Lords Sitting of 15 October 1996

Preamble
Reassembling after the Summer Recess, the House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Birmingham.
Lord Rotherwick Lord Rotherwick—Sat first in Parliament after the death of his father.

Stansted: Hijacked Aircraft Procedures
Lord Chalfont Lord Chalfont asked Her Majesty's Government:
Whether they are satisfied with the security arrangements involved in the successful conclusion of the recent incident at Stansted Airport.
The Minister of State, Home Office (Baroness Blatch): My Lords, yes. We were very pleased by the successful and peaceful conclusion of the hijacking incident at Stansted Airport on 27th August. All involved in the incident both here and overseas, particularly, the Essex police, played their part very well and the value of contingency planning was proved to be very worth while. Nevertheless, there is no room for complacency. There are always new lessons to be learnt and the Government are examining closely the handling of this incident.
Lord Chalfont: My Lords, I thank the Minister for that Answer. I am sure that I speak for many when I congratulate all those concerned on the successful conclusion of the operation. However, do not the Government have one or two concerns about what happened on that day? Is the Minister aware that a radio reporter at the airport broadcast the exact disposition of the security forces around the aircraft—news which presumably could have been received on board the aircraft? Is she also aware of public reports that Stansted was the preferred airport of the authorities for dealing with hijacks, which has presumably made the airport unsuitable for that purpose in the future? Does the Minister recall press reports of the composition and activities of the committee set up by the Government, presumably in secret, to deal with such crises? Will the Government therefore consider a press blackout or at least an understanding that the press will do nothing to prejudice the activities of the security forces in any future crisis.
Baroness Blatch: My Lords, the noble Lord raises some very important points. Certainly, the police did not believe their operation compromised by some of the publicity given to the incident. As the noble Lord knows, one of the difficulties was that at the time the aircraft left Cyprus, CNN, a broadcasting organisation over which we have no control, gave details about the fact that it was hijacked and heading for the United
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Kingdom. Furthermore, Stansted is fairly exposed which meant there could be a great deal of intelligent speculation by people simply looking across the airfield and noting movements to and from the aircraft. All points are considered. If a blackout is deemed necessary it can be implemented. It is possible to have a secure landline to an aircraft but in the case of a hijack it must be properly negotiated with the hijackers.

Sex Offenders: Early Release Arrangements
2.41 p.m.
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
Whether they have any plans to change the criteria for parole for paedophiles and other sex offenders.
Baroness Blatch: My Lords, earlier this year my right honourable friend the Home Secretary announced proposals for changes in early release arrangements for all offenders, including the abolition of parole and the strengthening of the supervision of convicted sex offenders following release.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for that affirmative Answer. Is she aware that some years ago I wrote to the noble Baroness, Lady Thatcher, who was then Prime Minister, making a similar suggestion and that I raised the matter in your Lordships' House and received little support? Is it not now time to press for change, bearing in mind the chilling increase in the number of young people in peril and defenceless women who are suffering attacks?
Baroness Blatch: My Lords, I hope that the noble Lord will forgive me, but I am unaware of the letter that he wrote to my noble friend Lady Thatcher. I know that there is considerable concern about the matter and that changes have been made over the years. The proposed package of changes will be subject to parliamentary approval. They include extending and strengthening supervision arrangements; automatic life sentences for people who commit a second or further serious sexual or violent offence; a register of convicted sex offenders; a requirement on sex offenders to notify places of residence; a prohibition on sex offenders from working in any employment with access to children; DNA sampling extended to those convicted of a sex offence and to people currently serving a prison sentence for a sex offence, which is also subject to parliamentary approval; and the supervision of access to victims' statements and photographs in sexual offence cases. We will announce our conclusion on some of those proposals for legislation as soon as possible.
Lord McIntosh of Haringey: My Lords, will the Minister accept that there will be support from these Benches and probably on all sides of the House for many of the measures which are to be announced

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subject, of course, to their wording? However, I cannot say the same in relation to automatic life sentences for sex offenders.
Will the Minister acknowledge also that the phrase "sex offender" goes rather wider of the issue than is desirable? After all, some sexual offences relate to consensual acts in which there are no victims and for which the kind of register and increased parole and notification arrangements would not be appropriate.
Baroness Blatch: My Lords, I welcome the noble Lord's support. It would be a happy coincidence if all parties could come together in relation to these measures. I am sorry that the noble Lord feels unable to support automatic life sentences for serious sex offenders because the whole point of automatic life sentences is not to make them serve a great deal longer in prison. It makes two provisions which are very important: first, there is a full risk assessment before any offender is allowed to be released into the community; and secondly, if an offender displays a pattern of behaviour which gives cause for concern, he can be returned to prison. But the judges will determine the tariff for such sentences and there will be proper risk assessment.
The noble Lord made another important point which we shall discuss in more detail when it comes before the House. Arrangements will be made so that if there are exceptional mitigating circumstances, the automatic life sentence may be set aside by the judge.
Lord Stewartby: My Lords, will my noble friend assure the House that the Government recognise that in those matters, the overriding priority is the protection of the public rather than the freedom of the offender?
Baroness Blatch: My Lords, absolutely. The whole point of this is that we believe that the public deserves to be protected and we are doing all that we can to increase that protection.
Perhaps I may return to the noble Lord, Lord McIntosh, who is looking very unhappy. I referred to automatic life sentences and I believe that the noble Lord may have been referring to other offences which concern consensual behaviour. Offenders who have committed sexual offences will be subject to extended supervision which, again, will be determined by a judge.
The Earl of Longford: My Lords, I hope that the noble Baroness will agree that it is still the Government's policy that offenders, both adult and juveniles, are still human beings. The policy of any government should be aimed at rehabilitation.
Baroness Blatch: My Lords, perhaps I may say with some deference to the noble Earl that the people who are on the receiving end of those awful crimes are also human beings and it is their protection with which we are concerned.
Lord McIntosh of Haringey: My Lords, perhaps the Minister will forgive me for returning to this matter
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because I do not believe that she understood my question. I was referring to those sexual offences which have no victims but which represent illegal consensual acts between adults. Although of course the protection of the public and victims must be paramount in relation to the sexual offences to which the Minister referred, there are sexual offences which do not fall into that category and for which the register and extra parole would not be appropriate.
Baroness Blatch: My Lords, if this measure is passed by Parliament, that would be a matter for the courts. However, perhaps I may give one example. If there was consensual sex between two male people, one of whom was a 13 year-old boy and one an adult male, that would be a sexual offence. I believe that extended supervision would be appropriate in those circumstances.
Lord Dean of Beswick: My Lords, does not the case of the offender who has absconded while on some kind of remedial exercise, and who was responsible for the death of two innocent infants, require individual examination to ascertain what has gone wrong?
Baroness Blatch: My Lords, any escape into the community which causes anxiety is a reason for us to look at why and how it happened and to do all that we can to ensure that it does not happen again.

Scottish Prisons: Multiple or Consecutive Sentences
2.48 p.m.
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
Whether there has been any ambiguity in Scotland during 1996 concerning the lengths of imprisonment to be served by convicted offenders in cases of multiple or consecutive sentences.
The Lord Advocate (Lord Mackay of Drumadoon): My Lords, no, there has been no such ambiguity in Scotland.
Lord Campbell of Croy: My Lords, I am grateful to my noble and learned friend for giving me that reassurance. Is my noble and learned friend aware that many people in Scotland thought that the premature release of prisoners, which was widely reported in the press in August, was happening there, although the Secretary of State for Scotland is responsible for Scottish prisons and there is a separate Scottish Prison Service? As that is one of several examples, should not the main political parties be concentrating on enlightening the media and the public as regards the present amount of devolution in place rather than trying to invent new and expensive layers of politicians with systems which are unlikely to be workable?
Lord Mackay of Drumadoon: My Lords, while I am sympathetic to much of what my noble friend said, perhaps I may concentrate on the Scottish Prison

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Service, which for those of your Lordships who are in any doubt is what this Question is about. It will come as no surprise to your Lordships to learn that because Scotland has a separate legal system it also has a separate prison service. On the rare occasions when prisons get into the news, as happened recently when a prisoner in Peterhead escaped when he was being escorted to hospital, it was the chief executive of the Scottish Prison Service who faced the cameras and explained what had happened to the people of the locality, who were understandably concerned. It was a matter for which he and his staff took responsibility and would investigate.
As regards the concerns which were expressed in England, I was unaware that the matter had caused any apprehension in Scotland. However, I certainly undertake to draw the point raised by my noble friend to the attention of the chief executive. If any further problem should arise in England, it is to be hoped that it will not cause any apprehension in Scotland.
Lord Carmichael of Kelvingrove: My Lords, I am most grateful to the noble and learned Lord for his thorough explanation. The impression that I have gained is exactly the one that he expressed. I am sure that we all agree that the noble Lord, Lord Campbell of Croy, went slightly wide of the Question on the Order Paper with his supplementary question. However, many of the legal people in Scotland with whom I have discussed the matter have agreed that there is not the same opportunity for ambiguity in the Scottish law as appears to be the case down south. I am most grateful to the noble and learned Lord for clearing up this little puzzle.
Lord Mackay of Drumadoon: My Lords, I am grateful for the noble Lord's support. The explanation may be that the law in Scotland on the matter is clearer than that south of the Border. That is why my right honourable friend the Home Secretary proposes to bring the law of England in line with that of Scotland.
Lord Campbell of Croy: My Lords, I am grateful to my noble and learned friend for the further points that he makes. However, because I have been fortunate enough to spend almost all of the past three months at home in northern Scotland, I was very much aware of public concern that prisoners were being released both north and south of the Border without receiving the customary preparation and probation work beforehand. Is it true that, as reported, about one-third of the prisoners who were released early south of the Border reoffended within three months?
Lord Mackay of Drumadoon: My Lords, I have with me some information in that respect which was up to date until a few days ago. Noble Lords will appreciate that the statistics that need to be prepared take a few days to come to hand. However, my information is that the level of reoffending was not as high as the figure suggested by my noble friend. About 541 prisoners were released early. As of a few days ago, some 200 of that number would have been released in any event. Therefore, we are dealing with a period of only three
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months. Of those 541 prisoners, six are back in prison or in some other form of custody either for further offences or because they have been recalled for breach of licence. A very small number have reoffended and been taken back into custody. There may be others who have reoffended on a more minor level which has not justified their recall to custody or the refusal of bail. As I said, although my information is a few days out of date, my understanding is that the figure is way below the one-third mentioned by my noble friend.

Whitehall Buildings
2.53 p.m.
Lord Wallace of Saltaire Lord Wallace of Saltaire asked Her Majesty's Government:
Which other buildings in Whitehall, apart from the Treasury, they consider most suitable for partial conversion into residential and hotel accommodation.
Baroness Miller of Hendon: My Lords, the Executive Agency, Property Advisers to the Civil Estate (PACE), which co-ordinates departments' plans, informs me that it is not aware of any proposals for the partial conversion of Whitehall buildings into residential or hotel accommodation.
Lord Wallace of Saltaire: My Lords, would the Minister care to comment on a report in last Friday's Financial Times which stated that if the projects in the pipeline are successful the whole government office estate could be transferred to the private sector? Does the noble Baroness consider it wise that property which has been in government hands for 200 years and situated on land which the Crown has owned for 800 years should now be sold off? When one thinks about the Foreign Office, Downing Street, the Cabinet Office, Horseguards—and, indeed, Admiralty Arch, about which there has already been speculation—one wonders whether it is right for the Government to be selling off such fundamental Crown properties.
Baroness Miller of Hendon: My Lords, that was a rather long question. I should advise the noble Lord not to believe everything he reads in press reports; I am sure he does not. The private finance initiative, which is what much of the question refers to, is really about securing value for money. Moreover, we believe that most departments have no in-house expertise when it comes to property ownership. Instead of owning a depreciating asset, being exposed to cost over-runs and then managing the asset itself, we are contracting out to buy a quantity of services accommodation at set standards from the private sector. Payment will be dependent upon the delivery of those services. Risks are shared, thus reducing government exposure and introducing the prospect of reward to contractors who manage services well. As a matter of fact, we believe that the PH is a very good initiative and one which will provide very good value for money for the taxpayer.
Lord Richard: My Lords, I should perhaps point out to the Minister that she has just given a rather long

