumstances. This is a serious problem. However, I share the reservations of the noble
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Baroness, Lady Hamwee, about the Bill. We welcome the Bill and shall not in any way inhibit its passage, but we have to be exceedingly careful that there are not people outside who think that the Bill constitutes an automatic solution of their problems. Local authorities have my highest regard and I should not wish them to be the butt of complaints from communities and individuals as a result of people believing this Act of Parliament means that local authorities should take certain action.
It is right that we should place on record our questions as regards the Bill, but in this area it is easier to mention the problems than to find solutions to them. I do not think that Harry Greenway MP is expecting this measure to achieve a great deal immediately. The kind of noise people are subjected to arises from noisy parties, drinking parties and summer events. However, people who live in flats are subjected to other noise. I was proud to represent Edmonton which has many tower blocks. However, the first tower blocks in the London Borough of Enfield were built in Southgate. I attended the opening ceremony. In those days tower blocks had not acquired a bad name.
People who live in flats may suffer from noise which emanates from their neighbours. That noise may not arise as a result of parties but flat dwellers may still suffer from the noise created by their neighbours. I understand that the Government welcome the Bill and will do nothing to inhibit its passage. I have a briefing from the National Society for Clean Air and Environmental Protection which appears to be a reputable body. The briefing asks whether,
"the legislation would effectively mean a 11 p.m. curfew on all parties—is there no discretion for allowing one-off celebrations"?
It would be helpful to be told whether that is the case.
There is also the matter of the resources which will be required by local authorities to enable them to carry out their responsibilities in this area. I share the anxiety of the noble Baroness, Lady Hamwee, as regards the role of the police. No one, including the noble Baroness, Lady Hamwee, would wish to criticise the police for wishing to carry out what they consider to be more important work. However, it is the local authority officer who has the power to issue warning notices. Unless he has the co-operation of the police and is accompanied by a policeman when necessary, he and councillors will be frustrated as regards taking action and residents will despair of their problems being resolved. I hope that we can be told more—at a later stage, if not tonight—about how the police view this matter. I believe it was the honourable Member for Bromsgrove who said in another place that 17 people had been killed either through suicide or in disputes arising out of noise. We are discussing a matter which affects the health and mental stability of a great many people.
I wonder whether the noble Baroness has taken into account some of the information which the National Society for Clean Air and Environmental Protection has gathered. It contacted senior officers of local authorities on the Noise Bill prior to its introduction. It received some interesting and I would say depressing answers to its questions. To the question, "In addition to these new prosecution powers, would you also be likely to use the

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proposed fixed penalty powers?" 103 replied, "Unlikely to use"; 102 replied, "Too early to say"; and 34 replied, "Likely to use".
Another question asked, "If the Government clarified the law on powers of equipment confiscation, how likely is your authority to use these powers?" To that, 181 replied, "Likely to use"; 21 replied, "Unlikely to use".
The most significant question asked local authorities to select what they considered to be the major constraints on their ability to control noise nuisance. Thirty-four said lack of police co-operation, 169 said lack of staff and resources, 47 said lack of effective legislation, and 35 replied that there were no major constraints.
The noble Baroness, who is always fair in these matters, will recognise that we should not indicate that the Bill is an instrument which will be welcomed by local authorities. The general intention to do something about noise is welcome. In my continuing role as joint president of the Association for London Government, I keep in touch with London local authorities. They have a horrendous task trying to sort out finances and priorities.
On this side of the House, we welcome this initiative. I realise that there are time constraints on the Government but had this been a government Bill it would have been taken much more seriously by local authorities. However, the Official Opposition welcome the Bill and we shall do nothing to inhibit its progress.
10.2 p.m.
Lord Lucas: My Lords, I am grateful to my noble friend Lady Gardner of Parkes for bringing this Bill to the House. I congratulate her and my honourable friend Harry Greenway on giving it life in another place. I hope that its passage here will be speedier than it was in the other place and that it will attract fewer amendments than the Bill whose Committee stage we have completed this evening.
It is surely right that there should be an adequate system of controls on noisy neighbours. Where education and guidance no longer work, we need to address the problem through legislation. Local authorities already have powers to abate noise nuisance but they are slow and expensive and do not work as well as they might. As the noble Baroness, Lady Hamwee, said, this Bill is no panacea but neither is it a white elephant. It will fulfil a useful purpose in addition to the existing powers, and we welcome it.
My noble friend explained the provisions of the Bill in some detail. I shall not repeat what she said, but I should like to offer some comments on particular aspects of the Bill and on how we see it working in practice. After that, I shall make a few comments in response to the questions raised by the noble Baroness, Lady Hamwee, and the noble Lord, Lord Graham.
