Lords Sitting of 25 November 1996

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

Care in the Community
Baroness Cox Baroness Cox asked Her Majesty's Government:
What measures they intend to take in response to the concerns expressed by the Royal College of Psychiatrists in August 1996 that "the Government's policy in England and Wales on care in the community is in a state of deep crisis".
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, many of the concerns raised by the Royal College of Psychiatrists were addressed by the Secretary of State in February 1996, when he announced the allocation of extra resources and the publication of The Spectrum of Care, a report setting out the range of components required for a comprehensive mental health service.
Baroness Cox: My Lords, I thank my noble friend for that encouraging reply. What steps are being taken by the Government to meet the concerns expressed by the college over the large numbers of severely mentally ill patients who are being transferred into the community? Is my noble friend aware that they are transferred into hostels, where very often they are cared for by untrained volunteers who are inadequately prepared for the realities of mental illness or for caring for severely mentally ill patients? Will she give a positive response to the college's request for an inspectorate to ensure that all people working in community based homes or hostels are adequately trained?
Baroness Cumberlege: My Lords, I do not in any way want to decry the work that is done by volunteers,
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as I am sure my noble friend would agree. However, I support her point that volunteers who work in this very difficult field should have enough support from professionals and should have training that is relevant to the jobs that they do.
We do not feel that an inspectorate is the solution. We look to health authorities, which commission services, to ensure that they are up to standard.
Lord Walton of Detchant: My Lords, is the Minister aware that, in addition to the concerns expressed by the Royal College of Psychiatrists and despite the welcome initiative in February, the college is anxious about the diminishing number of admission beds for acute psychiatric cases and, as a result, many patients having to be transferred to hospital beds a long distance from their homes? Is the Minister satisfied with the operation of the amended mental health Act which requires patients released into the community with serious psychiatric illness to receive compulsory treatment under supervision?
Baroness Cumberlege: My Lords, I understand the noble Lord's point. Our first duty is to try to prevent patients entering hospital if it is at all possible and, through very comprehensive community services, to keep them at home. However, we recognise that there are occasions when they need to be admitted, and indeed in some cases detained for the rest of their lives in secure accommodation. We are increasing the number of medium-secure beds: £47 million has been invested. That means an addition of 1,250 purpose-built beds by 1998 and some very secure accommodation. The noble Lord's point concerning admissions is a matter that I shall need to consider further.
Lord Campbell of Croy: My Lords, is my noble friend aware that, although the Question refers to England and Wales, perfection in these matters does not prevail in Scotland? On one particular matter applicable both north and south of the Border, will the Government make very clear that care in the community cannot apply

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to one very small category; namely, the known, dangerous paranoid schizophrenics, who must be treated institutionally?
Baroness Cumberlege: My Lords, I was always under the illusion that Scotland was perfection. I assure my noble friend that when patients are discharged into the community there is real determination now to see that they are ready to leave hospital; that there is a care programme attached to them so that when they enter the community they are well looked after; and that they receive the support and supervision that they need. I agree with my noble friend that there will always be a minority who need to be detained. In such cases an assessment must be made between their civil liberties and the protection of the public. Increasingly, we look towards the protection of the public.
Lord Ashley of Stoke: My Lords, is the Minister seriously claiming that the measures taken so far by the Government have tackled what the Royal College terms a "deep crisis" in community care and the demoralisation in the field of psychiatry? If we couple the Royal College's indictment with today's report from MIND which claims very authoritatively that mentally ill people are being subject to widespread harassment, discrimination and abuse, we have a very sorry picture which should be addressed urgently by the Government with adequate funding.
Baroness Cumberlege: My Lords, we totally reject the allegations that the mental illness services are in deep crisis; they certainly are not. We are looking after a whole range of people now in much more compassionate ways than ever before. We accept, though, that there needs to be a balance between those who can be looked after in the community and those who need to be detained in long-stay institutions. Indeed, when the Secretary of State made his announcements, coupled with £95 million of extra resources, he majored on 24-hour nurse beds, where there was clearly a gap in the system. We are thus seeking to fill that gap.
MIND is a very effective voluntary organisation. We have looked with interest at its survey. It is extremely hard to eradicate discrimination among any groups of people, but we have certainly put a lot of work into looking at mental health in the workplace. We understand that one of MIND's major concerns was that people who sought employment were being discriminated against.
Lord Harris of Greenwich: My Lords, most of us recognise the difficulty of dealing with people with mental health problems. Is the Minister also aware of the increasing concern within the police service about the number of seriously mentally ill patients who have been discharged into the community, in their view wrongly, whom the police then have the responsibility of trying to help in conditions of great difficulty?
Baroness Cumberlege: My Lords, yes, we are aware of that, and that is why in courts now we often have a
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social worker or community psychiatric nurse to try to follow a diversion scheme so that people who should not be in the penal system are looked after earlier in the process.
We also recognise that pressure is increasingly put on the health service by those who should not be in hospital but who need secure accommodation. This relates to my earlier answer to my noble friend concerning the number of places available.
We also increasingly seek to establish crisis intervention teams in the community, which should help the police with their difficult task.
Lord Pearson of Rannoch: My Lords, is my noble friend aware of the growing demand for village communities for the mentally ill? Such communities can very often supply a far more appropriate and cheaper service than community care. Since they are in such demand from families, especially for the more severely mentally ill, will the Government look into the case for their promotion?
Baroness Cumberlege: My Lords, I am very aware that parents of children with learning disabilities—the mentally handicapped group of people—are concerned to build village communities for their care. I think that the case for such communities for those who are mentally ill is not as strong.
Lord Thurlow: My Lords, will the Minister give us an estimate of the number of beds in the new residential nurse units—which we all applaud—that are likely to be available in the next two years?
Baroness Cumberlege: My Lords, a lot of work is being done in this area. I presume the noble Lord is referring to the 24-hour nurse beds. We are working very hard with health authorities and trusts to ensure that these are established as soon as possible because we recognise that new long-stay patients are coming into the service who need this form of care. This is a new initiative which started in February and clearly there are not many such beds yet, though I believe some have been established through the Challenge Fund which we set up. Perhaps I could write to the noble Lord, with forecast figures as well as actual figures.
Lord Alderdice Lord Alderdice: My Lords—
Baroness Hayman Baroness Hayman: My Lords—
The Minister of State, Department of the Environment (Earl Ferrers): My Lords, there is plenty of time for both questions. I think it would be appropriate for us to hear from the Front Bench opposite.
Baroness Hayman: My Lords, if the Minister rejects the description that there is deep crisis in the mental health services in our inner cities, how would she designate the situation as regards acute beds where there are bed occupancy rates of up to 150 per cent. in the acute mental health units in many inner cities? Does she

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not agree that those units are under severe pressure because of the lack of a range of services such as long-term beds and crisis intervention services? What action are the Government taking to ensure that initiatives such as the diversion of mentally disordered offenders from the criminal justice system into the National Health Service is properly resourced? Does the Minister accept the need for a thorough review of the workings of the mental health Act?
Baroness Cumberlege: My Lords, we recognise that there is pressure on the mental health services in some of the inner city areas but it is not universal, even in those inner city areas. We know that bed occupancy rates relate not just to resources but also to the way that managers choose to manage. Indeed, on Thursday this week there will be a seminar in London to look at how beds can be better managed. This issue has to be seen in the full context of the building-up of the mental health community teams, many of which have yet to become established. They perhaps need to use volunteers and to find new skills. We are recruiting very heavily for those. It is totally wrong to say that mental health services are in crisis, because clearly they are not.
Lord Alderdice: My Lords, is the Minister aware that in Northern Ireland health and social services systems have been integrated for some time and that psychiatrists, social workers, nurses and others find themselves working together on the same themes? They are not employed by definite authorities and do not have the same kind of problems with budget difficulties across different departments. Would she be prepared to look seriously at those experiences in Northern Ireland over the past 20 years, since they might be usefully applied, whereas one would hope that other experiences in Northern Ireland would not be applied?
Baroness Cumberlege: My Lords, we are always willing to look at good experiences or forms of practice across the whole world.

Aircraft: Safety Standards
2.50 p.m.
Lord Brabazon of Tara Lord Brabazon of Tara asked Her Majesty's Government:
Whether they are still satisfied with the provisions of the 1944 Chicago Convention regarding mutual recognition of certification of aircraft and aircrew.
The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen): My Lords, the Government believe that the mutual recognition of certificates and licences issued in accordance with agreed minimum standards is the best way of ensuring that international civil aviation operates safely and efficiently. We are firmly committed to international action being taken by the International
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Civil Aviation Organisation and the European Civil Aviation Conference to ensure that minimum standards are complied with.
Lord Brabazon of Tara: My Lords, I am grateful to my noble friend for that reply. Is he aware that the convention was ratified originally by 26 nations? Yet now I believe there are 16 nations of the former Soviet empire which in theory anyway are allowed to certify their own aircraft for safety—aircraft which come from a country which itself has an appalling record. Can we be satisfied that those countries and others around the world maintain the minimum safety standards which are not only important for their aircraft coming to this country, where we can at least do something about it, but also and perhaps more importantly for other airports in the world where British aircraft fly?
Viscount Goschen: My Lords, my noble friend raises a very important point. That is precisely why we co-operate so fully with the international civil aviation assessment programme on a multinational basis, where teams visit contracting states to assess whether ICAO safety standards are being observed. We feel that a multinational approach on this issue will produce the best results.
Lord Clinton-Davis: My Lords, is the Minister aware that the Federal Aviation Administration in the United States applies different national safety standards for different categories, barring those in the lowest category of safety from United States' air space? Does he consider that that is a valuable initiative and one which Europe would do very well to copy?
Viscount Goschen: My Lords, certainly we look very carefully at what the Federal Aviation Administration does. We take great note of the results that it produces. But we feel that the best results are guaranteed by international action, getting as many countries as possible and the signatories of the Chicago Convention to act together to send inspection teams to the various countries which apply to help them assess their own standards.
Lord Glenarthur: My Lords, certification is one thing but operating the standards is another, as I hope my noble friend will agree. On a closely related matter, can he say what is being done by ICAO or any other organisation to encourage former Soviet countries, China and no doubt one or two others, to allow the adoption of height measurement of flying aircraft in feet rather than in metres, as is the case in some of those countries? Does he agree that it would thereby remove some of the complexities and obvious risks of error which can apply, particularly when aircraft transfer from one country's airspace to another's?
Viscount Goschen: My Lords, I believe my noble friend has identified an important point. It is clearly very important that pilots should know in which system they are talking, whether imperial or metric. With regard to

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which countries operate which systems and the communication between them, I should be delighted to write to my noble friend with the details.
Lord Clinton-Davis: My Lords, what do the Government seek to do through the International Civil Aviation Organisation? Do they agree, for example, that there are serious shortcomings in the current annexes governing these issues? There is no guidance, so far as pilot or operator ability is concerned, and no indication of the standards that are required. How can standards be checked unless they are known? Is there not an urgent need, particularly in the light of recent examples, to carry out a review of existing standards? How long are we expected to wait for the international consensus?
Viscount Goschen: My Lords, there is no problem of having to wait for international consensus. The assessment programme of which I spoke is under way. I understand that 53 countries have invited teams in and 18 countries have been visited so far. The programme is under way at the moment. It is not possible for any one country to be the world's policeman, as it were, on this issue. There has to be multinational action. We firmly believe that the programme being taken forward by ICAO is the best way for that to happen and for the countries to take seriously their responsibilities under the Chicago Convention.
Lord Whaddon: My Lords, will the noble Viscount bear in mind that air traffic control systems are of equal importance for safety? For aircraft to depart and arrive at an airport over the same path in opposite directions is not the happiest arrangement and is in fact an accident waiting to happen. Will he do his best to ensure that such practices are eliminated?
Viscount Goschen: My Lords, air traffic control is clearly the responsibility of the host state. But I agree with the noble Lord that air traffic control is of paramount importance when it comes to the safety organisation at an airport. I understand that a Question has been tabled on this very subject from the noble Lord, Lord Haskel, and is to be answered later this week. That might be the appropriate moment to talk in further detail about air traffic control.
Lord Brabazon of Tara: My Lords, can my noble friend say how many inspections have taken place in this country of foreign aircraft which were considered likely to fail the tests? What action has been taken where such an aircraft has failed?
Viscount Goschen: My Lords, my noble friend has identified another strand in the process. The Civil Aviation Authority in this country carries out ramp checks on aircraft. I understand that it has carried out 23 so far this year at the request of my department and two on its own initiative. Where there are serious problems, the aircraft can be detained and can be banned from flying. If we felt that there was enough evidence to have real doubts about the standards overall of the
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countries to which those aircraft were flying, we should not permit operations to continue from those countries. Happily, the vast majority of the ramp checks that have been undertaken have revealed only minor problems.

West Coast Main Line Railway: Investment
2.57 p.m.
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
How much has been invested by the Department of Transport and other sources of investment in the West Coast Main Line since the beginning of 1993, and what estimates of future investment they have made.
Viscount Goschen: My Lords, Railtrack is responsible for investment in the rail infrastructure. Railtrack has confirmed that investment in the West Coast Main Line for the financial year 1994-95 was £47.6 million. For the following year it was £50.9 million and for this year it will be £70.1 million. Railtrack is planning to spend a total of £1.35 billion over an eight to 10-year programme to renew the core infrastructure and is prepared to spend an additional £150 million on a passenger upgrade.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for the detailed Answer that he gave and for the figures. He is talking about a 10-year programme. Passengers and freight on the West Coast Main Line are carried in much inferior conditions to those on the East Coast Main Line. Does he consider that 10 years is a long time to wait for the line to be upgraded and for people to get value for money as well as to refurbish the industrial North West?
Viscount Goschen: My Lords, the refurbishment and investment programme is a very exciting programme indeed. The sum of £1.35 billion is a massive sum of money to spend on the railway infrastructure. I am pleased that the noble Lord recognises that and is pleased that the investment is being taken forward. It is a substantial programme and we believe that the timescale is appropriate.
Lord Taylor of Blackburn: My Lords, is the Minister aware that, even though we appreciate the amount of capital that is being spent over those years, a lot of the track will not be serviceable unless something is done urgently? Every week those who travel along those lines find it more and more difficult. Trains are becoming more and more broken down and the timetable out of kilter.
Viscount Goschen: My Lords, the figures that I mentioned are figures projected for the main programme. In addition, as I said, there have already been substantial sums spent. The noble Lord is concerned and rightly so about the immediacy of the problem; but, as I said, over £70 million is due to be invested this very year. This is a high priority for

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Railtrack. I believe that it has taken the problem extremely seriously and given major resources indeed to remedy it.
Lord Cledwyn of Penrhos: My Lords, will the line from Euston to Holyhead, which is a very important line, receive any part of the £1.3 billion?
Viscount Goschen: My Lords, I would need to have the map in front of me to tell me which parts of the main line one would have to go on and what money would result from the programme I have talked about. I should be delighted to send the noble Lord a copy of that map and indeed the investment programmes for all the destinations on the way to Holyhead.
Lord Cledwyn of Penrhos: My Lords, I am extremely grateful to the noble Viscount for recognising that the line is on the map.
Lord Haskel: My Lords, can the Minister please be specific and tell us when the West Coast Main Line will be upgraded to Crewe and to Glasgow? Can he give us a date?
Viscount Goschen: My Lords, I have already answered that point very fully. This is a massive investment programme. In order to upgrade the line there are clearly sections which will have priority. There is the track, the signalling and so forth. They all come together with the programme. I am sure the noble Lord will see the differences that these huge sums of money will produce in an improved service and quicker journey times.
Lord Barnett: My Lords, is the Minister aware that I have just travelled down on the line from Manchester and the train was 30 minutes late? That is not unusual. Indeed, it has been much later than that. Does this mean that I shall have to wait another eight years before the position improves?
Viscount Goschen: My Lords, I travelled down on the line this morning and my train was early. One always tries to get factual experience before facing your Lordships with the details. It is important that trains run on time. The railway privatisation programme is achieving just that.
Lord Marlesford: My Lords, does my noble friend recognise that the economic prosperity of the North West to which he alluded earlier depends among other things on freight being able to get to and from it efficiently and inexpensively? Does he recognise that a large proportion of the freight coming into and leaving the United Kingdom now goes through the port of Felixstowe, particularly the container freight? Is he aware—I am sure he must be—that the links by rail between Felixstowe and the rest of Britain, including the North West, are so inadequate that it is only possible to get one freight train in either direction right through going west? Does he think there is any chance of persuading Railtrack to make the not very substantial but absolutely crucial investment needed to upgrade the link past Ipswich for freight trains,
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which would take a great number of large lorries off the A.14 on their way to the North West and indeed other parts of Britain?
Viscount Goschen: My Lords, my noble friend strays some considerable distance from the detailed matter under consideration. Railtrack has given details of its substantial investment programme. It is not possible for everywhere to be a priority all at once. But it is the clear policy of this Government to put forward policies which attract more freight onto the railways. Railtrack's initiatives in terms of its investment programmes and indeed what the freight companies are doing will, we hope, do just that.
Baroness Farrington of Ribbleton: My Lords, does the Minister accept that the Government are responsible for the highly damaging removal of through passenger services between London and Blackpool? Are the Government aware that Blackpool has more tourist visitors than any other holiday destination in Europe? The Government's policy has led to an undermining of the hard work of those who work in the tourist industry.
Viscount Goschen: My Lords, I certainly do not accept that that is the result of government policy. As Members of the House who sit opposite will know and realise, the privatisation programme has been a considerable success. We are seeing massive levels of investment in the railway. We are seeing passenger franchisers who are keener than ever to attract people on to the railway and to operate more and new services in order to attract more people. That is the future for the railway. We believe that it has a good and bright future, with companies investing money and bringing in new management techniques to attract people to the railway.
Lord Taylor of Blackburn: My Lords, will the Minister answer the question? What is the position in relation to Blackpool?
Viscount Goschen: My Lords, I do not know what more I can say about that. If the noble Lord wants to have a further discussion in order to know what services are operating to Blackpool, I am sure I can provide him with a timetable.
The Countess of Mar: My Lords, is the Minister aware that the line from Euston to Birmingham seems to be regarded as the poor relation of all the railway lines? Today I was more than three-quarters of an hour late. Indeed, if I add on the fact that a train was cancelled before that, I was an hour and a quarter late. There seems to be an appalling situation with regard to the passenger rolling stock. It is in a terrible state. The loos do not work. Very often there is not a smoking carriage and, as a smoker, I am interested in that. There are constant signal failures, Railtrack failures and heaven knows what on this line. Can he say what is being done to improve that part of the line, particularly as we were told 12 years ago that we would get InterCity 125s and they never materialised?
Viscount Goschen: My Lords, I do not think we can take this too much further. We have been over this ground with regard to the new and exciting developments happening in the railway industry—new rolling stock being purchased and new investment and services being put on. All of that is very good news for the travelling public, especially, I would suggest, for the noble Countess.
Lord Clinton-Davis: My Lords, has the Minister had his attention drawn to a complaint that was made by some 25 freight operators, port operators and wagon manufacturers, accusing Railtrack of giving emphasis to passenger trains and little or nothing to freight traffic?
Viscount Goschen: No, my Lords.
Lord Clinton-Davis: My Lords, will the Minister respond to the allegation? Does he accept it or does he not?
Viscount Goschen: My Lords, that is a matter for Railtrack. The noble Lord informs me that a complaint has been made against Railtrack. I do not have the details. If the noble Lord would like to send me the paperwork, it will have been drawn to my attention.
Lord Monkswell: My Lords, is the Minister aware that he may not be aware of the problems of Blackpool because delegates to the Conservative Party Conference probably go by car rather than by rail? On another note, if this investment programme to upgrade the West Coast Main Line is going to be so beneficial and so successful, why has the rail regulator seen fit to suggest to franchise operators that they might operate tilting trains on the West Coast Main Line? Is he further aware that if tilting trains are used inter-city, all other rail users not using tilting trains—for example, the Eurostar running through the Channel Tunnel—will be consigned to run at slower speeds? Is the Minister happy with that situation?
Viscount Goschen: My Lords, the simple fact is that noble Lords opposite cannot bear good news about the railway. We have seen it over and over again. This investment programme is simply enormous. The issue the noble Lord identifies—the possibility of tilting trains—has to be an exciting development. The option for that to occur is exciting. The noble Lord does not appear to want faster journey times; he does not appear to want more modern rolling stock; we on this side of the House do.

Business
Lord Strathclyde: My Lords, at a convenient moment after 3.30 p.m., my noble friend Lord Mackay of Ardbrecknish will, with the leave of the House, repeat a Statement that is to be made in another place on EMU regulations.

Hong Kong Economic and Trade Office Bill
3.9 p.m.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, I beg to move that this Bill be now read a second time.
The purpose of this Bill is to provide the future Hong Kong special administrative region's London economic and trade office with a limited range of privileges and immunities. At present the Hong Kong Government operate a number of economic and trade offices around the world. They have offices in Brussels, Geneva, Washington, New York, San Francisco, Tokyo, Sydney, Toronto and Singapore. The main function of the offices is to promote trade with Hong Kong and to provide assistance to companies which are considering investing in Hong Kong. Their office in Brussels maintains close links with the European Commission, and the one in Geneva is responsible for handling Hong Kong's relations with the World Trade Organisation.
The Sino-British Joint Declaration of 1984 provides that Hong Kong should, after 30th June 1997, have a high degree of autonomy from China, particularly in the conduct of its trade and commercial affairs. For example, the future Hong Kong Special Administrative Region Government will be responsible for Hong Kong's trade policy and Hong Kong will continue to be a member in its own right of the World Trade Organisation and the Customs Co-operation Council.
The Joint Declaration provides for Hong Kong on its own to maintain and develop economic and trade relations with all states and regions, and for it to establish official and semi-official economic and trade missions in foreign countries. Thus Hong Kong will be able to maintain and further expand its network of economic and trade offices after 30th June 1997.
The Hong Kong Government office in London is in a slightly different position from Hong Kong's other overseas offices, reflecting the fact that Hong Kong is a British dependent territory until 1st July 1997. While the London office performs a valuable trade and investment role, it also promotes Hong Kong in other ways; for example, by maintaining contacts with noble Lords who have an interest in Hong Kong affairs, and with the press and business.
After 30th June 1997, the London office will become an economic and trade office. Its main function will be to promote trade and investment links between Hong Kong and the United Kingdom. These links are already extensive and are growing. Our exports to Hong Kong—our second largest market in Asia—were worth nearly £3 billion in 1995. There are around 1,000 British companies based in Hong Kong which also operate from there into China. In 1995 the United Kingdom received nearly £300 million in inward investment from Hong Kong.
The Hong Kong Government are concerned that their economic and trade offices should be given a suitable status by host governments, including a limited range of privileges and immunities. Some of the privileges and

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immunities, such as exemption from Customs duties and taxes, will be of practical benefit to the London economic and trade office. Others, such as inviolability of the official premises, will help to reinforce the fact that Hong Kong has, and will continue to have, autonomy in the conduct of its trade relations. The offices in Brussels and Geneva have enjoyed such privileges and immunities for a number of years. The Canadian and Australian Governments have enacted specific legislation to grant privileges and immunities to sub-state entities in order to provide a range of such privileges and immunities to the economic and trade offices in Toronto and Sydney. The Japanese have provided a range of non-statutory privileges and immunities to the economic and trade office in Tokyo and are considering enacting legislation to provide these on a statutory basis. The American Government have also undertaken to enact legislation so that Hong Kong's three economic and trade offices in the United States can receive privileges and immunities.
The Hong Kong Government look to the British Government, as the sovereign power until 1st July 1997 and as a co-signatory to the Joint Declaration, to help support Hong Kong's future autonomy. The Prime Minister made clear when he visited Hong Kong earlier this year that our obligation to the people of Hong Kong would not end at midnight on 30th June 1997. It is against this background, and the steps which other Governments have taken to give Hong Kong's economic and trade offices a suitable status, that the British Government have put forward the Hong Kong Economic and Trade Office Bill.
The Chinese Government have welcomed our intention to legislate to grant a limited range of privileges and immunities to the future London economic and trade office.
The privileges and immunities set out in the schedule to the Bill are taken mainly from the Vienna Convention on Consular Relations. However, they are not as extensive as those found in the convention as Hong Kong's economic and trade office will not be a consular mission. I believe that it is only right that the British Government assist Hong Kong in this way.
Moved, That the Bill be now read a second time.—(Baroness Chalker of Wallasey.)
3.15 p.m.
Lord Archer of Sandwell: My Lords, it is not every government Bill brought to your Lordships' House which receives a welcome from these Benches. Today, the Government have presented us with a Bill to which we can offer an unreserved welcome. Indeed, our criticism would have been if the Government had not produced the Bill. I like to think that they may enjoy the experience and that they will do it more often; but I am content to savour the moment while it lasts.
There is no division of opinion in your Lordships' House in wishing Hong Kong a happy and successful future. It is good to know that July next year will not see the end of Hong Kong's autonomy over its trade and commercial affairs. As the noble Baroness said a few moments ago, that is reserved to the people of Hong Kong by the Sino-British Declaration 1984.
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One beneficial consequence of that is that there will continue to be a Hong Kong presence in London. It will no longer be a dependent territory convention, but as the noble Baroness said, it will continue to supply Members of both Houses with information as well as, one hopes, to all those who seek information.
I also understand that London will continue to enjoy the presence of Sir David Ford, who has done so much to maintain good will between our peoples. The privileges and immunities set out in the Bill are no more than we would be likely to accord to the office of any friendly nation and no more than are set out in the Vienna convention or those accorded to Hong Kong's ETOs by a number of other countries and international agencies. I fully understand that that is because no purpose would be served by further gilding that lily. But I hope that that will not preclude the continuance of a special relationship which reflects our joint history. I shall be surprised if the Chinese Government find anything offensive to them in such a relationship.
There are still some questions over the future of Hong Kong. The future status of the Bill of Rights ordinance is not fully resolved; neither is the question of the future of the legislative council nor the final court of appeal. But this is not the occasion to pursue those themes.
With an expanding economy, the eighth largest stock market in the world, the fifth largest foreign currency exchange, with reserves of about 150 billion Hong Kong dollars and every inducement for China to encourage expansion, the future of Hong Kong in the new millennium promises well. We on these Benches look forward to seeing those hopes fulfilled.
3.19 p.m.
Lord Thomas of Gresford: My Lords, we on these Benches greatly welcome the Bill, particularly since it is presented with the agreement of the Government of the People's Republic of China. It augurs well for the future prosperity of Hong Kong that there should be set up a network of similar offices with Hong Kong's other trading partners, as outlined by the noble Baroness, Lady Chalker, a moment ago.
I am sure that it is the hope of the whole international community that the Hong Kong Special Administrative Region succeeds and remains prosperous. Some developments are very encouraging; others perhaps less so. First—I hope I do not stray too far from the subject matter of the Bill—the election of the chief executive by the nominated selection committee of 400 has its critics, although Britain can hardly complain about the system that has been adopted. But it has produced three candidates of outstanding quality, each of whom has committed himself to standing up for the interests of Hong Kong. Their sincerity is beyond doubt. Not one of them can be regarded as Beijing's puppet. All three are internationalist in outlook. Currently, their campaigns are being fought not simply for the votes of the 400 nominees who form the selection committee but openly for the hearts and minds of the Hong Kong people. They are setting out publicly clear policy decisions. I am sure that your Lordships will wish each of those candidates well.