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answer. Further, if I may say so with the greatest of respect, it was a somewhat incomprehensible answer. What exactly do the Government have in mind in relation to Whitehall and the Crown estate? Is it a sale with a lease back to the Government? I am not quite sure what the Minister said in that respect. Can the noble Baroness give an assurance that at least Nos. 10 and 11 Downing Street will remain in the public sector? While there will be a change of occupancy after the next election, we would not wish to see a change of functions.
Baroness Miller of Hendon: My Lords, the noble Lord stole my joke about long questions and answers. Perhaps I may make the position quite clear.
Noble Lords: Oh!
Baroness Miller of Hendon: I am so sorry that noble Lords opposite did not understand what I said the first time round. I thought that I had made the position quite clear. However, I am prepared to repeat myself. It is for departments to dispose of any office space they no longer require. That is really what we are talking about. Any consequent redevelopment or change of use is subject to the normal planning procedures operated by the local authority, which in the case of Whitehall—to which the noble Lord referred—is Westminster City Council. I can assure the House that this Government have no intention whatever of selling off No. 10 or No. 11 Downing Street; nor indeed the Palace of Westminster. We will most certainly be here after March, April or May of next year, or whenever. If noble Lords opposite have different views and believe that they will do differently, they may decide to make this beautiful palace redundant, but we will not allow that to happen.
Lord Richard: My Lords, I am sorry to press the point. Can the Minister say whether there is any specific office accommodation in and around Whitehall which the Government at present feel they do not require and in respect of which they are about to go through the quite astonishingly contorted actions just mentioned?
Baroness Miller of Hendon: My Lords, I cannot add much to what I have already said. As I said in my original Answer, there are no such plans. Indeed, I shall repeat it. The Property Advisers to the Civil Estate inform me that they are not aware of any proposals for the partial conversion of Whitehall buildings into residential or hotel accommodation. That seems to me to be perfectly clear. I am surprised that the noble Lord opposite, with all his high intelligence, does not understand plain English.
Lord Wyatt of Weeford: My Lords, is the Minister aware that every answer she has given today increases the disquiet of the House? Is it not absurd to be thinking of handing over any area of one of the most famous administrative centres in the entire world to the private sector?
Baroness Miller of Hendon: My Lords, I am very surprised and indeed sorry that the noble Lord feels any
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disquiet regarding what I said. It is certainly not my intention to make anyone unhappy; indeed, I always try to make people happy if I can. As I tried to say, it is for individual departments to consider the future of their Whitehall buildings. There are advantages in the PH but any proposals will be subject to normal planning procedures and planning policy as well as all the necessary guidance on historic buildings and other matters. I can certainly say that this Government very much protect the heritage of all of our buildings.
Viscount Mountgarret: My Lords, am I right in thinking that some time ago Members of both Houses of Parliament were desperately short of offices and other accommodation? If that is the case, why is part of Whitehall being converted for a use other than that of parliamentary business? At the eastern end of the Palace of Westminster there seem to be major developments. Indeed it appears that New Scotland Yard is being used for government purposes.
Baroness Miller of Hendon: My Lords, I am sorry that I cannot give a particularly satisfactory answer to my noble friend. I do not have any information about that, but I shall most certainly find out.
Lord Carmichael of Kelvingrove: My Lords, it is slightly worrying that in all her replies the noble Baroness has not given any reassurance as regards the future of Dover House in Whitehall. That is important to many people in the Scottish Office.
Baroness Miller of Hendon: My Lords, I know of no plans. I have said that we have heard of no plans. I have not been informed of anything in that regard. As far as I am concerned, there are no plans in that regard.
Lord Campbell of Alloway: My Lords, I am a little lost. Am I right in saying—as I understand the Question—that the Government do not consider the Treasury "suitable for partial conversion"? Am I right in saying that they do not consider anything else suitable for partial conversion? Is that the answer to the Question?
Baroness Miller of Hendon: My Lords, I should make clear something that perhaps I have not made clear—
Noble Lords: Oh!
Baroness Miller of Hendon: I am sorry if noble Lords think I may have misled them in some way. The position as regards the Treasury building is different from that of other buildings to which the noble Lord, Lord Richard, referred. I shall read my brief exactly to make the position clear to noble Lords. On 13th September the Treasury announced that it had decided to appoint Exchequer Partnership plc to redevelop its headquarters in Whitehall. This imaginative bid breaks new ground—
Noble Lords: Oh!
Baroness Miller of Hendon: Noble Lords may well laugh, but it most definitely is an imaginative bid. It

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will break new ground as regards the private finance initiative. It offers good value for money for the taxpayer which we on this side of the House are particularly keen to achieve, and it provides modern, efficient office accommodation for the Treasury which is very necessary. Negotiations with Exchequer Partnership plc are continuing. Obviously at this stage, for commercial reasons, it would be premature to reveal further details. However, the Treasury expects to sign heads of terms shortly and further information will be provided then. I am sorry that I did not make clear that that position was different from the general position I discussed subsequently.
Lord Mackie of Benshie: My Lords, the noble Baroness said there were no plans as regards Dover House. Does that mean that if the Scottish Office wants to get rid of the building, it can put it up for sale, or let it, for some imaginative proposal and the Government would have no objection in principle?
Baroness Miller of Hendon: My Lords, since 1st April it has been for individual—
Noble Lords: Oh!
Baroness Miller of Hendon: I accept that noble Lords opposite find that date humorous. I agree that it is an unfortunate date to have to announce. However, since 1st April it has been for individual departments to consider the future of their Whitehall buildings. I can inform the noble Lord, Lord Mackie, that it is a matter for each individual department. Any proposals would be subject to normal planning procedures and planning policy—I can do no better than repeat what I have said—and would take into account guidance as regards historic buildings and other matters.
Lord Wallace of Saltaire: My Lords, will the Minister confirm that one possible use for those parts of the Treasury buildings which the Treasury will no longer need is as residential and hotel accommodation? Will the Minister also confirm—as she said in a previous answer—that under the private finance initiative the Government consider property to be a depreciating asset whereas most of us were brought up to understand that property was an appreciating asset which one sells only when one is in financial distress?
Baroness Miller of Hendon: My Lords, I am not in a position to confirm what the noble Lord has just asked. However, I can inform the House that an announcement will be made shortly by Sir Terry Burns who is the highly respected chairman of the Treasury Management Board. Negotiations over the heads of terms regarding the Treasury building with the proposed private sector partner are currently in progress. For obvious commercial reasons it would not be in the Government's interest to make any further comment or announcement at this time.
Lord Mowbray and Stourton: My Lords, I do not wish to add to the misery of the noble Baroness but
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is it not time for the Government as landlord and active owner of all these places to call a halt to these rumours? A few months ago we were told that Admiralty Arch was to be sold off. Shall we be told next week that the Palais de Danse will buy the Banqueting Hall? I say with great respect that it is rather frightening that all these lovely buildings which have been designed for a purpose are being treated in this way.
Baroness Miller of Hendon: My Lords, I have spoken at length about the Treasury building but other than that building there are no further plans in this regard.
Baroness Hayman: My Lords, is the Minister aware that her paean of praise for the PFI rings strangely untrue to people working in the National Health Service? On the issue of value for money, would it not be sensible to have an investigation and study undertaken by the Audit Commission on the value for money of the PFI in the NHS before the Government embark on any imaginative PR schemes elsewhere?
Baroness Miller of Hendon: My Lords, I think the noble Baroness will agree with me that that matter is wide of the Question.
Baroness Park of Monmouth: My Lords, I too wish to be clear about this. Are we really saying that private finance initiatives, or any other such initiative, may be taken by individual government departments and not referred in any way to Parliament? This is a national issue. We are talking about buildings that belong to the nation. I am sorry but I find it extremely difficult to understand how one can justify the fate of a building resting in the hands of a particular department at a particular moment in time.
Baroness Miller of Hendon: My Lords, as I said, there are no plans in this regard in relation to other buildings. I have nothing further to add.

Business of the House
3.7 p.m.
The Lord Privy Seal (Viscount Cranborne): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That Standing Order 38 (Arrangement of the Order Paper) be dispensed with on Wednesday 16th October to enable the Public Order (Amendment) Bill to be taken before the Motion standing in the name of the Lord Avebury, and that Standing Order 44 (No two stages of a Bill to be taken on one day) be likewise dispensed with to enable the remaining stages of the Bill to be taken that day.—(Viscount Cranborne.)
On Question, Motion agreed to.

EU Enlargement and CAP Reform: ECC Report
3.8 p.m.
Lord Middleton Lord Middleton rose to move, That this House take note of the Report of the European Communities Committee on Enlargement and Common Agricultural Policy Reform (12th Report, HL Paper 92).
The noble Lord said: My Lords, I begin by declaring an interest in the common agricultural policy in that I am a director of farming companies in receipt of various payments under CAP schemes. Further, I should explain that the word "enlargement" in this report refers to the enlargement of the European Union to include 10 countries which have applied to join. Those countries are Poland, Hungary, the Czech Republic, the Slovak Republic, Bulgaria, Romania, Slovenia and the three Baltic states: Lithuania, Latvia and Estonia.
Last December in his Statement to Parliament on the Madrid European Council my right honourable friend the Prime Minister said:
"I now refer to enlargement. Ahead even of prosperity, the European Union exists to provide security and stability for the peoples of Europe. For that reason, I believe that enlargement is the most important task facing the European Union. Having demolished the iron curtain, we must never again have a dividing line running through the middle of Europe… The Madrid Council considered reports from the Commission on the implications of enlargement for the European Union's policies, and those are profound. To be affordable and to be consistent with the EU's obligations under the general agreement on tariffs and trade, the common agricultural policy will have to be reformed when the Union enlarges".— [Official Report, Commons, 18/12/95; col. 1220.]
That Statement fully endorsed Sub-Committee D's 1994 report to this House on the association agreements between the EU and the central and eastern European countries. Early on in that inquiry we recognised that East-West trade was only a small part, although an important one, of the problems that had to be tackled before any possible accession by those countries. In that report we said that enlargement could not take place without substantial reform of the CAP.
At the 1994 Essen European Council it was recognised that something had to be done about an unreformed CAP which stood as an obstacle in the way of enlargement. The Commission was instructed to suggest a way forward. In consequence a strategy document was produced last autumn over the signature of the Agriculture Commissioner, Mr. Fischler. It is the report to last December's Madrid Council to which the Prime Minister referred in his Statement. It is on that paper that Sub-Committee D has based this year's inquiry; and it is the document referred to under the heading on page 7 of our report.
In asking the House to take note of the report, I wish to express my gratitude to my colleagues on Sub-Committee D and to the many individuals and organisations who provided evidence, both oral and written. I should like to pay tribute, too, to our specialist adviser, Professor John Marsh of Reading University whose advice has been invaluable, and to the excellent work of our clerk, Miss Mouland. Our thanks are due, too, to our embassies in Lithuania and Poland which looked after us so well during our visits this summer.
I have much pleasure in being able to present this report to your Lordships before leaving Sub-Committee D because it is built on and rounds off three major reports on this theme made while I was chairman of Sub-Committee D. In our 1991 common agricultural policy report we criticised the Commission's plan for CAP reform, which was then known as the MacSharry proposal, and gave our opinion as to how such reform ought to be carried out. The reforms made in 1992 came some way towards that prescription, but not far enough. I have mentioned our 1994 report on the trade agreements with the CEEC and our conviction that no enlargement was possible without CAP reform. The present report contains echoes of our 1990 report on The Future of Rural Society.
I turn now to the Commission's strategy document, the subject of our inquiry. It is a very interesting paper because, as we say in our introduction on page 7, the Commission recognises for the first time in print that the 1992 CAP reforms did not go far enough. (Perhaps I may refer to the common agricultural policy as the CAP for brevity's sake.) The paper describes accurately the agricultural economies of the applicant countries and makes various proposals as to how those could be accommodated on enlargement of the EU.
On the question of CAP reform, the paper offers three options. The first is to maintain the status quo which, for reasons upon which I shall enlarge, it rightly rejects out of hand. The second option offers a policy for reform which coincides precisely with the prescription which our committee gave in our 1991 CAP reform report four years earlier. Our recommendations for CAP reform were, and still are, that there should be reductions in the levels of agricultural price support progressively to a set time scale towards world market prices and consequent reduction of export refund payments and import controls. We said that there had to be phasing out of the quotas. We recommended the unfastening of agricultural policy mechanisms from those relating to regional, social or environmental policies. We say that any compensation payments to farmers should be transitional and decoupled from production decisions. Those are repeated virtually word for word in the Commission's strategy paper, option 2.
However, the paper shrinks away from this option as being too radical. Nevertheless it offers a third option which would in effect reach the same target but much more slowly and through a process of evolution. During such a process it would retain some of the undesirable features of the current CAP. In addition, it makes some useful if vague proposals for what it calls an integrated rural policy.
Our report examines the paper in detail with particular attention to the pressures other than enlargement which give urgency to CAP reform. We make our own recommendations on how to do so building on those of the Commission. We were pleased throughout our inquiry to note how well our 1991 prescription for reform has stood the test of time. In its paper, the Commission comes some way along our recommended road. As we took evidence we noted how close to our ideas were the ideas of other witnesses, notably MAW, our own National Farmers' Union and all the agriculture