As regards whether the provisions of the night noise offence be adoptive or mandatory, it was decided in the other place that the offence should initially be adoptive but that this should be reviewed after two years. We also
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agreed that the Secretary of State should be given a power to direct local authorities to operate the new offence should that become appropriate.
That seems to us to be the right balance in the long term. The 24-hour complaints service required to fit in with this Bill is likely to be inappropriate for areas where night-time noise nuisance is uncommon, such as many rural areas. In those areas existing powers continue to be available, as elsewhere.
Next, I emphasise that there must be an actual sufferer from whose dwelling the nuisance is measurable. This Bill is no charter for busybodies or officious local authorities. There will be objective standards (determined by the Secretary of State) for noise nuisance both as to the permitted level and as to how that is measured.
As the noble Baroness, Lady Hamwee, said, our proposals for the permitted noise level are that to trigger the offence noise would have to exceed 35 decibels and would have to exceed the underlying noise level by at least 10 decibels. That underlying noise level would be measured over a period of five minutes and would, therefore, include the "long lows" as well as the "short highs" of a building under an aeroplane flightpath.
We have not set the figure of 35 decibels or of 10 decibels on the face of the Bill. We believe that the figure should be flexible and one which can be adjusted from time to time as the technology advances or, indeed, as people's views of the offence change. Therefore, I disagree on that point with my noble friend Lord Balfour. Thirty-five decibels is typical of night-time noise levels in bedrooms with closed single-glazed windows fronting a busy suburban road. Just how many bells there are on a pink elephant I would not know.
Research indicates that 90 per cent. of the population of England and Wales is expected to experience noise levels of less than 35 decibels inside rooms on the front of their dwelling at night. The World Health Organisation issued guidance in 1980 that,
"a level of less than 35 decibels is recommended to preserve the restorative process of sleep".
I am sure that that is something that we are all looking forward to.
A possible measurement protocol, including the permitted level and the manner in which the noise is measured, has been tried out in a number of local authorities in England and Wales. Those trials have shown that the new offence is likely to apply to prolonged excessive noise such as that produced by amplified music.
The trials show that noise from conversation held at a reasonable volume or from listening to television, radio or amplified music in the normal course of life would not usually exceed the proposed permitted level. Intermittent or impulsive noise such as sporadic hammering, slamming of doors or dogs barking will not be measurable for technical reasons. As the owner of three peacocks, seven guinea fowl and a couple of dozen bantams, I must say that I am grateful for that fact.

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The local authority officer, once he has established that an offence is being committed, will have a wide discretion. Such discretion will enable him to deal appropriately with cases where, for instance, an offending noise is simply the result of a one-off celebration such as a wedding, anniversary or a birthday. I should tell the noble Lord, Lord Graham of Edmonton, that we expect those people to act with common sense.
The local authority officer may conclude that it would be inappropriate to take action in such circumstances. He may allow time for the event to finish; he may require the noise to be reduced to a reasonable level—and, indeed, may advise on what that level is; and he may seek to resolve the problem informally.
If a local authority officer issues a warning notice under the Bill and that notice is not complied with, he has the alternatives of taking the matter to court, where the maximum fine will be level 3—that is currently £1,000. We agree that that strikes the right balance and reflects the seriousness of the problem of neighbour noise. Alternatively, he will be able to serve a fixed penalty notice which not only provides a more immediate sanction on offenders but also prevents less serious cases reaching the court. The level was set in another place at £100. That is higher than any other fixed penalty currently in place. The Government's acceptance of that level for this offence should not be seen as a precedent for other fixed penalties.
The noble Baroness, Lady Hamwee, asked who would keep the money and why it should be the Government and not local authorities. It is a simple matter of it being a criminal offence. We do not believe that there should be a financial incentive for the people who are charged with creating, so to speak, that criminal offence. I see that the noble Baroness wishes to respond. I give way.
Baroness Hamwee: My Lords, I am grateful to the Minister for giving way. However, my point was whether it was appropriate for the Secretary of State, presumably, of the Environment to do so. I assume that he would be a conduit into the Treasury and that, therefore, it would in fact be no different from the Home Office or another department collecting the money.
The point is this. Should the Secretary of State for the Environment or the Home Office collect the money? I am not clear where fixed penalties normally go. However, I should have thought that they would not necessarily go to the particular Secretary of State. I said that I thought it important to decouple any financial incentive from law enforcement.
Lord Lucas: My Lords, I entirely agree with the noble Baroness. I can assure her without reading what is in front of me that the money goes to the Treasury.
The Bill also clarifies the law on confiscation of noise-making equipment. I can think of no more appropriate sanction against those who commit such offences than to deprive a persistent and thoughtless noise-maker of the source of the noise. The Bill provides safeguards for third party rights; and we welcome that.