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The future of Hong Kong depends upon confidence. This is not the moment to debate whether the provisional legislature breaches the Joint Declaration. The Foreign Secretary made clear the Government's position on that matter in a debate in another place on 14th November. A nominated legislature that has no place for dissent and fails to include places for representatives of the Democratic Party, which secured 16 of the 20 directly elected seats in LegCo in the September 1995 elections, will not attract the legitimacy, confidence and respect for its deliberations for which the international community looks. The noble and learned Lord, Lord Archer, referred to a special relationship between the United Kingdom and Hong Kong's Special Administrative Region. I hope that that has the opportunity to grow.
Perhaps I may focus upon the legal system as an essential ingredient in ensuring Hong Kong's future economic prosperity. If the next century is ever to be the Pacific century—an aim to which the People's Republic of China no doubt aspires—the rule of law must be paramount. It is no coincidence that the natural flair, energy and commitment of Chinese people has achieved its greatest success in economic and trade terms in Singapore, Hong Kong and Malaysia. Taiwan with its own well developed system of commercial law is another example of their success. The greatest legacy of this country to Asia has been stable administration, the lack of corruption and the rule of law. These are great traditions which this country should be proud to have passed to Asia.
In June I was concerned to discover that, following a decision of the State Council of the People's Republic of China, foreign businessmen engaged in China, whether in commercial trade or joint ventures, will no longer have the option as of right to settle commercial disputes with their Chinese partners in the long established and well respected China International Economic and Trade Arbitration Commission. What is now proposed is that if the local partner in China does not agree to go to the international commission, any dispute will be referred to the newly-established local arbitration bodies in 90 or so cities or to local Chinese courts. The fear is that this will open the door to local protectionism or even local political intermeddling. Certainly, the same expertise in international trade and investment cannot be expected of these local arbitration bodies.
For Hong Kong to maintain its position as a funnel for investment into China and its traditional middleman trading role, it must preserve its legal system based upon its British traditions as a strong and incorruptible framework, independent of political influence, and free of corruption. If that is permitted to remain in place we need have no fears that Hong Kong will ever lose its foremost place in the Far East. As Chief Secretary Anson Chan recently said:
"We can justifiably call ourselves [in Hong Kong] the single biggest storehouse of knowledge and experience pertinent to doing business in mainland China".
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Long may that be the case. The converse is that if that legal framework is weakened, a penalty will be paid by the Hong Kong business community. My information is that trade within China may be considered a higher risk because of the lack of legal enforcement procedures. That means added cost to the businessman in terms of higher interest rates to fund his trade and higher insurance premiums.
I hope that I have not strayed too far from the subject matter of this Bill. I am sure all noble Lords hope that the excellent work of the existing Hong Kong Office under Sir David Ford will continue, and that there is a smooth transition on a through train at least for this side of the Hong Kong Government's activities.
3.25 p.m.
Baroness Dunn: My Lords, I wholeheartedly support the Second Reading of this Bill. In doing so, I should like to make three brief points. First, the foundation of the Sino-British Joint Declaration is that Hong Kong will enjoy a high degree of autonomy under the unique concept of one country two systems when sovereignty reverts to China in 1997. The conversion of the Hong Kong Government Office in London to the Hong Kong Economic and Trade Office in 1997 and the granting of limited privileges and immunities to its staff will reinforce the important principle of Hong Kong's future autonomy. This will be greatly appreciated by the people of Hong Kong.
Secondly, I pay warm tribute to the Hong Kong Government Office and all its commissioners and staff through the years, particularly the present energetic Commissioner, Sir David Ford, and all his colleagues, for their sterling efforts. They have helped to foster understanding about Hong Kong here in Britain. They have built up for Hong Kong a large number of well informed friends in many sectors of the British community who take a deep interest in Hong Kong's well being. We owe them a debt of gratitude.
Thirdly, this is perhaps a good moment to reflect on the economic and trade opportunities that Hong Kong continues to offer Britain and the rest of the world. Inevitably, economic prospects receive much less attention than short-term political prospects. With less than eight months to go before Britain relinquishes its constitutional ties with Hong Kong, we should focus on the immense potential for Britain of its economic relationship with Hong Kong and, through Hong Kong, with China and the rest of Asia.
The World Bank estimates that East Asia will grow at an annual rate of 7.7 per cent. during the period 1995 to 2004 more than twice as fast as the rest of the world. By the year 2000, the bank estimates that half the growth in global trade will be generated in East and Southern Asia, and that, by the year 2010, Asia's combined economy will be larger than that of Europe or North America.
Hong Kong is at the heart of spectacular developments. In addition, it enjoys unrivalled geographical and political links with China. It accounts for over 60 per cent. of foreign investment into China and one-third of its foreign exchange. It is China's

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window on the world. Hong Kong, despite its size, is an important market in its own right. As the noble and learned Lord, Lord Archer, stated, it is the world's fifth largest exchange market, the eighth largest stock market and the second most competitive economy. Its GDP per capita, at 25,000 US dollars, is the third in the world behind the United States and Switzerland.
Whatever measure one chooses, Hong Kong's economic and trading opportunities are truly impressive. I have no doubt that British businessmen will continue in ever increasing numbers to beat a path to the doors of this office in London, the future of which will be secured by the Bill.
3.32 p.m.
Lord Marlesford: My Lords, in rising to welcome the Bill, I am privileged to be able to declare a business link with Hong Kong stretching back to 1961.
Of all the jewels in the British Crown none shines more brightly than Hong Kong. What an example to the world it is. I need use only one figure to demonstrate that fact. The entire GDP of India is 262 billion dollars. The GDP of Hong Kong is 132 billion dollars. Hong Kong, with 6 million people, has an economy half the size of that of India, with over 900 million people. I believe that the reason for that is that poor India has suffered from 50 years of strife and socialism whereas Hong Kong has benefited from 50 years of stability and capitalism. It is the continuation of that remarkable combination which the Joint Declaration of 1984 sought to underwrite and we have a very important continuing role in helping, in a friendly manner, to guide that future. For three years after next year Britain has a particular remit under the Joint Declaration with the continuation of the Joint Liaison Group between Britain and China. It is wholly appropriate that special arrangements should be made for the continuance of the Hong Kong office in London. It is served as Commissioner at present by Sir David Ford, whom I have been privileged to know for 20 years. He is one of those most distinguished Hong Kong public servants who have made a huge contribution, within that capitalist system, to the prosperity and stability of Hong Kong.
I am sure that China would wish that situation to continue. I am very optimistic for the future. We must do everything we can to maintain these close links. The Bill provides for one of those links.
3.35 p.m.
Lord Wilson of Tillyorn: My Lords, I join other noble Lords in welcoming the Bill. A key part of the strength of Hong Kong which was so dramatically described by the noble Lord, Lord Marlesford, has been its autonomy in trade and economic affairs. It is in keeping with the pragmatic way in which Hong Kong has run its affairs, and in which it has been allowed to run its affairs, that it has had under the benevolent umbrella of British missions around the world offices in separate buildings looking after Hong Kong's interests. Those offices have promoted Hong Kong policies even when on some occasions they have not been entirely in accord with the policies of Her Majesty's Government.
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This is a good opportunity to pay tribute to all the Hong Kong government servants who have worked in those offices over the years. They did not join the Hong Kong Government to act as quasi diplomats around the world and it is typical of the ready way in which the Hong Kong Civil Service has taken up any job thrown at it that they have taken up those tasks so effectively. Those of us who have benefited from the services of Hong Kong Government offices around the world, particularly perhaps my noble friend Lady Dunn and myself, have learned that it is sometimes an advantage to have people who do not come straight out of the formal apparatus of the Diplomatic Service. They are an extraordinary, flexible bunch of people.
London was the biggest and most important of those offices. It is interesting to recall that, in its heyday in the 1970s, that office employed 120 people; it had regional offices in Manchester and Edinburgh; and, apart from looking after trade and investment, it managed recruitment and training for the Hong Kong Civil Service. It looked after Hong Kong residents in the United Kingdom. It ran a centre for 50 Hong Kong students and carried out very effective liaison with Members of both Houses of Parliament, with the press and with leading businessmen.
I join noble Lords who have paid tribute to those who have been commissioners in the London Office. There have been nine such commissioners since 1969, when the office was set up in its present form. It is particularly apt to pay tribute to Sir David Ford because he has twice been commissioner and is due to retire after an extremely distinguished period of service to the government and people of Hong Kong.
We have heard many impressive statistics. Hong Kong is the eighth largest trading territory in the world, and continued autonomy in the management of its foreign trade and economic affairs is one of the vital provisions of the Joint Declaration of 1984. That Joint Declaration goes into an immense amount of detail, much of which is now neglected because it was drawn up in 1984, but it includes specific provision for official or semi-official economic and trade missions abroad.
I welcome the arrangements put in place around the world and here in London for this key part of the transitional process. It must be in Hong Kong's interests that the arrangements for the transition from a highly autonomous British dependent territory to a highly autonomous special administrative region of the People's Republic of China should be as smooth as possible. There are many aspects to that smooth transition and we cannot go into all the other parts today. However minor and technical the Bill may seem, it is a significant and very welcome step in ensuring the necessary change within the framework of continuity.
3.39 p.m.
Baroness Chalker of Wallasey: My Lords, I am delighted that the Hong Kong Economic and Trade Office Bill has received such a warm welcome from noble Lords.
It is a practical measure that has limited expenditure implications. It adds very little to the amount that has already been spent for very good purpose with the

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existing office. I am particularly grateful to noble Lords who have spoken in this debate for giving the Bill their full support, none more so than the noble and learned Lord, Lord Archer of Sandwell, who gave it such a generous welcome.
There are a few matters that arise, but it is important that we note these fascinating and important statistics given by the noble Baroness, Lady Dunn, my noble friend Lord Marlesford and the noble Lord, Lord Wilson of Tillyorn. Hong Kong has always been a thriving centre. The figures are dramatic indeed when one considers that 6 million people create half as much wealth in Hong Kong as do 900 million people in India.
The people of Hong Kong will be greatly heartened by the reservoir of goodwill towards Hong Kong that has always existed, and will continue to exist, in your Lordships' House. I have no doubt that they will see the Bill as evidence of the British Government's determination to do all that we can to ensure that Hong Kong continues to enjoy a full autonomy in the conduct of its economic and commercial affairs.
Many tributes have been paid to Sir David Ford during this short debate. I should like to pay my own. I well remember the briefings that I have had from the Hong Kong Office here in London and from Sir David and others while on visits. It has been an extraordinarily successful relationship, and one which we shall always value.
I was fascinated to hear the noble Lord, Lord Wilson of Tillyorn, talk of the size of the Hong Kong Office in the UK. It may be a reassurance if I merely say that the Bill provides that if Hong Kong wanted to have further offices elsewhere in the UK, the privileges and immunities under the Bill can, with the consent of the Secretary of State, be made available to them. I know, and greatly value, the contribution of the Hong Kong Chinese people in Manchester. I know that is true in many other places around the country.
The noble Lord, Lord Thomas of Gresford, spoke about the chief executive. While that matter is somewhat outside the terms of the Bill, I am glad to say that the choice is imminent. I believe it is to be made on 11th December. There are three good candidates. The members of the selection committee have a great responsibility. As soon as the choice is made, there will be one less uncertainty on the frame ahead.
There is no doubt that this Government and the Hong Kong Government are fully committed to co-operating with the chief executive designate, to help him in his preparations for a smooth and successful handover. That is essential, because the economic success of which your Lordships have spoken must continue.
I am sure that noble Lords will continue to have dealings on trade and commercial matters with the London Hong Kong office after the summer of next year. I am sure that it will continue to perform its functions as efficiently and effectively as it now does. In that, it will be playing a most valuable role in promoting trade and investment between the UK and the future Hong Kong special administrative region.
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I commend the Bill's Second Reading to the House. I hope that it will complete its passage through this House as smoothly as today's debate has gone.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Economic and Monetary Union
3.44 p.m.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, with the leave of the House I should now like to repeat a Statement being made in another place by my right honourable friend the Chancellor. The Statement is as follows:
"Over the last few days, a number of highly misleading claims have been made about the draft legislation for the detailed preparation of economic and monetary union. These culminated in the misrepresentation of a series of documents in yesterday's Sunday Times.
"I am strongly in favour of full parliamentary debate and scrutiny of these important issues. That scrutiny must be properly completed before any decisions are taken which might have binding effect on this country. What the whole House must want is an informed debate at the right time rather than one based on inaccuracies and innuendo. That is why today I want to clear up the misconceptions and clarify the issues and procedures involved. My right honourable friend the Leader of the House will in due course make an announcement about the form and timing of the debate which must certainly come before the Dublin Summit. I repeat that no binding decisions will be taken in any forum until that debate has taken place.
"Last week, European Standing Committee B considered the latest relevant documents that should be subject to parliamentary scrutiny. It had all the up-to-date relevant legislative documents before it. These were commissioned at the Florence Summit in June, and cover the legal status of the Euro, the proposals for a new voluntary exchange rate mechanism of the european monetary system and the stability pact designed to provide a mechanism to help ensure that participants in Stage 3 of EMU do not run an excessive deficit.
"I have written to every Member of Parliament, setting out the facts about these texts. I have today arranged for further copies of this letter to be deposited in the Libraries of both Houses. I stand by that letter and I believe it to be accurate in every respect. I do not propose to read out the details of the letter but I would once again like to underline four key points about the draft EU legislation.
"First, the opt out from EMU that the Prime Minister negotiated at Maastricht remains entirely unaffected.
"Secondly, everything contained in the EU stability pact—including fines on 'ins'—derives from and was foreshadowed in the Maastricht Treaty.

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"Thirdly, unless we join Stage 3 of the EMU, we will retain, as now, control of domestic economic policy. We would still have our existing commitment to endeavour to avoid an excessive deficit but there is no question of any fines or other sanctions being imposed on us for running an excessive deficit.
"I know that some colleagues have raised the possibility that Recital 13 of the draft regulation strengthening surveillance could be used to impose policy obligations or sanctions that can be binding on member states. This interpretation is incorrect. Article 103(5) can only be used to impose detailed rules as to procedure. Any recommendations that might be made under Article 103(4) are non-binding.
"Finally, the stability pact makes good economic sense for the UK and for Europe as a means of making sure that EMU is soundly based, whether we are in or out of a single currency. If we are in, we need to ensure that no other member of EMU falls into excessive deficit or debt crisis which might tend to drive up interest rates. If we are out, we need the Euro-zone to be stable as the British economy is more successful when the economies of our major customers are successful. That is why I am negotiating so toughly in ECOFIN in British interests to get the details right. That is why Parliament must scrutinise properly what I am doing.
"I have always accepted that these documents should be subject to the House's rules on scrutiny. Since the scrutiny procedure will not have been completed by the time the ECOFIN Council of Ministers meets on Monday, 2nd December, I shall maintain a scrutiny reserve at that meeting. There is nothing new or exceptional about that. Scrutiny reserves are often entered by Ministers at many meetings of the Council. I was quite clear in every discussion I had with honourable Members last week that I would maintain a scrutiny reserve in this case until the proper process was completed. That means that nothing of substance can be settled at next Monday's ECOFIN meeting.
"I would like now to turn to the documents referred to in yesterday's Sunday Times. The first of these is a briefing note prepared at the request of the EU Commissioners, Sir Leon Brittan and Neil Kinnock. It was designed to help them be aware of British views, at an early stage of the negotiations, before the Commission's thinking on the stability pact was finalised.
"The note was requested and sent to both of them in confidence. This is because European Commissioners are constitutionally independent, although I am quite sure that other Commissioners regularly receive briefings from other governments. Since someone—I believe the honourable Member for Dunfermline—has seen fit to break that confidence, and put the document in the public domain, I have today decided to release it. I am happy to do so, since it confirms that throughout the negotiations I have shown proper regard for the interests and procedures of Parliament, and a desire to achieve a sensible and acceptable outcome on the
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stability pact. In fact, I particularly rely on it. This was a document which I never expected Parliament to see. It shows that in private, as well as public, I was particularly anxious to preserve the freedom of nation states to control their own economic policies and particularly anxious to protect the position of this House and its parliamentary procedures. I hope that releasing it does not weaken my negotiating position in the council because it contains nothing that other finance ministers do not now know about the positions I am holding.
"The paper states that 'the current proposals will not be acceptable to Parliament'. This was correct at the time. The whole point of the document was that it was sent before the Commission had tabled its proposals. The paper makes it quite clear that I was concerned about certain proposals that we feared the German and French Governments might be making to the Commission. It transpired that we were largely mistaken about the French position. In fact, the German position has in negotiation been much more reasonable than we then feared.
"When the Commission later tabled its proposal in the form of the papers European Standing Committee B had before it last week, it reflected British thinking to a much greater extent than before. In particular, it preserved the key principle of political judgment by Ministers being applied before any fines would be imposed on any member state that had joined EMU. The Commission proposal in itself will and can settle nothing. It provides a basis for further negotiation and eventual settlement at European Council, perhaps, but not certainly, in Dublin. I would welcome the views of this House about the position we should take in those negotiations.
"The second document is from the European Monetary Institute, which comprises all the central bank governors of the member states and is sometimes regarded as a precursor of the European Central Bank. It is not a Commission document, nor a council document, nor does it have any legal effect. It is advice on policy sent to the Council of Ministers in confidence. I was not able to communicate this document officially. However, in order to ensure that the House was well informed on its substance, I wrote to the honourable Member for Clydesdale, the Chairman of the Select Committee on EU legislation, on 31st October describing the main points. This paper has now been widely quoted in the press and I have decided to release it today. Honourable Members can see for themselves that my summary of 31st October was an accurate one.
"The document gives opinions and advice on how, in the opinion of central bank governors, a so-called Mark 2 ERM for member states outside an EMU might operate in practice and how the monetary stability of the whole Union might be safeguarded in future. It makes it quite clear that membership and even co-operation on exchange rate matters will remain voluntary. The conclusions of the Florence Council, repeated by the EMI, stated of any ERM, 'membership would be voluntary'. The EMI document also states, 'such closer co-operation would

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be concluded on a voluntary basis at the initiative of the individual non-Euro area member state.' Article 109m of the Maastricht Treaty already states that exchange rate policy is a matter of common interest, which is of course sensible as wild exchange rate fluctuations would be disruptive to trade in the single market. That provision goes back to the Treaty of Rome.
"At Monday's meeting of ECOFIN, I do not expect and I never have expected any items of EMU legislation to come up for formal adoption. We will, however, seek in good faith to reach a broad measure of political agreement—as we were mandated to do by the Florence Summit. I will maintain the scrutiny reserve to any political agreement. And the results of discussion at ECOFIN will be available to inform the European debate in this House before the Dublin Summit. That meeting at Dublin is the earliest occasion at which any binding decision could be requested.
"Madam Speaker, there are two possible futures for this country. First, at some stage in the future we might move to the third stage of EMU and adopt a single currency. As this Government have always made clear, there could be advantages in such a move. But the associated legislation on the details of EMU must be sensible and effective and suit British interests. That is why it is so important to maintain our ability to participate and contribute to the negotiations now.
"They would represent part of the legislative base on which any future British government might enter EMU. They are part of the detail to be settled before we form our views on the way we should exercise our option. We must never repeat the mistake of abdicating from negotiation so that the structures are designed to meet only the interests of other member states.
"Secondly, we might always remain outside a single currency. Under those circumstances, we will ensure that we retain as now complete control of domestic economic policy and we are not made subject to any new binding legal obligations that go beyond non-binding recommendations of the kind we have already been subject to under the treaty and in practice for the past four years.
"Whether we are in or out, my concern is and will remain to respect the position and traditions of this Parliament and our independent nation state."
My Lords, that concludes the Statement.
3.56 p.m.
Lord Eatwell: My Lords, I am grateful to the Minister for repeating the Statement made by his right honourable friend in another place. We on these Benches are particularly pleased that protests from all sides have made at least one small breach in the Prime Minister's attempts to suppress democratic debate on this vital matter.
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As the Minister never wearies of telling us, the Government are keeping their options open and will decide to join if they believe that joining is in the best interests of Britain at the time, given the options available at the time when a decision must be made. However, the Minister cannot evade the fact that the British Government are this very day involved in the negotiations which are shaping exactly what EMU will look like.
At the ECOFIN meeting in Dublin next week, and at the Council meeting in December, the Government will be receiving advice on the future regulation of monetary union from a committee in which British officials are participating today. The Government are therefore taking part today in forming the options that Britain will face, whether or not we decide to join. The framework for the operation of monetary union is being decided now. The Chancellor of the Exchequer has said that Britain is bound by nothing, but that is simply not true. The boundaries of Britain's choices are being determined by negotiations taking place today.
The Statement that we have just heard recognises that the associated legislation on the details of EMU must be sensible and effective and suit British interests. That is why it is so important to maintain our ability to participate and to contribute to negotiations now, and why the House is entitled to know the Government's approach to those negotiations—negotiations which are vital to the economic future of this country, whether we are in or out.
The Financial Times reported this morning that:
"it emerged yesterday that EU member countries are edging towards agreement on a stability pact".
On Thursday, the Minister told us that the Government were in favour of a stability pact. He was reluctant to tell us how the Government believe the stability pact should be enforced. Do the Government support the proposition that deficit countries should be fined? If so, at what levels of deficit do the Government believe fines should be levied? Is the political judgment referred to in the Statement to be reinforced by numerical limits on deficits or numerical limits on declines in GDP, which will define when fines should or should not be levied? If deficit countries are not to be fined, what is the Government's position as to what other disciplinary measures would be appropriate?
In considering the treatment of the countries which stay out of the monetary union, we must always remember that the Government have not yet decided whether Britain will be in or out. So far as the Government are concerned, we may as well be one of the "ins" concerned about the actions of the "outs" as one of the "outs" concerned about the actions of the "ins". Given the relationship between "outs" and "ins" referred to in the closing paragraphs of the Chancellor's Statement, does the Minister agree that there should be any rules at all limiting the monetary and fiscal policies of the "outs"? More precisely, if Britain is in, does the Minister believe that the "outs" should be free within the single market to use devaluation to acquire as much competitive advantage over the British economy as they wish? If he believes that there should be rules, what proposals are the British Government advancing for the

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control of behaviour of the "outs"? If Britain is out, does not the statement that the stability pact makes good sense for the UK and for Europe as a means of making sure that EMU is soundly based contain the inference that we are intimately concerned with what the actual structure of the regulations for the "ins" will be?
It has been clear over the past few days that the Government are reluctant to allow Parliament to debate these decisions—decisions which are being formulated now. That does a grave disservice to the House and, most importantly, to the future of this country. It is vital that this House and another place should have an opportunity to examine proposals as they emerge to alert the Government to those proposals which might be damaging to British interests and to proffer the advice derived from the enormous experience of Members of this House. Will the Minister give an undertaking that the House will be given the opportunity to consider these matters regularly as they emerge over the next few weeks and months, and will the Conservative Party abandon its grotesque attempts to suppress democratic debate on this matter?
Lord Ezra: My Lords, I too would like to thank the noble Lord for having read out this important Statement. In the light of its contents it is indeed regrettable that the Statement was not made earlier in order to prevent the misconceptions to which the Statement itself refers, and in particular what was contained in the Sunday Times yesterday. The Statement itself contains in my opinion a clear view of UK policy objectives in this very complex matter. The broad thrust is that, while we retain our position as not being committed to making a decision on whether or not we move into Stage 3, we would wish to ensure by active participation that the rules which were established were such that if we should decide to join at a later date they would be acceptable, and if we did not, that it would contribute to the stability of the European Union. I hope I have got that right.
That being said, the matter remains a very complex one and in particular I would like to ask the noble Lord if he could explain precisely where we stand in relation to the stability pact. Those who are going to participate will of course be called upon to submit detailed information about their financial affairs and in particular about their possible deficits. The UK already, under Stage 2, submits information of that kind. Will that be continued, will it be extended, will we participate in that part of the operation of the stability pact? Secondly, in relation to the stability pact, will we be positively and actively involved as Council Members in formulating that pact even though we might not eventually exercise our Stage 3 decision in a positive manner?
As regards fines, it is clear that if we were not to join at Stage 3 we would not be subject to any fines, but I understand that it has been proposed by the Commission that the proceeds from the fines should go into the general Community budget. That being so, I presume that we would share in the benefit of those fines whether we were in or out. Is this a proposition which is seriously being proposed? Obviously we should not object to it. I presume that the Chancellor would strongly support it. The way in which the fines
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will be levied and their level will, as I understand it, be a matter for Council decision, so even though some "outs" (possibly ourselves) may not eventually join, we would be positively involved in determining the level of the fines and the way in which they were collected. Is that a correct interpretation of what is going to happen?
Finally, I would say that the Chancellor's very firm statement that whatever happens we must go for fiscal rectitude within the European Union (whether or not countries went through to Stage 3) is something to be strongly commended and I hope very much that we shall do everything within our power to make sure that comes about.
4.5 p.m.
Lord Mackay of Ardbrecknish: My Lords, I should like to thank both noble Lords for welcoming the Statement. Perhaps I may also thank the noble Lord, Lord Ezra, for his opinion that the Statement represents a clear view of policy on this matter, an opinion with which I agree. It is a complex issue, but I think that what the Chancellor has had to say in the other place very clearly puts the Government's policy on the record in such a way that I do not believe anyone, even the noble Lord, Lord Eatwell, could be confused over it.
Perhaps I can say to the noble Lord, Lord Ezra, that we are of course currently involved in formulating the stability pact. That is what the current discussions are all about. As I said on Thursday, it is important that that stability pact is in place before anyone joins a single currency, otherwise what is the point of countries striving to obey certain rules in order to join the currency if, the moment they join, they then break all the rules? That would appear to be very destabilising, and the last thing that any of us would want, whether we wished to be in or out, is a destabilised economy in Europe. Clearly it is in everyone's interest that the stability pact is in place and ready for those who will join the common currency when and if it comes about.
The noble Lord also asked me about what will happen in the case of the "outs" and will we continue to report on the situation regarding our own convergence, our own deficits and so on. Of course we are prepared to formalise the satisfactory process we have been forming for some years because, following parliamentary approval each year, the noble Lord, Lord Eatwell— I cannot remember whether it is the noble Lord, Lord Ezra—and I usually debate one evening (in the absence of many other noble Lords in the House, it has to be said) what we are going to send, and we submit to the Council a convergence programme which consists of the economic policies set out in the Budget Red Book. Your Lordships will of course get this year's version tomorrow. Those were the points that the noble Lord made to me and I hope that I have answered them.
I turn to the noble Lord, Lord Eatwell. He complained about my wanting to keep our options open. I am not sure why he complained because I have a quote here from a CBI conference speech in Birmingham by Mr. Tony Blair, who said that Britain must generally keep its options open on monetary union. I really could not understand the beginning of his speech when he was

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complaining about me keeping my options open. I have made it perfectly clear that we have always intended to keep our options open. Then he seemed to be complaining about our being involved in the negotiations without having decided whether we are going to stay in or go out. As I understand his party's new position, in addition to having a referendum, they wish to make a decision at the appropriate time. Does he suggest that the Government should not take part in these negotiations? I shall answer the question which he keeps on asking me: of course we shall take part in the negotiations. We shall continue to take part in the negotiations.
As regards the other question about deficit countries being fined, may I suggest that he reads 104c of the Maastricht Treaty because he will see that there are very many steps before we get to a position where a member state might be fined. I do not think that we should concentrate too much on the fines position. We should concentrate instead on the important position of making sure that no country in the system runs an excessive deficit. Equally, neither should any country outside the system run an excessive deficit because we do not believe that excessive deficits are good things, whether a country be in or out.
The noble Lord concluded by asking if we would return to this issue. I think your Lordships will agree that my regular appearances at the Dispatch Box probably do not suggest that we are lacking debate or discussion on these matters in this House. Of course, whether we have a debate on the Floor of the House later, perhaps when the sub-committee reports, is not a matter for me but for the usual channels.
Lord Eatwell: My Lords, before the noble Lord sits down, will he acknowledge that I at no time said that Britain should not have an option of deciding whether to join and that he has misrepresented me in his remarks?
Lord Mackay of Ardbrecknish: My Lords, I had occasion to read over what I said just before the noble Lord intervened last Thursday. I believe that anybody reading what the noble Lord said today could reasonably assume that he was complaining about the Government and I keeping our options open.
Lord Pearson of Rannoch: My Lords, I wonder if I could press my noble friend on two passages which he has mentioned. The first is a quotation from the Minister himself last Thursday, the 2Ist, when he replied to the noble Lord, Lord Bruce of Donington, who asked for an unequivocal assurance that the United Kingdom, if it decides not to participate in EMU, will not be subject to any penalties whatever under Article 104c of the treaty. The answer my noble friend gave is still something which intrigues me. He said:
"The position as I understand it"
and indeed, he has referred to it again now
"is that there will be a procedure for those who remain out; they will be required to submit convergence programmes".— [Official Report, 21/11/96; col. 1344.]
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I appreciate that my noble friend has touched on this; but I want to know how we will be required to submit convergence programmes. What is the penalty for us if we do not?
The second part of the question is related. My noble friend mentioned Article 109m of the treaty; but he gave, if I may say so, a rather selective quotation from that article, which reads as follows, and I quote from Article 109m, paragraph 1:
"Until the beginning of the third stage, each Member State shall treat its exchange-rate policy as a matter of common interest".
That is the sentence in which my noble friend acquiesced. But Article 109m goes on:
"In so doing, Member States shall take account of the experience acquired in cooperation within the framework of the European Monetary System … and in developing the Ecu, and shall respect existing powers in this field".
Finally, and most importantly, my question seeks an explanation of this extremely devious piece of wording in Article 109m, paragraph 2, which states:
"From the beginning of the third stage and for as long as a Member State has a derogation, paragraph I shall apply by analogy to the exchange-rate policy of that Member State".
We have seen how boggy is the wording of the Treaty of Rome; we have seen how the Luxembourg Court of so-called Justice twists it to the ever-closer union of the peoples of Europe. I ask my noble friend whether he can give the House an assurance on Article 109m.
Lord Mackay of Ardbrecknish: My Lords, no one, with the probable exception, I fear, of my noble friend, disputes the fact that the rules for the "ins" will not apply if we are not in. That seems logical and sensible. I give my noble friend that assurance again.
As regards the stability pact, unless the UK joins EMU Stage 3, it is under no obligation to avoid an excessive deficit and could not be subject to any penalties if its deficit were shown to be excessive under Article 104. Therefore, in or out of EMU Stage 3, we believe that we should avoid excessive deficits by the use of proper financial discipline. The fact is that currently—and, indeed, I mentioned this in answer to the noble Lord, Lord Ezra—even if EMU comes about and we are not in it, we see no reason why we should not continue to respond as we do at the moment to the annual demand for a report on the convergence criteria and on deficits.
Lord Barnett: My Lords, at the outset, I agree with the Chancellor's remarks today when he said that he agrees with the stability pact whether we are in or out. Perhaps the Minister should tell his noble friend that the plain fact is that whether we are in or out, we cannot live in isolation. We cannot run our economies in isolation whether we are inside or outside the European Union altogether but certainly outside EMU.
Will he confirm also his understanding and agreement of the fact that in practice whether we join EMU—as the Government, and, indeed, the Opposition, are intending to keep their options open as regards whether to join EMU—it is important that we should seek to have some influence on how a stability pact would work

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now and that we should seek to influence it now rather than wait for that to be done by the "ins" alone when we should have no influence at all?
Will the Minister make clear also that as another place is to have an opportunity for a full debate, we too in your Lordships' House, before the Council meeting, will have an opportunity for a full day's debate, and that that will not be at the fag end of the day?
Lord Mackay of Ardbrecknish: My Lords, as I mentioned earlier to the noble Lord, Lord Eatwell, questions of debate are matters for the usual channels. When they reach a decision, I suspect that I shall have to come here for another debate on this subject.
I am grateful to the noble Lord for his approval of the Chancellor's Statement and for the clear terms in which it was made. The noble Lord is right that we must be fully and totally involved in all the discussions taking place currently so that when we make the decision whether to join, we shall have played a major part in building the structure which we shall then be asked to join. That must be common sense from wherever one starts whether one is sceptical about the advantages or keen to join. It must be in everybody's interest that there is a sound structure on the day when we decide whether to join.
Lord Jenkins of Hillhead: My Lords, I begin by expressing my sympathy to the Chancellor for having to divert his mind on this day and having to make a Statement of this degree of complication, which I personally find satisfactory.
However, is it not the case that the report of your Lordships' Select Committee presided over by the noble Lord, Lord Barnett, agreed unanimously—even including the noble Lord, Lord Bruce of Donington—that sterling could live with a single European currency provided that outside it followed the same disciplines that it would have to follow if it were inside?
Is it not also the case that people who believe that we should behave totally irresponsibly from an exchange rate point of view and continue to be members of the single market are living in a fool's paradise? Therefore the logic of people like the noble Lord sitting on the Back-Benches there—the noble Lord, Lord Rannoch?
Noble Lords Noble Lords: Lord Pearson of Rannoch!
Lord Jenkins of Hillhead: Lord Pearson of Rannoch. I am so sorry to the noble Lord—
Lord Pearson of Rannoch Lord Pearson of Rannoch: My Lords—
Lord Jenkins of Hillhead: I have got your name now. You may sit down.
The noble Lord, Lord Pearson of Rannoch, behaves as though we could pursue a totally irresponsible exchange rate policy. The logic of that is that we should be out of the single market and, indeed, out of the Community as a whole.
Lord Mackay of Ardbrecknish: My Lords, I am grateful on behalf of the Chancellor for the noble Lord's
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words. I am not entirely sure whether my noble friend Lord Pearson of Rannoch thinks that we should carry out an irresponsible exchange rate strategy. As I believe I have mentioned from the Dispatch Box not long since, the history of those countries with strong currencies has been that they have had strong economies. I do not see any great merit in devaluation just for the sake of a year or two's competitive advantage. Therefore, I believe that exchange rate stability is important and whether in or out of EMU, that must be the correct policy for Britain to pursue.
Viscount Waverley: My Lords, what are the current arguments for and against joining EMU?
Lord Mackay of Ardbrecknish: My Lords, it would take me most of the rest of the afternoon to explain that. Essentially, the argument in favour is that currency fluctuations and, indeed, the cost of currency exchange in some way diminishes the single market idea and that it would be easier to run a single market with a single currency. Therefore, that is a broad outline of the plus side. On the other side, there is the problem for the United Kingdom that we play in more than just the European market. We are major players in the world market and therefore it is important to us that we look to both those markets—the important European market and the important market in other parts of the world. We must consider how the Euro would influence that particular part of our important manufacturing and commercial work.
Lord Dean of Harptree: My Lords, as this arose primarily as a parliamentary matter, will my noble friend confirm that it is totally clear from the Statement that the Government have consulted—and have every intention of continuing to consult—Parliament before any substantial decisions are made? Will he further confirm from the Statement that the British Government will continue firmly but fairly to support British interests in all these negotiations?
Lord Mackay of Ardbrecknish: My Lords, I am happy to confirm to my noble friend that we will indeed work in all these negotiations in the interests of the United Kingdom, as we have always maintained. I can also assure him—as my right honourable friend the Chancellor has done in his Statement—that until Parliament lifts its scrutiny reserve he will put a reserve on any agreements or discussions in next week's ECOFIN.
Lord Bruce of Donington: My Lords, one of my difficulties in listening to the noble Lord is his repeated statement that we have to negotiate and continue to negotiate. Negotiations always imply that in addition to taking certain things one has also an obligation to give way on certain things. The unease in another place, and also in this place, has been about the extent to which we are prepared to give. There is an endeavour to ensure that we do not surrender—at this stage at any rate—any of our rights to conduct our own affairs in the economic sense of the term, in the monetary sense, in terms of taxation and so on.