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economists in this country and in the EU who gave evidence. Most member states and organisations within them will need persuading, although there are signs of enlightenment among some influential bodies both in Germany and in France.
We follow up our 1994 report by looking again at the East-West trade arrangements, which remain highly unsatisfactory and present another obstacle to the accession process. We attempt to put flesh on to the skeletal proposals for environmental and social measures which the Commission recognises must go along with a more rigorous European agricultural economic climate. We finish with the hope that, having dared to put a toe into the water of reform, the EU will take the plunge while the opportunity is there. The stability and prosperity of Europe depend upon it.
That is an outline of the report. Looking at its contents in a little more detail, Part 1 introduces the report and provides its background. Part 2 describes the Commission's agricultural strategy paper including the three options to which I have referred. Part 3 summarises the evidence. It is a long section which reflects the weight of evidence taken, and the desire of so many individuals and organisations to express their views. Part 4 presents the opinion of the committee which is summarised in Part 5.
In our opinion section we welcome the recognition by the Commission that the present CAP cannot be expected to accommodate the 10 applicant countries. We agree with the Commission that, with the expected increase in production in the CEECs added to that of the EU and the surpluses that would be engendered, an unchanged CAP would face increased budgetary costs and that this cannot be contemplated.
We agree with the Commission about the other pressures on CAP such as, first, the future round of WTO talks scheduled for 1999 which will be designed to take further the reductions in agricultural production and support begun in the Uruguay round. Secondly, there is the prospect of enlargement, which will create further problems in complying with GAIT commitments, especially commitments on subsidised exports. Accession of CEE countries at high support levels will result in surpluses in an enlarged EU far in excess of those allowed to be exported with subsidy. Thirdly, as I have said, inclusion of the CEE countries would increase budget expenditure on an unreformed CAP. The Commission's strategy paper gives an estimate of 12 billion ecu per year. MAFF in evidence calculated an additional 15 billion ecu annually for Poland, Hungary and the Czech and Slovak republics alone on a 1996 draft agricultural budget of 41 billion ecu. Fourthly, the world demand situation provides an opportunity to be exploited (as is implicit in United States farm policy and its Farm Bill, now called the FAIR Act). A CAP which relies on supply management in isolation from the world market is ignoring this trend. Fifthly, the EU budget deal expires in 1999. Lastly, the CAP is urgently in need of reform anyway in its own right.
In our opinion section also we regret what seems to be a lack of enthusiasm on the part of the Commission and the Council to recognise the urgency of the need for
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reform. Applicant countries must know in advance how to plan their agricultural policies with confidence that the CAP is not a moving target.
We deplore the continuing restrictions on imports of agricultural produce to the EU from the CEECs under the Europe agreements.
In regard to the mechanisms of reform, I have indicated that we would have preferred option 2. Alas, this option would have little chance of getting through the European Council and undoubtedly that is why the paper shies away from it with a rather lame excuse about environmental and social risks. These risks we seek to minimise later in the opinion section.
Our committee recognised the political realities and refrained from baldly recommending the radical option and condemning out of hand the milder option 3. We did not want the report to be at once discarded in Brussels as insensitive, especially at the present time. We wanted our report to receive attention in Brussels as a constructive response to the strategy paper.
MAFF in evidence argued that the contrast between evolutionary and radical reforms was largely a false antithesis and that, logically pursued, the evolutionary and radical reform would in practice lead in the radical direction.
So we go along with the evolutionary approach in option 3 in so far as it advocates reduction in price support to world market levels. That would indeed be a giant stride along what we consider to be the right road to CAP reform. We say, however, that the CAP must start to get rid of supply management mechanisms. It should retain intervention only as a safety net and any compensatory payments should be short-term adjustment aids only.
Coupled with such reductions we agree with the Commission that there should be carefully planned policies to offer alternative sources of employment and other social objectives in rural areas. We say that these and environmental policies must be totally separated from agricultural policies. If you try to make one set of policies do the work of another set, you end up with confusion. We reject once again the concept of cross-compliance.
I read with interest a DGII publication which has just recently emerged from Brussels on the subject of compensation payments to fanners. DGII is the department which deals with economics and finance. The paper concludes that such benefits could be obtained more efficiently with "targeted instruments". "Structural measures", it says, "seem more appropriate". This is wholly in line with our opinion on the subject given in our report. So I hope that there will be close liaison between DGII and DGVI as the Commission deliberates on enlargement.
The Commission says at the end of its strategy paper that it is,
"confident that the ideas presented [therein] will be fully and widely discussed within the Union and the CEECs".
We hope that this report will help to stimulate the discussion and lead to the formulation of legislative proposals which will promote speedy reform of the CAP.
I was heartened three weeks ago listening to Mr. Fischler's Chef de Cabinet at a conference in which I had been asked to take part. He referred to the Commission's view that the 1992 CAP reforms were only the start of the process. He recognised the pressures for reform which I have described; he recognised the trend towards free agricultural trade, with less supply management and less price support. He agreed that there was a need for a safety net compensation for those European farmers who will be hit by CAP reform and the need for substantial support for rural economies. That is fine, but he gave no indication of any sense of urgency.
Our report expresses concern and, indeed, dismay that the Commission and Council have not produced any timetable for reform. We therefore end by saying that they must get a move on:
"The Commission and the Agriculture Council must act with the utmost urgency to begin the process of reform".
If it is envisaged that accession by the CEECs should begin in the year 2000, discussions on detailed CAP reform are needed now.
When this House debated our 1994 report on trade with the CEECs and enlargement, I quoted our then ambassador when he spoke to me on a visit by members of our sub-committee to Budapest. I believe that Sir John Birch's words will bear repeating. They are even more relevant two years later. He said:
"If 10 years ago we thought we could obtain a situation in Eastern Europe where the Russian army had withdrawn into Russia and where the CEE countries were moving into parliamentary systems of government, we should have paid billions of pounds to achieve it. Now we have got that situation for virtually nothing. For heaven's sake do not let us lose it".
I commend the Report to the House.
Moved, That this House take note of the Report of the European Communities Committee on Enlargement and Common Agricultural Policy Reform (12th Report, HL Paper 92).—(Lord Middleton.)
3.29 p.m.
Lord Reay: My Lords, as I follow my noble friend Lord Middleton on the speakers' list I should like to begin by paying a tribute to his tenure of the post of chairman of Sub-Committee D, which he relinquishes at the end of this Session. In fact the beginnings of his double tenure of the chairmanship reach back far further than my membership of the committee. However, I served long enough under his chairmanship, including visits to three central European countries, to learn to enjoy the experience immensely and to profit hugely along with my colleagues on the committee from the unique combination of qualities that he brought to the job.
My noble friend managed on the one hand to be unfailingly pleasant, enthusiastic and courteous; on the other hand, a steely ruthlessness ensured that he never lost his grip on the timetable, whether of a single morning's evidence session or of the report as a whole. And he never lost sight of the political objective. Needless to say, under his chairmanship one also wholly forgot party differences.
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My noble friend's overriding political objective was, above all, to maintain the independence and integrity of the committee. As he himself is wont proudly to point out, it is extremely unusual, if not unique, in Europe to find a parliamentary agricultural committee that calls for less public assistance to be given to farmers. My noble friend's wisdom, shrewdness and political sagacity are widely appreciated in this House and he will be sorely missed on Sub-Committee D.
I declare an interest as a landowner and director of an agricultural land-owning company.
In paragraph 1 of our report we acknowledge that the European Commission in its agricultural strategy paper has shown a change of heart towards CAP reform. For the first time it has shown recognition that the maintenance of the CAP in its present form, in the face of the challenges that lie ahead of it, is not a feasible option. We welcome that. The problem lies in the fact that it has not seen how to move from that general appreciation to a set of concrete proposals embodied in a strict timetable. When it was presented with an opportunity to take the all-important first step, as with the 1996 agricultural price review, it did not seize it. That inaction on the part of the Commission seems on the face of it curious as well as deplorable. With world prices recently standing well above CAP support prices for many products, notably food grains, now would have been a particularly good time to act. Support prices can more easily be reduced when they have less immediate relevance to farmers.
Yet the Commission has not acted. Why not? Could it be that the same world market conditions that provide an opportunity to start the process of reform have also removed the essential incentive to do so by relieving pressure on the Community budget? That would be an ironic conclusion to draw but, if true, provides perhaps just the latest illustration of how unforeseeable are the consequences of bureaucratic price fixing and detailed bureaucratic determination of agricultural policy generally. So the future world food supply situation has a bearing on the prospects for CAP reform.
The predictions are not unanimous. On the one hand there are those like Lester Brown of the United States who argues that rising demand for food in China, for example, will be responsible for much higher world food prices for years to come. On the other hand there are those like the experienced Mr. David Hadley of MAFF who, having heard all these predictions before and finding that they never amounted to very much for very long, observe that the underlying yield trend is still upwards without advances in biotechnology having yet had much of a chance to make a contribution and who therefore see little reason to expect world prices to remain above European Union prices beyond, say, 1997. If Mr. Hadley's view is closer to being the right one, there may never be a more propitious time to start introducing CAP reforms, or a time at which it can be done less painfully, than now.
Where is the impetus to come from? The Government, in their reply to the report, seem wholeheartedly to embrace virtually every one of the committee's conclusions. Their reply states unequivocally,