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I turn to some points raised by the noble Lord, Lord Graham, and the noble Baroness, Lady Hamwee. The noble Lord referred to the NSCA survey. That was undertaken before local authorities had had an opportunity to examine the detail of the Bill. We agree that the Bill is only part of a solution. It is also necessary to improve local authority practice and the liaison with the police.
The noble Baroness, Lady Hamwee, raised the question of alarms. Those will be covered by the Bill under Clause 11(2)(b).
The noble Baroness referred to the issue of vibration which may be difficult to measure under the protocol in the Bill. However, it may still be possible to take action under statutory nuisance.
As regards whether the level of the fixed penalty is too high, it is a balancing act. If one sets the level too low, people do not take it seriously. If one sets it too high, people wish to take their chance in court. The other place has taken a view on it and we are content to see how that works out in practice. But we shall keep the matter under review.
As regards co-operation in practice with the police, in line with one of the recommendations of the neighbour noise working party, a joint code of practice is being prepared by the professional bodies of the environmental health officers and the police. This will offer best practice advice on effective liaison between the police and the local authority in environmental noise control. Currently police involvement in noise control enforcement is almost exclusively required where there is a threat of breach of the peace, public disorder or violence or where confiscation of noise-making equipment is being attempted. Where the threat so described continues to exist, I am sure that the police will still seek to attend as at present. However, in many instances I am told that the police involvement largely reflects the uncertainty felt by many local authority officers about the legality of their position in undertaking confiscation of sound equipment without specific power. We believe that the clarification provided by the Bill of the powers of temporary confiscation and forfeiture of such equipment may reduce the need for police involvement in such cases.
I turn now to resource implications for local authorities. The Government recognise that those local authorities which adopt the provisions of the night noise offence will need to provide a noise complaints service 24 hours a day. One of the messages from responses to the consultation paper on neighbour noise control was that those authorities with the greatest need for out-of-hours noise complaint services already tend to provide them. Indeed, in 1993–94, 35 per cent. of local authorities already operated a full 24-hour service.
The additional cost of manpower for local authorities to enforce the night noise offence is estimated to he £1 million in the first year, rising to £3 million per year in the third year. Our calculation of these additional costs is based on a gradual take-up of the night noise offence provisions by those local authorities not currently providing a 24-hour noise complaint service.

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The Government have undertaken that those additional costs will be taken into account in the revenue support grant settlement.
Lord Graham of Edmonton: My Lords, although the additional cost is designed to take account of the additional take-up, will those authorities which have already voluntarily started a service be recompensed? Alternatively, will those who have been doing the job well for a short time have to soldier on paying their own costs, while the Johnny-come-latelies get a subsidy of some kind?
Lord Lucas: My Lords, I do not believe that we will differentiate between those who came first and those who have yet to arrive. However, if there is any question about it, I shall write to the noble Lord.
The Bill before us will give local authorities an additional weapon in their attempts to address the distress and suffering that are caused by night-time neighbour noise. The Government welcome it as providing a suitable balance of increased controls on the thoughtless and persistent noise-maker, with provisions to ensure that the rights of the individual are not unduly curtailed.
10.16 p.m.
Baroness Gardner of Parkes: My Lords, I thank noble Lords for their participation in the debate and for the many interesting points that have been made. The noble Earl, Lord Balfour, brought up the technical matter of defining the decibel level. I shall look into it to ascertain the technical answer for which he asked.
Another interesting point raised is the decibel level permitted at work by the Health and Safety Executive. It is a relevant point and we shall seek an answer to it. The noble Baroness, Lady Hamwee, mentioned the problem of alarms, which I thought was already under control, and the Minister responded. Nowadays one has to have a 20-minute cut-off point on an alarm. Only someone whose alarm is defective or who has failed to replace it with one of the proper type will be an offender. For many years I suffered over long weekends when an alarm rang for three days. I quite understand the events which the noble Baroness describes.
Whether local action should be mandatory or discretionary is an important point to which we should return at Committee stage. The fact that it is discretionary at the beginning makes it clear that people will be able to determine whether the action suits their area and the demand for it.
I support the point made by both the noble Baroness and the noble Lord, Lord Graham, that local authorities must balance tight budgets and assess value for every penny they spend. In this city, London, there is a 24-hour noise patrol which has proved hugely successful. It is so valued by the ratepayers that they would give up most benefits for it except the rubbish collection—that is the first priority on every resident's list. The noise patrol has been hugely successful, but it has experienced difficulties in getting a successful
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prosecution under the present law. It is more difficult when one has to establish nuisance than when there is an objective assessment, as in this case.