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If the noble Lord in replying to my question earlier last week, had been able to give the firm assurance that under no circumstances would the Government envisage acting in the sense that I then suggested that they would, much of this trouble could have been eliminated. Have the Government taken into account the existence of Article 103 of the treaty, which obligates this country to play a constructive part and to conduct its economic and fiscal policies in the interests of Europe as a whole? This country has a very good reputation for honouring its obligations under the Treaty. I would have thought the community could have relied on our strict adherence to Article 103 of the Treaty rather than facing a battle over the whole series of regulations that tie us in.
The noble Lord will be aware that the British opt out did not extend to Article 104c, with the exception of paragraph 14. Will he therefore, without any doubt or equivocation, cause to be written into the regulation that these circumstances, as outlined in the regulation, shall have no application to the United Kingdom should we decide to remain outside the European currency? That would then simplify the matter.
Lord Mackay of Ardbrecknish: My Lords, when the noble Lord, Lord Bruce of Donington, asks me to simplify a matter I am always particularly guarded about what I then say. I find that sometimes his questions do not simplify the matter—at least for me if not for the rest of your Lordships' House.
In so far as there is any link between Article 103 and Article 104c, the treaty already makes it clear that the UK, if it does not join EMU Stage 3, is not bound by the obligations of other states to avoid excessive Government deficits—Article 104c—and the UK protocol on EMU, paragraph 5. We would simply, as now, need to endeavour to avoid excessive Government deficits. So the situation of having to meet the convergence criteria if we are out does not actually apply—although, as I have repeatedly stated, we believe that avoiding excessive deficits is sensible, whether in or out. I hope—although without too much expectation of it coming about—that I have answered the noble Lord's question.
Lord Campbell of Alloway: My Lords, will my noble friend the Minister resolve a matter of puzzlement that arose between the speech of the noble Lord, Lord Eatwell, and his subsequent intervention? Was it not the gravamen of the noble Lord, Lord Eatwell's complaint that we were taking part in the formulation of the framework? If that is so, and if Mr. Blair now has substantially the same policy as we appear to have—that we go in if it is in our interests—is there not an inconsistency between that and the first speech of the noble Lord, Lord Eatwell?
Lord Mackay of Ardbrecknish: My Lords, that is what I thought when I listened to the noble Lord, Lord Eatwell's intervention, but I am sure that he did not mean that. I am sure that he agrees with his party's policy—which is now alongside the policy that we have had for some time—that we should make a decision
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about joining EMU at the right time, when that has to be done, and in the interests of the United Kingdom. Meanwhile we should play a full part in the negotiations, in all the detailed work leading up to the creation of EMU and that decision. We can then make the decision on the basis of full knowledge of what is on offer and in the knowledge that we have played our part in building, if I may describe it as such, the house in which EMU is going to live.
Lord Tordoff: My Lords, it may be of assistance if I say a word on the scrutiny situation in your Lordships' House. Not everybody will be aware that Sub-Committee A of the Select Committee under the chairmanship of the noble Lord, Lord Barnett, has recently been reviewing this matter for some weeks on the basis of letters sent by the Chancellor, which have been referred to—I hasten to add that they are not the actual confidential documents, but a précis taken from those confidential documents. That scrutiny process has been completed so far as concerns the subcommittee and it will proceed to the Select Committee tomorrow. I hope that we can then pass it to the House. That being so, there should be a document available to your Lordships within a reasonably short period which could be the subject of a debate at the earliest possible moment.
Lord Mackay of Ardbrecknish: My Lords, I am grateful to the noble Lord, as I am sure the whole House is, for that explanation of the position of the Select Committee of your Lordships' House as regards scrutiny. As I said earlier, the question of a debate is for the usual channels.
Lord Desai: My Lords, is there not a point worth making about excess deficits? The countries which run excess deficits pay a fine to the market in the form of extra interest rates. Therefore the only difference that a stability pact would make is that that money would go to the European Union rather than to the market as a whole.
Lord Mackay of Ardbrecknish: My Lords, the noble Lord, Lord Desai, makes an important point. At the moment a country pays a "fine" to the markets if it runs excessive deficits. But in the EMU the market would be an all-European one, so any penalty that the market imposed would be on us all. That is why, as far as concerns being in the EMU, it is important to avoid excessive deficits.
Lord Monson: My Lords, the Minister's right honourable friend the Chancellor of the Exchequer is right to maintain that what happens on the Continent affects us whether we are in or out of EMU. But if in a few years' time some of our nearest continental neighbours should run into severe financial or economic difficulties—possibly as a consequence of their well-known underfunded pension liabilities—and are not allowed either to devalue or borrow, they will have either to raise taxes sharply or cut benefits sharply. Would not the consequent civil unrest in countries like

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France and Italy make the present French lorry drivers' blockade look like the proverbial Sunday school picnic? Will not turmoil of this nature affect us almost as severely as the non-existence of a stability pact?
Lord Mackay of Ardbrecknish: My Lords, it is a pity that the noble Lord was not present in the Chamber last Wednesday when we had an interesting debate on the very subject of pension provision in Europe and what effect the EMU and the Maastricht Treaty had on it. However, I believe that the noble Lord underlines the importance of having a stability pact. It will simply mean that countries will not have the option of running excessive deficits: they will either have to increase taxation or they will have to reduce the benefits of expenditure. In this Government we believe that that is a thoroughly worthy thing for any government to do. Indeed, it is an important part of any stability pact.

Dental Auxiliaries (Amendment) Regulations 1996
4.30 p.m.
Baroness Cumberlege Baroness Cumberlege rose to move, That the draft regulations laid before the House on 30th October be approved [2nd Report from the Joint Committee].
The noble Baroness said: My Lords, these regulations amend Section 45(2)(c) of the Dentists Act and raise the fees which dental auxiliaries pay for first enrolment from £7 to £10; for retention on the roll from £10 to £20; and for restoration of a name onto the roll from £2 to £5. The amendment has been requested by the General Dental Council which is required by Section 45(2)(c) of the Dentists Act to maintain rolls of registered dental therapists and hygienists, collectively known as dental auxiliaries.
The council has had to meet significantly increased costs during the past 12 months in a variety of areas, in particular in connection with extensive repairs to their building. The last increase in retention fees for dental auxiliaries was five years ago. The 382 dental therapists and 3,813 dental hygienists who are currently enrolled with the council carry out sterling work in support of the nation's 29,000 dentists. It is right that they should be registered and that their activity should be regulated. However, that costs money. The proposal will increase the income of the General Dental Council by about £42,000 per year and help to meet the increased costs which I have outlined today. I am sure that the proposed modest increases in fees are entirely appropriate.
Moved, That the draft regulations laid before the House on 30th October be approved—[2nd Report from the Joint Committee].—(Baroness Cumberlege.)
Lord Carter: My Lords, the House will be extremely grateful to the Minister for explaining the regulations. They provide a welcome opportunity to discuss a small but important subject relating to NHS dentistry. Moreover, they give us an ideal opportunity to discuss in depth and at length the general state of NHS dentistry and I am sure that the Minister is fully briefed for such
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a debate. However, bearing in mind the amount of business on the Order Paper for today, and the fact that I have tabled an Unstarred Question for later, I do not propose to discuss the matter.
As the Minister said, the measure before us deals with a small but necessary change to the administration of the registration of dental hygienists and therapists, and not the more urgent issues that we believe are facing NHS dentistry. As the noble Baroness pointed out, the registration fees have not risen for some time. While few hygienists and therapists will be itching to reach further into their pockets, I am sure that the majority will consider the increases suggested by the General Dental Council to be fair and long overdue.
We all benefit from the current high professional standards of those who work as dental auxiliaries. An effective registration system is fundamental in order to maintain those high standards. We are, therefore, happy to support the measure today and a wider debate on NHS dentistry as a whole must wait for another day.
On Question, Motion agreed to.

Copyright and Related Rights Regulations 1996
4.33 p.m.
The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie)The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie) rose to move, That the draft regulations laid before the House on 11th July be approved [27th Report (Session 1995-96) from the Joint Committee].
The noble and learned Lord said: My Lords, these regulations amend the Copyright, Designs and Patents Act 1988 in order to implement EC Directives 92/100 and 93/83, the so-called "rental and lending" and "cable and satellite" directives. They also cover provisions of the so-called "term" directive, 93/98, which were not dealt with in regulations approved by Parliament last December implementing the rest of that directive in the United Kingdom. Except for a few provisions, implementation of the directives is already overdue, and we very much regret that the complexities of the regulations and the need for earlier consultations with interested parties have meant that we have been unable to complete their preparation on time.
Directive 92/100 deals with two areas: first, rights in respect of commercial rental and non-profit lending to the public of copyright works; and, secondly, rights granted to performing artists, record producers and broadcasters as regards other forms of exploitation of works and performances. Most of the latter rights are already provided in the 1988 Act, and the main changes to UK law resulting from Directive 92/100 are therefore in the fields of rental and lending. The 1988 Act already grants rights to authorise rental of computer programs, films and sound recordings, but the directive means that such rights will now also apply to almost all other kinds of works including, for example, music and works of art. Moreover, the directive requires that rights to authorise rental of films and sound recordings are granted not only to producers of those works, as is

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already the case in the United Kingdom, but also to contributing authors and performers. In the case of films, however, the directive specifies that these rights of performers are presumed to be transferred to the producer on contracting to make a film, unless there is agreement to the contrary. We are also applying a similar presumption to most authors' rights, as is permitted by the directive.
However, as required by the directive, authors and performers will retain a right to equitable remuneration for rental of films and sound recordings where their rights to authorise rental have been transferred to producers, whether voluntarily or by presumption. The directive leaves freedom to decide from whom this remuneration may be claimed, and we have concluded that it should be payable by producers, with whom authors and performers already have contractual arrangements under which they receive payments for rental. The remuneration right will not become exercisable until 1st April 1997, again, as is permitted by the directive.
The directive also requires public lending rights to be provided for the same kinds of works and beneficiaries as in the case of rental, but permits certain categories of establishment to be exempted from liability for lending. The regulations provide that schools and other educational bodies will be exempt, and in practice, therefore, the lending provisions will be mainly of relevance to public libraries. The directive also offers a choice between granting exclusive rights to authorise lending, or rights to remuneration for lending. In the UK, authors are remunerated for public library lending of books through the scheme established under the Public Lending Right Act 1979, and the regulations provide that that arrangement will continue. However, UK law already grants exclusive rights to authorise library lending of films, sound recordings and computer programs. The regulations maintain this approach and extend it to other forms of works to which lending rights will now apply, but subject to a reserve power for the Secretary of State to order that lending shall be licensed, as against payment of royalties, in cases of unreasonable refusal to permit lending.
Directive 92/100 has also necessitated a considerable number of adjustments to the 1988 Act in order to put certain performers' rights on a similar footing to those of authors, which was not previously the case. In addition, it requires the introduction of two new rights for performers, those being a right to authorise distribution of recordings of their performances and a right to remuneration for broadcasting and public performance of sound recordings of their performances. The directive leaves considerable flexibility as to the manner in which that latter right is formulated, and the regulations are framed such that performers will have a right to be equitably remunerated by sound recording producers, who already have rights enabling them to obtain payment from users.
Directive 93/83 on cable and satellite broadcasting necessitates two main changes to UK law. The first concerns which national copyright law should apply to satellite broadcasts and, as required by the directive, the
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regulations provide that this will be the law of the country of origin of the broadcast, subject to certain safeguards applying where a broadcast commences in a country with lower copyright protection than the EEA but an EEA broadcaster or satellite uplink station is involved. The other main change is a requirement that copyright owners collectively exercise rights to authorise cable retransmission of broadcasts from other EEA states containing their works.
Two remaining aspects of Directive 93/98 are also dealt with in the regulations. The first is a requirement to introduce a 25-year period of protection of a kind similar to copyright for the benefit of the first person to make available to the public a previously unpublished work in which copyright has expired. The other is a requirement to treat principal directors of films as authors of films for copyright purposes. However, the directive leaves freedom to determine who else is to be so treated, and the regulations provide that, as now in the United Kingdom, film producers will remain authors, along with directors. In addition, as permitted by the directive, the authorship change will not apply to films created before 1st July 1994. The regulations also contain a number of transitional provisions chiefly concerned with the new rental and lending rights resulting from Directive 92/100, which will apply to existing works and performances.
We received many submissions from interested parties, for which we are grateful, and we have done our best to take them into account in formulating these complex regulations. However, we have had to strike a balance between competing points of view on areas of the directives which leave flexibility to member states. Inevitably, it has not been possible to satisfy everyone, but I am confident that the solutions we have arrived at are both fair and workable. I beg to move.
Moved, That the draft regulations laid before the House on 1 1 th July be approved [27th Report (Session 1995-96) from the Joint Committee].—(Lord Fraser of Carmyllie.)
4.40 p.m.
Lord Brain: My Lords, I thank the Minister for introducing the statutory instrument in the way that he did. He took on board in his introduction a number of points that I might have made; therefore I hope to be shorter than I might otherwise have been.
As usual when speaking in a debate on copyright I declare an interest to the extent that I am treasurer of the British Copyright Council; however, today, I do not have any financial interest in any of the matters under discussion. First, I should like to repeat the remark made in another place that it is a great pity that these directives were not implemented by means of a Bill rather than a statutory instrument. Had it been done in that way, with the Committee stage perhaps being held in the Moses Room, we should have been able to elicit answers more quickly and concisely and I should certainly not have had to make the long speech that I now have to make.
I thank the Minister for one part of the statutory instrument which he did not mention; namely, the tidying up of the directive on duration in relation to the

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life of photographs. When it was debated last December, I made the point that there was some doubt. The Minister has taken the matter on board and I thank him for clarifying it.
The directive relating to cable and satellite transmissions is relatively clear and straightforward. There is one small point on which I should like confirmation from the Minister when he replies. Paragraph 7 of the statutory instrument adds a new Section 144A to the 1988 Act. New Section 144A (1) correctly states that the owner of the copyright may,
"grant or refuse authorisation for cable re-transmission".
The Minister made that point in his opening remarks. However, all the other paragraphs of new Section 144A appear to assume that the cable re-transmission right will be granted. I think that that was simply the easiest way to draft the clause; however, I should like confirmation that there is not a presumption and that a licensing body can still refuse authorisation.
The most important directive covered is that on rental and lending. I shall not repeat the two principal aims in the explanatory recital of the directives. They were well repeated in another place. The first establishes the right of authors to share any income generated from the rental of any work to which they have made a contribution. The second states that that remuneration has to be equitable or fair.
A general point emerged from the debate in another place. The statutory instrument may not enable the generally weaker negotiating parties—authors and performers—to achieve their equitable remuneration against wealthy companies easily. They may have to go to the courts or the copyright tribunal, as suggested several times by the Minister in another place, to have matters settled. Does the Minister consider that one of the basic aims of all collecting societies should be to enable them to fund actions by their members to establish some case law? Could one interpret new Section 191G(6), set out in paragraph 21 of the statutory instrument, as encouraging that? Case law in this matter is important. Another point is: is there any way by which the copyright tribunal might act as a mediator rather than an adjudicator and so speed up the process? I do not know what the feeling is; nor do I know the exact detail.
Following the points on equitable remuneration and how it is to be obtained, I am slightly concerned about two parts of paragraph 10 of the statutory instrument. It relates to new Section 18A. Two pairs of words concern me. The first is,
"making a copy of the work available".
I hope the Minister can confirm that those words apply only to a copy that has been correctly authorised under Section 16 of the 1988 Act and that they are not a licence to make further copies of the work for rental or lending. The second pair of words appears in the same sub-paragraph. They are, "or may be returned". Surely if you lend or rent something you expect it to be returned. The words have an air of allowing an extra copy to be made for the equivalent of sale or gift. What does the Minister feel about those words?
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On a similar point, again relating to new Section 18A, I am concerned that subsection (6) might be taken to imply that the original copy could be lent while an extra copy is made and retained by the person engaged in the rental or lending. I hope that the Minister can confirm that I do not misunderstand the paragraph.
Turning to paragraph 11 of the statutory instrument, as I understand it new Section 36A is to be read with new Section 18A, giving the result that there is no infringement of any right met by an educational establishment provided it meets the operation of subsection (5) of the new section. In other words, it is part of the educational activities of the establishment that something is lent out and there is no financial benefit beyond the normal covering of the costs of that establishment and that it is not a rental.
Turning to paragraph 12 of the statutory instrument—this is the complicated part—am I right in thinking that the Government's aim in drafting new Section 93A as they have is to ensure that the film or video producer is the first link in any chain leading to the income to be divided under Section 93B so that it may benefit those holding these rights to income? Does it follow that should the producer have ceased to exist—this may sometimes happen when a film company is formed just to make the film or video and then put into voluntary liquidation—the rental rights can be traced by following the copyright chain to any particular body? Do the Government agree that because a copyright continues to exist, so must a rental right? Does the Minister consider that the wording of the clause allows an application to the copyright tribunal so that the links in the chain to a source of potential income can be identified? If he does agree, is there any way that there could be a direction issued by the copyright tribunal so that the chain has to be disclosed to those entitled to that income without the expense and/or delay of a copyright tribunal hearing?
Having discussed and questioned at some length how income may have been generated and traced, I now move on to how it may be shared by applying the principles of "equitable remuneration" and "the importance of the contribution" made by the various people likely to benefit from the income generated. In doing so, I refer to paragraph 14 of the statutory instrument. New Section 93B sets out the position reasonably clearly, but I have three questions.
Is the separation in new Section 93B(1)(a) and (b) of the author and principal director meant to suggest any difference in balance between the amounts of contribution? I suspect not. Am I right in thinking that Section 93B(3) is intended as a link in the chain that I described earlier with the intention of enabling rental income to be recovered from the person receiving significant income from the rentals, who is probably a distributor or a wholesaler rather than the local video shop? I do not think that producers, unlike some collecting societies, have the ability to visit every video shop in the way that collecting societies visit hairdressers, and so on. I believe that that point is fairly important.

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Does new Section 93B(4) imply that the parties to any agreement must have available to them the full details of any rental agreements and of all income resulting from the rental flowing to the rental right owner? Can they go to the copyright tribunal to ensure that they receive the information? This appears to be covered by the new Section 93C, but I should be grateful if the Minister could confirm that subsection (4) does not prevent an application under subsection (2) if, for example, the single payment was made on the basis of, say, 500,000 copies being rented when in fact the film or video in question turns out to be a blockbuster and 5 million copies are sold.
I now turn to performers' rights. As the Minister said, these are new rights and will result in many more additions to the 1988 Act. Am I right in saying—I think the Minister more or less confirmed this—that these new sections give the performers largely the same rights as I have discussed at some length for authors? Authors have a well established network of collecting societies, both in the UK and abroad, for the collection and distribution of income from rights. Is it the intention of the statutory instrument that performers should establish, under new Section 191G(6), a similar network? The wording is:
"a 'collecting society' means a society or other organisation which has as its main object, or one of its main objects, the exercise of the right to equitable remuneration on behalf of more than one performer."
I hope this implies that it will have to be managed so that the money can be distributed to the performers.
Finally, having discussed what these rights are and how income from them may be traced, I have a question with regard to giving notice as required by paragraph 33 of the statutory instrument. Should this notice be given in writing? Can it be given by the author's or performer's agent, manager or collecting society? To whom should it be given, the producer, the director, the distributor or the rental right owner? Can the Minister think of anybody else who might need to be informed? Can the copyright tribunal remedy any defective notice when it has been impossible to complete the chain to ensure that it ends up on the right desk or the right fax machine in the time available? I am well aware that these draft directives have existed since July, but some of the members of the British Copyright Council are uncertain as to their exact meaning. I believe that the closing date for giving this notice is 31st December of this year. I should therefore be grateful for clarification from the Minister with regard to rectification by the copyright tribunal. I believe that the letter from the Minister, Mr. Ian Taylor, to Mr. Geoffrey Hoon following the debate in another place confirms that equitable remuneration should be given for all agreements made prior to 1st July 1994 concerning all works still in copyright as amended by the duration statutory instrument. It has been suggested that the date of the original directive might have a bearing on this, but I understand that that is not so.
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I apologise for the length of my speech. I was aware, as I have explained, that the letter was in the Library, but I was unable to obtain an accurate copy of it in time to consult and I have therefore had to ask the Minister questions.
4.57 p.m.
Baroness Dean of Thornton-le-Fylde: My Lords, I should start by declaring an interest. I am the unpaid referee for the Musicians' Union on disputes between individual members and the executive of that union. My predecessor was the noble Lord, Lord Goodman.
The statutory instrument implements directives 92/100, 93/83 and 93/98. I shall concentrate on Directive 92/100 and deal with the rights of performers and with the possible impact on our free lending libraries.
There is no doubt that the present instrument is an improvement on the draft of February 1995, but I believe that it will still not implement the directive in its broadest basis and as was intended. British performers and their unions, the British Actors' Equity, the Northern Ireland Musicians' Association and the Musicians' Union, are all concerned that it will still leave UK performers in an inferior position to that of their counterparts in the European Union.
Paragraph(ii) of Article 8.2 of the directive,
"ensures that the remuneration is shared between the relevant performer and phonogram producers".
The statutory instrument does not fully meet that intention nor the other part of the directive which refers to a,
"single equitable remuneration as between the producer [record company] and the performer".
I suggest that, as presently worded, the instrument does not give the right to the performer to negotiate an equitable remuneration or to go to the copyright tribunal. I understand that UK performers will be the only ones covered by the directive who will be in this disadvantaged position simply because of the way the instrument is worded. Perhaps I can ask the Minister, on top of all the questions already put to him in this short debate, if it was the intention of the Government when they drafted the instrument to leave UK performers in this disadvantaged position. If that was their intention, why?
The provisions as worded will present real problems for UK performers in obtaining payments due to them from other countries. This is not new, but the directive provided the opportunity to rectify an unfair and one-sided anomaly which has put UK performers at a disadvantage compared to performers in other European countries.
Since 1961 there has been, under the Rome Convention, provision for performers to receive payment by legal right. Of all the EU countries, only the UK and Ireland have interpreted the convention as meaning that those rights are with record producers and not shared by performers.
The Minister may say that the legal right remains, and surely it does, but 30 years' experience has shown that it can only be realised through international agreements

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between performers' collecting societies operating on a compatible basis. The UK does not provide this compatible basis and the instrument before us does nothing to assist or to rectify the anomaly. I ask the Minister to comment on this view and to say why the Government have chosen yet again to allow UK performers to be at a disadvantage compared with their European counterparts whose governments have in all cases without exception recognised performers' rights and interpreted the law and indeed this directive accordingly. Indeed, in all other countries except Germany it appears in provisions that the sharing will be on a 50:50—in other words, equitable—basis. Indeed, in Germany the share of performers is higher than 50 per cent.
My second point relates to our free lending libraries. It is not incompatible with the remarks I made with regard to performers. Again, my main concern is with sound recordings but also video, CD-ROM, computer software and all the other new technology developments we are seeing. I gather that books are not affected by this instrument because the 1964 legislation, requiring libraries to lend books free, is backed up by the public lending rights scheme, which is funded by the Government and comes under the Department of National Heritage.
As we all know, today's libraries are not simply about books. They have not been so for a number of years. With the developing technologies and different forms of obtaining information, of learning and of entertainment, libraries have had to change to meet those developments and they have done so.
Libraries are in a different position from commercial interests. We all recognise that. I ask the Minister to clarify the position for libraries. I am sure that, like this side of the House, the Government would not wish to do anything which would damage the ability of libraries to serve their local communities or indeed to reduce access to members of the public who might otherwise not have any access at all to the kind of services that libraries provide. Have the Government considered that point? If so, what is the outcome of their consideration in regard to the impact of the instrument on libraries? Will the Minister also indicate whether the Government are considering an extension of the public lending rights scheme. If not, what practical solutions do they suggest to the position that may result from this instrument being put on the statute book?
This is a small instrument but it is extremely important; hence, the number of speakers in today's short debate. I know that the Minister has had many questions. I should be satisfied if the answers to some of my questions were given in writing if it is not possible to reply to all of them today, but certainly I should like to have answers.
5.2 p.m.
Baroness David: My Lords, these regulations, which implement EU Directive 92/100, directly affect public library lending. I want to draw the attention of your Lordships to the implications of that. My noble friend Lady Dean has said a certain amount about it already.
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An exclusive right is to be given to authors, performers and producers of sound and video recordings and films to authorise or prohibit rental and lending of their programmes. That exclusive right may be waived in respect of lending by public libraries, provided that authors and performers obtain a remuneration. Member states are allowed to determine the remuneration in the light of their cultural objectives.
I want to explain how the regulations will affect public libraries. Lending books by public libraries will not be affected. In the UK, public libraries are obliged to lend books free to their users under the Public Libraries and Museums Act 1964, as my noble friend said. That is in England and Wales. There is similar legislation for Northern Ireland and Scotland. Authors are paid for the loan of their books by public libraries in the UK under the PLR scheme funded by the Government via the Department of National Heritage. However, public libraries would either be prevented from lending other materials, such as maps, printed music, sound and video recordings, CD-ROMs and computer software, etc., or authorised to lend them in return for a payment to the authors.
It appears that the Government do not intend to extend the PLR to those materials. Therefore, public libraries will have either to confine themselves to lending a more restricted range of materials, depriving the public of things that they clearly want, or to pay the authors/producers from an already diminishing budget remuneration for the loan of such items.
The new regulations will not affect the lending of materials by educational establishment and certain other libraries and archives, provided the lending service is not run for profit. The Minister explained that in his speech. The reason why public libraries lend sound and video recordings is that libraries exist to make information, ideas and works of imagination easily accessible to everyone. Lending books and other printed materials has been a traditional function of public libraries. Information is now published in a great variety of forms. Increasingly, some categories of material are published only in the newer media and in some cases a new medium complements the printed word. Some categories of library user—for example the visually impaired—find the new media much easier to use. Therefore, it is important that public libraries can stock and lend new forms of media as they develop, if they are to continue to give the good service which they already do to the public. Public libraries, in making them available, could also help develop the market for new media by acting as a showcase. They could also help people acquire the computer and searching skills necessary to access information—for example, information available in CD-ROM form.
In 1994-95 public libraries lent 555 million books and 33 million items of other media—sound and video recordings, etc. But 10 years ago public libraries lent approximately 644 million books and 15.5 million items of non-book media. So book lending has decreased while lending of other media has more than doubled.