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"The Government agrees that, following a period of adjustment, EU farmers should be expected to obtain the return for their production solely from the market and this should be on the basis of world prices … there should be no need for supply management mechanisms and that intervention, if it remained, should revert to a purely 'safety net' role to deal with genuine market emergencies".
That view is also endorsed by, among others, consumer groups, manufacturers who are made uncompetitive by the high prices they have to pay for raw materials brought within the European Union, and those like horticulturalists, leading unprotected lives outside the CAP, who compete with subsidised producers of the same resources, for example land.
Is the desire to see a market-driven CAP unique to this country? Not, it appears, entirely. Perhaps our most glittering witness was the famous German agricultural economist, Professor Stefan Tangermann of Gottingen University. He arrived alone and kept the committee enthralled with one-and-a-half hours of lucid evidence delivered in English. He was plainly of the same fundamental view as ourselves. He described himself as an internationally minded economist who wished to see as many countries as possible living with world prices. He was in two minds as to whether he wanted to see any mechanism at all in operation to protect farmers from movements in world prices. He saw the political case for a safety net—he suggested that intervention prices might be set at a level of 75 per cent. of the moving average of world prices over the preceding five years—and proposed that farmers receive payments to enable them to adjust to lower world prices over a 15-year period.
Professor Tangermann pointed out that there were sectors within European agriculture which led the world in efficiency—he singled out pork and poultry producers—and which would be quite able to compete globally once they could be sure of not having to pay more than world market prices for their foodstuffs. In his view, even much Community cereal production, particularly of wheat, was competitive at world prices under normal market conditions. He said that in Germany, outside official circles, a debate was beginning and that there existed thinking reflecting the attitude found in farming circles in the United States that it was time government got out of the farmers' way.
Interestingly, he attributed the change in Commissioner Fischler's thinking (which has led the commissioner to acknowledge that further reform of the CAP is necessary) to French influence, reflecting the views of "élite" French farmers who feel confident they can produce for the world market if given a chance.
Sir David Naish, president of the NFU, confirmed that within COPA, the European umbrella organisation for farmers' unions, it was now permitted to talk about reform of the CAP whereas three years ago the idea would have been unmentionable. But outside officials circles, where it counts, in France or Germany, those views are not, or are not yet, allowed to be heard.
When questioned about German attitudes to the CAP, Mr. Stephen Wright, Under-Secretary at the Foreign and Commonwealth Office, had this to say:
"The Germans are clearly very sensitive about the idea of reforming the CAP. It is not a subject that they discuss easily".
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Those words spoke volumes. It is political leadership that is lacking. It is not as though there had been any retreat, any resiling from the objective of European Union enlargement.
President Chirac, speaking last month in front of the Polish Parliament no less, pledged the support of France for the entry of what he termed "our sister country in the East" into the European Union by the year 2000. Yet plainly it would be preposterous to admit the CEE countries into a pre-reformed CAP.
The extension of milk quotas or set-aside, or of the highly artificial, costly and obscurantist restrictions of the sugar regime, to the countries of central and eastern Europe is a prospect too horrifying to contemplate. Yet what alternative to measures of supply control would there be were the high prices of the CAP to stimulate production way beyond the capacity of the domestic market to absorb and with GATT forbidding further access of subsidised export to the world market? It is not as if delay served any good purpose. Far from it. As my noble friend pointed out, acceding countries should know as soon as possible the type of CAP they are to be required to adopt. For one thing, the longer the CAP provides an example of protectionism in action the greater the danger of those countries proceeding to emulate it in miniature in their own economies. Indeed, we saw that process at work on our visit to Lithuania.
There is also the consideration emphasised to us by our MAFF witness, Mr. David Hadley. With reform now inevitable within a short and ever reducing time span and recognised at last by the Commission to be inevitable, the European Community is throwing away valuable time that could and should be spent paving the way for reform by explaining the necessity for it to Europe's fanners.
The European Union's enlargement to include the CEE countries and the present unreformed CAP reflect all the incompatibility of an irresistible force meeting an immovable object. Both remain on course for their dramatic, almost ordained, collision. All of us on the committee had no doubt: it is the object that must move. However, as the report makes clear and as my noble friend emphasised, European Union enlargement does not provide the only pressure for CAP reform. It is considered quite likely that the CAP may eventually produce surpluses that even present CAP restrictions may make it impossible to export. Beyond that, before the end of the decade, we have a new World Trade Organisation round which is certain to produce international pressure for further removal of CAP subsidies, particularly now that the United States in its latest farm Bill has embraced a further impressive dose of liberalisation for its farm sector.
There is a final reason why the CAP should be reformed—because it is a wasteful, expensive and inefficient policy that looks more and more anachronistic the more other parts of all economies are liberalised, privatised and freed from states' dependency. All political parties in this country seem now agreed that this is the age for smaller government. The time is fast approaching when governments need to start at least a partial withdrawal from agriculture too.
3.42 p.m.
Baroness David: My Lords, I must first apologise to the House. I shall have to leave this debate at a quarter to five because I am chairing an all-party group at that time. I have explained that to the noble Lord, Lord Middleton. I hope very much to be back at any rate in time for the winding up of the debate and I shall read everything that I have missed.
First, I should like to echo everything that the noble Lord, Lord Reay, said about our chairman. He has very great knowledge and expertise which was invaluable to the committee. He has given us a very clear message. Reform is essential, and action should be taken now. The political reasons for turning down the more radical option, option 2, are understandable. But that does not mean that there should be silence now on immediate moves to get on with the evolution from the 1992 reforms. The disappointment at the recent reaction to the Commission's proposals to increase the tariff quotas which govern imports of agricultural produce from the CEECs is mentioned in our report. The Commission proposed an increase of 10 per cent. a year for five years, but in Council the opposition to that modest increase was such that it was reduced to 5 per cent. As we said, that does not bode well for future moves towards accession. It is agreed that politically accession of the CEECs is most desirable. They must be feeling frustrated and naturally complain of the moving target that the CAP seems to be.
In my speech I shall concentrate on Lithuania. I was lucky enough to be one of the delegation which went there. It is a country which I had not visited before and I found it a fascinating experience. Vilnius is an ancient city. The old parts are both interesting and attractive. There are many beautiful churches which are gradually being restored to their original use. One had been changed into a museum of atheism.
Our first day was spent in meetings at the Ministry of Agriculture with the Minister and two State Secretaries. The State Secretaries were civil servants. The Minister told us that they were working with the Czech Republic and Poland in preparation for membership of the WTO. He complained that agriculture in Lithuania was "oppressed" by restrictions of agricultural imports to the EU. That is a complaint that is made constantly and, it seems to me, with justification.
The collective farms were being privatised, and a process of restitution of land to former owners was under way. They suffered from shortages of finance and machinery, which the state could do little to remedy. They needed investment and aid from agricultural consultancies. They still saw their major markets as being in the East. Technological aid was coming from the West, but there was a need for bigger quota allocations from the EU so that their farmers could become accustomed to the standards required by this market. They said that an expansion of quotas would be seen as a gesture of goodwill to Lithuania for its important part in the fall of the former Soviet Union. The Minister asked for a period of time to prepare its agriculture for competition with the EU.
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State Secretary Stalianus described the forms of land restitution. To carry out the reform, 426 land reform units each employed five or six specialists and, at that time, 41 per cent. of the total land area had been measured and prepared for return. A 1994 law had established the legal basis for a market in land, but it was not developing as well as expected because few people wanted to buy. Foreign investors were permitted to lease land for up to 99 years. State Secretary Purvinskis explained that before land privatisation those working on the land had been specialists in certain aspects of the agricultural process. They found it now more difficult to adapt to management of the whole farm structure. The processing industry was suffering from under-investment and needed help. The PHARE programme was important in reinstating the vitality of that sector.
The impression at the end of that morning was of certain frustrations. They felt that the EU could be more understanding and that aid, in both advice and investment, was urgently needed.
Our meeting in the afternoon with the parliamentary agricultural committee I found a little depressing. The members were sceptical about accession to the EU and that scepticism was fuelled by the high subsidy levels for agriculture within the EU and with the tariff barriers which hindered imports from Lithuania. The EU, they thought, was more concerned to deal with its own surpluses than to welcome foreign trade. Therefore, they continued to look to the East to develop their markets. The chairman contrasted the attitude of the "philosophers" in Brussels, who promoted their case for accession, with the more realistic attitude of the farmers. They sought economic adjustment rather than the equalisation of legislation, and concluded that it would be a very long process.
Our next day was highly enjoyable. We got out into the country and met with representatives of local government of the Panevezys County. We discussed their area and their responsibilities. They told us that they exported dairy products, butter, cheese and milk powder to the West, but, again, found access to the European market very difficult. They stressed the importance of co-operation between producers and processors. But it appeared that the memory of the former co-operative structure acted as a disincentive to establishing that relationship.
We moved on to a dairy processing plant and it was fascinating. We were given a great welcome. The machinery was both old Soviet-supplied apparatus, and new machines. They were investing in new machinery as profits made it possible. They were keen to become modern and efficient. This project had in fact been set up jointly with the PHARE programme and ADAS to promote marketing techniques for agriculture. They were proud of their products and were extremely generous in pressing them on us: ice cream, ice lollies and sour cream were being prepared and packaged; curd rolls coated in chocolate; and cakes elaborately decorated. I thought that a liquid form of yoghurt was particularly good. When we left the dairy, I asked Professor Marsh whether he thought that it would

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conform to EEC regulations and he said that it definitely would not. But I felt that they were making strenuous efforts.
We moved on to the Raguvele Agriculture Enterprise where Mr. and Mrs. Rimseviciai gave us a tour of their farmlands. They were working to reclaim land owned by her grandparents. It was a large property. They were being extremely enterprising. They had installed machinery to make bread and pasta from their stored grain. They made pasta for diabetics. There was a large orchard and good storage facilities. They had established a restaurant in a former manor house, where we had an excellent lunch. The sanitary arrangements would certainly not have come anywhere near western standards. We were impressed by their enterprise and energy; they had certainly "added value" to the raw materials their estate produced and I wish them well.
On our last morning we visited an open market and then a supermarket that had recently opened. We were surprised at the variety of vegetables, fruit and tinned produce on offer; there was a real choice. In a covered area there were two largely unrefrigerated areas, one selling cheese and cooked meats and the other raw meats. I tasted a really delicious pâté, but to my disappointment, Professor Marsh advised me not to buy.
We were told that the fresh fruit and vegetables were imported from the other Baltic states and from the East. The supermarket was like any supermarket here. Eighty per cent. of its goods came from Lithuania. They made their own bread and cakes on the premises. We were rather surprised that we were allowed into some of the refrigerated areas, but I suppose we were rather special guests.
The impression we had at the end of our visit was what a huge task the CEEC countries had in transforming their states from communism into free democracies. In Lithuania we felt that the older politicians and farmers were not so enthusiastic as the younger politicians, civil servants and those in local government. The older ones hankered a bit for the past, where perhaps everything was simpler. Everyone there thought that the EU was not being as helpful as it could be because of the tariff barriers and the quotas and, above all, they thought that the CAP was a moving target—a natural resentment, one would think, and our recommendations deal with that. I hope that notice is taken of them and of the fears expressed.
The press coverage to our report was disappointing but at least the Farming News was enthusiastic, as was the letter to our ambassador from the Lithuanian Minister of Agriculture. He said that the report reflected the real situation of agriculture in that country.
Perhaps I can make one final point in relation to the integrated rural policy, which no one found easy to define. I would strongly support the recommendation in paragraph 113 of the report, which urges DG VI (agriculture) and DG XI (environment) to co-operate in achieving the necessary levels of harmonisation of activity. Co-operation between the directorates is extremely important.
3.52 p.m.
Lord Beaumont of Whitley: My Lords, I am the first
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speaker in this debate who was not a member of the committee and am therefore the first from outside to pay tribute to the report as such and to its introduction by the chairman. I do that wholeheartedly, though I do not necessarily agree with everything in the report.
The report's title is Enlargement and Common Agricultural Policy Reform. I hope your Lordships will forgive me if I take the opportunity to speak on what I regard as the basics of agricultural policy for this country and deal with enlargement only towards the end of my comments.
We were reminded in the report that the origin of the CAP lay in the need for food security and the price stability to support it. That was and probably still is a worthy aim. Twice in this century we have needed food security and, looking at the state of the world, it is impossible to say that we will not need it again. For a time, in the Cold War, we were tempted to think that any likely conflict would involve the kind of warfare in which food security was irrelevant. I do not know if we were right to think that, but it does not apply any longer. Moreover, I believe that a world run on sustainable lines—to which we are all now committed—means that there is a need for each country or each group of countries to be sustainable in themselves.
It is our misfortune in this country to be grossly over-populated. We must meet that situation with a population policy, and that has been widely neglected by politicians of all parties over a long period. I hasten to say that by a population policy I do not mean anything as Draconian as the policy applied in China. Those who are looking for a population policy would do well to consider the experience of the Indian state of Kerala. It started with the same kind of population increases as experienced by China but brought the increases down to the same situation as in China but all by voluntary and democratic means.
We must also continue to seek and maintain food security. The noble Lord, Lord Reay, touched on a matter discussed seriously in the report and taken up by various witnesses as to whether world prices for agricultural products will go up in the future. I still believe in the prices rise forecast by the World Watch team. The main argument against came from Mr. Hadley of MAFF, quoted in Section 13—that prices will not go up because, although there will be increased demand, those who are demanding will not have purchasing power. That is the most spine-chilling statement that I have seen for a long time. It is possible that Mr. Hadley is absolutely right. But the idea that the world is so appallingly run that we will permit mass starvation before we provide national and international finances to prevent it is one that I totally reject. If I say that that will happen only over my dead body, your Lordships may answer "probably". But I hope that it will also be over the dead body of the whole of the British Parliament.
If I and World Watch are right in our forecast of rising prices, we have at present a small window of opportunity of respite from intensive farming methods in which to put into place environmental policies.