Another advantage of the objective assessment is that the complainant would not have to appear if the case goes to court. A certified report would be issued by the qualified person. That would be helpful because many people are frightened to complain about a neighbour. We know from the road rage cases recently that people are often intimidated and do not wish to fall foul of their neighbours. Tempers can get very hot and recently there have been bad incidents with people who live near each other. It is a good point. There will be a more objective assessment which will be certified. There will be cases like the drink driving cases where people prove that the equipment is faulty. Hordes of people got off because the equipment was established as being defective. Plenty of cases will be argued on that basis.
The noble Baroness asked for my views regarding the £100. I have had no information from the Magistrates' Association, so I do not know its views. I quote only my own. A penalty has to hurt a little. By the time I had stopped being an active magistrate, parking fines did not mean a thing to people; they were just accumulated by the dozen. But what really upset them were wheel clamps, because those hurt; they were an inconvenience. I therefore think that a fine of £100 would be something of a pain to pay, while £40 would probably not be enough.
The other day I heard someone say: "I had to pay my dentist £40 for my treatment". I do not know whether it was national health treatment; it probably was. I heard people complaining about it on a television programme. Yesterday I paid the washing-machine man £40 to walk through the door—and he did not have to do all the years of studying that dentists have done. Forty pounds these days is the call-out fee on most appliances. Therefore the £100 proposed and accepted in the Commons is about right.
Baroness Hamwee: My Lords, perhaps I might intervene to pass on the advice I have heard that dentists ought to charge while the tooth is still hurting and not afterwards. Then people would be more willing to pay. I also want to ask whether my point about the views of the Magistrates' Association might he taken up during the Bill's passage through this House. I take the personal comments of the noble Baroness, but I am concerned about the balance between the fixed penalty hurting and the provocation to resist it and take the matter through the courts.
Baroness Gardner of Parkes: My Lords, the noble Baroness makes a very valid point. I certainly hope that we shall be able to get the information from the Magistrates' Association. That would certainly be the body to give such advice.
Money values have changed so much. In my day, the old-age pensioner came for a half-a-crown extraction. You took the tooth out for that amount. Whenever I quote something at an old price, my sister tells me that I am still thinking in the days of the threepenny

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meat pie. That is true. It is possible to forget how money has changed in value. We will seek those views. They would be very interesting.
The noise patrol that I mentioned is a 24-hour, seven days a week service. The local authority had chosen to fund it as part of its expenditure. It may be that in another area the call-outs would be few. In the case of the Pink Elephant, which we both knew well—it was not exactly a disco; in those days such places were called late night music and dancing establishments—the licensing control lay with the Greater London Council. Every time we used to bring in a busload of local people to explain how awful it was. The case was heard across the water. The people sitting there frankly did not believe it. There was no objective evidence. Had the decibels been measured it might have been rather more effective. Measurements could have been taken in any one of 20 houses in the area. Since then, licensing has moved to the local authorities. The London Borough of Enfield would now know what was happening. In fact, the London Borough of Enfield opposed renewal of the licence, but that had no effect at all because it was seen as the view of "Big Brother" without anyone being informed. It is very important that control now genuinely comes under the local authority.
The noble Lord, Lord Graham, mentioned being outdoors in the summer. As I understand it, the Bill will not cover noise out of doors; it will only cover noise affecting people within a building. I find the one-off celebration the most difficult. I would hope that in most cases people would go round to see their neighbours and say that they were having a 50th wedding anniversary or 21st birthday party. It depends on an area, but very often people will ask those who live locally to join in. Then there is a great tolerance of such an event. Even if that were not the case, the officer could issue a warning, or could call first and give a verbal warning before entering into any of these formal procedures.
In the past, for years I knew people on whom the police had called before the nuisance legislation came in. People would turn the music down until the police car had gone round the corner and would then immediately turn it up again to its previous level. The
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only way the police could have stopped the noise would have been to stay there all night, which would of course have been impossible. So the one-off celebrations would, I hope, be dealt with by common sense.
Walkman radios have affected people's hearing to the extent that sounds now need to be louder than they used to be. One is meant to use the Walkman radio in one ear at a time so as not to damage the hearing too much. But the people who sell Walkmans do not ever advise that. However, it means that people's hearing has in fact been damaged, as research in America shows. Also, people's sensitivity to sound differs greatly. That is why an objective amount above the noise level is an appropriate objective assessment. Traffic in general is covered by different regulations and does not come into the Bill at all.
I believe that I have covered all the points raised. Certainly, there will be much more discussion at Committee stage. I thank all those who have taken part. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

London Local Authorities Bill [H.L.]
Reported from the Unopposed Bill Committee with amendments.
Police Bill [H.L.]
Returned from the Commons earlier this day agreed to.
Industrial Tribunals Bill [H.L.]
Returned from the Commons earlier this day agreed to.

Employment Rights Bill [H.L.]
Returned from the Commons earlier this day agreed to.
House adjourned at twenty six minutes past ten o'clock.