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The Library Association—I should perhaps declare an interest as a vice-president and long-time supporter—is concerned that the regulations will adversely affect public libraries. Some industries and some producers will mistakenly wish to prevent public libraries from lending their products; others will give permission to lend only on condition that they receive an additional remuneration; they may also wish to impose other restrictions such as a "holdback" or limits to the numbers of copies to be bought (a "holdback" would prevent libraries from displaying a new product until a specified time had elapsed after the release date); any additional remuneration will have to be borne out of already declining purchasing budgets; and the already complex procedures for negotiating licences and permissions will become more difficult and costly. The end result is likely to be fewer non-book media items available for loan through our public libraries.
Perhaps the Minister will answer one specific question. When a member of the public goes into a public library now and asks for the Oxford English Dictionary in order to look up a word, that is all right. Suppose that, under the new arrangements, rather than a book version of the Oxford English Dictionary, the data is on microfiche or CD-ROM. Will it be equally easy for the member of the public to get the information that is wanted in the new situation? I hope that the Minister will be able to give me an answer to that question.
The new regulations are very tightly drawn, so that it will be more difficult to make the necessary arrangements with the various firms and associations, and negotiations will be more difficult than they have been. The Library Association has been quite successful under the present arrangements in coming to agreements—for instance, for sound recording music with the British phonographic industry. These regulations may make it have to renegotiate and it may be quite difficult to come to arrangements as good as in the past.
So what can be done? We appreciate that there is very little likelihood of avoiding implementation of the EU directives. However, some clarification is needed from Ministers on how the legislation will work in practice and how remuneration to authors and performers will be paid for. For example, how feasible is it for every author on a CD-ROM to receive remuneration for public lending? How will public libraries find the money to pay the authors and producers?
The Library Association believes that the simplest solution would be for the Government to pay that remuneration under that existing Public Lending Right scheme. The administration is already in place and public libraries are used to being sampled for that purpose.
I hope the Minister understands the problems that public libraries and their users face and will help to find a solution. It seems to me that the PLR scheme, extended, would be the simplest way forward. I am a great supporter of public libraries. I am very anxious indeed that their lending should not be less and that the
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public should be able to get as much out of them in the future as they have done in the past. They give an enormous amount of pleasure to a very great many people. The education side of learning about new media will be very helpful too. I hope for a good response from the Minister.
5.10 p.m.
Baroness Hamwee: My Lords, I thank the Minister for explaining the regulations, or perhaps I should say decoding or decrypting them. The speeches this afternoon have shown that the regulations are not as esoteric or technical as they would appear. The contributions of the noble Baronesses, Lady Dean and Lady David, have shown that the regulations raise points of concern.
I declare an interest. I am a partner in a firm of solicitors which acts for many individuals and companies in most branches of the entertainment industry. Because we act on both sides, I have not been able to work out any financial interest in the outcome of the debate.
It is a pity that the regulations are in the form of a statutory instrument and cannot be amended. Even though the regulations amend primary legislation, it is something of an irony and a difficulty that in applying the three directives we do not have the flexibility in this House or in another place to have as wide-ranging a debate centering around particular proposals as we would were we dealing with that primary legislation on a more direct basis. It is appropriate that there has been long consultation with various bodies. The practitioners and those who will be directly affected should have the first and the longest say. However, the time that has been taken has led to a great degree of frustration that the directives have not yet been implemented. I sense that some of the alterations that have come out of the negotiations have tended to address the workability of technical issues rather than more substantive points.
Reference has already been made to the provisions for equitable remuneration. It is a pity after so long a time that there is not a legislative basis in this area. The workability of the market requires that one should know in advance how such a matter will operate or, at any rate, whether there will be equality of bargaining power. That point has already been referred to by the noble Baroness, Lady Dean. My experience from acting on both sides—acting for an artist or a writer and for a company contracting to acquire certain rights—is that the author or performer is generally the weaker party. That is often so even when the artist is a major artist. One feels within the legal profession that it would be quite useful if one could start negotiating contracts about two stages down the line from one's standard amendments to a standard contract. However, one has to go through the arguments every time.
I wish to take this opportunity to raise a number of specific points. I hope that these have already reached the Minister. They reached me very late in the day, so they reached the Minister even later. I apologise that I was not able to give him longer notice.

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My first query concerns the redrafted Section 18 of the 1988 Act. Section 16 of that Act says that the owner of the copyright in a work has the exclusive rights to do certain acts in the United Kingdom. One of those acts is what is referred to in Section 18. Section 18 gives rise to the possibility that it would be an infringement of copyright in the UK to do something in the EEA. Is it really intended that that will have effect in relation to extraterritorial acts?
Secondly, the noble Lord, Lord Brain, referred to the effective date of Regulation 27(1). I should be grateful if the Minister could assist on whether, for instance, any equitable remuneration could arise for rental of a video in relation to a film where the contract was entered into before 19th November, 1992, the date in Regulation 27(1). That regulation does not expressly refer to Regulation 33. It uses the term:
"Except as otherwise expressly provided".
It would be helpful to know whether Regulation 33 is intended to be construed as being an "express provision". It is clearly important to the financial interests of a large number of writers and performers to know how these two regulations interrelate.
On the question of satellite broadcasts, why are the regulations silent on a provision aiming at the protection of programmes containing encrypted signals? The specific rule adopted by the directive for encrypted signals reflects the inherent differences between broadcasting of unscrambled or clear signals and encrypted signals. I should be grateful if the Minister could assist on the question of the reception of signals broadcast in an unscrambled form which cannot be controlled once the uplink operation is done—the dispatch of the signal, if I may put it in more lay terms. One can only watch, as a member of the public, an encrypted signal once it has been decoded. The insertion of a specific rule for encrypted signals was the result of intensive lobbying to the European Commission. I should be glad to know why in this country we are dealing with the matter in a different fashion. Turning the broadcast into a communication to the public is quite different from the clear broadcasting of unscrambled signals.
I turn to the question of the exclusive right of authors to authorise communication to the public by satellite. It would be helpful to know whether the reference in Section 20 of the 1988 Act to the broadcasting of a work or its inclusion in a cable programme service covers the lack of provision for an author to have an exclusive right to authorise satellite broadcasts of his works. That is required in Article 2 of the directive but is not in the regulations.
In relation to satellites, the statutory instrument does not contain a provision ensuring that the acquisition of a satellite broadcasting right must be obtained "only by agreement". Those words appear in Article 3 of the directive. Can the Minister confirm that the current practice of voluntary contractual negotiations, as they have been described by me, between the holders of rights and the users will be continued?
I now turn to cable retransmission and the question of definition. I apologise to your Lordships for this series of technical questions, but I believe that this is
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the last opportunity that the industry will have to get answers to them on the record. Can the Minister explain why the formulation in the directive has not been adopted verbatim in the statutory instrument? The definition of cable retransmission contained in the statutory instrument is not as detailed and precise as in the directive, which refers to,
"simultaneous, unaltered and unabridged retransmission".
As regards the acquisition of the cable retransmission rights, the directive requires member states to ensure that cable retransmission in the United Kingdom takes place,
"on the basis of individual or collective contractual agreements"
between the owners, neighbouring rights holders and cable operators. Can the Minister confirm that the current practice of voluntary or contractual acquisition of cable rights will continue to be applied?
I now come to the issue of mediation. Article 11 of the directive refers to mediation, but the statutory instrument contains no provision on the possibility of having recourse to mediation. Perhaps the Minister can explain that.
Finally, I turn to the prevention of abuses of the negotiating position. The directive requires member states to ensure that parties to a cable licence agreement will enter into and conduct negotiations regarding authorisation of the cable retransmission, "in good faith" and will not hinder negotiations without valid justification. Reading that, I realise what an interesting gap that shows in the differences between the legal system of this country and other countries within the EU as regards whether one looks at the spirit of a provision or its precise terms.
Can the Minister confirm whether, as in the past, the Monopolies and Mergers Commission will continue to have jurisdiction on refusals to grant licences on reasonable terms. Can he also confirm whether that jurisdiction will extend to abuses of the negotiating position on the part of the cable distributor? I apologise again for taking the time of the House, but I do not apologise very much because these matters still need to be clarified at this stage so it is right to take the time to do so.
5.23 p.m.
Lord Peston: My Lords, the directive and the statutory instrument cover many matters and I can comment on only a few of them. I have no problem there because other noble Lords have dealt with all the important matters better than I could possibly have done. The noble Lord, Lord Brain, said that it would have been better if we had had a Bill to deal with these matters, and I agree with him. Apart from anything else, the statutory instrument is longer than some Bills that I have dealt with. I know full well why the Minister would choose not to have a Bill, but a statutory instrument. However, that limits us as to how we can become involved in the detail. The noble Baroness, Lady Hamwee, said that the matter was not esoteric or technical. The topic is not, but the statutory instrument is extremely esoteric and technical. Just listening to the debate today I have my usual problem that I believe

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I understand what has been said but then someone says something and I realise that I do not understand a word of what we are talking about. However, I shall do the best I can.
I certainly believe that this is a real question and not an academic matter. For example, I take simply the row that has been going on between Thorn EMI and the British Academy of Songwriters, Composers and Authors on composers' royalties. We are dealing with very serious matters here. We are talking about vast sums of money and the very important rights that people have.
Having said that, although there are criticisms, I do not believe that we should ignore the fact that, central to the directive and the statutory instrument, is something which is very important to creators and performers; namely, that they are provided with new rights to earn additional revenue from renting and lending their works. Even though noble Lords have made points saying that that is not exactly the way they would have liked to see matters happen or there is this or that problem, one should not underestimate that ultimately this provision will lead to developments which will be beneficial to creators and performers.
My experience of this whole area of intellectual property is that it is fraught with difficulty. We have the authors, composers, performers, producers and lenders. They all need each other, but my experience when they get in touch with me is that they all hate each other as well. Each assumes that there is something hidden going on which is preventing them from getting their just deserts. The noble Baroness, Lady Hamwee, said that she appears as a lawyer for both sides. I hope that her firm has a lot of money. There are many sides and I hope that the noble Baroness appears as a lawyer for all of them. The fact is that one knows as an outsider that one cannot do right by all of them.
A further difficulty that I have is that, on the whole, those who have been in touch with me have been on the side of the performer and composer, and people like that. The one group which did not feel that there was any point in getting in touch with me were the producers and television companies, at least until today.
I wish to place on record the view that if one wishes to influence another, whether speaking from these Benches or from the Government Benches, writing to them with about an hour to spare is not exactly the way to get one's view included in whatever is going on—
Baroness Hamwee: My Lords, perhaps I may intervene. That includes receiving a letter just after one has finished one's speech.
Lord Peston: My Lords, I am indebted to the noble Baroness. I am as sympathetic to producers as I am towards anybody else. Certainly, as regards the television companies, I am also sympathetic to their concerns about unreasonably withholding consent and that kind of thing. If no one tells me about it, there is not much that I can do. There are other areas where occasionally I believe I know what I am talking about,
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but that does not happen very often in your Lordships' House. Most often I am in the hands of others, and I believe that many noble Lords are in that position. My main point is that ultimately this provision has to be a good thing for performers. One hopes that in practice it will be of benefit to them.
I now turn briefly to one or two points of detail, although I am sure that the Minister is perfectly well aware of them and can respond easily. I was surprised to learn that many composers have their own companies and that one effect of the directive and statutory instrument is that it may place a very considerable burden on such small businesses in order to make sure that they get their rights. They involve themselves with all sorts of monitoring procedures which are extremely costly. For example, a great deal of emphasis is placed on having access to the Copyright Tribunal. Clearly, people should have access to it, but my experience is that it is immensely expensive. A composer may just about know how to compose a piece of music—frequently not to my taste these days—but the idea that the composer may have any of the skills required to go to the Copyright Tribunal and argue about matters of remuneration and things of that nature without enormously expensive legal backup, is far fetched. I have been as supportive of the Government as one can be in terms of getting rid of unnecessary legislation; but I am worried that we are creating yet again a regulatory minefield here.
The next point is one to which noble Lords have already alluded. I understand the position of the department to be that the statutory instrument correctly implements the directive. The Minister has himself told me that, and I am sure that he will repeat it in a moment. As always, I look forward to what the Minister has to say. However, the view of my advisers is that even if in spirit it formally embodies the directive, it is still some distance away from doing what it ought to do. My noble friend Lady Dean points out that in some respects it appears to be less generous than the amount performers and others will get in the rest of the Community. I should like to hear the comments of the Minister on that point. The whole point of the directive in the first place was to produce a uniform situation throughout the Community in which everybody was treated in the same way. I should like to emphasise that point.
Many noble Lords have made the point—I simply go on record as saying that I am sympathetic to it—that at the root of the approach that we adopt here is the producer's right in this matter and that everything else stems from it. Critics outside and noble Lords have said that the lack of a right exercisable directly against the user means that, for example, the performer always has to go through the owner of the copyright in sound recording. One must place on record that that is not entirely satisfactory.
I do not want to prolong these matters, although I find all intellectual property matters fascinating. However, I believe that we should hear a little more from the Minister on the question of libraries. This matter was raised by my noble friend Lady David. I am very concerned about what is happening with the new technology in libraries generally. The example cited by

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my noble friend was a very good one. As I understand it, one can go to a library and look at the Oxford English Dictionary as a reference work and indeed any other reference work.
Many of us in our younger days, or even today—although noble Lords have access to the Library—relied on the reference sections of public libraries. They have been a boon to all kinds of people. It seems to me to be a matter of fundamental principle that where works of reference appear on CD-ROM access to them should remain unchanged, although their form may be different. Just as I can make a photocopy of a definition in the Oxford English Dictionary, as my noble friend implies, I ought to be able to print off exactly the same definition from CD-ROM without any infringement, or no greater infringement than would arise with a photocopy. One merely cites the Oxford English Dictionary as an example, but one has in mind the whole range of reference works on CD-ROM.
As I shall point out in the next debate in your Lordships' House, being a computer nut—perhaps that is a bit too strong—or someone who is obsessed with what can be done both with computers and on-line, I am extremely concerned about what is happening in this area both in relation to costs and the whole question of copyright works. The noble Lord will be happy to know that I shall save some of those remarks for the next debate. I believe that a good deal of reassurance is required that libraries will not be undermined by something that ought to be a boon rather than a threat to this kind of public service.
I feel that 10 minutes is enough. The Minister has a good number of questions to answer. There are many matters that one can take further but those will have to be saved for another day. I finish where I began. I hope that nothing that I have said will be interpreted as opposition to the appearance of definite lending and rental rights for all the relevant people. It is an important step and one that I strongly support.
5.34 p.m.
Lord Fraser of Carmyllie: My Lords, during the course of this debate on the regulations I have been asked a number of very detailed questions. I indicated at the outset that we had spent a considerable time on consultation on this matter. I appreciate that those who are concerned want as many answers as they can possibly get to the points that have been raised. I regret that I shall be unable to answer all of the questions, not only out of courtesy to those who speak in subsequent debates, but, more importantly, because such is the detail of the questions that I wish to be confident that every answer I give is accurate. While I shall attempt to answer a number of questions, as to those that I fail to answer I undertake to write to those concerned and make available the letters more widely so that any points of detail can be understood.
The noble Lord, Lord Brain, asked whether the regulations allowed authors and performers to achieve equitable remuneration for rental. We believe that they do. We appreciate that both authors and performers are concerned. They may have to undertake copyright
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tribunal proceedings in order to establish what is equitable. I do not believe that there can he a formula to determine what is equitable given the nature of the concept. That being so, it appears that ultimately there is no way to avoid resort to some legal mechanism. If it were not the tribunal it would have to be the courts. If there is a concern about cost, I believe it is a matter of common agreement that if tribunal costs are high the likelihood is that court costs will be even higher. We would like to see agreement reached wherever possible to minimise that cost.
I apologise if I appear to dart about a little but, as will be understood, this is a fairly complicated matter. The noble Baroness, Lady Dean, asked why Article 8.2 of the directive was not implemented so as to give performers rights exercisable against users and a more equal share of royalties with record producers. The regulations allow a fairly large degree of flexibility. We have attempted to utilise that flexibility to ensure that what is included fits into the pre-existing framework in the United Kingdom. For many years only record producers have had rights enabling them to obtain royalties from users. We do not consider it necessary or desirable from the point of view of users to disturb such long-standing arrangements. Granting performers rights exercisable against users would also mean the restructuring of producers' rights to ensure that there was only a single payment by users which was then shared between producers and performers and specified in the directive. We firmly believe, therefore, that the directive's requirement for performers to receive a share is best met by granting them the right to be equitably remunerated by producers.
As we understand it, where performers are granted a 50 per cent. share it is usually in respect of traditional forms of broadcasting and performance. The rights being granted to the United Kingdom will apply also to newer forms of exploitation that are now emerging but which have yet to become established in practice. We are reluctant to prescribe a share in these changing circumstances.
The noble Baroness further suggested that performers would be likely to have difficulty obtaining payments from other EU states unless their rights in the United Kingdom were similar to those elsewhere. The directive does not require full harmonisation in this area. The approach we have adopted should not affect the rights of UK performers under the treaty to claim payment in other EU states on the same basis as nationals of those states. Moreover, performers will have rights which are not transferable by them to producers and can be exercisable collectively against producers. That should assist in enabling them to reach reciprocal arrangements with collecting societies in other EU countries.
The noble Baronesses, Lady Dean and Lady David, asked why the regulations granted owners rights to control public library lending. It was a theme to which the noble Lord, Lord Peston, and the noble Baroness, Lady Hamwee, returned. I stress that book lending—clearly the most significant category—will essentially be unaffected since most books are covered by the public lending rights scheme which will remain in place. This gives authors only a right to payment for lending.

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I am aware that libraries would prefer a similar approach to be taken for other kinds of works. However, we do not consider that that would give the owners of rights sufficient protection. It would not allow them to seek conditions aimed at preventing unauthorised copying, especially of material in electronic form. The noble Lord, Lord Brain, raised a concern about further copying in such circumstances.
In many respects the economic impact of lending is no different to that of commercial rental, which is subject to exclusive rights of control. Therefore, we believe that similar rights should apply in the lending field but with the important safeguard that we are retaining part of the order that lending be licensed since we are conscious that public libraries should not face unreasonable restrictions on lending. In addition, existing lending stocks will not be subject to the new rights of control.
The regulations do not alter the position in regard to the inspection of works in public libraries. The example that was put to me of on-the-spot reference is not lending within the meaning of the directives.
I was asked why the Government do not take more material into the public lending right scheme in order to reduce burdens on libraries. That is a matter for my colleagues in the Department of National Heritage. They have no current plans to extend the scheme to include new categories of material lent by public libraries. We are now obliged by the directive to introduce new lending rights for all kinds of works and we have taken the view that we should achieve that by establishing the new rights set out in the regulations.
The noble Lord, Lord Brain, inquired whether the intention of the new Section 93A is to ensure that a film or video producer is the first party responsible for payment of remuneration for rental. In fact it is Section 93B which specifies by whom the remuneration is payable, and the purpose of Section 93A is primarily to ensure that at the time the film was made the film or video producers had the necessary consents from the authors for rental of the work by introducing, as permitted by the directive, a legal presumption that unless there is an agreement to the contrary the rights of authors to authorise rental are transferred to the producer.
It is Section 93B which provides that in the first instance film producers will be responsible for that equitable remuneration of authors. It also provides through subsection (3) that if a film producer ceases to own the exclusive rental rights in the film, then his successor in title would be responsible for paying any outstanding remuneration. I hope the noble Lord will forgive me if I do not now answer some of his very erudite questions, but I will ensure that he receives answers.
The noble Baroness, Lady Hamwee, asked whether the wording of Section 18 is compatible with the right of the copyright owner in Section 16 to do certain exclusive acts in the United Kingdom, including the issue to the public of copies of work and whether therefore the reference is intended to have effect in relation to extraterritorial acts.
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Section 18 defines the meaning of the right referred to in Section 16. It previously defined that right as being exhausted by the first issue anywhere in the world of copies to the public. Therefore, there is nothing new in Section 18 being affected by extra territorial acts. However, the regulations will now limit the effects to the benefit of copyright owners so that exhaustion only happens when the copy is first issued in the EEA rather than anywhere else in the world. It will be limited to act only when it occurs within the EEA rather than anywhere else in the world.
The noble Baroness also asked why the regulations do not make provision for encrypted programme-carrying signals as required by Article 1(2)(c) of the satellite and cable broadcasting directive. That is because Section 6(2) of the 1988 Act already contains the effect to which she refers. The noble Baroness also asked why the regulations do not contain an express provision on the author's exclusive rights to authorise the satellite transmission of his work and why they do not contain any provision ensuring that the acquisition of such right must be obtained only by agreement. The answer is the same. The regulations do not mention them because the Act already incorporates those points.
The noble Lord, Lord Brain, asked a detailed question about whether the tribunal would have the power to order the production or discovery of documents. I understand that the tribunal already has the power to make such an order requiring all parties to produce all documents in their possession or power which are called for. That is certain to extend to documents disclosing details of income. Had we introduced a separate requirement to provide information, it would not avoid the possible need for legal proceedings, since the requirement would be of no value without some means of redress in cases of failure to comply with it.
I am conscious that I have not answered all the questions asked of me but I hope that I have singled out the most important. I will ensure, having scrutinised the record, that any unanswered questions are addressed.
On Question, Motion agreed to.

Information Society: Science and Technology Committee Report
5.45 p.m.
Lord Phillips of Ellesmere Lord Phillips of Ellesmere rose to move, That this House take note of the Report of the Science and Technology Committee on Information Society: Agenda for Action in the UK (5th Report, Session 1995-96, HL Paper 77), and of the Government's response (Cm. 3450).
The noble Lord said: My Lords, before I turn to my main task of inviting the House to take note of the Report of the Science and Technology Select Committee on the Information Society: Agenda for Action in the UK and the Government response contained in Command Paper 3450, I trust that your Lordships will forgive me for first paying tribute to my friend Lord Sheffield, whose recent death has saddened us all. Lord Sheffield was one of the prime movers behind the establishment

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of the Select Committee on Science and Technology and for this, and in many other ways, we owe him a great deal. For me it is a particular sadness that he cannot be in his place today to take part in this debate.
The Select Committee study was launched almost exactly a year ago under the title, "The Information Superhighway: Applications in Society". A wide-ranging call for evidence was issued and, in accordance with a tightly-defined timetable, written submissions were received from 97 individuals and organisations, 27 of whom gave oral evidence at 16 formal sessions in Westminster. To all of these witnesses the committee is most grateful. In addition members of the committee visited a number of leading organisations in the UK, including British Telecommunications plc Laboratories at Martlesham Heath; Nortel Technology Laboratories at Harlow, and Acorn Online Media, together with St. Matthew's Primary School and Netherhall School in Cambridge. It is a pleasant duty for me to record the committee's thanks to the staff of all those organisations for the trouble they took in showing and explaining to us their work and the many new opportunities that are arising.
In addition to these visits in the UK, some members of the committee also made an intensive visit to three centres in the United States: Boston, Washington DC and Raleigh, North Carolina, where we benefited greatly from the revealing accounts of current policies and developments given by many American witnesses. On those visits we were much helped by UK officials stationed in the US, particularly Mr. Poston, HM Consul General in Boston and his staff, and Dr. Don Rolt, Counsellor for Science, Technology, Energy and the Environment at the British Embassy in Washington.
As a relative newcomer to this House and to membership of the Select Committee I must also make it quite clear that the study could not have been carried out without the unflagging interest and enthusiasm of the members of the committee, who included two co-opted members, the noble Lords, Lord Butterworth and Lord Hollick. I am personally most grateful to all of them, but I should make special mention of my noble and gallant friend, Lord Craig of Radley, who undertook to take my place as chairman if I was for any reason unable to act, and did indeed most ably chair one session of the committee that I was prevented from attending by ill health.
I must also acknowledge most warmly the assistance of our specialist adviser, Professor Charles Oppenheim of De Montfort University and the help of Dr. Bradshaw, the committee's specialist assistant, who accompanied the delegation to the USA and made many other contributions to our work. Above all, however, I must offer the committee's thanks to our Clerk, Dr. Phillipa Tudor. The report was published last July in the traditional form on printed paper and was at the same time published electronically on the world wide web—as seems most appropriate given the subject of the report. This was the first report of a parliamentary Select Committee to be published in this way and the public reaction, which can be monitored by noting the number of times the report was examined on the web, was most satisfactory. More than 6,000 people in three
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continents accessed the report during the first two weeks after publication and a high level of interest was maintained for the following month, a clear indication that publication on the web reaches places that the traditional method does not reach. Happily the Government's response has also been published on the web, in accordance with the expanding use of this medium under the "Open Government" programme and I understand that this will become the standard procedure for making such reports and responses available to a wide public in the future.
Your Lordships will be well aware that the Select Committee addressed a complex, wide-ranging and rapidly evolving subject and I must admit that our report, long and complicated though it may seem, does not cover all aspects of the subject in adequate detail. In particular, we have not provided a full guide to the advanced technologies that are now available and coming into use. For those of your Lordships who would like to study the subject in more detail I commend to you the excellent POST report, Information 'Superhighways': the UK National Information Infrastructure that was published in May 1995. For later developments the weekly supplements published by major national newspapers illustrate vividly the rapid pace of advance—both technical and commercial—that continuously introduces new ideas into the debate. For example, the introduction of the world wide web in 1990, led to a rapid and enormous increase in the number of computers connected to the Internet and only in the last year has prompted the development of a new programming language, JAVA, that is consistent with all the major operating systems now in use and has given rise to the concept of the network computer in which relatively inexpensive workstations, with limited local facilities, are linked to powerful servers and networks. The full implications of a shift to this system have yet to be worked out, but there will be major implications for the design of installations in schools, libraries, citizens advice bureaux and so on.
Over recent years Government have been increasingly active in this important area and it is a pleasure to note the many publications that have been aimed at increasing public knowledge and awareness of the potential value of the new technology in all aspects of national life. In these efforts the Department of Trade and Industry has been particularly active and I look forward eagerly to the response of the noble and learned Lord, Lord Fraser of Carmyllie, to this debate. nevertheless, turning to the committee's recommendations I must admit to some disappointment that the Government have not been as accommodating in their responses as we had hoped. Although the Government have shown some measure of agreement with more than half of our recommendations they have failed to accept a number that we consider important and, since I am sure that noble Lords speaking later in the debate will be intending to address many of these outstanding issues, I shall confine myself to remarking on only four of them.
First, I refer to our proposal that the Government should set up an information society task force, chaired by an enthusiast, to advise government on the agenda