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Environmental and agricultural policies should be integrated. That is another major matter which came up in the report. It is important that they should not be treated separately. We are beginning again to rediscover the importance of holistic policies. In that I agree with the evidence submitted on that subject by the RSPB.
The third strand of my comments this afternoon concerns the fact that I should like to see a growth of small mixed farms as a source of rural regeneration and a spur for the production of increased rural services, thus spilling over into the whole debate of rural policy, of which we may see more after the next Queen's Speech. Also, I wish to pay tribute to the Government's decision to ease the tax burden on rural shops. That is an immensely important step forward and absolutely necessary for the health of the countryside.
With regard to enlargement, I shall believe it when I see it. The European Union is more likely to shrink than expand in the near future. Some noble Lords will agree with some of the goals I have laid before the House and will say that food security and the holistic future for agriculture and the rural environment are worth while, but will see too many obstacles in the way in the shape of GATT, the WTO and other institutions. I agree with them that these form a massive barrier to a sane policy for British agriculture, but it is one which we must strive to overcome.
The report is a major contribution to the ongoing debate on what is one of the most important subjects which this country has to decide, and keep on deciding, year in, year out—what it is to do to keep its countryside and agriculture healthy and keep an agricultural policy which safeguards the security of this country and indeed of Europe.
4 p.m.
Lord Barber of Tewkesbury: My Lords, I, too, as a member of Sub-Committee D, wish to pay tribute to the noble Lord, Lord Middleton, and I endorse everything that has been said about him. I wish to mention another aptitude which, like all great chairmen, he has in great measure. I refer to his ability to make us enjoy all the sessions we have had with him. I also feel, because I leave Sub-Committee D at lunchtime tomorrow, that it would be proper for me to congratulate the noble Lord on the reports over which he has presided. They have been remarkable and the report before us is one of the most remarkable of all. It is remarkable for the perspectives which it reveals on issues which barely surface in the media. Where, for example, do you find any analysis of the depressing belief which comes through from the CEE countries that the EU is hardly bursting with enthusiasm to see them as members of the club?
Perhaps I may digress for a moment. When I came to your Lordships' House some years ago I had spent 10 years in that part of "quango land" where you were dead unless you had your policies fully explored in the public arena. When I came to your Lordships' House I was dismayed to find out how little circulation was granted to your Lordships' Select Committee reports. On some
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occasions there were not even press conferences to announce that they were there. I have spent a good deal of time in the past five years trying to publicise the merits of these remarkably valuable documents. I have even been to see the Clerk of the Parliaments. I gather that things are on the move and that the reports will be granted a much wider circulation than they have had in the past.
I anticipated that a number of noble Lords would wish to contribute to the debate so I decided that I would offer two perspectives which I think are important. One has been touched on and the other not at all. It is necessary to acknowledge fully the degree of hostility to further fundamental reforms on the part of some powerful member states. In previous years I believe that we did not take this point on board to the extent that was necessary. This hostility is irrespective of the CEEC accessions. A Member of the European Parliament, Mr. Gary Titley, who gave evidence to us, put it succinctly. He said:
"there is no possibility of every Member State government supporting a radical reform which will bring them into conflict with their farming communities … One government … could veto the whole process".
The noble Lord, Lord Reay, referred to Germany. I was particularly dismayed—I was going to say outraged—by a letter we received from the French Embassy here. The letter said:
"Some people see in the enlargement a means to question once again the basis of the CAP. This is not the case for France. It is not the case for the majority of the member states according to the first discussions which took place on this issue last year, nor for the Commission".
MAFF rather gloomily noted that some member states seemed reluctant to embrace the idea of change until the last possible minute.
We have already heard of Professor Stefan Tangermann, a quite remarkable man. I can put another slant on what we heard from the noble Lord, Lord Reay. Professor Tangermann and I were at Ditchley Park not long ago giving tongue at an international seminar. Some very interesting Franco-German attitudes to the CAP came out. Professor Tangermann was telling the seminar about his bond, which was a means of easing out of non-viable holdings aged and not very well off farmers. The Franco-German delegation was quite outraged. It said that far too many farmers had already left the industry and that measures were required to keep them in and not to encourage them to leave.
There is, too, the accompanying factor of the farm labour force. The Rural Development Commission has told us that since the 1992 reforms 5,000 farm jobs have disappeared in this country with another 20,000 in farm-related industries. There is also the factor, widespread within Europe, of the not fully employed members of the farming family at home who would be squeezed out on to the labour market under further pressure.
In the UK there may be some danger of believing that our farming community consists wholly of an elite desperate to say goodbye to the CAP and take on the world. If we believe that then we delude ourselves. For while our elite may be a bigger proportion than across

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the Channel, I have no doubt that the vast majority are extremely anxious about the prospect of a steady withdrawal of a support system that has generated large annual sums, often equal to or exceeding commercial farm revenue, and bestowed considerable capital assets like milk quota—for free—whose total value would put the National Lottery in the shade. I read the other day that a senior member of ADAS puts the milk quota figure—the money that has gone out into the farming community—at around £8 billion. Acknowledging that such a cosy system could not last indefinitely, it is total humbug to suggest that the harsher era to come will be welcomed enthusiastically. Perhaps confusion has arisen because there are many arable farmers who would not admit in public that they felt themselves to be incapable of surviving in a CAP-free world.
So, in the face of opposition, deep seated and in some countries politically powerful, the Commission is going to tread warily and may attempt to introduce change by skilfully fashioned stealth. But one of the main instruments to replace some of the CAP support is so stealthy that no one really knows what it is. The much quoted "integrated rural policy" sounds impressive but the nearest we came to a definition from the Commission was that it was concerned with,
"the quality of life, social and ethical issues",
which I suppose could mean something if you think hard enough. I understand that Commissioner Fischler has arranged a conference in Cork next month where the subject will be debated, but one suspects that for a long time its structure, purposes and application will be obscure and only time will tell if it is to become a practical instrument rather than a useful piece of Euro-speak holding flannel.
I have laboured this issue of hostility to reform because it has been persistently and grossly underestimated by commentators in this country, although at least one, the City Editor of the Daily Telegraph, has now made up his mind. He wrote despairingly last week:
"The CAP has proved impervious to logic, reform or even capping, and it is now far too deep-rooted to destroy".
And it is worth noting that there are now reports that even the forecasted reduction in arable aid payments for next year may be aborted. That is quite extraordinary. Perhaps, as the Council of Ministers decides that change is too awful to contemplate, we may have to rely on the US Department of Agriculture to arrange some reform through its battles against grain export subsidies. It is important to realise that it is the Commission which proposes and the Council of Ministers which disposes. A great deal of confusion has arisen from our failure to understand that.
But there is another issue which is also shrouded in uncertainty and lacks purposive analysis—the structure, shape and character of UK agriculture post CAP reform, assuming it comes about. If we can believe for a moment that after political blood-lettings in Brussels' corridors the CAP is reformed to meet eventual World Trade Organisation requirements, and direct support largely eliminated, we can also assume that very many farm holdings will drop below the profit line. The
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casualty list must be a heavy one. Just how many will depend almost wholly on where levels of parallel indirect support are pitched and how closely withdrawn grant is succeeded by new cushioning aids.
I am advised that some member states have organised themselves rather well to be recipients of indirect aid. Austria has virtually the whole of the country covered, and Germany one-third, with grant-attracting schemes.
As the golden days of arable aid fade away it becomes clear that we cannot rely on world prices, particularly for grain, rising to compensate in part. The recent euphoria on that score was gravely misplaced and we shall have to relearn that supply has a habit of swiftly catching up on demand so that above-average prices disappear. To sharpen up the realities, an international firm of farm accountants forecast last month that our UK farm profits were expected to fall by two-thirds in the near term and that the money-spinning days that had boosted profits since 1992 were coming to an end.
The likely picture emerging is, I think, distinctly opposite to that about which the noble Lord, Lord Beaumont of Whitley, spoke. I think that the likely picture is of fairly painful restructuring; of bigger farms, of more mechanisation, of fewer employees, of more contract and share-farming. Perhaps the age of farming partnerships through professional farming companies on a really impressive scale may be on the horizon because of the economies of scale so easily made available to the medium-sized operation.
Because of its specialised nature it would be absurd to attempt too close a parallel with the pig industry which has been outside the CAP in a grant and subsidy-free trading world for the past 30 or 40 years. But it is fascinating to look at an industry left to get on with it in the open market place which has, of necessity, organised itself to compete and which is continuing to develop a vertical integration all on its own, along with a highly standardised quality product. It is calculated that in five or six years' time, fewer than 250 units—corporate or family—will be supplying 80 per cent. of the annual output of around 15 million pigs worth over £1 billion, with the processors down to six, one of whom already provides 47 per cent. of bacon output. Survival for the smaller units will depend on finding a niche in that vertical structure where they can perform adequately. It is those self-same market pressures which will be pressing down on the other farm commodities. The pigs scenario will be different only in scale and time. Have we really faced up to that prospect of deep structural change and all that it implies in terms of the farming industry in this country and of the broad spread of the clutch of rural policies?
Let us take for example the land use issue of the marginal grain land: unless the world grain price was considerably and consistently above current levels, grain growing simply could not pay on large tracts of the Cotswolds, the thinner chalk downs, and the poorer sands and gravels. We could postulate an unsupported UK grain price resulting in significant areas of marginal land going out of cereals production. What it would be going into is anybody's guess. Extensive livestock grazing? Work out the capital cost of so doing, and one has another think.

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Government publications including the White Paper, Rural England, have been helpful and full of sensible thoughts but have lacked a specific thrust towards setting out the logical effects of withdrawal of direct farm prices support in its various forms. Recent studies coming from university departments seem unduly preoccupied with abstract concepts relating to social issues in rural areas.
There is admittedly a great deal that cannot be visualised, but some models could be worked up as a framework for looking at the probabilities—not least in assessing just how soft or hard the landings might be for the farming industry as it moves from one era to another.
Those seeking out possibilities for softer landings might look to another report, Preparing Europe's Rural Economy for the 21st Century, by Professor John Marsh, Sub-Committee D's adviser, and the same Professor Tangermann about whom we have already heard. That report was prepared for the Land Use and Food Policy Inter-Group in the European Parliament. Ingeniously, it argues that reform might not necessarily mean eliminating price support completely. It proposes the retention of intervention prices in years when they are below average world market prices. The stocks could be bought in and sold later on the world market without subsidy. Overall, of course, what is regarded as "good" politics will constantly be employed to smooth the harsh edges of the market. When I look at that report and stop and think about what those politics would do, I have the very distinct impression that therein lies "CAP mark 3" without any radicalism at all.
We have had almost a plethora of documents on the current state of play in the farmed countryside and about the CAP, and a whole host of policy aspirations on the part of government. Now we need something more because, as the European Union enlarges itself and we have at least begun to talk seriously of CAP reform, we face a large black hole of ignorance on the likely emerging shapes of our agriculture in this country.
4.14 p.m.
Baroness Wilcox: My Lords, I declare an interest in that I am president of the National Federation of Consumer Groups. I welcome the recommendations in the Select Committee's most excellent report. The evidence that was given to the committee by the Consumers in Europe Group and the National Consumer Council, and the subsequent examination of those witnesses, has borne fine fruit. Perhaps I may highlight four areas of importance to consumers: urgency of reform; the intervention system; reconsideration of the Commission's Option 2; and devolution of decision-making.
The committee recognised the need for reform now and expressed its concern about lack of progress. Its acknowledgement of the importance of the enlargement of the European Union and the future round of WTO talks scheduled for 1999 as pressures for reform is absolutely right.
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Turning to the intervention system, there is no justification for the intervention system to continue as it is at present. I support the committee in agreeing with the Commission that it should explore the possibility of restoring intervention to its real intended role of supporting farmers in a crisis.
The committee urges the Commission to reconsider Option 2 in its strategy paper. That option deserves our fullest support as it shifts from price support to direct payments for specific social, environmental and regional policy objectives. The Commission itself dismisses that more radical reform option because of, in its words, the
"undefined social and environmental risks that it implies".
Rubbish! A willing heart, wide consultation among consumer groups and good research would lead the Commission inevitably to the view expressed by the committee in paragraph 108:
"We see no such problems but, rather, substantial opportunities if the policy is implemented in good time and can be made sufficiently responsive to the varied areas in which it will be applied".
I am sure that many Members of your Lordships' House will join me in warmly welcoming the committee's view that there is a strong case for certain policy decisions to be devolved to member states. As is stated in paragraph 114,
"In a Community which extends across extreme variations of terrain and climate, it is difficult to imagine that detailed environmental measures could be decided upon by, or implemented from, Brussels".
I, with the National Consumer Council, have long argued that,
"The Council of Ministers should agree to devolve responsibility for policy on direct income support payments to Member States within five years, subject to European Union guidelines to ensure the free movement of goods, fair competition and that there are no conflicts with European Union agricultural policy directives.
Within the guidelines, Member States would be able to develop schemes designed to meet their own social, regional and environmental policy goals".
On behalf of all consumers in the European Union, and especially poor consumers, the British Government must continue to press the Commission to reconsider Option 2, radical as it is—and rightly so—to shift the burden of support away from the price we pay when we buy food. It is the poorest who spend proportionately most of their income on food. If it is a country's choice to reach some particular environmental objective, we should all contribute through taxation and direct payments that can be seen and evaluated by all.
British consumers have found their voice through the representative groups lobbying on their behalf, supported and encouraged by governments, both Labour and Conservative, over many years. In that, we lead the field. Northern Europe, particularly Holland, Belgium and Sweden, is well represented and those consumers are well briefed on the CAP. Although consumer organisations exist in central and eastern Europe, they were set up quite recently and are still very weak. As we consider enlargement of the Community, it is for us to show the way forward in this reform and gather converts. Already it is obvious to our current partners in the Union that to adapt central and eastern European countries to current levels of CAP support would take

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spending to levels that none of us can possibly afford. Good! But without the Commission's reconsideration of Option 2 the poorest consumers in Europe will continue to pay the price and we—you and I—as consumers here will continue to pay a regressive tax as our partners slowly (and it will be slowly) lumber reluctantly towards reform.
We must press the Commission again to reconsider, to consult widely, not to miss this perfect opportunity to right a great wrong. I agree with the noble Lord, Lord Beaumont, that this report is a great contribution to one of the most important debates of our time. May its wise decisions prevail.
4.20 p.m.
Lord Gallacher: My Lords, the agricultural strategy paper is an important document which has been recognised as such, first of all, in your Lordships' House this afternoon and certainly by all the parties who gave evidence to the Select Committee.
The three options offered in this strategy paper were very significant, certainly Option 2, which has been touched upon, and also, of course, Option 3, which looks as though it is going to be the preferred option. Option 2 was undoubtedly the most radical, but, as has already been said, the memorandum from the French Embassy to the sub-committee suggested that Option 3 was more attainable, especially in the light of CAP interests and Community voting alignments. French influence on the CAP is still significant and, if I may say so to the last speaker, French influence on consumers in the CAP is even more significant. One would wish that all the effort that goes into consumer affairs in this country were replicated in France. Unless it is so replicated, the prospect of change in the attitude of the French Government, quite apart from their farmers, is considerably diminished.
As the report mentions, the volume of undecided matters is quite staggering. The World Trade Organisation is to review the role of agriculture in 1999. In addition we have 10 membership applications from CEEC countries with widely differing agricultural circumstances. The present relative CAP stability justifies an obligation to push on with reform proposals even after the major MacSharry CAP changes in 1992.
Figures from British Cereal Exports about world cereal markets in 1996–97 show a production increase of 8 per cent. to 1,436 million tonnes. On the other hand, consumption is up by 3 per cent. to 1,419 million tonnes. Stocks have risen to 195 million tonnes but are still only equal to 50 days' supply. European Union grain production figures for 1996 are estimated to be as high as 187 million tonnes by comparison with 174.3 million tonnes in 1995, but Spain's estimate in 1996 of 19.7 million tonnes has nearly doubled the 1995 figure of 10.8 million tonnes. (These figures came to me from COCERAL on 26th June this year.)
The 1996 US Farm Bill was signed into law and is to last five years from 4th April, which takes it to the year 2002. It makes major changes in arable and dairy sectors. The National Farmers Union of England and Wales has summarised the likely effects of the US Farm
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Bill in its brochure Farming Economy for July to September 1996. This brochure suggests that the USA is moving from a deficiency payment system to a decoupled payment system. The NFU view is that in the next World Trade Organisation round the USA will seek a much higher level of domestic subsidy cuts than the 20 per cent. agreed in the Uruguay round. This is forecast on the basis that most of its domestic support arrangements are now in what is called the "green box" and are thus immune from cuts. This is especially true of the arable and dairy sectors. The NFU believes the US Farm Bill is a further reason for the European Union to consider more CAP changes before the next WTO round in 1999.
The Select Committee report in a footnote records that the CAP regimes for fruit and vegetables, olive oil and wine were unreformed in 1992. The fruit and vegetables regime has since been the subject of reform proposals which were approved by the Agriculture Council in July of this year after 18 months of negotiation. One can reflect on that by looking at the prospect of what further changes there may be in the CAP.
Minimal changes have been made to Community regimes for sugar and milk where quota systems are firmly entrenched. The milk regime for its part is to be reviewed in 1997. Milk quotas are now a source of market distortion. Several speakers have mentioned that very fact this afternoon. They need major revision en route to gradual elimination. Palliatives such as cross-border quota sales will only prolong the status quo which is unfair to the United Kingdom in particular.
Wine is of major importance both to certain CEEC applicants and European Union states. Some CEEC producers are succeeding in the United Kingdom market on the basis of price plus quality. If the CAP wine regime is not soon reformed, the admission of certain CEEC applicants to the European Union will seriously increase the cost of the wine regime, including its administration.
In the context of CAP reform, the experience of New Zealand is of interest and importance. Despite qualifications that must be made because of structure, size and other factors, the pain of change for New Zealand was partly eased by the quality of its overseas marketing skills. In this area United Kingdom producers could learn from their New Zealand cousins.
The Select Committee report's consideration of the agrimonetary implications of adopting a Euro-currency was considerably helped by papers from Professor Swinbank of Reading University. In particular, the future, if any, of the green rate mechanism allowing adjustments of CAP prices is of vital importance to all member states, whether their present exchange rates are weak or strong.
Ending distortions caused by green rates has long been an objective for the CAP. As such, it has yet to happen. The introduction of the Euro by major countries in the European Union can hardly be of no significance for green rates. While monetary matters may be outwith the scope of Sub-committee D, agrimonetary systems certainly are not. It is therefore essential to get green

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rate systems on the active agenda of items to be settled before any monetary union. Here again the views and influence of France will be important.
A feature of both written and oral evidence on the strategy paper concerned methods of farming. The Select Committee report takes a balanced view of this question while recognising its significance. Moves to relate CAP prices to world prices are of major short and long-term consequence. Such changes will of themselves bring about radical structural alterations in farming sizes and methods. The report deals as realistically as possible with social and environmental aspects of this matter, given that the European Union is only beginning to reflect on alternatives.
If one attempts to cost CAP changes, plus the expense of granting full EU membership to CEEC countries, the total outlay is formidable, whatever basis of estimating one chooses. The Agriculture Council will be hesitant about changes on cost grounds alone. This must not become a reason by itself for delay. The Select Committee report strikes a note of urgency on this question. Although some may feel that this is the wrong approach at this time, the formidable body of evidence engendered by the strategy paper clearly suggests that, while cool, calm deliberation may not unravel every knot, delay in this area could be dangerous in many ways, while 1999 is not a distant prospect given the magnitude of the tasks.
4.30 p.m.
Lord Wade of Chorlton: My Lords, first, I must declare an interest as a director of a farming and land-owning company and of a company involved in the international food trade. It has been a privilege to be a member of Sub-committee D, which dealt with this important issue, and to serve under the chairmanship of my noble friend Lord Middleton, to whom praise has already been given. As one reads all the reports for which he has been responsible one sees that they have a consistent approach which leads to a sensible conclusion. They take us through all the issues of the CAP as it has evolved, the problems created for consumers, as mentioned by my noble friend Lady Wilcox, and the fact that it is insupportable and unacceptable over a long period. I hope that the four reports will be seen in that context and will be noted not only by the British Government, who have taken serious note, but, more importantly, by those who preside in Brussels and who clearly have a different view of the importance of the relative aspects to which my noble friend Lord Middleton has drawn close attention.
I agree with his sentiments on enlargement and what will happen to the CEE countries. Their economies are in a poor state. In my view, they must have the opportunity to improve their economic structures and to grow more in line with the rest of Europe. If not, we shall be creating future problems in respect of which we cannot imagine the outcome. One way of dealing with the matter is to offer them more trading and investment opportunities to improve the quality of their existing exports, in particular in the food sector. The noble Baroness, Lady David, sensibly drew attention to the
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fact that not all their quality products compare with those of the rest of Europe and therefore it is important that they should have an investment opportunity to be able to do so.
Many noble Lords have referred to the fact that we were confronted with two different opinions on the future of the agricultural market and the kind of role which the CAP might play within it. Attention has been drawn to the fact that Americans are taking a different view of the future and the way in which we should respond to it. A couple of weeks ago I was invited to the annual lunch of the Food and Drink Federation at which Admiral Crowe, the United States Ambassador in London, made the main speech. It might be interesting to hear some of the issues that he raised.
Admiral Crowe referred to the fact that America passed a 1996 Federal Agriculture Improvement and Reform Act, described as FAIR. Whether it is depends on where you are coming from, I suppose. The Act heralds a new era of management and production flexibility by enabling US farmers to plant for the market rather than for government programmes. That would be wonderful to see, would it not? That issue is extremely important because the shape and scale of global demand for food and food products is in flux. Populations which rely on staple commodities are multiplying dramatically. The World Bank predicts that by 2030 the world's population will have risen from around 5.7 billion today to 8.5 billion. Looking at the issue another way, estimates suggest that the trade forces unleashed by the Uruguay Round will increase world income by a massive 5.25 trillion dollars in the next decade. That is a mind-boggling figure and, naturally, a large portion of that amount will be spent on food and drink.
With those trends in mind, Washington hopes to increase annual agricultural exports by 7 per cent. to the year 2000. That would yield a 50 billion dollar increase in economic activity, creating an additional 378,000 jobs. That will not come cost free because, as has been pointed out, the American Government will spend a great deal of money to make that happen. However, the point is that they are spending the money to create trade, jobs, business and wealth for America. We are spending a great deal of money in Europe to support agricultural trade which creates little wealth for anyone. Although I have been in the farming industry all my life, and I take the point that we have gathered billions of pounds as a result of quotas, I have always been against quotas, grants and support of any kind. At the end of the day they merely increase the cost of entry but put no more money into the producers' pockets. During the past few years the CAP has spent more than £20 billion a year on the CAP, but the lot of agricultural farmers has risen not one jot.
Where does that lead us and what will happen? I agree with the sentiments of my noble friend Lord Barber, who has a wide knowledge of what the agricultural industry will do. At the end of the day, no more attention will be paid to this report than was paid to the previous excellent reports of my noble friend Lord Middleton. We shall remain dominated by the timeset of the past, which believes that the only way in which