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for action in the UK and publish reports. We were encouraged to make this proposal by two observations; first, that the government publications by a number of different departments of state and agencies have had less impact than they might have had. Many of these publications have been well produced and attractively presented, but all too often they have lacked the detailed information and guidance that are needed by potential users of the technology in society and the general effect, I fear, has been rather diffuse. Our second observation was that the Untied States Advisory Council on the National Information Infrastructure has been very effective in providing guidance to American communities on the steps they can take to connect themselves to and take advantage of the so called information superhighway.
The differences between the two national approaches are well illustrated by the nature of the Kick Start Initiative published by the US Advisory Council, which encourages
"community leaders across the Nation to provide all individuals the opportunity to access and use the Information Superhighway",
and goes on to elaborate a wide variety of methods that have been used to achieve this objective. One of the case histories that is described concerns the initiative in the State of North Carolina that we were able to study during the committee's visit to the United States. There we saw, among other things, how a highly qualified teacher at a central school could give a lesson over the highway to classes at a number of remote schools with the active co-operation of teachers in those schools.
I shall return briefly to education, but my aim here is to ask the Government to think again about the need to bring their initiatives and guidance into better focus and to reconsider the value that an information society task force might have in acting as a generator, promoter and focus for information and ideas. No doubt, much is going on and there are almost continuous announcements of government initiatives: those highlighted by the Lord Privy Seal in his evidence to the committee included not only the very welcome Cabinet Committee, which he chairs, but also the Central Information Technology Unit (CITU), the DTI's Information Society Initiative (ISI), the DTI's Multi-media Industry Advisory Group (MIAG), the DfEE's Education Superhighway Initiative (ESI) and the contributions of the Technology Foresight Programme.
Since our report was published we have had the Government's Green Paper government.direct— A prospectus for the Electronic Delivery of Government Services—and next month we are promised IT for All, which is to set out
"the most ambitious programme of its kind ever attempted in a major nation".
That is a bold claim and we shall wait to see it with eager anticipation. Perhaps it will, for the moment, pull together all these initiatives and point the ways ahead, but I shall hope to see also the introduction of a process able to carry us forward in a rapidly evolving scene.
The second issue that I must touch on briefly is the Government's rejection of our recommendation that the restrictions on telecommunications companies either conveying or providing broadcast entertainment services in their own right should be reviewed as a matter of urgency. Here again we live in a rapidly changing world and hardly a day goes by without the announcement of some major development in the global telecommunications industry.
In recent weeks we have had the proposed merger of BT and MCI and the amalgamated of the Cable and Wireless "Mercury" operation with three UK-based but largely foreign-owned cable companies to form Cable and Wireless Communications (CWC). Only today I read in The Independent newspaper that AT&T is objecting to the BT/MCI deal on the grounds that the UK telecommunications industry is not as open to competition as that in the USA and that,
"the key principle behind competition in the UK, which encourages operators to build rival cable networks, is acting as a barrier to genuine customer choice".
This is complicated territory and I understand very well the reluctance of the Government to change the rules set out in 1991 that have helped to encourage a great deal of investment in the cable infrastructure in the UK. Nevertheless, the development of the cable industry in recent years suggests strongly that the expectations of 1991 were rather wide of the mark. Who anticipated then that cable TV companies would be profitable only in the provision of telephony or that their penetration of the TV market would be so low? This reminds me of the advice that we were given by the Director-General of OFTEL early in our inquiry that the main problem is the provision of attractive material for transmission—content, as it is known in the often repeated saying "content is king". I am sure that others will address this issue, but I hope for my part that the Government will think again—perhaps influenced more by AT&T than by the committee—about the problems that have arisen over the provision and control of content packages and the impact they have had on the viability of the cable companies.
My last points are quickly made. Together with the other members of the committee, including most especially my noble friend Lord Flowers, who is prevented by ill health from being with us today, I fear that the Government view—or perhaps I should say the education department's view—of developments in education, particularly at the primary and secondary school levels, seems to us complaisant. We are not persuaded, for example, that an adequate range of good quality software designed for the UK national curricula already exists or that teachers are being properly trained in the use of the new media. Here again there seem to be too many organisations and agencies involved and there is a clear need for the Secretary of State for Education and Employment to take the lead in improving teacher training in IT. On this front we were also extremely disappointed by the Government's negative response to our support for the enterprising Free Computers for Education scheme.
On the other hand, we were encouraged that the Government is sympathetic to our proposals for networking public libraries and citizens advice bureaux—though we note that progress towards these two highly desirable goals depends upon the support of the Millennium Fund. I would wish to encourage the Millennium Commission to consider favourably the applications they have received from "Information for All", on behalf of the public libraries programme, and the National Association of Citizens Advice Bureaux. Implementation of these schemes could go far to minimise the risk of our society being divided between those who benefit from the IT revolution and those who do not.
There are many other issues addressed in the report of your committee and in the Government's response, but I trust that the most important ones that I have neglected, including those that affect the provision of healthcare, will be taken up by other speakers. I look forward to a lively and constructive debate that will lead to further advances. I beg to move.
Moved, That this House take note of the report of the Science and Technology Committee on Information Society: Agenda for Action in the UK (5th Report, Session 1995-96, HL Paper 77), and of the Government's response (Cm. 3450).—(Lord Phillips of Ellesmere).
6.4 p.m.
The Earl of Selborne: My Lords, the House will indeed be grateful to the noble Lord, Lord Phillips of Ellsemere, for the clear and comprehensive manner in which he introduced this important report. Indeed, he reminded us that Lord Sherfield, way back in 1979, was instrumental with Lord Shackleton in advising the House that we should have a Select Committee specifically to address science and technology. The terms of reference were very wisely drawn up in the widest possible terms to consider issues of science and technology with which, in the opinion of the committee, the House's attention should be concerned.
If ever there was a subject which meets fairly and squarely that specification, this is it. As we speak the information society is permeating every aspect of our government, of our lives, and is clearly critical to our competitive status, to the quality of our life and to much else besides. It affects every branch of central government, local government and industry. It clearly affects this House, and it is very difficult to think of an area which would embrace so many different aspects of our lives. It is complicated by the fact that this subject is technology driven; that technology changes by the day—one could perhaps say sometimes even by the hour—and clearly a report of this nature will be out of date very soon as, I have to admit, will be the Government's response.
It is clearly important that we address this issue and look at what is a masterly overview from the committee. I can say that because I was not a member of the sub-committee which produced the report. I find a compelling echo of the Clinton administration's "agenda for action" in this report. We clearly need to bring
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together and co-ordinate a large number of initiatives which are taking place in this country and make sure that we are taking the best possible advantage of those initiatives.
It is clear that there are a number of advantages of which we can be proud and of which the Government can be proud. It is clear that the decision to deregulate the telecommunications industry very early on compared to other countries has been of inestimable advantage to us. It has given us a flying start. We can go back some 15 years or so when the original scheme to put personal computers into primary schools allowed our society to become very much more aware of the opportunities that personal computers offer. We have in fact in this country a greater penetration of computers in the home and in the school than in many other countries and we also have the rapid investment in the infrastructure. It is haphazard; it tends to follow the route of the cable companies and, as the noble Lord, Lord Phillips, reminded us, it is in danger of leaving some embarrassing gaps. Nevertheless, they are advantages on which we simply have to build.
It is only fair to say that in our Minister for Science, Mr. Ian Taylor, the Government have a Minister with great knowledge and enthusiasm. The noble Lord, Lord Phillips, and I went to speak to him before the Select Committee started this inquiry. I think we must recognise just how many initiatives have emanated from the different parts of government.
Having said that, I would draw attention specifically to an area, for example in the aspect of health care, where the report demonstrates some opportunities, perhaps missed at the moment, to provide the information society with the benefits of which we are clearly not making use. Paragraph 5.81, for example, talks of the opportunity to reduce the administrative load on general practitioners. There is not a doctor in this country who would not complain about the amount of paperwork. There are opportunities spelled out in paragraph 5.81. If only we can network GPs' practices to consultants and to hospitals so that one can have on-line appointments. But we need a secure, confidential, intranet system.
That will not happen by market forces; it will not happen if a cable company happens to be passing that way. It has to be planned. Likewise, at the moment a GP has to provide records on paper. It was a central provision in an earlier age. But of course nowadays, if records are to be kept in electronic form, it is quite absurd to require GPs to copy them out on paper. Paragraph 5.82 states what will happen, but nothing has happened yet. I hope that the Minister will assure us that that matter is in hand.
Paragraph 5.83 refers to the number of forms which are duplicated and the figure of £100 million is mentioned. I do not know whether that figure is right, but I know that there is a log-jam and that modem technology can and should move it. Again, someone must be responsible for doing that.
Paragraph 5.85 refers to the handling of health scares, which is a topical subject. Only last week we heard about the sad effects of the scare about the pill a year

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or so ago. Had an Internet with the network been available to pass on information securely and confidentially, I have no doubt that the unnecessary damage which was caused by that scare would have been avoided. Opportunities will not happen unless there is a co-ordinating body bringing together the local provision of networks, the local requirements of the health authority and other legitimate requirements of the area.
I was interested to read the evidence which the committee took in North Carolina. It also reported on progress in New Brunswick and Wales. All three are centres of excellence in their own respect. In each there is a clear theme; there is a regional agenda which is well defined by a co-ordinating and leading agency, bringing together the requirements of the GPs, hospitals, libraries, primary and secondary schools, further education and industry.
As a result of the way in which we determine departmental responsibilities, it is difficult at a regional or central level to obtain that degree of co-ordination. In the United States and Canada it is clear that central government have been proactive as policy makers in setting guidelines and in getting things moving. The noble Lord, Lord Phillips, reminded us of the United States' "Kick Start" initiative, which is well named. It implies that the United States Government—Al Gore and President Clinton—have seen themselves as very much responsible for making things happen. It is the "can-do" society, to which the report refers.
As regards education, the report highlights the centres of excellence which have been built up by experience and a number of inspired initiatives. Paragraph 5.71 refers to those centres, while Appendix 7 refers specifically to Netherhall School in Cambridge. I have had experience of city technology colleges, specifically the Thomas Telford School in Telford, of which I was the first chairman. A large investment was made in new technology but it is expensive to keep that up to date. There is now talk of laboratory schools, which is an important concept, to determine what is best practice and what lessons can be learnt from other schools.
After five to seven years, with centres of excellence and information technology, some lessons are already clear. It is extremely expensive to provide multimedia networks within schools, let alone between schools and local communities. They need to be updated at least every four or five years. That is inevitable due to the speed of the technology. Incidentally, one always under-estimates the capacity of the band network required.
Enormous opportunities are available not only as regards giving access to schools, further education establishments and libraries, which is undreamt of through the Internet, the web and local networks, but there are also opportunities for the rest of the community to benefit by further distance learning and adult education. There are also opportunities for industry to benefit from the facilities on offer. Some of the best initiatives are providing just that and it is truly impressive.
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Of course, we have a log-jam. Super-Janet can just about cope with the research institutes and parts of higher education. Further education is hardly provided for and it is not clear how on earth we shall provide the kind of capacity which Super-Janet has for all those centres of education, including secondary and primary schools, which would derive enormous benefit. Clearly, it will be expensive and technical support will be required in schools and colleges of further education. We must be able to maintain highly sophisticated terminals and networks and a great deal of servicing will be required. I know that the Thomas Telford School has invested heavily and in a pilot scheme has had access to educational trust funds. However, it is clearly important that nationally we face up to the consequences in all our schools.
I return to the requirement to provide a co-ordinating, overall focus. I realise that the Government are always chary of task forces which appear to override departmental responsibilities. It does not fit easily with the concept of Cabinet responsibility. Nevertheless, that is precisely what we need and I am sure that is why the sub-committee recommended the task force. If the Government cannot bring themselves to support the task force, will they at least recognise that in a similar area—that of sustainable development—we were faced with precisely the same issue?
Like the information society, sustainable development permeates almost everywhere. There is not an aspect of central or local government on which sustainable development does not have some bearing. In 1994 the Prime Minister recognised that and appointed a round table of 30 people to advise. He also appointed five people to the sustainable development panel. I had better come clean immediately and say that I am one of that panel of five and therefore I like the idea of panels of five. Its convenor is Sir Crispin Tickell and its responsibility is to advise the Prime Minister on any aspect of sustainable development pertaining to government policy. It has produced a number of initiatives and some advice which, on the whole, have been followed up by government.
If we cannot have the task force which the report recommends, why not opt for a well-focused panel with a leader who can get things done, as the noble Lord, Lord Phillips, suggested? Why cannot we have a focus which will demonstrate to government time and time again what is needed? I am sure that when the noble Lord, Lord Phillips, said that some of the Government's response smacks of complacency, he was probably making a very fair point.
6.17 p.m.
Baroness Dean of Thornton-Ie-Fylde: My Lords, I welcome the Select Committee's report, particularly the chairman's opening remarks. It is good to have the Government's response available today because it focuses our considerations. The debate on this topical issue is well timed and it will be ongoing. This is a major contribution to the national debate.
I wish to refer, first, to paragraph 6.8 of the report and to the Government's response dealing with the regulation of illegal and harmful content. The regulative

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framework is right in highlighting the need to review the framework of regulation and the approaches to regulation. Traditional approaches will not be capable of application to these new services and technology in the same way and with the same effect. The relationships are so different. For example, the user of the new services can also be the content provider, often anonymous and untraceable. There are no geographic boundaries so areas of jurisdiction are not apparent.
Furthermore, there are too many regulators. Perhaps I too should declare my hand, as did the noble Earl, Lord Selborne. I chair one of the regulatory bodies in this sector. The fact that there are too many regulators is accepted by the regulators themselves. The figures vary but ICSTIS, the body which I chair as paid chairman, looked at the numbers involved in content regulation and identified 13 different organisations in the UK. Others will say that there are more, but it appears that the number of regulators grows with the strength of the argument to reduce them. Surely, it is confusing for the consumer, quite apart from the overlap of the regulatory bodies. One must question how much falls through the holes between the regulatory bodies.
Within the framework it is essential not to ignore the effectiveness of industry and self-regulatory solutions which have evolved in the UK to great effect. That has not always been the case but there are some very good examples of the type of regulation which has worked; for example, in telephone services, direct mail and advertising. In this debate we should ensure that initiatives which are effective and which offer systems of redress at no cost to the taxpayer have their place in any future regulatory framework.
Some of the discussions today about the reorganisation of the regulatory framework assume a clear separation between content and economic issues. The report takes a more pragmatic view and the Government response recognises that it is not a straightforward matter to draw such a neat distinction between the two. I agree with those views. We need to consider how it would work in practice. For example, economic regulatory levers may need to be applied in order to influence issues which relate to content. There may be a need for quality thresholds.
While traditional forms of regulation, current models, and arrangements on which those are based are not necessarily relevant to new services, it is important that the experience of what has been developed is not lost: for example, the procedures to ensure user/consumer involvement in policy development; transparency in decision-making; and systems in place to ensure effective and impartial redress.
Paragraph 6.9 of the report refers to the Internet Service Providers' Association—ISPA, which is a new body. I was interested to see in the report that page upon page of abbreviations already exist in this domain. They seem to grow by the day. But let us talk about ISPA. That is a new body and one to which the Government have given their support, along with the code and the Internet Watch Foundation, the IWF. That is not the International Wildlife Fund; it is the Internet Watch Foundation.
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Three principles articulated in the documentation from those new organisations are rating, responsibility and reporting—the new three Rs perhaps of this new superhighway age. I gather that at this stage they are merely proposals and that nothing has yet been established or is working. Rating will provide a rating service for news groups, which is the area of greatest concern, for members of the organisation. I gather that there is little progress so far, but it has great promise.
The responsibility aspect seeks to ensure that all players—service providers, users, and enforcement agencies such as the police—must take responsibility where they can and, within their powers and competence, do what they can to ensure co-operation in relation to standards and action to maintain those standards.
The third R is reporting in the form of a hotline for the public which I gather has yet to be established. That would enable both members of the organisation and the public to ring in and report illegal material. It is not dissimilar to other initiatives which have been established in other sectors of public policy development.
Inherent in any system of regulation, statutory or voluntary, must be the commitment of those to whom it applies. It must have their support. Without that, it will not succeed, as has been demonstrated so often. And in this world of new technology, which is developing at such a pace, any regulation must be capable of adaptation.
The new ISPA and IWF initiative is to be welcomed and should be supported. It is in its early days and is concentrating its focus on illegal material, which at the moment is the area of greatest public concern. As the new initiative develops, I suggest another three areas on which we should concentrate to ensure the integrity of the system. They relate to the consumer but also, in overall terms, to the industry itself. I call them the three Cs—coverage, confidence and clarity.
There must be coverage because the system can work effectively only if it is supported by all. Often breaches of what is regarded as acceptable by an industry are perpetrated by those not part of the system—those who choose to be outside the ground rules. What can be done to bind those people?
The industry initiative and blueprint has been promoted in Europe and seems to be receiving support. The DGXIII communication on illegal and harmful content adopts much of that model. However, as the European communication notes, in order to achieve coverage there will need to be the effective co-operation of enforcement agencies at an international level. This industry has no boundaries. There are several such agencies—the UN (ITU), the OECD and the WTO.
The second C—confidence—is another essential element of the model. It needs to develop the confidence of those to whom it applies—the providers—and the confidence of those for whose benefit and protection it has been established; that is, the public, the consumer. The scope for introducing independence in decision-making needs to be considered too as that will contribute largely to the building of wider confidence.

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The third aspect is clarity. That is crucial in the standards it sets and the procedures by which it seems to apply those standards. Clarity in terms of accountability for decisions and identifiable and public indicators by which its success can be measured will need to be developed.
The report highlights and recommends the ICSTIS model, of which I am chairman. ICSTIS regulates what is known as the premium-rate telephone service sector of telecoms where the revenue is shared between the network operators and the service providers. It is shared by virtue of a contract. The authority of ICSTIS is gained from telephone companies which agree to support the code of practice and regulations and require their service providers, by their contracts, to abide by the ICSTIS code.
In turn, ICSTIS has a contract with the telephone companies. It is neither a statutory nor truly self-regulatory model but a model of independent regulation funded by the industry but with no industry representation on its board. The organisation is 10 years old this year and I am pleased to inform your Lordships, with some small degree of pride, that it has just become the first regulatory body in the United Kingdom to achieve the ISO 9002 world standard for its complaints handling system.
In their response to the committee's recommendations, referring to the ICSTIS model, the Government refer to the licence condition obligation which the director general imposes on network operators as an indication of why they do not feel that the ICSTIS model may be relevant for this new technology because the committee recommended that it may be a model on which to build.
The licence condition referred to by the Government is only for live services, which currently represent less than 5 per cent. of that 250 million-calls-per-year industry. The remaining 95 per cent. do not have such a licence condition.
The relationships between service providers, network operators and callers are different in this new technology in the premium rate telephone sector. Of that there is no doubt. It is not possible to apply the model as it stands. However, the features of such a voluntary model are there to be built on. Independent complaints handling and decision-making processes build consumer confidence in an industry system. Standards applied through a code with sanctions to back them up ensure that they are applied equally. There must be flexibility to update and upgrade the code to ensure that it remains relevant to changes in the nature of services. That is all-important in any open regulatory system.
I was pleased to read in paragraphs 5.64 to 5.69 reference to universal access, I am sure that we all agree with those proposals. Some of us—and I include myself—would have liked to see a stronger reference with matching recommendations. The technology now available and the developments taking place almost weekly could provide many opportunities, and many of our citizens are currently missing out on those opportunities. It is essential that we do not have a have
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and have-not division in our society in accessing the superhighway. Some may say that the division is already occurring.
These new developments provide the chance, if we take it, to start to change opportunities in a real way. I know that that was the intention of the committee and I support it. That is why I support the libraries in their bid for millennium funding, referred to by the noble Lord in his presentation of the report. What a marvellous way to start to open up access and opportunity in our communities irrespective of the income levels of the individual members of those communities.
I thank the Select Committee for its very detailed work. We are indebted to it, as Members of this House, for the thoughtful considerations and recommendations put forward and for the evidence from witnesses—and the calibre of those witnesses—so many of whom are key players in these developments.
It is a report which we will refer to continually in our business in this whole area of public policy as this topic and debate carries on and indeed is widened.
6.32 p.m.
Baroness Hogg: My Lords, I must start by declaring an interest—or, rather, interests—as I am shortly to become chairman of London Economics, which does a substantial amount of strategic analysis and competition casework for broadcasters, telecoms businesses and indeed regulators in the converging media markets. I am also involved with a number of financial services businesses, which have a fast-growing interest in the electronic markets for their products.
I wondered whether I should try your Lordships' patience with a still longer list of interests, simply to make the point that every business and organisation is actually or potentially affected by the digital revolution. But I will leave that to the register.
As a member of the sub-committee, I should like to start by expressing my thanks to, and my admiration for, the chairman of our committee, Lord Phillips of Ellesmere. The noble Lord navigated us most skilfully along the superhighway, as well as through various international air terminals.
The Internet is the offspring of the academic and defence communities, of which we had also other most distinguished representatives on the sub-committee, notably the noble Lords, Lord Craig and Lord Flowers. On security, on research and educational uses of information networks their expertise was invaluable. The noble Lord, Lord Flowers—who I am very sorry could not be here today—could run a personal advisory service on the precise timings of the daily traffic jams on transatlantic superhighways. I wish him a speedy recovery and happy surfing meanwhile.
Lest your Lordships should suppose these are unique honorary members here of the nerd generation—I note that the noble Lord, Lord Peston, has already registered his claim—you may be interested to learn, as we were, that Compuserve has more private subscribers over the age of 50 than under the age of 30.

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I wish to single out only two of the 40 recommendations made by the committee for your Lordships' attention. It is easy to be intoxicated by the potential of digitisation. Our ability to transform all forms of information—data, text, picture, sound, even to replicate the sensations of touch—into a digital stream, and to transmit massive quantities of information worldwide virtually instantaneously, is an extraordinary power which has been associated with the notion of a second Industrial Revolution. The exponential growth of the Internet—driven by the market, not by some government plan—is evidence of the potential speed of development in this area. Such developments challenge our notions of national regulation and sovereignty; there are, as has been said, no Customs posts in cyberspace. Internet-type systems pose very difficult issues with respect to intellectual property of the kind your Lordships were discussing earlier today. At the same time, they offer obvious opportunities for the more effective delivery of government services, from education to health.
But it is important to keep at least one toe on the ground. Markets for many of these services have yet to be established. Who will be prepared to pay for any of these, and how, are questions taxing both the public and the private sectors. Thus the first recommendation to which I would wish to draw your Lordships' attention is the need for the creation of a task force or a panel of some kind outside Whitehall to advise Government.
The Government's own paper on the electronic delivery of government services is a very welcome step on which I wish to congratulate my noble friend. He will perhaps forgive me if I stress the need for continuing vigilance to ensure that individual government departments do not all insist on their God-given right separately to reinvent the wheel. In conformity with the objectives of the Citizens Charter, I trust everything will be done to see the problem of access from the individual's point of view and to work cross-departmentally to aid navigation. This is the kind of issue on which an external task force or panel, or whatever, could be a useful support—or do I mean goad, my Lords? I am sure my noble friend will give further thought to this.
My second point concerns the regulatory framework. Witness after witness testified to the benefits the United Kingdom enjoy from the liberalisation of our telecommunications market, which has permitted new information services to grow faster here than in the rest of the European Union. But the framework within which this has taken place needs to evolve along with the market place. The word "convergence", with respect to these industries, is bandied about all too loosely. The digital revolution will not destroy all distinctions between, let us say, entertainment and financial services. What it will do is enable a much wider range of products and services to be delivered along networks hitherto specifically dedicated to either broadcasting or telephony: fibre optics, cable, terrestrial, satellite or good old twisted copper pair. This changes the nature of competition in these markets. Thus the committee
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concluded that a new regulatory regime for these industries would be needed by 1998. Some serious work will be needed—very soon—to get that regime right.
6.37 p.m.
Lord Porter of Luddenham: My Lords, I was not a member of the committee which gave us this excellent report, so may I thank my noble friend Lord Phillips of Ellesmere and his committee and say how much I have benefited from reading it.
The report compares the recent advance of information technology with the shift from the agricultural to the industrial economy. The Government response was no less positive when they modestly described their own proposals as "IT for All". It is probably true that information technology will he seen in the years to come as one of the principal contributions of the second half of this century to the technological and scientific history of mankind. The only other advance of comparable importance since the war is surely the discovery of molecular genetics, with its own incomparable code of information transfer.
Information technologies have been developing throughout our history, from speech and writing to the printing press, the typewriter, the telephone, radio, and then on to calculating machines and computers. But there is no doubt that a seachange has taken place in the last few years and is advancing at an incredible rate today.
The discoveries which made today's information revolution possible were principally those of solid state physics and in particular the transistor—that tiny electronic switch which provides one bit of information. It was discovered largely at the Bell telephone laboratories in New Jersey by Bardeen, Brattain and Shockley. In 1949, Claude Shannon, also at Bell, had advanced information theory through his brilliant synthesis with the second law of thermodynamics. In those days several of the great industrial laboratories—especially in the United States—left their top scientists free to follow their own ideas. The information revolution which followed owed a great deal to that policy.
At first sight it seems clear that information must be a good thing and that ignorance is bad. But there are exceptions even to this apparent truism and the recommendation in paragraph 6.9 of the report, the one most strongly supported in, I believe, the whole report by Her Majesty's Government, refers to the need to eliminate information which is illegal and to discourage the transmission of other information which is objectionable in a civilised society.
The report points out, perceptively, that the technology needed to eliminate such unwanted material is in the hands of every citizen, it is called an on-off switch, and parents, in particular, should know how to operate it. Nevertheless, the undertaking by the UK Internet service providers, mentioned in the government response, to implement a code of practice enforcing the removal of such material, is most welcome.
I shall refer to only two other recommendations of the committee, which, considering their importance, received rather scant encouragement from Her

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Majesty's Government. Both are about education. Recommendation 6.22 expresses the need for an information technology module in all initial teacher training courses. The government reply tells us of many things under consideration but little that is actually happening. Thus we hear that the TTA, the teacher training agency, is looking at further means to improve teacher confidence in IT, exploring means to help teachers identify their training needs and is also currently considering its research priorities. These, we are told, are likely to include the effects of IT on teaching and in particular the use of IT in relation to improving literacy and numeracy—I shall return to that in a moment.
The other recommendation, 6.24, is about extending the use of IT,
"to develop [the] educational content…[of the] British curriculum…by a targeted R & D programme, for which public funding should be made available".
The Government admit that there is scope here for further development, that this is an area where the private sector is active, but that,
"the extent to which programmes with support from public funds are required will depend on a variety of factors, including the nature of emerging technologies, the pace at which they develop".
That really is not good enough and the Department for Education and Employment, which is responsible for co-ordination in this area, should recognise the need for more positive, urgent action.
Already we are communicating regularly, through e-mail, with colleagues and associates throughout the world. The Internet is widely available in universities and some schools. The word processor has made it possible for students to type their publications or their thesis for themselves, and they are now expected to do this—gone are the days when they employed others for such simple tasks. Students will soon be in deep trouble if they do not have the skills or the means to do those things. Incidentally, those advances affect not only students; they are equally valuable to older users like myself when they find their own random access memory becoming ever more random.
We have heard several reports only this month about the inadequacies of British children in mathematics, particularly their mental agilities, without the computer. We are also aware of the parlous state of spoken and written English in many schoolchildren who have been deprived, in recent years, of a proper education in grammar and the reading of the good English.
These problems are closely related to the proposals about education in the information society. It is not just that teaching time is limited so that when new areas such as these are introduced to the curriculum others have to go, there is a "trendency", seen increasingly since the sixties, to suppose that the new technologies will replace the stuffy old things like English grammar and even, in extreme cases of post-modernism, that watching television is a substitute for reading.
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Information technology can, of course, be a valuable addition to reading and to communication by writing and speaking, and an invaluable tool for the teacher. But it is not a substitute and must never be allowed to become one.
Therefore, while recognising fully the immense importance of teaching all our citizens, especially the young, to be computer literate and to take full advantage of the great superhighway of information to which they are being given access, let us not do this at the expense of teaching numeracy and the proper use of language.
6.45 p.m.
The Earl of Northesk: My Lords, I join other noble Lords in expressing gratitude to the noble Lord, Lord Phillips of Ellesmere, and his committee. The report before us today summarises the information society in all its myriad aspects in a clear, intelligible way. To any who feel themselves stumbling in the dark of IT's terminology, to anyone who has an interest in how IT will shape our future, the report serves as an excellent introductory analysis.
IT is of course an immense subject. The perception that it will be an agent for radical and extreme change permeates the whole report. Thus, in paragraph 1.6 the report says:
"As the Bangemann Report said 'this revolution adds huge new capacities to human intelligence and constitutes a resource which changes the way we work together and the way we live together'. The potential technological, economic, and social upheavals resulting from the information revolution could be of the same order of magnitude as those arising from the shift away from an agricultural to an industrial economy".
Indeed, the noble Lord, Lord Porter, referred to that. It is a useful analogy. The industrial revolution may have created some troubles and difficulties, but there is no denying that we as a nation benefited from it enormously. There is merit in assessing how and why as a guide to how we should proceed with IT. It seems to me—and I am no historian—that one of the most important reasons was that, in the main, we were prepared to embrace the new technology. In effect, governance, commerce, and society itself could see the potential benefits and were, to a greater or lesser extent, in step with the technological advances in both thought and deed.
I am less certain that this is so as the information revolution gathers pace. Yes, there is adoption of IT on a grand scale and in all kinds of areas, but our capacity to adapt to it seems a much more nebulous affair. The evidence provided to the committee by the University of Leeds puts its finger, so far as I am concerned, on that particular pulse in calling for,
"computer literacy skills to be replaced by 'information literacy—,
explaining this requirement thus in paragraph 4.88:
"Without it being seriously addressed and adequately resourced, the users of the Information Superhighway will be as disenfranchised as if they had been set free in a library without ever having been taught to read and write".

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The credibility gap, if I can call it that, between adoption of the technology and adaptation to it is as wide as that. In much the same vein, the British Library states in paragraph 4.209:
"We have everything to play for, but we have to find ways of getting all parts of the community thinking about how it is going to affect their particular interests and lives";
while the Technology Foresight ITEC Panel at paragraph 4.213:
"We think it is going to be quite disruptive, quite profound and we ought to be master of it and a leader in its exploitation not a rather unwilling laggard who just has it done to us".
In that regard, I am frequently struck by how many of your Lordships and how many Members of another place seem to be, if not intimidated by, diffident towards the new technology. Indeed, as the report mentions,
"The Westminster Parliament has not been an 'early adopter' of Internet technology".
We should not be too surprised by that. It is exceedingly difficult to unlearn, as it were, the habits of lifetimes spent working with paper-based institutions and acquire those necessary for working with ones based on information technology. It requires an entirely different mind-set from that with which most of us grew up and to which most of us are used.
At the moment we live and work with systems that rely upon compartmentalisation and specialisation. These are not readily adaptable to IT, nor indeed IT to them. This goes to the very heart of one of the most consistent threads within the report, much emphasised by my noble friend Lord Selborne; namely, that what is required above all else is a co-ordinated approach. Thus:
"What is needed now is a concerted effort to pull together all the current UK initiatives, many of which are excellent, into a coherent whole".
In the light of that, I share the disappointment of other noble Lords, even disquiet, that the Government chose to reject the committee's recommendation for a UK information society task force with the specific remit that:
"One of its first jobs should be to draw up a policy document setting out its advice to the Government for a UK agenda for action, involving both the private and the public sector".
Superficially at least, there is some logic in the reasoning underlying that decision, as,
"it would suggest a top-down culture to the Information Society".
However, in the words of the report,
"Since the development of the Information Society should be a national objective, the Task Force should represent the full diversity of interests, expertise and opinions across society as a whole".
I trust that I do not misrepresent the committee if I say that that vision does not strike me as being intended to be in any way top-driven. More importantly, there is an urgent requirement for the visionary lead and impetus that an ISTF (if noble Lords will forgive the acronym) would provide.
That said, I do not doubt the validity of the Government's perception that their existing IT initiatives,
"provide a useful diversity of input, and combine to form a coherent and balanced approach to the development and implementation of issues relevant to the development of the Information Society".
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However, that approach is re-active rather than pro-active. Our journey through the information revolution will be no more than an aimless magical mystery tour if we simply rely on what we meet on the way to determine our course and if we do not afford ourselves achievable destinations within a predetermined time frame.
Of course I acknowledge the publication this month of government.direct. However, in the words of my right honourable friend Roger Freeman,
"The purpose of this Green Paper is to explain the Government's vision of what is possible, and to start a debate".
I also note that apart from,
"a number of pilot schemes in partnership with industry … it is likely to be a year or 18 months before … implementation of the strategy".
By inference, the proposals within the Green Paper again envisage a re-active rather than pro-active involvement with IT.
This particular dilemma of IT is nowhere more apparent than in its regulatory and legislative context. The blurring of the boundaries between the broadcasting, telecommunications and information services industries is a well-recognised phenomenon of IT, and one that should serve as a catalyst for regulatory convergence in these areas. However, as the report indicates,
"In 1994 the Government said that 'it … would … be premature at present to promote change in the regulatory structures, in the absence of much more concrete information about how convergence will occur.' In the meantime, the Government has continued to legislate separately for the rapidly converging industries concerned".
The greater part of the evidence submitted to the committee on this subject reveals that there is an overwhelming sentiment supporting the contention that such a re-active approach is seriously undermining the capacity of the UK to keep up with developments in IT, let alone take full advantage of them.
So far as concerns the legislative context, I have had occasion in the past to cite a comment from Nicholas Negroponte. I make no apology for repeating it in this context:
"Most of the people, and particularly legislators, are fundamentally clueless about what is going on".
If policy formulation is to all intents and purposes re-active in character, this can only be reflected in our consideration of such policy and in its enactment into law. And, of course, that is further compounded by the diffidence/intimidation that so many parliamentarians appear to feel towards IT. The upshot is that, as legislators, we are simply playing "catch-up" with the new technology. Worryingly, that that is so is manifest in very many areas of our society. For example, it has been observed by police constable John Thackray of the South Yorkshire Police, one of the country's most experienced computer investigators, that:
"We are far behind our own criminals on these matters. We only catch them when they get complacent and keep using old technology and old methods. If they simply keep up with current technology, they are so far ahead they are safe".
That signifies the very real risks implicit in a re-active approach to IT.