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Europe can develop is by having more controls and regulations rather than seeing the opportunity of the market-place.
The pressures on British agriculture will be brought about by changes in the world markets rather than by quick decisions taken within the European Commission to make things happen rapidly. We shall see steady changes and adjustments as the importance of the global markets impacts on industries and the European economy most of all. It is beyond the limit of the European economy as it stands to continue to create the wealth which will make possible the payments that are now being envisaged. Therefore, the adjustments must be made slowly. I believe that the American example of taking advantage of the global markets, which will undoubtedly increase during the next 20, 30 or 50 years, will be the key factor.
My noble friend Lord Barber referred to the pig industry. We can see the dairy industry moving slowly in the same direction. I am aware of four large Cheshire dairy companies which have decided that now is the time to sell out. They believe that milk and quota prices are probably as good as they will be for some time and now might be the time to turn their assets into cash and to put that into something which has a longer-term view. That will create pressures on the rural economy.
I turn to the final issue to which I wish to refer; the integrated rural economy which is referred to in Mr. Fischler's report. No one knows what it means—it is quite clear that Mr. Fischler has no idea what it means—but it sounds good and it sounds as though something positive might happen. From previous experience of what the Commission means, the danger is that it might mean that we shall be told what to do in every respect. It may turn out to be a regulatory system and that the Commission will say, "We will have a building here and a field there and that kind of a forest there". That would be a disaster, would it not? That would work against the interests of Britain, our industry, agriculture and the nation.
What it might mean, and what I hope it means, is that there will be an understanding of the changes which are to take place in our rural economy and that people will move from what has been the stable wealth creator in rural areas—that is the production of food—to other opportunities and that the market will press for them and demand them. Governments and the Commission must understand that they must provide the opportunities to encourage that change and not resist it. All successful government actions are those which promote natural change and opportunity rather than trying to hold on to something which at the end of the day is unsustainable. The noble Lord, Lord Beaumont, is not in his place but I strongly believe that the only situation which is truly sustainable is economic growth and greater wealth for the people who wish to be employed in all these businesses.
I support the report and I hope that as many people as possible will read it, support it and act upon it.
4.40 p.m.
Lord Brain: My Lords, your Lordships will be
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pleased to know that we have reached the half-way stage in this debate. I am the ninth of 18 speakers. Of course, that means that many of the earlier speakers have said some of the things that I wish to say.
As other members of the committee have done, I wish to thank the noble Lord, Lord Middleton, for the way in which he chaired the committee and for the help that he gave us all in reaching our conclusions. Also, I support his comments about our professional adviser, Professor Marsh, and our Clerk, who did a marvellous job. If your Lordships look at the report, it can be seen that there are 250 pages of evidence, which they have managed to summarise to 20 pages. To an extent, that demonstrates how much the evidence agreed, one person with another. But, nevertheless, that is a great achievement.
In a way, I shall follow the noble Baroness, Lady David, because I too visited Poland. Some of the comments towards the end of my speech will be based on what we saw there. But that visit has also influenced me as regards the reasons for the earlier part of my speech. Again, I return to those words "timing" and "programme". We are in an information technology age and yet there seem to be no points on the critical path at which time decisions must be taken. We have the end of the present CAP policy and the WTO meetings, both of which will take place in 1999. We have also the EMU and green money problem, which comes around, strangely enough, at about the same time. Therefore, there are many reasons why we must start to talk now, or the Commission must start to talk now.
Also, it is not only delaying the planning in the 10 countries which wish to join. Because of the uncertainty, it is delaying the planning of inward investment, perhaps from this country into those countries. In another report we heard how a large food producer found that, because of quotas and such matters, it could not produce any more in this country and had to set up an operation in Ireland, I believe.
The same must apply to people who would like to set up operations in, for example, Poland. I happen to know, because I heard it outside, that the factories of the Polish Sugar Corporation, which have been advised in part by the British Sugar Corporation, are supplying a major food processor which was installed in that country from this country. Therefore, the quality and improvements that we can bring about if we know what the future policies are to be are important.
We have heard the words "compensation", "adjustment", "integrated rural policy", "regional rural policy" and "the environment". Indeed, we use those words in our report. We have said also that there should be use of the social, structural and cohesion funds in the whole planning of the future. But does not that mean that there are other directorates-general which need to be involved? Does that not take time? I note that the report mentions Directorate-General V, IX and XVI. They cover social, environmental and general cultural planning. The CAP reform goes far beyond agriculture: it goes into the whole structure of many of those countries.
The noble Lord, Lord Wade, talked about money. On the radio on Sunday morning I heard that the only way in which a small farm in Wales was able to make a

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profit was from the support systems available. That means that money must go round in circles, and when it does that, every time it touches "go" somebody removes 5 per cent. or more. The bureaucracy involved is enormous.
I turn now to Poland. I shall not go into quite so much detail as did the noble Baroness, Lady David, about the meetings that we had. My feeling was that in general those on the governmental side and the parliamentary side were very positive and very interested and we had an extremely open discussion.
However, I wish to talk about the infrastructure in Poland. We visited a fairly modern dairy which was certainly upgrading itself by using computerised control systems to ensure the quality of its product. But one must realise that that dairy was supplied by 8,000—I repeat 8,000—producers, some of whom were supplying only five or 10 gallons—in other words, 25 to 50 litres—a day. Your Lordships can imagine the infrastructural problems of getting that there. More than 500 people were employed to collect the milk. That is a great deal of rural employment. As the noble Lord, Lord Barber, said, if you start to make those changes and, as the noble Lord, Lord Wade, said, if you reduce the number of dairies, you will reduce rural employment in Poland.
But also one of the problems about the lack of planning—and this is where I return to the financial problems—is that there is no market in land in Poland. People just go on farming because there is no money. Nobody has any confidence in what future prices will be in Poland. The Government seemed interested in the idea of an agricultural bond. The average age of farmers in Poland is about 60. The bond would enable older people to leave farming, or perhaps to lease or share farms. But at the moment they struggle on.
We visited one small farm which milked 25 cows, with a total herd of about 60. If that farmer wanted to expand, the nearest land consisted of two or three small plots which were 10 kilometres away. Your Lordships can imagine the problems of trying to farm such an area. The farmer was keen to expand. He had support from the dairy to install a modern milking system, a chilled system, in order to provide milk of the necessary quality. He was efficient, keen and young.
The other place that we visited in Poland was a fruit processing plant which processed fruit and vegetables and which made fruit juices and so on. Before we visited the factory we were taken out to see one of the suppliers. He was not a major supplier, but because he was an entrepreneur and had been efficient he was busily building a cold storage unit so that he could keep his apples in optimum condition and receive a higher price for them by selling them to the apple juice processor in February and March instead of having to sell them all by December. That is the entrepreneurial side of Poland.
They need to know which way they are going; whether they will have milk or sugar quotas and so on. I welcome this report.
4.48 p.m.
Lord Mottistone: My Lords, I welcome this excellent report and thank my noble friend Lord Middleton and the
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members of his sub-committee for it. Several years ago, I had the privilege of sitting on that sub-committee for several years and not a lot has changed.
In speaking in the debate, I must declare an interest in the Biscuit, Cake, Chocolate and Confectionery Alliance for which I act as a parliamentary adviser. As well as being advised by that alliance, I also received advice from the Food and Drink Federation. I am delighted to see that the more important views of both those trade associations have been included in the relevant recommendations in the report.
The particular recommendations which I invite your Lordships strongly to support—and indeed, nearly every noble Lord who has spoken has done so—are those which press the European Union and the Commission to reform the CAP and to do so now and not later; and in particular to drop support prices and supply management mechanisms as recommended in paragraphs 128 and 129.
As other noble Lords have said, as time goes on, the need for these changes becomes ever more pressing for all members of the European Union. But, as I indicated earlier, I remember Sub-Committee D making very similar recommendations about 15 years ago to the European Community. Ever since, there have been similar recommendations and reports, several of which, happily, have been produced under the chairmanship of my noble friend Lord Middleton who has been remarkably consistent not only in his own approach to the problem, but also in following those that went before.
It seems to me that the problem is the grip that the French have on the Commission in general and DGVI in particular, as epitomised in the concluding sentences of paragraph 27 of the report. I think that it is almost cheeky of the French Embassy to make that contribution. That point was well made by the noble Lord, Lord Barber of Tewkesbury. However, I would quarrel with him on one point. The noble Lord gave the impression that it was all new information that he was kindly giving us, but we had actually realised it—in my case for at least 20 years, and I suspect that many of my noble colleagues had known about it for much longer. Apart from that, I agree with everything that the noble Lord said.
It seems to me that the basis for it, if I may touch on that, comes from Napoleon or indeed Colbert. If you read a bit of history, you will see how they recommended this kind of approach in the 17th and 18th centuries. The French do not seem to have realised that Napoleon lost the battle of Waterloo. When he said that the British—although I believe that he probably referred to the English, as I am sure the Scots would understand because Napoleon was so ignorant—were a nation of shopkeepers he thought that he was insulting us. But, in fact, he was giving us all the praise in the world. If only the French could become a nation of shopkeepers, we would be a lot better off in Europe and, indeed, in the world as a whole.

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Artificial prices to protect farmers instead of decoupled payments have the effect of interfering with trade in all types of agricultural products, processed foods as well as primary products. Indeed, my noble friend Lord Wade put that a great deal better than I can. Since the CAP was imposed on the Community, mainly by the French for the reasons that I have given, as part of the Treaty of Rome—and it is nothing new—the world has moved on. That is what these people must understand. In particular, with all sorts of particular misgivings by nearly every individual nation, including the United States of America, the world as a whole has come to see that the freest possible trade is to the benefit of everyone. Some of the remarks that my noble friend Lord Wade quoted from the American ambassador made that so very clear.
Broadly speaking, each stage of world trade agreement is more free than its predecessor. The WTO, for example, is freer than the GATT. Cannot the French and their lackeys in DGVI see that major changes to the CAP are necessary soon—and I emphasise the word "soon"—to meet the internationally agreed WTO, as well as to help the agreed expansion of the European Union? I am delighted to see that our own National Farmers Union goes along with that need; indeed, I believe that practically everyone else here also does so.
But we can only ask the French and the Commission to admit that a CAP based on managed prices is fatally flawed and detrimental to free trade if we are prepared to accept freer trade ourselves. An example of where the report does not include and perhaps—I hope not—does not support the views of the Biscuit, Cake, Chocolate and Confectionary Alliance and those of the Food and Drink Federation is in not protesting at the maintenance of a highly artificial minimum import price system for soft fruit which is an important Polish product. The artificial price system concerned is maintained because of United Kingdom Government insistence. Perhaps when he comes to wind up, my noble friend Lord Lucas might give encouraging support to the thought that the UK Government are about to change their policy in that respect. Then we will be able to say whatever we need to say to these rather anciently-informed countries across the sea. That point is referred to by a Food and Drink Federation representative in column 287 of the oral evidence on page 113 of that section of the report.
Of course, the growers of our own food must be given sufficient financial help where this is necessary. Paragraphs 128 to 135 of this report spell out sensible action to achieve this very clearly. It must be remembered, however, for the good of us all in the Community, that value added processed foods traded overseas with minimum or preferably no restriction, bring in much more financial benefit to the European Union than trade in primary agricultural products. Therefore, the Commission needs to listen more to what DGIII says in that respect than to DGVI. We need the European Commission to have the slogan: free trade for all.
4.57 p.m.
The Duke of Somerset: My Lords, as an outgoing member of Sub-Committee D, perhaps I may join others
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in welcoming this particular and important report. Perhaps I may also congratulate and thank our chairman, the noble Lord, Lord Middleton, for his resourceful competence in chairing the committee and echo the remarks so well put by the noble Lord, Lord Reay, on that score. Although the subject of the report was visited by the committee only two years ago, this new report is still very important for a number of reasons. Not least among these is the emphasis provided by the similar, but stronger, message that this second report delivers.
Like other noble Lords who have spoken this afternoon, I believe that the committee felt strongly that the impact of its report was not as resounding as it would have wished. I am told that these reports are well regarded both in the industry and in the EU Commission, yet the exposure that they achieve in the media in this country is disappointingly limited. Perhaps this second attempt, which is logical in its conclusions and attainable in practice, will focus the minds of the Commission more accurately. For, like it or not, it is they, together with the Council of Ministers, who now decide the path of British agriculture and the health of the environment in this country.
We have surrendered most of our sovereignty to Brussels, so, barring an upset by Sir James Goldsmith, we are reduced to arguing our position as a small cog in the European Union. Unfortunately, even in this process, whatever the merits of our case, other considerations will override. So it matters not that it is crazy to pay producers to dump perfectly good fruit and vegetables, or to store indefinitely perfectly good meat products in intervention, or for us to import French milk when we have a perfectly good capacity of our own, for it is in reality the artificial politics of the trade-off between Ministers carrying the electoral baggage of 15 nations that triumph.
While this report is much more temperate in language than my efforts, it emphasises the need to reform the CAP. The question, of course, is whether this need will be acted upon in time; that is, before the US Farm Bill encourages what is estimated to be a 30 per cent. expansion in production by the end of this century and the corresponding reduction in world prices that will inevitably result. The report makes it quite clear that the enlargement of the European Union to the east is only one of a number of factors that are driving this need for change. The future round of the World Trade Organisation talks, the agricultural budget and the future shifts in world market demand are the other main factors. However, enlargement per se is a crunch subject for the European Union, and particularly as regards its agriculture. The noble Lord, Lord Middleton, quoted Sir John Birch, our former ambassador in Budapest. The noble Lord mentioned the ambassador's sensible words with which he greeted us when we visited that country. Those words are just as true now as they were two years ago.
As we see the former Soviet Union collapsing and we watch the determined fanatics of Islam spreading their wings closer to the border, and sometimes within NATO, it would be disastrous to permit the CEE countries to think that life would be better outside NATO and outside the European Union. It is ironic that