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Finally, I offer what I believe to be the most intriguing piece of evidence submitted to the committee. Microsoft stated that,
"the big thing that kept people coming back was the ability to form on-line communities, to meet people in a common interest, whether it be travel to Alaska or gardening or political debate".
It may well be that the concept of the "cyber society", even the "corporate nation", are the stuff of science fiction. However, the juxtaposition of a deep disaffection with our existing political and governmental processes and the possibilities inherent in IT—especially the fact that it is no respecter of geographical boundaries—means that that is something that could very well happen. This is the order of magnitude of
"the potential technological, economic, and social upheavals"
to which the report refers.
In evidence to the committee, Microsoft,
"stressed the need for the government to think about the future, rather than thinking 'about the business as if it were yesterday—.
What is required is a more visionary and forward-looking approach.
Nor should we close our minds to the fact that it is the responsibility of us all, of the whole of society and not just government, to make our contributions in this area. We all need to adapt to as well as adopt the new technology if we are to establish the necessary foresight and understanding not only to enable us to get the best out of IT but also to shape it for the benefit of all, and if we are not to be "a rather unwilling laggard who just has it done to us".
6.57 p.m.
Lord Haskel: My Lords, I consider myself particularly fortunate to have worked on this topical report. I can tell the noble Earl, Lord Northesk, that I have been fascinated by information technology ever since a dozen BBC micros were introduced into my company. Since then we have always used information technology to give us a competitive advantage. So I am particularly grateful to my hard-working colleagues on the committee, to the noble Lord, Lord Phillips, for leading the committee so well, to our specialist adviser, and to Dr. Tudor our excellent Clerk.
I have an interest to declare. I am a non-executive director of a cable company and am involved in the merger of three cable companies and Cable & Wireless about which the noble Lord, Lord Phillips, spoke. Now that it looks as if the merger will go through, I expect to receive my P45 fairly soon—a document with which some noble Lords on the Front Bench opposite may become familiar in the spring.
The merger is relevant to the commercial aspects of our report. As we heard, the present regulatory regime encourages a variety of operators to build an infrastructure but the control of that infrastructure lies with the local loop. The local loop is the connection between the infrastructure and the home or office.
The local loop is the most expensive part of the network to install and maintain. At present, that local loop is largely owned by BT and is being duplicated by local
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cable companies. Away from metropolitan areas, where there is plenty of business traffic, the individual cable companies do not have the critical mass to provide an effective alternative, even with their right to transmit entertainment. That is why they are merging, and that is why providing the local loop is likely to become a monopoly or, at best, a duopoly. In the end BT and one or two other large companies will control the local loop and therefore control Britain's information society. That is why I join the noble Lord, Lord Phillips, and other noble Lords in being unhappy about the Government's response to our recommendations in paragraphs 6.6, 6.7 and 6.8 which call for better public access and regulation of that access. The Government's response is that its role is to promote a stable regulatory environment in order to encourage infrastructure investment,
"promoting effective competition and communications networks".
I find this complacent and backward-looking, rather than forward-looking, because this policy will leave the monopolies or duopolies in control of the local loop and thus in control of the network. Perhaps the Minister will give further thought to our proposals, bearing this argument in mind.
One of the delights of working on this report was the feeling we got from many witnesses that the information society will be a more open society. We became a little infected with this spirit of openness, and that is why our first recommendations, paragraphs 6.1, 6.2 and 6.3, dealt with opening up the work of Cabinet Committee GEN 37 and the relationship between this Cabinet Committee and the information society.
One of the essential purposes of our recommendations for an information society task force is to break down these barriers and open up the information society. This spirit of openness may have infected us, but sadly it did not infect the Government. The rather tired response of
"collective responsibility requires Ministers to respect the privacy of Cabinet business"
is not exactly an example of open government encouraging an open information society. That is why our report was published on the web, as the noble Lord, Lord Phillips, told us. For the Government to say in their response that the present arrangements of various committees reporting to Ministers provide a useful diversity of input misses the point entirely. We are concerned about looking outwards to the information society at large, not about looking inwards to advise Ministers.
However, I welcome the Government's support for our proposals to encourage the use of e-mail in government, citizens advice bureaux and doctors in general practice. I am sure that they will not only benefit from the lower costs but will also find that, as in business, e-mail will provide a powerful tool for empowerment by overcoming barriers to information. The shop floor can e-mail the chairman direct. As a result, decisions are taken lower down and information is more widely available. All this produces subtle changes in the hierarchy by reducing layers of access. Working patterns become more flexible and informed. I hope that the Minister will take note of these lessons.

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I am disappointed that the Government, in their response to our recommendation in paragraph 6.24, do not consider training as part of education. After all, we are still in the Year of Lifelong Learning. Providing education and training for all, using interactive multi-media programs over the Internet, is an important part of Labour's concept of an information society. This is particularly important in providing education and training for employees of small and medium-sized companies whose firms do not have the facilities to provide their own training. Perhaps I may suggest that the Minister should send a representative to the National Film Theatre on 10th December, when our plans for this service will be presented to a conference.
I welcome the Government's agreement with our proposal in paragraph 6.9 regarding unacceptable content on the Internet. We called for a code of practice and on 4th October the Internet Service Providers' Association issued such a code. My noble friend Baroness Dean spoke of this. However, in addition to what my noble friend Baroness Dean, said, I draw the Minister's attention to the first words of the fifth paragraph:
"The current code is intended only as a starting point from which to evolve a comprehensive code".
It is important continuously to develop this code because the internet is a fast-moving worldwide institution, as many noble Lords have said.
A code of practice is designed to back up the legal obligations currently in force. More important is the concept of regulation by the Internet Watch. As the Government pointed out in their response to our proposal in paragraph 6.10, and as my noble friend Baroness Dean pointed out, regulation can keep up with changing technology whereas a code of practice will only reflect the existing law. Is it intended that the Internet Watch Foundation will become a regulatory body like the Broadcasting Standards Authority? The global scale and huge diversity and volume of material on the Internet is just too large for a voluntary code which only applies to those service providers who agree to it.
Internet Watch is focusing initially on child pornography. Will the Minister ask for this to be extended to a watch on racism, as the paper from the Institute for Jewish Policy Research on the Governance of Cyber Space suggested? Regulation of the Internet is closely tied in with issues such as privacy versus freedom of expression and copyright versus freedom of information. This is a complex and difficult area, to which I hope the Minister will give special attention. He would have been greatly assisted in this by the information technology task force which we proposed.
As the noble Lord, Lord Phillips, told us, the information society is developing rapidly. Much has happened recently, both technically and commercially. In concluding, perhaps I may bring to your Lordships' attention a development about which I became aware during the summer which adds urgency to some of our recommendations. I refer to voice recognition.
Voice recognition is much more advanced than I thought. Not only can you dictate letters and memos direct to your computer, but Bell Canada has recently
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introduced a telephone service where you do not need to dial the number, you just speak a name. If this technology can replace the keyboard, the number pad, or the mouse, the information society will become accessible to many more people far more quickly. It will also make it more accessible to older people.
Our recommendations in paragraphs 6.17 and 6.18 calling for steps to be taken to assist the "have nots" and the "cannots" and to provide library terminals will become more urgent as voice recognition is introduced. I am pleased that the Government agree with these recommendations, but, if voice recognition becomes as universal as the telephone companies would like it to be, then the Government will have to give a lot more priority to these recommendations.
However, I remind noble Lords that human error is always with us. I am one of the Compuserve subscribers over 50 to whom the noble Baroness, Lady Hogg, referred. Compuserve recently arranged a special home delivery deal for some of its clients with the local supermarket chain. Using a CD-ROM and the Internet, we placed a heavy and bulky order. The order never arrived. However, the following day we received an e-mail which said:
"Order for the Lord Haskel. Our delivery van diligently scoured the area but could not find a pub of that name".
7.10 p.m.
Lord Dixon-Smith: My Lords, I add my congratulations to the noble Lord, Lord Phillips of Ellesmere, for finishing a truly mammoth task. I was privileged to start the examination on his sub-committee. I enjoyed the one or two sessions that I was able to attend but I then left to begin a different examination. This paper points the way forward in a very practical way across a broad field of problems which in my view are easy to over-estimate. We have reached our present situation of having an enormous amount of technical development without perhaps the degree of government co-ordination, enthusiasm and regulation which some people seem to think necessary.
I have heard the Internet described as an anarchic organisation. That is perhaps what one would expect of something born out of a defence need. I hope that my noble and gallant friend sitting opposite will forgive me for that. It has grown out of demand and the one thing that will continue to develop is demand. Demand will come from the direction in which individuals like the individuals within this Chamber wish. We should always remember that. We should keep it very much in the background of our mind.
My intention is to come at this report from the position of a provider in the field. In the early 1980s the Essex County Council established a small unit to look at and develop the use of computers in schools, to study the implications and to find out what was involved. It was supported by what were then the Department of Education and Science and the Department of Trade and Industry. Inevitably that unit became incorporated into what was in those days an institute of higher education and subsequently that institute of higher education was taken out of local government control and became a part of what is now the Anglia Polytechnic University. It has

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been given the rather exotic title of the Ultralab, and is one of Europe's top research centres for multi-media technology. That has happened despite all the inadequacies of the current framework.
It is perhaps worth relating what the unit does. Its staff very often are leaders opening conferences on multi-media in education across the, whole country. Inevitably, there is a multi-media degree, which one would expect, and there is even a Master's degree which is taught on the Internet. There is a student operating entirely out of Fremantle in Australia who will obtain a very good degree. We operate multi-media and information systems as part of teacher-training within the university, which comes back to points that have already been made. Those aspects of work are already taking place. Indeed, there is an on-line component in an MA.Education degree. Because of the work of that unit, particular support can be provided for pupils with learning handicaps, such as dyslexia or visual impairment. One can become involved in language teaching. All those things go on not just in the university but also in the classroom.
It is very important at this point to use another military metaphor, if I may be permitted to do so. I thought that it might have been out of line but I was told by an educational man that it was very much in line. The military people may, however, pick me up. There is concern in the teaching profession that the computer might put some of their positions at risk. The military metaphor is appropriate; namely, that battle is about holding ground. Ground cannot be held without troops on it. Teaching is about classrooms and individuals; but a class cannot be held without a teacher in it. In fact, we are talking about systems which will come to the support of traditional teaching and which will aid and improve it. We have to develop the thinking in teaching education to make that possible.
I turn to another aspect of work that is already taking place. Obviously, there is research. The unit gets a very good score in the research assessment exercise. One of the current projects is funded by a major local hospital to assess multi-media for postgraduate medical doctors' training. That has an immediate and major impact on the possibility of keeping doctors up to date as medicine and medical technology develop. Better than that, it feeds back into medical education. We do not train doctors but we do a lot of work with nurses, radiographers, and so on. So there is feedback there. As an aside, we have in the DTI's "Schools On-Line" Internet project the "Best Educational Web-site", which was announced at Edinburgh this year.
Going on from that and coming to more serious problems, it is surprising where one can go with a little unit of this kind. It is at present working with the BBC, studying and helping to develop thoughts on the future of television. That arises inevitably from the development of digital broadcasting and of course the similarity between that and telecommunications. The distinctions are disappearing. I had a problem because I found that the BBC were also working with BT on the future of telecommunications. One might have thought that there was a potential conflict of interest there but
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there is in fact a community of interest. Surprisingly, it is working with Norte], looking at the question of social interactions as a result of the technical changes that are now happening. So the family television set will become the family computer. What happens when there is a conflict of interest between granny who wants to watch an entertainment programme and little Johnny who needs to do his homework? That is the reality of what is happening on the ground.
It seems to me somewhat ironical that within just one year of passing a Broadcasting Bill and having a new BBC Charter, we should already need to be looking at the question of how we regulate and control the broadcasting and telecommunication industries. Those industries are moving together. There is no escaping that fact.
It is my candid opinion that we can never move the regulatory framework to be in advance of the situation on the ground. The developments that are taking place are so quick that we shall have to face the reality that the framework in which people operate must always be open enough to permit the developments which are happening in reality to take place without restriction. We shall then have to look at what needs to be done to make sure that wholly undesirable ill effects do not take place. I am very happy with this report and support it wholeheartedly.
7.19 p.m.
Lord Butterworth: My Lords, as a member of the committee, I thank and congratulate the noble Lord, Lord Phillips, on his chairmanship of it. Indeed, he was the skilful pilot who brought a complex report safely to port.
I shall focus entirely on those parts of the report which deal with education. Information technology has already begun to produce changes which, cumulatively, will amount to a social revolution. Education must be given a primary role if society is to be adequately prepared to deal with those changes as they occur. The changes are revolutionary because,
"They will change the way we work and the way we live together. They will bring about a fundamental change in the way we communicate with each other, a fundamental change in how we use information and understand knowledge as a product".
An impressive amount of work in this field has already been undertaken in the UK. A recent study of G7 countries showed that in secondary schools the United Kingdom has the most computers per 100 pupils—12 per 100 pupils. We were the third highest in primary schools after only Canada and the United States. However, as has been said so often this evening, leadership is now urgently needed in the whole field of information technology. Not only must different activities be co-ordinated but they must be drawn together in a national strategy. Thirty thousand independent purchasers—for there are 30,000 individual schools—can make many expensive mistakes if they are not given clear guidance in a co-ordinated national strategy. Some schools and colleges are moving forward admirably. About 5,000 schools and colleges are already connected to the Internet. But the divide is widening between schools which are moving forward and those

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which are not. If we are to make a success of the information society, every child must be entitled to these information and communication technologies.
This problem knows no boundaries and it certainly cannot be contained within the ambit of individual government departments. We need a co-operative, co-ordinated approach and leadership within an agreed national framework providing guidance but at the same time allowing local initiative and competition. For instance, in the field I am looking at this evening why should we not create a school intranet, to provide a national education framework? The intranet could drive connectivity through all the schools. The intranet could enable government and the department to communicate electronically with all schools and colleges, an innovation which might ultimately be self-financing and even save money. It is estimated that the department currently spends in excess of £9 million a year on postage in communicating with schools.
The intranet could become a prime means for communicating with all staff, especially in academic fields and matters of the curriculum. It would provide a minimum platform of appropriate standards and it could harness expenditure and minimise the risk of inappropriate expenditure. Again, as already pointed out, we were not convinced that the present arrangements, including the new Cabinet Committee GEN 37, working within government protocol, could produce the kind of galvanised leadership that we have in mind. Incidentally, it would be quite interesting to know how often GEN 37 has actually met in, say, the past six months. Perhaps the Minister, when he replies, will let us know.
The most important point I want to deal with is the committee's concern with the state of teacher training. Our fears have not been allayed by the Government's response. First, we recommended that all initial teacher training courses should contain an information technology module. I do not know whether noble Lords will believe it, but the teacher training agency has still not confirmed that information technology will even be included in the national curriculum for initial teacher training. For established teachers the agency is considering information technology as part of the profile for newly qualified and experienced teachers. But that does not go far enough. A modular accreditation should be available to all serving teachers to enhance their qualifications. Accreditation is what is needed for that would create a market in the teaching profession for the development of information and communication technologies. Moreover, teachers should be offered opportunities to develop IT skills through the technology itself; through networks, CD ROMs and the like. Why not offer financial assistance to teachers to help them in purchasing their own equipment in order to have personal access to this new world?
In this section our report concluded:
"Despite the vital need to remedy IT skills shortages amongst teachers, our enquiry identified the need for improved co-ordination between the DfEE and the various agencies working in this area before this need can he addressed fully. The ultimate responsibility for sorting out the present confusion over who should be taking the lead in improving teacher training in IT rests with the Secretary of
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State for Education and Employment. We call on the Secretary of State to investigate this area as a matter of the highest priority for her Department".
We are still calling tonight.
Finally, perhaps I may mention the field of educational software, a new industry in which we ought to be commercially dominant, for educational software carries the culture of the country. British educational software should be exporting our educational system, our culture and our social values. We have so much operating in our favour. We have the expertise, we have the educational credibility, and we have the English language. Yet the software market is dominated by the United States, including the CD ROM market and the on-line content of the Internet. Moreover, software production requires a global market to support it but our home market is not big enough on its own to ensure automatic access to global markets. Some government assistance is essential if we are to be successful. However, it is a delicate area and it is important not to distort the market so that it becomes unsustainable. Consultation is needed with the software or content industry on what might be the most helpful method of giving assistance.
The industry itself is rapidly changing and now consists not only of software suppliers, but also of book publishers, television producers and some film producers. Suppliers and purchasers may be helped by a cental source of information. The National Council for Education Technology (NCET) already has reviews of over 400 CD-ROMs on its web site. It is interesting to note that its pages are currently being accessed over 1,000 times a week. This might be a nucleus which could well be extended.
We were among the leaders in understanding the impact of information technology. We urgently need a galvanised leadership within an agreed national framework if we are to be successful in the new information society, and education is a key area.
7.30 p.m.
Lord Craig of Radley: My Lords, I should like to touch on three points in particular in this very interesting debate. But before I do so, I add my congratulations to the noble Lord, Lord Phillips, for his excellent chairmanship. He will understand as much as anyone how pleased I am that he has stayed the course so fully.
In response to our report the Government say that they are encouraging departments and agencies to make good quality information available to citizens and businesses electronically on-line. That is good. They appear to agree with the recommendation of the Select Committee that wide use of this medium should be made to publish official documents and information. Further, the Government say that they will revise advice when necessary to promote this objective. Those of us who have had access to government.direct on the worldwide web will have had a foretaste of what is being done. It is excellent. In the same section of their response and elsewhere the Government say,
"decisions on what information should be selected for placing on line are best left to individual Departments and Agencies".

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As individual and stand-alone statements of government policy, these three are hard to fault. But am I alone—and I judge not by the tone of this debate—in believing that, taken together, they hardly add up to a very pro-active stance or really strong encouragement of a far wider exploitation of the electronic medium? It would be welcome if the Government were much more enthusiastic and forthcoming in their drive to make the public aware of what is becoming available. Until I plugged into the worldwide web, I was quite unaware of what was on offer through the excellent CITU web pages at government direct.
The recently published Green Paper seems at last to go some way towards bringing these issues to greater public notice. There is a clearly stated commitment to make all kinds of government information available electronically. I welcome that and the forthcoming IT for all trial. I hope that the Information Society initiative for small businesses has been well received: it deserves to be.
However, as we identified in our report, there appears to be a particular hang-up over Crown copyright. When will the Government be ready to announce their decisions on the future management of Crown copyright? Have they set themselves a target date? It would be great encouragement to know that this is soon to be resolved. It would give much greater scope for departments to publish electronically. Incidentally, I was really dismayed to learn that the report of the Select Committee Towards Zero Emissions for Road Transport just out will not be published by this House electronically. Surely that is a subject of very wide public interest. It is high time that all parliamentary reports and publications are available electronically. It is marvellously convenient to be able to access, with a few key presses on one's lap top, the text of a House report or what a noble Lord has said a few days or perhaps weeks ago.
However, the costs of keeping information up-to-date are growing more and more and are expected from these resources. Are the Government confident that these costs will be contained and offset by savings elsewhere? The noble Baroness, Lady Hogg, also posed that question. I have seen no examination of it to date.
My second point relates to the proposal in Paragraph 6.20 of the report that a programme of information sharing and mutual assistance between Commonwealth countries in the development of information super highways should be set up. What became clear in the course of our inquiry is that there were others in the Commonwealth apart from the United Kingdom, who have been gaining considerable experience and making good progress in the applications of IT. The Canadians, particularly in New Brunswick, and the Singaporeans, for example, have set themselves demanding targets for super highways and their uses.
The Singapore Minister of Communications, speaking last June, said that after lagging far behind the developing countries for so long, Asian countries today are either planning or are implementing cutting-edge information technologies which will enable them to
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leapfrog ahead of developed nations. We can find the whole speech on the Singapore Government's home page on the Internet, together with the full text of 17 speeches made since June on IT topics in Singapore and much more besides. Goodness, have they not leapfrogged us in spades on the worldwide web!
The Government's response to our recommendation about drawing on the expertise of other Commonwealth countries seems to brush a joint approach rather to one side. They concentrate on what the United Kingdom Government are doing to support Commonwealth scholarships and the like. That is worthy, but what we had in mind was much more exciting and dynamic.
During our visit to the United States, I was struck by the considerable efforts being made by the United States Government to make IT infrastructure available to a number of African states. One I have read about is a fibre optic ring main on the ocean bed around the whole of the African continent to enable individual nations to plug in and gain access to worldwide high capacity telecommunications.
There seems to me to be a very important issue here; namely, that worldwide availability of text, sound and video may become as important in the future as the availability of the BBC World Service, for example, is today. We need to be thinking how the right news and the wealth of other information about us and our interests are going to be accessed and projected around the world in the 21st century.
A concerted effort by the more electronically advanced Commonwealth countries is called for so that national and Commonwealth ideals are made widely available and not compromised otherwise we might find ourselves, on a global scale, caught out by some dominant gatekeeper with little interest in spreading the information which we judge important. I do not believe that it is too early to be giving these issues serious consideration as the information revolution spreads around the world.
Happily, some remote regions are becoming more able to access and use expertise to help their activities; for example, SatelLife a not-for-profit organisation, which exploits the speed and versatility of the electronic medium to allow information exchange, for example, between medical workers in remote jungle areas, which have never had any telephone access to the rest of the world, and the appropriate consultant specialists in a western hospital. Not infrequently, the calls from such outposts are not for blankets or food but for more of this kind of speedy satellite communication. But there is a long way to go before it becomes widely and readily available.
Pervasive to much of the evidence taken by the committee—this is my third point—was the problem of security of information stored and transmitted digitally. Whether it be patients' records in a paperless NHS system or the way in which chargecard and other payment methods are transacted by computer screen, we urgently need to find appropriate solutions, to explain them to the public and to reassure ourselves that the methods adopted are reasonable and trustworthy. Much of this will be international in coverage and will

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therefore need agreements at government level. I hope that we can be reassured about this level of commitment and approach to so important a topic.
Only last week a newspaper article reported that the United States Government had lifted its ban on the export of high grade cryptographic systems. If this is true, perhaps the noble and learned Lord can say whether the Government are satisfied with what the United States have done. As the report makes clear, the committee welcomes the Government's proposal to license trusted third parties as a step in the process of protecting information and preventing fraud. In the Green Paper government.direct I was pleased to see in the list of strategic principles (set out on page 13) the emphasis placed on the principle of public confidence. Without it, the IT revolution will be a drag and not a boon. Incidentally, the list of principles makes no reference to a need for material retention and archiving. Surely, this needs to be addressed to set out a clear policy on what records government departments must keep and in what medium. Much of the use and value of IT will hang on the confidence that the public has in these all-pervasive arrangements. I look forward to hearing what the Minister says about it.
Finally, I should like to draw attention to the committee's recommendation in relation to citizens advice bureaux. I should like to underline a point that has already been made by the noble Lord, Lord Phillips. I believe that these bureaux should be linked to an on-line database. If we are to avoid a new divide between the information rich and the information poor, wide support for the steps that the National Association of Citizens Advice Bureaux has in hand is called for. It is at the vanguard of planning to make information available to those who cannot afford to provide IT facilities for themselves or are unable to fathom their workings. Its efforts to support an information system on CD-ROM, to link its offices together electronically and to provide public self-help databases accessible through user-friendly terminals in libraries, CAB waiting rooms and other public areas, deserve strong support.
There can be fewer more helpful ways of providing on a nationwide scale something of real value to citizens. I hope that its bid to the Millennium Commission will be rewarded with the grants needed to realise its plans and that its ambitious and far-sighted project will attract the support of the Government that it deserves.
7.44 p.m.
Viscount Chelmsford: My Lords, I believe that everyone connected with the agenda for action is to be congratulated on an extremely interesting report. Today we have heard some fascinating speeches in the House. It is of considerable help to have this discussion after the Government's response. It allows us to try to move forward. I have tried to make a kind of swot report to look at strengths and weaknesses and to see where we have got to.
There is no doubt that there has been a step change in the Government's thinking about the importance of what I call ICT (information and communications
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technologies). One finds evidence of this in many places: the ministerial group GEN 37; the formation of CITU with a mission to embrace best practice in electronic government; and, interestingly, the Civil Evidence Act 1995 which for the first time allows electronic hearsay evidence to be rated by judges for its worth. Late last year a joint venture began between the Lord Chancellor's Department and the DTI. It commissioned a working party of the Law Society to try to achieve a situation in which the use of electronic commerce had every bit as much legality as the use of manual commerce. That is an ongoing process.
The merger of the Central Statistical Office, the Office of Population, Censuses and Surveys and the statistics branch of the former Department of Employment to form the Office for National Statistics, together with the collaboration between that office and Ordnance Survey, provides a very good start on integrated databases which are a key part to moving forward on electronic government. Of course, the personal launch of government.direct by four Ministers, one a Cabinet Minister and one in video conference from Scotland, shows considerable personal support from Ministers themselves. All of these are strong indicators of government commitment. I suggest that the real question is how to translate that commitment into effective action.
The Select Committee had concerns to which the Government have now replied. Taking those responses into account, I offer some concerns of my own. Because the Green Paper is the first post-CITU product, it seems clear that the strategy of better service to citizens and business is now a major priority for the public sector. But who, I wonder, is the Green Paper's audience? Who will actually read it? When I first read it I thought that it was aimed at the kind of people who would support it anyway. I then played the disc and somehow the layout made exactly the same language appear more understandable to the citizen at large. But will that citizen have a PC with a disc? I wonder who will actually pick it up and read it. If, as I believe, government.direct is a real attempt to reduce the gap between the ICT haves and have-nots I doubt whether the Green Paper will ever be read by the have-nots. I question whether this kind of consultation will work. I believe that a White Paper would have been a better option.
Achievement of this better public service requires a massive culture change. It requires departments to co-operate to achieve a single point of entry for the citizen to a government-integrated database or help desk as envisaged in government.direct. This will be very hard to achieve. It will require very firm management to end inter-departmental turf wars. The comment by the Government in 6.14 that what is placed on line is best left to departments seems to me to ignore the co-ordination that is necessary for an integrated database.
I worry about the long-term role of CCTA. I am pleased to learn that it is to improve co-ordination across Government and to facilitate effective delivery of services to the public. I also understand that in due course it must pay its way by charging departments for

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services which such departments may well feel are being imposed upon them. If departments are free to reject CCTA services but CCTA can sell only government-directed products, then CCTA staff are in an unenviable position. I should have thought that the Government could achieve much more by giving CCTA a guaranteed period of, say, not less than three years.
I turn to specific sectors. I focus upon transport, education, training and health. I thought that transport would not be mentioned until the noble and gallant Lord spoke just now. I do not believe that the Government's current transport strategy takes proper account of the power of the new technologies now available to improve congestion, reduce pollution and improve health and safety. Here, I declare an interest as president of ITS Focus. That is how I know that ITS (intelligent transport systems) can help. That view is supported in a recent EU communication:
"by way of example, telematic applications can help to reduce the requirement for transport infrastructure investment, urban congestion and pollution."
I am not the only person saying that.
Three Foresight Technology proposals were approved for transport: the intelligent vehicle, the informed traveller and clear zones. The first of those is moving forward strongly. The second already had much work ongoing. However, I do not see any evidence that the environment project has begun, yet I read that the second round of proposals is beginning. Can the Minister say who monitors progress on the implementation of existing proposals in round one?
In relation to schools, I was very impressed by the speech of my noble friend Lord Butterworth. The real ICT needs for schools are not only those of infrastructure, which in any event is heavily subsidised by British Telecom and cable companies, and not necessarily the equipment because with a little effort schools can get support from corporates in the vicinity of their school, but the real question is what use the school makes of that largesse.
The role of the teacher is changing, and that is the crucial need. I should like to quote from an interesting speech by Sir Geoffrey Holland KCB, Vice-Chancellor of the University of Exeter. He stated:
"The new technologies transform access to learning; they make it possible for the student to study at a time, place and pace of his or her choosing. They make learning student-centred and call for a redesigned role for the teacher as a supporter of the learner rather than as the fount from whom all wisdom flows. They dramatically reduce the unit costs of learning and can make learning fun and an adventure."
I quote from the same Commission document:
"Education in the information society must move away from a system centred solely around teachers to focus more on learners. It must be built around learning and less around teaching."
That is a major culture change for teachers.
I am concerned about the lack of IT skills. I am president of IDPM, the Institute for the Management of Information Systems. In this year's annual skills report so much concern was expressed about the crisis in professional IT skills that we wrote to the Prime Minister to flag our anxiety.
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The IT industry lead body is ITITO. My institute is a member. We anxiously await government support for a national campaign to increase IT skills through ITITO. Here is an institute which is teaching IT skills and there are many schools that do not have such skills, and obviously the two sectors must get together.
I doubt whether the National Health Service is moving forward fast enough in ICT. It now has much of its NHS network in place although I note that the Government are exhorting it to move forward faster. I recollect that a 1993 award finalist for innovation was the Oxfordshire Health Authority which had then achieved electronic pathology reports with 300 GPs in 47 practices. Results of blood tests were reaching GPs within 24 hours. In Northampton Hospital waiting times were also being sent electronically to 20 places and both waiting times and worrying times were reduced by that use of electronic trading.
That was in 1993, yet when I asked a National Health Service manager what had happened subsequently to build on that I was told that once the NHS network was in place it was for local authorities to do their own thing. Oxfordshire had shown what could be done but since it preceded the network it apparently received no support. If that is true, it shows that the National Health Service management was short sighted.
As a private sector enthusiast I was taught that the way forward was to build on the work of champions. Oxfordshire health authority was a 1993 champion which could have been a role model for nationwide improvements in customer service. I am all for infrastructure, but surely we can support innovative applications simultaneously.
Last week an elderly friend of mine was rushed into hospital for tests. She reported that she had had her entire life history written down manually by three separate departments over 10 days. We have got a long way to go.
I hope that by relating these fears and concerns I am drawing the Minister's attention to areas that need a helping hand to move forward. They do not detract from the very considerable advance in the strategic vision of ICT which the Government have embraced; rather they are about how the current vision gets translated into benefits.
I would not like to give the impression that all of us are perfect and that if anything goes wrong it must be the Government's fault. Let me draw attention to the great irony in information technology, which is best expressed in verse:
Reducing paper is our aim, we hear the IT men proclaim; Yet when they put this into prose their use of paper is verbose; Instead of halving what is used, the tree gets doubly abused. Oh, for the skilful written brief on two short pages—for relief!
7.55 p.m.
Baroness Anelay of St. Johns: My Lords, I am grateful to the noble Lord, Lord Phillips of Ellesmere, and the Select Committee for their work. I must start by declaring an interest, albeit most definitely a non-pecuniary one, as president of my local citizens advice bureau in Woking. I welcome the report because

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it recognises that there are increasing concerns about the growing gap between the "information rich" and the "information poor", and it makes the point at paragraph 5.64 that,
"The Information Society is not an exclusive club. Every British citizen should be able to become a member".
The advent of the information age could revolutionise the information and advice world.
The National Association of Citizens Advice Bureaux gave evidence to the Select Committee and believes that it is able to fulfil a key role in extending access to the information superhighway of the future. It can make sure that both the information-rich and the information-poor have access to clear public information through the information superhighway. In that regard, I welcome the comments of the noble and gallant Lord, Lord Craig of Radley.
There is a CAB service in over a thousand cities, towns and villages across Great Britain and Northern Ireland handling over 7 million inquiries each year. One in seven of us uses the CAB service every year. When giving evidence to the committee, NACAB said at paragraph 4.31 that its clients,
"on the whole are what we would term the have nots, who might be left behind in the information society…the people who come to us are largely fallen on hard times, and they come to us for advice and information. So we have the confidence of the have nots…Citizens Advice Bureaux getting involved in the superhighway means we can bring them aboard to some degree."
I am using the CAB service as an example of the way in which the advent of the information age could revolutionise the information and advice world simply because it is an organisation which I know well. I am aware that much of what I say today could be relevant to other advice and counselling agencies. Like many organisations, CABs are looking at the superhighway and asking: what is it going to do; how will it fit in; and will it help us to do our job better?
I believe that the information superhighway gives us the potential to improve information and advice services in two major ways. It can make it possible to improve the quality and quantity of the traditional forms of advice work done by over 30,000 CAB advisers, over 90 per cent. of whom are volunteers, and it can be used to develop innovatory services, especially direct access by members of the public to the information they need.
This development of advice services will depend upon two factors: first, that the government make information readily available; and, secondly, that the Internet develops into a fully fledged superhighway offering two-way real-time video transmission and interactivity. If those two pre-conditions are met, then how could CABs be involved in exploiting the potential of the information superhighway to bring improved advice services to the public?
The opinion of the Select Committee at paragraph 5.67 is that,
"The Citizens Advice Bureaux could become more effective and efficient if all their bureaux were linked to an on-line database system to make unnecessary the regular manual updating of their current databases."
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Behind those rather bland words, "the regular manual updating", lies a mind-numbing task, as I know. I have done it in my time.
The database is a 70-volume, 12,000-page paper system held in every bureau. Updating it is a scissors and paste job. It means that by the time NACAB has collated the amendments and posted them, and the bureaux have done their scrap book work, the information may be up to six or seven weeks old. Just think of the time which could be freed up for better use if this job disappeared. It would mean that the CABs could see an extra 500,000 clients a year. And the advisers would have much enhanced access to accurate up-to-date information. I am pleased to say that the CAB service nationally already has plans to satisfy the Select Committee's observation. It intends to create an on-line database accessed by bureaux via ISDN lines to regional file servers. The database would be updated daily. The system would be further developed through the addition of case law from courts and tribunals, copies of the relevant statutes, and a range of advice tools such as calculation packages which would help to manage clients' debt casework and cope with social security benefit calculations. And of course a useful by-product of such a change would be the training of 28,000 CAB volunteers in IT skills which they can export into paid employment, if they so wish.
But what of other innovations which rely upon the development of the superhighway and could improve the provision of services to the public by CABs? It will be possible to improve and extend services to people who live in remote rural areas or who have mobility problems. Using the superhighway, advisers could make home visits distant from the bureau and be connected via a lap top computer to the national information system and to their parent bureau office systems. Video-conferencing facilities would be valuable for outreach work too.
The Select Committee took evidence of how the public could have direct access to the Internet and recognised that,
"Public libraries and CABs can also provide a supportive environment in which people can try out new technologies to which they might not otherwise have access, either at home or at work".
When the committee took evidence, the noble Lord, Lord Gregson, pointed out that the have nots are so often the cannots as well, and asked what use public access points for Internet use would be for them. I believe that advice agencies endorse his observation and will make sure that when the public use access points they will be assisted by trained advisers whenever appropriate.
There have already been significant initiatives in the use of IT taken by CABs in Northern Ireland, Scotland and some parts of England. For example, a CAB in Gloucester provides an advice service on the Internet. It is used by people with disabilities and those who are housebound to help them communicate with the outside world. The London division of the CAB service in partnership with Thames Water provides up-to-the-minute advice to the public on a range of specialist subjects, including money advice, welfare rights, computer development and social policy through the use of information technology. CABs were delighted

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to be invited to participate in two of the three pilot projects announced by the Government at the launch of the Green Paper government.direct. These are Direct Access government, a one stop shop on the Internet to allow access to government forms and regulations, and the Touch Screen Pilot which has been developed by the Inland Revenue, the Contributions Agency and Customs and Excise to provide information. Spennymore CAB in County Durham is one of the eight sites being used for this pilot scheme. But until now the use of IT by bureaux has been decidedly patchy because of disparate access to resources. Each bureau is autonomous and responsible for securing its own funding.
I was made acutely aware of the results that that could have a few years ago when I visited Belfast for the first time. I had left Woking in the midst of negotiations to upgrade our creaky PC (an Amstrad) to a series of 486s, desperately trying to avoid having to settle for 386s. I then visited the CAB on the Shankill Road. There was delight that somebody had just given the bureau the chance to upgrade to an electronic typewriter. The quality of its advice was excellent, but its ability to deliver it as widely and efficiently as it would like was severely hindered.
NACAB's strategic plans to equip every CAB and each part of the national association with hardware, software and telecommunication links, plus training and support will require funding. It will have to be outside the bureau's usual local resources. As the noble Lord, Lord Phillips of Ellesmere, said in opening the debate, NACAB has taken an innovative approach. It has applied to the Millennium Commission for 50 per cent. of the costs in addition to seeking £2 million from government and £8 million from the private sector.
I believe that the development of the information superhighway and its use by advice and counselling agencies is a major way of ensuring that the most disadvantaged groups share in, and benefit from, technological change. The development of the information superhighway provides the opportunity for all to face the challenges and grasp the opportunities of the information age. I welcome the recommendations of the report.
8.6 p.m.
Lord Methuen: My Lords, I am sure that noble Lords will agree that we have just listened to a most interesting and enlivening debate on one of the most important topics of the moment, as was brought out in this excellent report for which I thank the noble Lord, Lord Phillips, and his committee. Unfortunately I have had only limited time m which to digest its comments and so I shall confine my remarks to some of its technical aspects.
As other noble Lords have said, we are facing in the information society a revolution comparable to that of the industrial revolution 200 years ago. I spent some 30 years in the IT industry of which the last 19 were spent with Rolls-Royce, from which I retired two years ago, where we had an almost total information society ranging from a paperless shop floor, inter-company
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E-mail, video conferencing and total networking world wide. We had a computing-secure environment to prevent unauthorised access.
The need for computer literacy from the worker on the shop floor to the managing director is obvious and emphasises the need for IT education at the earliest stage of school education. The noble Lord, Lord Haskel, may like to note that my son-in-law who suffers from RSI does all his input by voice recognition, and that has been very successful.
There is one minor point in the report which needs correction. Paragraph 1.13 concerns coaxial broadband cable systems. Those are perfectly capable of providing bi-directional data paths at megabit speeds and have been widely and successfully used on university campuses and on large industrial sites since the late 1980s. We had three of them at Rolls-Royce, so perhaps I speak with experience. One would however of course now use fibre optic cables for such installations.
I turn now to the information society. Teleworking is capable of making vast changes in people's lives, reducing the need for commuting, and is already doing so for many people. As the noble Lord, Lord Dixon-Smith, said, the coming together of television and personal computers, which surely should be made much more practical with the onset of digital television, will provide a vehicle for the domestic, office, and industrial user to obtain the maximum benefit from the information available on the networks. In many ways we are only just at the beginning of this revolution. We have yet to get the best out of expert and knowledge-based systems which can offer guidance to the layman and the professional in the performance of their occupations. That is particularly appropriate to organisations such as the CAB.
However there is, as other noble Lords have said, further work required to improve the security of the network and data and to tackle the issues of privacy and data quality, some of which of course are trivial and irrelevant. Government leadership and sponsorship, in conjunction with industry, are essential if the UK is to maintain its position in the leadership of the information society. Therefore I strongly support the formation of the task force or panel as mentioned by many previous noble Lords.
There are two final points I should like to mention. The information explosion will lead to an increase in manpower working in the IT industry. Already a substantial amount of that work is being exported to countries such as India and the Ukraine where good quality personnel is available at substantially cheaper costs than in Europe. The excellent communications facilities make the distances quite irrelevant. It is therefore imperative that we have a well-trained workforce to minimise that job loss.
I should like to mention in this forum the problems associated with the year 2000. Many existing software systems only employ a two-figure year and that recently resulted in a Marks & Spencer batch of baked beans with a "use-by" date of 2000 being rejected as being 96 years old. That problem is of enormous magnitude and worldwide is going to cost billions of pounds to put

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right. At a recent meeting in Scotland 150 IT managers were asked who was doing anything about it. Only two put up their hands. This matter is so serious due to the unknown content of much software in such areas as air traffic control and embedded micro controllers that it is suggested that one should not fly in the 48 hours between 31st December 1999 and 1st January 2000. The manpower needed to overcome the problem is enormous and there may not be sufficient skilled people to do the job particularly on legacy systems.
It is not a question of budgets. Time does not stand still and will simply run out and may leave many companies with unusable software. I hope the Minister can give some comfort to those of us who are aware of this problem. Otherwise the reputation of the information society may well be left in tatters.
8.12 p.m.
Lord Peston: My Lords, in welcoming this splendid report, I should like to make some general remarks and then some specific ones on the Government's response. On a personal note, I am an enthusiastic user of computers and I waste more time on the net than I care to admit, even to myself. When I first came to your Lordships' House, they did not know what to do with me. They said, "He is a professor; we will put him on the Library Committee". I went to the Library Committee and at the first meeting under Any Other Business, I said, "Where are the computers?" I was like a man in a Bateman cartoon. One noble Lord said, "Oh, I am perfectly happy with a ball point", and I am afraid I was not as nice a person then as I am now and I asked him what made him give up the quill pen.
We have come a long way since then and one of the things to bear in mind is how cheap in real terms is all the equipment we use. A state-of-the-art machine with incredible computing power can be purchased for £1,500. If you do not want state-of-the-art—and most people do not although they are all as crazy as I am and they think they do—for about a third of that you can buy a computer that was state-of-the-art three or four years ago. That, by the way, is the answer to Lord Dixon-Smith. The family which has those tensions buys more than one machine. We live in a consumer society, and that is the answer. I shall not upset your Lordships by telling you how many videos, television sets, computers and hi-fis I own, but I can tell you that in each case it is much more than one. This notion that somehow it is a big deal buying a computer simply does not convince me at all.
One other subject which the committee did not discuss—and I do not criticise them for this; they cannot discuss everything under the sun—is the enormous importance of these developments for democracy. I remember when I was a research student at Princeton, and that is a long time ago now, someone said to me—and we then had no idea about the personal computer; we were thinking in terms of mainframes—"Of course, the great impact of these machines is going to be in terms of democracy. We shall be able to create in the big nation state Plato's concept of the small nation state. Everybody will be able to have their point of view expressed, and governments will be able to find out
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what people think." We were hopelessly naive then: we actually believed that governments wanted to find out what people thought. The technology is there to do all that sort of thing and I believe that our democracy will change as a result of that, although I would not care to predict what will happen.
The only other general remark I wish to make, and it relates to what I have already said, is that the present position is primitive and, although we burst with pride when we think where we are today compared with the past, even 10 years from now—certainly a generation from now—people will regard what we are doing as so primitive that they will wonder how we got along with it. That is why the dynamics of this are so important, and although I believe that the Government should show more leadership than they are willing to show, they clearly should not show a sort of leadership which stops things happening.
I remember the noble Lord, Lord Marlesford, apropos of one of my interventionist speeches not long ago saying that if we had taken that view, we would never have built the railways, and this was me trying to control something. I well take his point: in terms of technological development an enormous amount of resources are wasted; but, although I think the Government are failing on this (and why would I not say that?) I do not want interventions that prevent us wasting resources because the only way forward is both to destroy what the past contains and to have several people differing on what we ought to do next.
On the response, I think the noble Earl, Lord Selborne, used the word "complacent". I had written down "lukewarm" as the Government's response. What troubles me about the response is its negativism. Indeed, it is almost a self-contradictory negativism because the Government have rejected the main recommendation; namely, that we should have this ISTF chaired by an enthusiast, and this document demonstrates more than anything the need for someone to be enthusiastic about all this. I am enthusiastic, but I am not in the business of being chairman of whatever this body is—I bet it would not be paid anyway! However, we need someone who believes in driving it ahead, and I must admit that this document suggests exactly the reverse: no one wants to drive it ahead.
I meant to ask the Minister beforehand about the fact that he refers to the MMIAG and its membership. I hope at some point he might write to me and place a copy of his answer in the Library. I should like to know who specifically are the members of the MMIAG. I particularly should like to know whether a lot of them use the things we are talking about, and use them enthusiastically.
I have no stronger evidence about the need to do something to respond to what the committee says than doing what I do regularly: I logged in. Incidentally, one of the problems for those who are very keen is that we will get nowhere if people do not switch their machines on and log in. I am not certain there will be a law that says that when we have the whole country networked, it will also be mandatory to switch on and log in. There is nothing more boring than someone with whom you

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are trying to communicate under E-mail who does not switch his machine on for a couple of weeks. When you wonder why you have not had a reply, that is the answer. A lot of people in my business of economics—real hotshots—do not switch their machines on, yet still claim to be at the frontier.
It is possible to log into the DTI itself on the web. What do we get, My Lords? We see a nice picture of the Minister, and that cheers us up immediately. We also get the Government's response—the document we have before us—we get the competitiveness White Paper; and ministerial speeches. The one thing we do not get is information. If the idea is that the DTI is providing information, and if whoever wrote the document believes that, they cannot possibly use the web. There is no data there at all. Something has gone wrong with my method of using it because until recently there was available at least a list of all the departments with the officials and what they did. It did not contain telephone numbers or anything useful like that, but it did say who they were. That list seems to have disappeared, for it was not there this morning. However, that might be my fault.
That is the Government telling us that everything is all right. They also go out of their way to get up one's nose because they tell us that the aim of whatever service they believe they are providing is to help business people find the right contact points in the DTI quickly and easily. The idea that only business people matter is as good a way of annoying me as anything I can think of. If the department has an opportunity to edit the web, it might use the word "people" instead of "business people".
That is the DTI telling us that everything is all right. That is the DTI boasting that,
"Indeed, a vast amount of data is already available free of charge on CCTA's multiple award-winning government information service on the Internet".
I have written the word "no" in the margin because there is not a vast amount of information. There ought to be. Perhaps I may make two interesting comparisons. First, the Law Lords are on the Internet with something useful: since last week one has been able to obtain their judgments. Secondly, as regards the private sector, one can obtain excellent free access on the Internet to The Times and the Telegraph, including access to archive material. That is what we want and that is what the Government do not give us.
There is a very good reason for that, and perhaps the best way of explaining is to take as an example the Office for National Statistics. The noble Earl, Lord Selborne, made the point that it is technology-driven, which is right; but it is also economics driven. The great problem with the public sector is that it is not keen to give anything away if it believes that it can sell the original material direct to the public. Therefore, if one tries to log in to the ONS network, as I do, one receives practically nothing worth having.
In a democracy, it is interesting to ask whether we ought to have a complete government database available free on the Internet. I believe that we should. Of course,
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if one obtains information free on the Internet, one cannot sell it. That appears to be the crux of the problem, and that is why I am a good deal less impressed by the Government in this respect. That is not a political point because I am sure that if my party were in power it would take a similar mingy view of the matter, unless someone such as I had any influence. Perhaps I would, and perhaps I would not.
I turn to a matter which we debated several hours ago relating to copyright and related rights. Your Lordships' committee dealt with that issue and tonight the noble Baroness, Lady Hogg, raised the question of access. Noble Lords who are on the net obtain free access but most people pay for a provider and for the telephone bill. Some material is free but, increasingly, one pays for that which is available. At paragraph 2.21 the committee points to a fundamental issue. It states:
"If users have to pay for electronic access to what they hitherto receive freely in print form, they will question whether they need that information at all, and their usage may decline dramatically".
Perhaps I may take an obvious point. If one can go into a library and look up words in a dictionary for nothing, one will do that. However, one will not be able to go to the library, log on and get access to the same dictionary on line for nothing. The most important dictionary, the Oxford Dictionary, is not available free on the Internet but it is available in hard copy form free in your Lordships' Library. In terms of the use of resources, that is absurd.
My two favourite examples are similar: they are access to the telephone directory and access to what used to be called the British Rail Timetable. In this privatised era, I have no idea what that timetable is called but I refer to the timetable of the privatised complex of railways. Both those publications are available on CD-ROM in a user-friendly form; but, importantly, one cannot gain free access to them. When one considers that the marginal access is zero, one can see that there is an enormous waste of resources for charging for that. Furthermore, the committee is right in asking why one would gain access when it is easier to go to one's library and look something up. That situation is absurd. We must face up to the economics of the situation. We cannot ignore the copyright issue, and so forth.
I have hundreds of other comments to make, but I have already missed one half of a football match and am not prepared to devote the second half to your Lordships. I shall conclude by saying that the central message that I wish to put across is that of the committee: we are at the beginning of something marvellous. Thinking of the future, your Lordships ought to be pressing for the recommendations to go forward. I am not saying to the Government, "You must take over and control things". I believe that I am echoing the committee by saying to the Government, "You must respond enthusiastically and say that things can happen, rather than say that we cannot do this, that must be left alone and so forth". The change is going to happen, and one would like to see the Government taking the lead.
8.26 p.m.
Lord Fraser of Carmyllie: My Lords, this has been an extremely interesting debate. I regret to say to the noble Lord, Lord Peston, that if I attempt to answer only half the points that have been raised I should take up the whole of the second half of the match that he wishes to watch.
We formally welcomed the report when it was first published. I take this opportunity to say to the noble Lord, Lord Phillips, that the welcome which was then extended is repeated by me for the additional focus that it has brought to this important area. If I were disappointed by any tone in the debate it was that in some respects it was thought that the Government were either indifferent, lukewarm or complacent about the issues that have been raised. We certainly do not believe that we are all knowing in the way in which the information society will develop. However, as best we can, we are committed to ensuring that we should be a leader in the global information society. While it seems to have been challenged, the information society initiative is cross-departmental. Our comments about our strategy on the matter have been placed in the House Library. In spite of the criticisms of it, it is to be found available on the DTI's world-wide web site. I hope that that has been helpful.
The information society initiative brings together a wide range of programmes and activities in support of business, the field of education, proposals for the electronic delivery of government services and a major forthcoming initiative, which I had hoped would receive a warmer welcome in the debate, called "IT for All". It is specifically aimed to increase public awareness and the use of information and communications technology.
The Deputy Prime Minister has also announced plans to earmark the Millennium Commission's share of lottery money, currently some £300 million a year, following the completion of the millennium projects, to create a new information and communications technology fund. That will allow greater numbers of people to experience the benefits of information and communication technology which have been referred to—for example, in schools, colleges and libraries—and will ensure, as many noble Lords have indicated tonight, that we do not see a society divided between information haves and information have-nots.
Taken together, without being complacent, we hope that these initiatives will help to enhance the skills base of the United Kingdom, increase the competitiveness of United Kingdom firms and improve the quality of life for all our citizens. We well recognise the point made by the noble Lord, Lord Methuen, that real skills are emerging in South-East Asia and we would be wrong to fail to recognise that.
We are committed to practising what we preach. The recent Green Paper was published as a Green Paper rather than a White Paper because it intended thereby to ensure that we received views and comments rather than simply expressing what our final views would be on the electronic delivery of government services. I hope that that paper is recognised as setting out ground-breaking
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ideas which will revolutionise both the Government's internal communications and the way in which that interacts with the public.
Indeed, I hope that that is of particular interest to my noble friend Lady Anelay because we could see the development of an electronic "one stop shop": a terminal situated in a library, a shop, or even in the high street, perhaps in CAB premises, which would provide a gateway to government services. It might be possible to fill out a tax return, renew a licence, and find information on a new government project, all through the same computer terminal. The Government have asked for reactions to their proposals from all quarters, and an e-mail address has been set up to which anyone can send comments. The consultation period will last until 7th February.
We do not wish to suggest—and I repeat what appeared in our response—that the development of the information society will be a top-down affair. I am sorry if that has caused some concern but it certainly is our view that we cannot allow that to happen. It would be very undesirable. One has only to look at the way in which grass-roots innovation is driving technology and services forward to see that there should not be a top-down approach.
I heard what was heard and repeated by those who contributed on the desirability of setting up a group. It is not necessary for me to repeat my view except to say that the multimedia industry advisory group is chaired by Mr. Ian Taylor, my ministerial colleague. I do not know who has spoken to him, but certainly in departmental terms he is hugely enthusiastic about what is taking place. Whatever criticism may be directed to government Ministers, I should have thought that a want of enthusiasm on his part would have been a most unfair comment to offer. The range of people acting on that group is included at paragraph 6.5 of the response to the committee's report.
The Government now make available a huge amount of official information from something like 400 public sector organisations on the Internet and now that Hansard has gone on-line, the official report of this debate will be available on Parliament's own web page tomorrow morning.
On the services side, we have seen in the UK recently the development of a self-regulatory framework, brought forward by the Internet industry itself, to deal with the very small percentage of material which is illegal. That is an innovative and responsible action by service providers, which can only enhance the experience and reputation of the Internet.
That is why the Government see their role in the development of the information society as promoting awareness of the potential, and the potential risks of the new technologies and applications. We want to show the opportunities that new technologies can present. We want to demystify technology, which I hope is approved of, and reduce technophobia. We want businesses and the public to ask themselves how they might benefit from use of the technology.

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In order to do this, it is important to draw on expertise from the private, academic, and public sectors. The Government have convened a range of advisory groups and panels to cover the various aspects of information and communications technology, and to ensure a wide diversity of opinion, from a range of different perspectives.
Besides promoting awareness and debate, the Government are also responsible for providing a stable regulatory environment to encourage investment. The Government's policy of promoting effective competition in communications networks is a prime example of that. The noble Lord, Lord Phillips, referred to the committee's view on cable regulation. New communications technology and services require very considerable and sustained investment. Investors must have confidence that successful long-term investment will be rewarded appropriately. Our commitments to long-term regulatory stability in cable policy, for example, have given United Kingdom cable franchisees the confidence to schedule investment of more than £12 billion in new cable networks this decade.
We remain convinced that that framework is valid. It provides certainty for all involved and also gives clear dates for review. We are of course aware that regulation must move with the times and I note that both the noble Lord, Lord Haskel, and my noble friend Lord Northesk were keen to ensure that that is understood. Indeed, we recognise that and we also recognise the regulatory overlap to which the noble Baroness, Lady Dean, referred. It is for that reason that we agree with the Select Committee's analysis that in the medium term, a new regulatory framework in both telecommunications and broadcasting will be needed to reflect the increasingly technical convergence between those traditionally separate sectors.
Indeed, so far as I am aware, this was the first time ever that there has been a commitment in principle to that convergence. But my noble friends Lady Hogg and Lord Dixon-Smith both uttered words of caution: that convergence is as yet at an early stage and it is important not to second-guess technological and commercial development, although, as they and I now recognise, that will undoubtedly increase as those sectors become fully digital.
Of the various points which were raised in more detail, nothing was referred to more repeatedly than issues affecting education. Working together, the four UK education departments issued a consultation paper in May 1995. This sought the views of the education service, and industry, on networked communications for education. It challenged industry to pilot relevant technologies in schools and colleges.
Taking account of the results, the education departments set out the priorities for the development of education superhighways in their paper The Way Forward. That was launched by the Deputy Prime Minister last November. He announced a programme of projects piloting superhighway technologies in education, which is being independently evaluated. With
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further funding from the DfEE, the programme now includes 25 projects, and a total of some 1,000 schools and 50 colleges of further education.
The noble Lord, Lord Phillips, my noble friend Lord Dixon-Smith and others raised the issue of teacher training in educational software. The DTI's schools on-line project also aims to link schools up to the Internet and to research whether that technology can be beneficial to teachers and pupils in delivering the national curriculum. Phase 1 of the project links some 60 schools to the Internet, focusing primarily on science and modern foreign languages. Phase 2 is currently being developed and aims to address issues which were identified in Phase I such as the development of teachers' Internet skills.
We recognise also that IT teacher training is an area of priority and need. The IT area is currently among those identified as a priority by the Teacher Training Agency which has lead responsibility for improving teacher training across the board.
The noble Lord, Lord Haskel, raised some interesting and important questions about the development of content regulation and the Internet. The Government have been working closely, both in G7 and in Europe to consider how effective regulation of content can be brought about. The consensus which we have been instrumental in achieving is that self-regulation is the best way in which to proceed at this stage. I am sure that noble Lords would also support the priority being given, for example, by Internet Watch to combat the spread of child pornography.
The noble Lord, Lord Methuen, raised the problem of the century date change. As he spelt out, we recognise the seriousness of that issue. We have been taking what steps we can to ensure that businesses are well aware of the problem and are ready to take the necessary action. Although responsibility in this context must rest with individual businesses, we have been encouraging the CBI and CSSA to set up Task Force 2000 to raise awareness and co-ordinate action. Initial funding for that task force was provided by my department. We are calling for every business in the country to check its systems to see if there is a problem, and then to commit the necessary resources to fixing it. Since any solution will then need to be fully tested, I echo his words that there is not much time left before the year 2000 is upon us.
The noble and gallant Lord, Lord Craig of Radley, asked a specific question about Crown copyright. I am pleased to confirm that on the day the Government published their response to this report, my right honourable friend the Chancellor of the Duchy of Lancaster announced in another place a wide-ranging review of the future management of Crown Copyright, with the intention of publishing a Green Paper on the subject next year.
There are clearly cost implications in this, as the noble Lord, Lord Peston, seemed to acknowledge—although I think that he fell into the category of the nudge and wink of increased public expenditure on this

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issue—which my right honourable friend the Chief Secretary to the Treasury has recently been commenting on in public.
Lord Peston: My Lords, I do not think the word "expenditure" passed my lips. If it did, it was to do with private expenditure and buying new computers; certainly no public expenditure. I would be fired immediately and the noble Lord knows that.
Lord Fraser of Carmyllie: My Lords, that was a fine effort at retrieval. The noble Lord indicated that there were vast areas of information which are presently covered by Crown Copyright and so on for which proper charges are made. He indicated, certainly a personal view, that it should be provided free to one and all.
I am conscious that this debate has gone on a long time. I am also conscious that there are a number of other matters that I have not commented on. I hope I have covered most of the issues that were raised. My noble friend Viscount Chelmsford mentioned the programme for business. This is a programme designed, as a partnership with business, to develop over its four years of operation in response to changing market conditions and business needs. It has a particular, but not exclusive, focus on the needs of smaller-use companies and works closely with a range of busy business intermediate organisations, particularly business links and trade associations.
There are two other matters I should try to deal with. First, my noble friend Lord Selborne and others made some reference to the issue of the National Health Service. In the area of healthcare, the electronic network known as NHS Net is already operating and will continue to develop and expand as take-up increases. It will enable GPs to make hospital referrals on line, provide access to information, libraries and electronic books and facilitate the dissemination of new health warnings.
We remain committed to introducing the changes necessary to allow GPs to keep records solely in electronic form. This is not an issue solely for Government, nor can we act unilaterally in all the areas where there are very real issues of security. From my time as a health Minister, I cannot think of any other area where that matter arises more acutely for individuals. Introducing this change requires detailed consultation with the BMA—a process which, perhaps not surprisingly, has taken longer than expected because of the wide agenda on primary care which has diverted the profession's attention away from some discrete action such as this.
In a related way, the noble and gallant Lord, Lord Craig, identified the importance of public confidence in the security of confidential information passing over advanced communications networks. He made reference to an article in a paper fairly recently which indicated that the United States Government had relaxed their position. I can confirm that the United States Government have allowed some liberalisation of their export controls over encryption equipment.
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It has of necessity been something of a gallop through the many points that have been raised. If I have dispelled anything, I hope it is the notion that we are lukewarm to the report, to the contents of it and to the very valuable advice offered to the Government. Far from being indifferent to it, I hope that in the coming months a real, clear focus will be given to this area of activity.
I conclude by again recording my thanks to all those who have not only participated in the debate hut also contributed to this most valuable of Select Committee reports.
8.47 p.m.
Lord Phillips of Ellesmere: My Lords, my first duty is to thank all those Members of the House who have made kind remarks about my role as chairman of this committee. I must say that the credit is entirely due to the members of the committee who made my task a pleasant one. It is one that I shall recall with great—and I hope it does not sound too conceited—satisfaction. I am also grateful to all Members of the House who contributed to this wide-ranging and interesting debate.
I am particularly encouraged by the wide degree of agreement that has emerged on all sides of the House in discussing the various topics that have come out in the debate. Being an incorrigible optimist, I am even somewhat encouraged by the response of the Minister, the noble and learned Lord, Lord Fraser of Carmyllie. I look forward to the further development of what the noble Viscount, Lord Chelmsford, described as the "sea change" in the Government's attitude to this area. It is not improbable that this rapidly developing area may again attract the attention of the Select Committee at some time in the future.
Finally, on a slightly different note, perhaps I may say that today is the anniversary of the birth of Andrew Carnegie, a person well known—at least in my early days—for his contribution to the development of the public library system in the United Kingdom. I hope that this report and this debate may in time be seen to have made contributions to the dissemination of information in the United Kingdom at least comparable to that made by Carnegie.
With my thanks to all those who have taken part in the debate, I commend the report to the House.
On Question, Motion agreed to.

ADAS
8.48 p.m.
Lord Carter Lord Carter rose to ask Her Majesty's Government what public benefit is expected to result from the privatisation of the agricultural advisory service and agricultural research organisations.
The noble Lord said: My Lords, in opening this debate I should declare an interest as president of the British Institute of Agricultural Consultants. I should point out at the outset that the debate deals only with the proposal for the privatisation of the ADAS consultancy

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business, the ADAS research centres and the Wolverhampton laboratory. It is a serious matter of considerable importance to the agricultural and food industries and I trust that the Minister will spare us the performance we had last week with the starred Question of the noble Lord, Lord Mackie of Benshie.
There will also be an opportunity to debate the merits or otherwise of privatisation generally in the debate on December 4th in the name of my noble friend Lord Haskel. I shall therefore restrict myself to a series of questions about the proposed privatisation. The Minister may not have time to answer them all, so perhaps he will write to me in respect of those questions he does not answer tonight and put his reply in the Library.
The first question is one that I asked last week; namely, why the rush? We understand that it is hoped that the privatisation will be completed early in the new year. The original intention was to ensure that ADAS should achieve 100 per cent. cost recovery by 31st March 1997 and the sale would then take place at some time through the summer or autumn of 1997. The research centres were excluded from the statements which were made in 1995 on the subject, but now they are included. I understand that Mr. Michael Heseltine has pressed for this early sale. I think we all know why: because of the general election in the spring.
There is a fundamental aspect of the proposed sale which is causing grave concern throughout the agricultural industry and for all those concerned with the matter. I studied with care the privatisation documents from PA Strategy and nowhere is there any mention of protocols concerning impartiality, objectivity and freedom from commercial interference and requiring such undertakings from prospective buyers. My honourable friend Mr. Gavin Strang, the Opposition spokesman on agriculture in the other place, sent a letter to Mr. Douglas Hogg, the Minister responsible on 5th November last saying:
"Will ADAS simply be sold to the highest bidder regardless of any conflict of interest with the independence and objectivity of scientific advice? What view do you take, for example, of the prospect of a large feed compounder, or fertiliser or seed company buying ADAS? Will you publish the full terms under which the privatisation is intended to be carried out?".
In his reply the Minister carefully did not answer that vital question. He said:
"I am not sure what you mean by publishing the full terms under which the privatisation is intended to be carried out. Clearly I am not going to publish anything which might weaken the vendor department's negotiating position in the sale process. I have already published the objectives of the privatisation. We will pursue a competitive sale process. The criteria for evaluating bids will reflect the published objectives".
When I read that last sentence, especially the reference to "a competitive sale process" and the
"criteria for evaluating bids will reflect the published objectives",
I had the feeling that Sir Humphrey is alive and well and living in Whitehall Place. It would indeed be an irony if ADAS is sold to a commercial concern and thereby the largest agricultural consultants in the UK would not be able to meet the exacting criteria, for example, of the British Institute of Agricultural Consultants requiring,
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"objectivity, impartiality and freedom from commercial interference".
A further question arises. We know that there is talk of a management buy-out. If successful, presumably that would protect impartiality and objectivity at the outset. But what happens if ADAS is later sold on to another buyer? Do the Government intend to protect objectivity in the protocols of the sale by including restrictive covenants to cover this in a sell-on by the first buyer or buyers?
As I understand it, ADAS and its research centres are not allowed to make a profit out of work carried out for government departments or agencies, such as the MLC or the HSCA. They can recover only 100 per cent. of costs but no more. Will that continue to be the position after privatisation? Alternatively, will the new owner or owners be able to build in a profit margin on the contracts that they negotiate with the Government?
If we turn to the documentation itself, I must say that it is an extraordinarily flimsy basis upon which to offer for sale a major government asset. It consists of three very thin pages containing hardly any information regarding the privatisation prospectus. When ADAS or the Government come to work out their figures, I hope they will be a little more careful than those who compiled the ADAS report of 1995-96, which has been sent to all prospective buyers. I say that because on the second table which appears on page 6 regarding commercial consultancy cost recovery, there are two glaring errors. It seems that 100 per cent. cost recovery by ADAS does not extend to proof-reading.
The Government say in their statements regarding the sale that it will be,
"on the best available terms—that is, terms which optimise the risk adjusted net benefit to the taxpayer".
What on earth does that mean? Can the Minister tell us in layman's language the meaning of the words,
"terms which optimise the risk adjusted net benefit to the taxpayer?".
In the statement regarding the sale the Government say that,
"to ensure that the services provided to MAFF and the Welsh Office from the private sector can be delivered continuously, economically, efficiently and effectively".
There is nothing there about objectivity and impartiality. The statement goes on,
"to provide for a clean break between government and the privatised organisations or, failing that, to minimise any contingent liabilities falling on the Government".
What exactly do the words,
"minimising any contingent liabilities falling on the Government"
mean? Is there any question of the sort of dowry from the taxpayer which has featured in other privatisations to assist with the costs of pensions and the takeover of employee contracts?
After privatisation I understand that the Government expect that 50 per cent. of the work of the new body will be for the Government or their agencies. How will that actually work out in the case of something like BSE? The expertise is very specialised. Let us suppose that the private owner of ADAS does not like the BSE research contract that the Government are suggesting?
What happens then? The Government cannot go elsewhere to get it. It is clear that the effort to get ADAS to charge for its services which began in 1990 has undoubtedly resulted in a reduction of advice to individual farmers, and particularly to smaller farmers. As a private agricultural consultant, I am well aware of the relative profitability of advising one client for £5,000 compared with 10 clients at £500 each.
What will be the relationship of the BBSRC and the NERC to the new bodies? How will this relate to the work of the new FRCA and where will the FRCA get its research done?
I turn now to the important work that has been carried out on Technology Foresight which identified the function provided by the public sector research establishments as strategically important to wealth creation and quality of life. It emphasised the need for internally competitive science, focused on long term strategic objectives. The Technology Foresight Steering Group made it clear that British industry cannot take foresight forward alone. A clear commitment to a long-term partnership between government, industry and academia was underlined. It is very hard to see how the privatisation of ADAS will fit in with that.
Investment of public funds in basic and strategic research is necessary to maintain the necessary infrastructure, both physical and scientific, to ensure that such investment will maintain a critical mass of staff, facilities, expertise and maintain a reputation which is essential for attracting collaboration with commerce. Loss of investment of public funds will inevitably lessen the amount of basic and strategic research undertaken in the UK. Too high a proportion of short term applied research and a restricted breadth of research will have serious consequences for the UK agri-food industries. Without sufficient investment in basic and strategic R&D the UK will cease to be at the forefront of sustainable, economic and innovative food production.
The other important crucial question is: what is the role of MAFF within UK R&D? I believe its position has been seriously weakened. While that was in part to he expected, given the serious funding cut-backs which have occurred, it was in no way inevitable. MAFF is no longer providing the lead which is so crucial if we are to maintain our agricultural importance within Europe. Instead, ADAS appears to be prepared to allow UK scientists to compete among themselves for funding until the competition becomes totally unhealthy and counterproductive.
It is not that long ago that we emerged from the nonsense over near-market research and public good research. I know that the noble Baroness, Lady Trumpington, who is present this evening, will remember the discussions that we had on the matter. I recall that the noble Baroness gave the only definition of near-market research which made any sense. When I asked her to define it, as I am sure she will remember, the noble Baroness defined it as being something which, "if you want it, you will pay for it; but if you do not want it, you will not pay for it." I believe I observed at the time that that was the Cynthia Payne approach to public expenditure.
I conclude by returning to what I believe to be the central question which the Government must answer. They are clearly determined to get the ADAS consultancy business, the research centres and the Wolverhampton laboratory off their hands before the election. If indeed the R&D part of ADAS is sold off either as part of the sale to a single buyer or separately, the buyer or buyers will have control of the intellectual property rights of the R&D and, through commercial confidentiality, will be able to restrict access to that R&D to benefit that buyer or buyer's commercial objectives. What is now known as "lock-out technology" could have disastrous effects on the British agricultural and food industries if ADAS ends up in the wrong hands. I hope the Minister will give a clear and unequivocal answer to that crucial question.
Will any buyer or buyers of ADAS or any part of it be required to give cast-iron guarantees regarding the impartiality, objectivity and freedom from commercial interference of future ADAS services? Will such a guarantee be further reinforced by restrictive covenants controlling a sell-on by the original buyer or buyers? If the Minister is not able to give that assurance, then we may be sure that ideology has triumphed over a proper regard for the public benefit and the national interest.
9 p.m.
Lord Chapple: My Lords, I am concerned with the content of HRI and the effect that anything that happens to ADAS will have on other associated parts of the industry. I should like to quote first from the Amos Memorial Lecture given by Sean Butler in November. He said that,
"it is difficult to encompass the contribution of PSR [public sector research], to evaluate it and to capture it, either in terms of outflow from PSR or inflow to industry. It is difficult even to identify the flow of knowledge from academic source to industrial product, because there are so many contributors who add to. enhance, define, develop, and refine that flow. On the other hand, it is sometimes possible to identify specific discoveries or developments made by scientists in PSR, particularly in plant breeding, and then to trace the commercial outcome. It is because academic research can be seen to contribute to 'wealth creation' in both general and specific ways that the precise performance of PSR is so hard to define"
That must surely be a warning that we shall throw the baby out with the bath water if the Government proceed to privatise ADAS and its accompanying departments.
I turn now to HRI. Professor Payne, who is currently its chief executive, wrote a short paper, and I make no excuses for quoting from it again. In it he states:
"HRI is a public sector research establishment. It was set up by Government in April 1990, following extensive rationalisation, as a MAFF-sponsored Non-Departmental Public Body … It was intended to be a centre of specialised excellence that would serve and support the UK horticultural industry. It has achieved this goal".
He continues:
"The UK Horticulture industry strongly supported, indeed requested the formation of HRI in 1990. Horticulture has great potential to create wealth and rural employment. The industry is largely unsubsidised and operates in a highly competitive world; fresh uncertainty over the future structure of the industry's R&D base is very damaging. The UK horticulture industry requires and uses research to keep abreast of its international competition.
"UK growers contribute significant sums … to support applied R&D. Strong Government support for horticultural R&D is justified because the industry is composed mainly of small and medium-sized

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businesses, none of which by themselves is able to sustain a strategic research programme. In addition, innovation in horticulture is essentially a public good to the benefit of the consumer. Any reduction in horticultural R&D in the UK will lead to a reduction in industry competitiveness".
Indeed, it would kill off half of those who are currently involved.
Your Lordships' Select Committee on Science and Technology took the view in December 1994 that,
"we would prefer the type of rationalisation of institutes undertaken with Horticulture Research International, which occurred as a result of identifying the needs of the relevant industry and then adapting the organisation of the research".
The House of Commons Agriculture Committee report on horticulture published on 9th August 1995 stated that,
"HRI received almost unqualified support for its work from those who gave evidence … We consider that MAFF sponsorship of HRI is better suited to take advantage of the vertically-integrated nature of research at HRI and to facilitate technology transfer. We recommend that sponsorship of HRI remains with MAFF".
Professor Payne's report states finally:
"At present, HRI's mission requires a breadth of coverage of research discipline and horticultural commodity that a private sector buyer is unlikely to be able to sustain. Private sector ownership of HRI, whether as a company or under university ownership is likely to lead to fragmentation and changes in mission which would reduce its effectiveness. It seems unlikely that a UK university will have the resources to endow or support HRI for the foreseeable future as universities are under very similar funding pressures to HRI itself. In addition, unless HRI is seen as a source of impartial advice, it is likely to lose its credibility. Any change that distances the industry would be greatly prejudicial to the future success and competitiveness of UK horticulture".
Both those people are very strongly involved in the industry. They both say simply that if the Government proceed with the privatisation of the industry, it will fragment and we shall be left with a rump of what now exists.
One fear that I have is that most of the departments of ADAS and HRI are situated in areas of countryside, sometimes near towns, and would be prime land for housing or other developments. It concerns me greatly that, if the horticultural industry is mined, it will be mined to benefit speculative development of housing on land which is currently used by those divisions of ADAS. I hope the Government will take time to consider and reach a decision on this when they receive the report from the prior options committee. It is rather like walking backwards to Christmas to try to know what "prior options" means in connection with what is happening in the agricultural and horticultural industry. I hope that, before the Government take any action on the report, they will allow comment in both this House and the other place.
9.8 p.m.
Lord Desai: My Lords, my first job was in agricultural research. I was employed by an agricultural economics department of the University of California to do research on the dairy industry. I tell you that because it was a publicly-funded research post at a publicly-funded department in a land grant college. All those things meant that the United States put public
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money into agricultural education and research. To this day it continues to put public money into agricultural research. It is one of the most successful research communities that we know of. Like everywhere else, there are under-funding crises there, but across the spectrum the government of the United States of America are a big investor in research because they know that research is essential to economic growth.
When the Minister replies he will probably say that we always oppose privatisation. He will say, "So what is new?" Let me therefore draw a line at the fact that there are known areas of research and education—and in health, though I do not want to go into that—in which it has been demonstrably proven that public ownership and public funding are more efficient and superior, bringing both direct and indirect benefits to the country. I know of no study which shows that privately conducted basic research is less costly than publicly conducted research. To measure the benefits of research is more difficult. As the noble Lord, Lord Chapple, said, there are direct and indirect benefits. But we know from larger studies, in economics and elsewhere, that investment in research and development is a very important and crucial input to growth.
In this case and also in the larger case of funding public research and research in universities, the Government have continuously and inexorably made us privatise; they have made us either cut resources so that British science is a cry outside, or they have made us more marketised. The consequence of this—and it will follow in ADAS—will be that research will be more expensive.
The Minister will ask where the money is to come from. The Government spend £350 million on management consultants. I am sure that a lot of that expenditure was not required previously because there was in-house capability to answer those questions which the Government now have to go outside to have answered. Something is not value for money just because it happens in the private sector; it will probably be value for money in the public sector as well. If value for money is defined in terms of profitability of an enterprise, then a government-owned enterprise will not work.
I agree with my noble friend Lord Carter. This is not to do with efficiency; it is to do with obtaining some money to reduce the PSBR. The problem is that in other areas finances have been so badly managed that the Government now have to sell everything to make a small reduction in the PSBR. I believe that the privatisation of the Agricultural Development and Advisory Service and agricultural research organisations will be a tragedy.
9.11 p.m.
Lord Mackie of Benshie: My Lords, I follow the noble Lord, Lord Carter, in hoping that we shall have a serious debate and a serious reply. I follow him in putting a question to the Minister. In his reply to my starred Question on 19th November he finished by saying:

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"As we have a minute left, perhaps I may say what are the principal objectives that we have set ourselves. First, we want to transfer the functions of ADAS and associated risk to the private sector on the best available terms".
I presume that that means for the most money.
"that is, terms which optimise the risk-adjusted net benefit".
Perhaps the Minister will be good enough to explain that phrase to my simple mind. He continued:
"Secondly, we want to ensure that services provided to MAFF and the Welsh Office from the private sector can be delivered continuously, economically, efficiently and effectively".
I should have thought that the services should be provided to farming. He then said:
"Thirdly, we wish to provide a clean break from the Government and minimise contingent liabilities". [Official Report, 19/11/96; col. 1199.]
I presume that must mean that he wants to save the Government money.
Perhaps I may put a question on which the Minister will have time to consult the available authorities. What is our position in the table in Europe for spending on agricultural research and advice? Are we at the bottom or half way down? Where are we? If he is able to do so, perhaps the noble Lord can answer that question directly and not by letter.
I turn to Scotland and quote from my own experience and background. I have an interest to declare because my grandfather was a founder member of the North of Scotland College of Agriculture; my uncle John was the chairman of governors; my father was the chairman of governors; my brother, Lord John-Mackie, was a vice-chairman of the governors; my other brother, Maitland Mackie, was the chairman; and my nephew is at the moment the vice-chairman of the combined Scottish college. So I have a certain interest to declare.
My interest springs from a long experience of the advice given by the Scottish colleges—as separate bodies when I was farming, although latterly together. The advice was free and it was impartial. The great thing about it was that one could be sure that advice from the college was given without prejudice. Furthermore, one could also be sure that you could tell any neighbour who was in trouble or any farmer who did not realise that such advice was available that he could have that advice and have it free.
Today the Scottish Agricultural College is one college, and that is right. It is run on a fairly commercial basis. I think that it is well managed and that it provides good advice. But it provides advice on a commercial basis and the price is about £50 an hour. That is not dear for good advice but that is what it costs. The fact is that the amount of use of the college has fallen since the introduction of a commercial standard. That is not bad in itself, but if one wants to put it on a fully privatised basis one ultimately moves to a state in which the objective is to make money.
That is not the objective of a college. The objective of a college is to give good advice and to make money for its customers. If it goes on to a fully privatised basis, in my view it will ruin the whole basis that has been so successful in the past.
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I pursued investigations in my home territory and telephoned various people, asking for their experience. I found that the amount of advice given—the use made of the service—had gone down with the constant rise in price. The Government have dropped the allocation of money to the service every year and it has had to put up the charges, with the result that only the most efficient people are using the service, not the kind of people who need to use it. Surely, that is not the object of the exercise. It is a very dangerous position.
I went further and telephoned a friend who is a very competent farmer farming 400 or 500 acres of good land in the Howe of Strathmore. He is an energetic chap. He grows new crops and he seeks niches. He grows very good asparagus as well as everything else. I asked him, "How much do you use the college for advice?" and he said, "Frankly, hardly ever. I don't have a sprayer because I use a contractor and so I take the advice of the chemical spraying company." It is a highly dangerous position when that sort of thing is going on with a highly intelligent and very capable farmer. He said, "I know that it's not free. I don't pay anything but in the long run I know that I am paying."
There we come to the essence of agricultural advice; namely, that it should be directed at farmers for their benefit. But it should also be such that the public trust it. Never in my lifetime—I have been in farming for a long time—have I known a time when the public distrusted more the methods of farming. It is quite extraordinary. The great example is BSE. The whole industry has been thrown into extraordinary confusion, loss and so on, by the feelings of the public. British beef today, with all the precautions that are taken in cutting out the spinal cord and removal of any unfit offal, is probably safer than it has ever been. But a large section of the public do not trust it. Therefore, every advisory body should and must be a body whose impartiality cannot be questioned.
A very able chemical company is producing a bean. It is the only bean resistant to the weed killer it sells. That is a smart move but the implications are not such as to make the public put any trust in it. The Government believe they will save money and that ADAS as a private company will be efficient and competent. That attitude is enormously shortsighted. I should like the Minister and the Government to think again.
When we come to research we are in an even more difficult position. Again I shall quote from Scotland which I know well. The Rowett Institute, the Macaulay Institute and the Moredun Institute are all famous bodies. They are dependent for more than half their income on private firms. That must influence their impartiality. It is good that they should get what we call near market jobs but the basic research is so essential and the basic research into the issues which bother the public is so vital that if the Government are aiming to save money it is a very short-term attitude indeed.
I have just come from a meeting of the agriculture and rural development committee of the Council of Europe. We heard evidence from four members of the research bodies looking at fishing—both aquaculture in

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the ecology of the fishing and the general hunting of fish. We were trying to find out whether the research was being co-ordinated. When I talked to the Danish member of the committee who knew her British colleagues well I asked her why among those four people there was no mention of a lack of funding. She said that the only people who suffered from a lack of funding for research were her British colleagues who were always complaining that they did not get it. That is a very dangerous situation.
Certainly, privatisation might produce tightly run bodies. But does it fulfil the main object? I do not think it does. I think this is a highly dangerous move. I hope the Government will think more about the long term and much less about the short term in this matter.
9.22 p.m.
Lord Lucas: My Lords, this is a challenging debate to reply to. I cannot remember when I have been asked so many questions in such a short time. I shall certainly take advantage of the offer of the noble Lord, Lord Carter, to allow me to write to him. I shall look most carefully in Hansard at what I have said and try to make sure that I have covered in proper detail all the points that have been raised.
We attach great importance to the maintenance of the scientific base in this country as does everyone who has spoken in the debate. Sometimes this scientific base has to be kept within the public sector facilities; for instance, when the performance of statutory functions or the provision of policy advice to Ministers are concerned. But, by and large, the greater good for the United Kingdom as a whole will be obtained by working with the private sector. That is for a whole range of reasons—better understanding and exploitation of commercial opportunities; better focusing of effort; better cost control and more scope for the most talented employees.
The noble Lord, Lord Desai, said that basic research was equally good in the public sector. I do not disagree with him. I believe that there is a strong role for basic research in both sectors. Certainly, the public sector has a very honourable record in basic research, which we have every intention of continuing. But a lot of the work done within the agricultural research institutes is of a type where there are obvious commercial benefits to come from it and which we believe will benefit from being undertaken in a more commercially oriented environment. Where it is something that requires the distribution of the results to the public or generally broadcasting them, since we shall be paying for it through MAFF, that is something that we can require as part of the contract.
Nowhere is the Government's commitment to the research base clearer than in the food and agricultural sector where the Government have invested, and continue to invest, heavily (about £258 million in 1996-97).
The noble Lord, Lord Mackie of Benshie, asked where we are in the European league table. I do not have an answer and I shall have to write to him about it.
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In earlier years the priority was to increase food production; the results were impressive. Now we are looking to make better use of resources by reducing inputs, ensuring that agriculture is truly sustainable and addressing environmental issues. MAFF relies heavily on science to protect the public and to investigate animal and plant diseases. We need to he confident that research is carried out expertly and without bias and that it is also provided in the most effective way.
The prior options programme investigates whether work undertaken by public research establishments still needs to be done; whether it needs to be funded publicly; whether the work needs to be done by a public sector body; whether there is scope for rationalising with other public sector establishments working in the same areas; and how establishments and functions should be managed in the future. It is surely correct to ask those questions about the responsible use of taxpayers' funds, to say the least of it.
I turn now to the particular question of ADAS, formally MAFF's Agricultural Development and Advisory Service. I had always wondered what it stood for. Doubtless the noble Lord, Lord Desai, knew that from his childhood. This is clearly a subject which is dear to the heart of the noble Lord, Lord Carter, and of rather more recent acquaintance to mine, too. I might indeed say, "amo amas ADAS" for both of us, not that that is correct Latin grammar, but it approximates English. All of the commercial consultancy work, laboratory services and all the R&D work of ADAS will be privatised. The work which is not suitable for privatisation—for instance, work connected with payments under environmental schemes—is to be retained in a new executive agency, the Farming and Rural Conservation Agency.
This privatisation has been well presaged. I do not believe that we are rushing at it. The organisation is ready. We have a good opportunity and a large quantity of interest is already evident although we have not yet sent out the full information package, which will be made available to serious buyers only.
I shall tackle in no particular order some of the questions asked by the noble Lord, Lord Carter. He asked what the relationship of the privatised ADAS would be to BBSRC and NERC. The public sector research establishments, including those of BBSRC and NERC, already have a wide range of strategic links with both public and private sector bodies wherever there is mutual benefit. We expect that to continue after the privatisation of ADAS.
The noble Lord asked how privatisation will affect ADAS's BSE work. Not at all. All the R&D work which the Government places with ADAS will be subject to a tightly specified contract with the new owners, as is the normal practice. In the longer term we are building safeguards into the privatisation which will safeguard the MAFF-commissioned work on the experimental farms and that will be done over the long term.
As regards intellectual property rights, the Government are well aware of the need to make appropriate arrangements to safeguard intellectual

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property rights and ensure that Government-funded R&D results are not high-jacked for commercial purposes.
The noble Lord, Lord Carter, wanted to know what "risk adjusted and net benefit" to the taxpayer means. Perhaps I may translate that as, "Looking for the best deal available in terms of proceeds from the sale and future services to MAFF and the Welsh Office". There are clearly a great many aspects to this with MAFF as a major customer and the Government as the beneficiary of any possible proceeds. It will be difficult to decide exactly what is the net benefit because so many factors come into it. But I do not believe that there is anything in the formula to surprise the noble Lord.
None of the change at ADAS means that we will spend less on agricultural research. ADAS will continue to provide advice and research to the Government, and the volume of work will be governed as at present by the available money and government priorities for that money. Nothing in the privatisation of ADAS will change that decision. It will still feature as a line in the MAFF spending settlement. That matter will be decided independently of whether or not ADAS is privatised. We hope that under a privatised ADAS we will be able to continue the process that has been going on in ADAS for several years, buy research more cheaply and thereby obtain more research for the same amount of money.
Privatisation will bring benefits to a wide range of interested parties. It will bring benefits to the taxpayer because it will allow MAFF to concentrate on its core activities. There may even be some proceeds from the privatisation, although it is a matter for MAFF how it chooses to balance the terms of the sale and whether it looks for guaranteed terms for the future business that it places with ADAS, which may itself bring a benefit, or looks for cash up front.
As to terms, clearly the identity of the purchaser will be a matter of keen interest to us. As the noble Lord, Lord Carter, hopes, we will look for objectivity, impartiality and freedom from commercial interference. There is not much point in placing work on pesticides with a pesticide company. No one including the Government believes that that is far enough away from commercial influence on that particular subject. Therefore, the identity of the purchaser will matter to us a great deal because of the future business that we expect to place with ADAS. We will not entertain a situation in which simply the highest price wins; it will be a combination of price and suitability of purchaser.
We believe that privatisation of ADAS will itself provide the stimulus to improve its performance and make the best of its opportunities for growth. ADAS is strongly in favour of its own privatisation. We believe that it will bring benefits to the farmer. It should lead to greater efficiency and a better response to market demand. The noble Lord, Lord Mackie, in particular raised the subject of farmers' use of ADAS. He harked back to the old days when advice was free on almost
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any subject under the sun. Clearly, we have moved away from that. We demand that farmers ask for advice which they consider is worth paying for. That is a habit which has become easy to those farmers I know. If they cannot afford it themselves they band together in groups to get it. They do not necessarily go to ADAS. As the noble Lord, Lord Carter, knows, there are a number of other thriving agricultural consultancies. The process of asking for advice and deciding whether or not it is worth having is something that is best dealt with by the users of that advice rather than that it should be provided and chosen by the Government, in which case it may well end up in the farmer's waste paper basket as an unwanted and unnecessary piece of advice.
Of course, if we wish farmers to have certain advice it will be open to us—and doubtless we will continue this—to pay ADAS or some other consultancy to undertake the work and disseminate the results free. But if it is information which farmers can properly pay for themselves we see no reason to add to what is already a very heavily subsidised industry.
Lord Mackie of Benshie: My Lords, surely the noble Lord does not suggest that the great rise in production during the period when advice was free in this country resulted from advice which was untrue, wasteful or was thrown in the waste paper basket.
Lord Lucas: My Lords, no; nor do I think it was entirely generated by government-funded research. I believe that a great deal of commercial work, particularly on plant breeding, has been paid for consistently by farmers in the price that they pay for their seed beyond anything else. It is also reflected in the effort that farmers these days put into getting proper advice on their planting and farming practices. We believe that privatisation will benefit the nation as a whole. ADAS has the potential to grow substantially at home and abroad. Privatisation will enable it to do so. Privatisation is the right option for ADAS.
There was no presumption that this would be the case and neither is there a presumption in any other prior option review of public sector research establishments. Of the first 10 reviews of establishments over all sectors, seven will remain in the public sector and three will be privatised. The Directorate of Fisheries Research is to stay in the public sector as an executive agency because it provides a significant amount of policy advice to MAFF and performs many statutory functions which could not readily be supplied by any other body.
A further 19 agricultural research establishments are currently being reviewed in the prior options programme. One of those is an establishment in which I have a small interest, the Silsoe Research Institute, which occupies a house which marked the beginning and the end of my family's fortunes when it was built. How they deal with that liability, should it be privatised, I wait to see.
Lord Chapple's daughter-in-law continues to work at Horticulture Research International so he has an added interest in the subject. The noble Lord, Lord Chapple,

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indulged in a paeon of well deserved praise for HRI. It is an excellent organisation. Our interest is to safeguard and enhance its future.
The noble Lord stated that the industry was made up of small businesses. That is true but so is farming, and farmers get together when they need advice and so should horticultural businesses if for no other reason than that there is a substantial source of extra funds coming their way under the European Union fruit and vegetable regime. Those funds will be available through trade associations and getting together will be very profitable.
There are many programmes in which HRI is involved which are for the public good and those we will continue to fund whether HRI is privatised. That is not something which comes into the equation as far as privatisation is concerned. If we want that work done, it has to be done whether the body is private or public.
All these agricultural research establishments are being considered on a case by case basis. Decisions on some of them have been made and some decisions are imminent. It is important that we get the answer right for each establishment for the sake of the establishment concerned and of the national agricultural scientific base.
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We realise that any review process raises uncertainty, but we believe that all establishments will emerge from the review process, whatever the decision on future management and ownership, stronger and better able to respond to the needs of their customers.
Lord Carter: My Lords, when the Minister has read Hansard, will he please pick up the point about sell-on by the first buyer? I understand that the Government will take all necessary precautions in relation to the first sale, but there could be a later sale to someone that the Government regard as unsuitable.
Lord Lucas: My Lords, the noble Lord, Lord Carter, asked a number of questions which I have only touched on and I will ensure that he is given proper and full answers to all the questions he has asked.
Lord Chapple: My Lords, can the Minister say who carried out the prior options review? It is important to know what their status is in the industry if the people do not work for MAFF.
Lord Lucas: My Lords, I do not have an immediate answer. I shall write to the noble Lord with the answer and comment as fully as I can on why we think they are suitable people to have undertaken the review. The decision will be one for Ministers.
House adjourned at twenty-one minutes before ten o'clock.