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they strive to join this club, to share in the social and economic benefits and the perceived stability and democracy, while many inside endeavour to push back the tentacles of federalism and the EMU. Perhaps by the year 2000 some of those countries will enter a shell from which some of the former inmates have fled, or perhaps they will enter an entity that has seen sense and has seen that some of its policies are unworkable and its intrusions unwanted and that its unelected dictatorial attitude has been rejected.
It is said that 60 per cent. of German people do not want a European currency which involves the loss of the Deutschmark. One can probably point to a similar figure in other member countries, including our own. The EMU is vitally linked to the CAP and its future. This link is called the agrimonetary system, whereby a "green rate" system of conversion is used for support payments. If, despite the wishes of the populace, a form of EMU is imposed on some countries, it is likely that some members will stay outside. How then will a single market be sustained? It would be most difficult if the current price support system was still in place. This subject is only touched on in this particular report, but is glaringly omitted in the strategy paper that we are discussing. Perhaps there is a parallel here between the CEE countries striving to hit the moving target of the CAP by the year 2000, and the British Government trying to hit an electorate without telling it what their monetary policy might be by then.
If the European Union really wants to welcome the CEE countries into the fold, it must make greater efforts to encourage fairer trade. It is still too obvious to most observers that the balance is tilted far too far in favour of established member country organisations. To pay lip service to an ideal and then deliberately to block any implications of that decision should be derided. The report instances where this has happened and makes appropriate recommendations. However, the attitude of the Council is demonstrated by the reduction in the tariff quotas which govern imports of agricultural produce from CEE countries. A proposed 10 per cent. increase was watered down to 5 per cent. for five years. Licences issued for these quotas are again biased to their benefit. The redoubtable Professor Tangermann, whose views on much of this subject seem so sensible—and of whom we have heard a little already—proposes auctioning them, with the funds so raised used to finance aid and development programmes within the CEE countries. The report favours that course of action. It would seem a sensible move.
The report devotes much space to the problem of the mechanism of reform. Either this can come first or last in Community thinking. If it comes first, with a workable plan it will be much easier to convince other members of the need for reform. If the decision to reform is made first, the mechanism could become a source of endless discord. Our report lays out a clear path, and this is one the Government should advocate. The Government appear to support the proposals, including still seeing a role for the concept of cross compliance on existing payments. The report describes that concept as unhelpful. I was pleased to note that the
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CLA also rejects cross compliance. That excellent organisation makes an important caveat where it warns of the dangers of the bond system. That bond would be allocated to the producer, who is so often a tenant in the United Kingdom. I declare my interest as an owner of let land. I would be alarmed at the prospect of value being syphoned away from one party to another. If that led to marginal land becoming less viable, the landowner would no longer have the resources to look after and care for that land. That could only be detrimental to the rural economy.
I wish briefly to support fully the notion of the integrated rural policy. I hope that the interpretation of that policy of the noble Lord, Lord Wade, will be implemented. I support the notion of fully decoupled, time limited aids working alongside separate policies with environmental and social objectives. The policy should be separate from the CAP. I return to where I started. It seems imperative that having debated this important topic in this House every effort is made by the Government to push the message home to both the Commission and the Council of Ministers. It must be got right this time because the 1992 reforms impacted only slightly on production levels. Any improvement has come from depletion of stocks through short-term world market changes. The CAP is still vulnerable.
5.8 p.m.
Lord Stanley of Alderley: My Lords, I declare an interest as a practising farmer for over 40 years. Perhaps more importantly, as an ex-member of Sub-Committee D, I may be allowed to say that I found this report arguably the most interesting that the committee has ever produced. As I believe my noble friend Lord Mottistone said, that means almost certainly that the EU will take no notice of it. My noble friend Lord Middleton may accuse me of being too cynical. I hope that is the case.
Certainly this report has made me realise that we have two choices. We can either continue with the present policy of fortress Europe protecting the agricultural industry and taking little account of what is happening outside the existing EU, or we can strive to make our industry economically sound and aim to be competitive in world markets. In response to the comments of my noble friend Lord Wade I say, "horror of horrors". If we follow his suggestions, I shall have to produce for the market rather than for the subsidy, and that would be a serious blow for me. However, to be serious, I cannot envisage that we can attempt to resolve any of our problems, in particular the accession of the CEE countries, until a firm decision is taken to follow the latter choice; that is, a competitive agriculture. In paragraph 87 the report states firmly that at the heart of any future CAP should be policies which ensure that producers are able to compete at world market prices. That is further elaborated upon and endorsed in paragraphs 100 to 102, 114 and 116.
With the possible exception of the noble Lord, Lord Beaumont, I think that all your Lordships would agree with such an obvious objective: that we should not continue to seek to be fortress Europe. But the snag is that the present system encourages exactly the opposite

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approach with valuable quotas, headage payments and set-aside payments which perpetuate the status quo and inefficiency that hinders the young progressive farmer. Being old and worn out, the present system suits me well. Indeed it suits most existing farmers well, but such a system must end in chaos as anyone will know who has taken note of what is happening in the Pacific Rim where its philosophy is totally and aggressively outward looking. That will make quite sure that unless Europe takes a similar outward-looking view she will end up an even poorer and deprived continent than she seems determined at present to be. Unless we, too, adopt such a policy, how can the CAP accommodate the inevitable future increase of cheap food from the CEE countries? Following the noble Duke's line, are we to have two tier subsidies? The thought appals me.
Of course because the present system is comfortable for existing farmers—and, as the noble Baroness, Lady David, implied that includes me—it will be politically very difficult to move to an outward looking and competitive agriculture. The noble Lord, Lord Barber, referred eloquently to that point in his speech. Inefficient farmers will go to the wall, which could or might cause social problems in the village. The United Kingdom has seen that happen to a much greater extent than those across the Channel. However, like my noble friends Lord Middleton and Lady Wilcox, and the noble Lord, Lord Brain, I am convinced that the problem must be faced now rather than later. Nettles not grasped this year always become much more difficult the next year. Alternatively, for the benefit of the noble Lord, Lord Beaumont, perhaps I should say that thistles not sprayed this year become worse next year.
I believe, however, that there are many ways to alleviate the problem. The first and most important is to state that an internationally competitive policy is the long-term objective in which there will be no place for supply controls such as quotas. A time schedule should be produced to avoid farmers getting into impossible financial difficulties in buying, selling and owning quotas. We can see that happening every day—and I own quite a bit, thank goodness.
Finally, as every developed country supports its agriculture in one way or another, it will be necessary to do so in the United Kingdom. I entirely agree that there is absolutely no place whatever for cross-compliance; and I once again ask the Government, as have so many noble Lords already, and the Commission to look at Professor Tangermann's bond scheme. I am sure that it could be made to work. I fully understand that there are some problems, as the noble Duke said.
I thank my noble friend Lord Middleton, Sub-Committee D, and its specialist adviser for producing such an excellent and thought-provoking report. It should be compulsory reading for every farmer.
5.14 p.m.
The Earl of Clanwilliam: My Lords, I, too, thank the noble Lord, Lord Middleton, and his committee for this excellent report and join with my noble friend Lord
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Barber of Tewkesbury and the noble Duke in the call for wider publication of these reports. The report is in the best tradition of reports of Select Committees of this House but they do not gain sufficient advertisement. Recently the sub-committee on fisheries issued its report and I had to make considerable efforts to ensure that copies were distributed to heads of other European member states. I hope that the efforts which my noble friend Lord Barber stated that he has put in train will have more effect than mine have had.
Deep structural reform of the CAP is required. Speed is essential if anything is to be done. World prices at present provide a propitious moment when there might be some movement. Nevertheless, I believe that the opposition of the French and the Germans, with their provincial farmers, is a problem which will be overcome only with great difficulty.
The reform is recognised as a unique opportunity to bring together agricultural and environmental interests. As may be expected, I make no apology for bringing to your Lordships' attention the cause of organic farming, which delivers environmental standards of the highest order and sustainable farming policy which does not depend on the agrichemical industry and promotes biological diversity in a way that no other system can offer. It also produces a standard of nutritious food which makes a mockery of the fast food and supermarket cheap food outlets that have overtaken our society today. Indeed, I am confident in saying that. I believe noble Lords will agree that there is a growing understanding in the country of the importance of diet and its effect especially on the young and the youth of our country. Recently a young woman stated on television that she had not heard the word "diet" until she was 30. That could only happen to a generation subsequent to the 1960s which has known only cheaper and faster food.
In addition to its contribution to society, extensive farming requires additional labour and a well-trained team of farm workers. By the same token, it takes the farm worker out of his satellite-controlled cab and restores the community spirit and the village farming environment. Above all, it promotes biological diversity in a way that no other system can.
As I have said in previous debates, there is no suggestion of wholesale transfer to organic farming, which would in any event be totally impractical, but we should target an increase from the present 0.3 per cent. of UK arable acreage through to a magnificent trebling to 1 per cent. That is the ambition of MAFF. I am very glad to have the opportunity to congratulate my noble friend on the Front Bench on the document that she has produced entitled MAFF-Sponsored Research into Organic Agriculture. It indicates that organic farming is a self-sustaining system and can be profitable. It remains only to persuade the Treasury to increase the assistance to those who wish to convert with decoupled and time-limited aid.
Paragraph 112 of the conclusions to the report states:

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"The policy is sufficiently flexible to accommodate a spectrum of farming ambitions. The farmer who wishes to farm extensively and use organic methods would have the opportunity to benefit from relevant environmental incentives which may add to income in ways which make his business viable".
I am glad to welcome the report particularly on that basis and I hope that it will go a long way towards persuading DGIII to pay some attention to DGVI.
5.20 p.m.
Lord Pearson of Rannoch: My Lords, I intervene briefly before the Front Bench speakers during this important debate. I do so to put one very simple question to my noble friend the Minister. Your Lordships have agreed that the CAP is in need of urgent and radical reform. Most of your Lordships seem to see such reform as necessary in order to permit the enlargement of the Community, although many of us believe that reform is essential, whether enlargement takes place or not, simply because the CAP has become such an environmental and economic disaster in itself.
But a number of your Lordships have mentioned the opposition to reform which exists among other Community nations. My noble friend Lord Middleton, in his excellent introductory speech, said that most member states would need persuading of the need for reform. The noble Lord, Lord Barber of Tewkesbury, emphasised this problem, as did my noble friend Lord Reay.
So I ask my noble friend the Minister whether the Government have given much thought as to just how difficult it is likely to be to persuade the Council of Ministers to agree to any worthwhile change at all. I suggest this because of the way in which the qualified majority voting system works under the Treaty of Rome. I would remind your Lordships that there are 87 such votes among the 15 member nations; 62 are required to carry a motion and 26 to block one. The UK has only 10 votes and, as your Lordships will be aware, we are often alone in our views. I do not know how lonely we are in our wish radically to reform the CAP, but the balance of national interest does not look encouraging. I say this because I understand—and I am open to correction from my noble friend on the Front Bench on the precise picture—that the principal paymasters of the CAP are Germany, Denmark and ourselves. We have only 24 votes between us.
However, I understand that the recipient countries of the CAP's largesse have some 54 votes between them. Even assuming that Germany and Denmark were to vote with us—my noble friend Lord Reay cast doubt upon the Germans' enthusiasm even for starting to discuss reform—we would be powerless to effect change because 54 votes are likely to be ranged against it. I repeat that 62 votes would be needed to effect reform. So even if these national voting figures and allegiances turn out to be somewhat pessimistic, I trust that my noble friend the Minister will accept that agreement about reform may well prove impossible to reach.
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If my noble friend does not agree with this analysis—which would, of course, be very good news—can he tell us how the Government see the qualified majority votes being cast for and against adequate reform of this pernicious policy?
It seems to me that, as with the many other problems created by our membership of the European Communities, once again it is the Treaty of Rome itself which lies at the root of the problems we have been discussing. But this is not the time to pursue that deeper problem. I merely await my noble friend's reply.
5.23 p.m.
Lord Mackie of Benshie: My Lords, I did not quite follow all that the noble Lord, Lord Pearson, meant in his short question, but I gather that he is against the CAP and Europe in general. We all recognise that there are problems. However, the report is, as usual with anything chaired by the noble Lord, Lord Middleton, excellent to the point that it follows the logic of previous reports. That is not always the case. I join in the congratulations to him on his period as chairman and trust that he will stay on the committee and keep a steely eye on the next chairman, to keep him on the right lines.
We must look at the report, but to see the effect of all the global tendencies on our agriculture at present we must also look at agriculture in the past in this country. We had the golden age of the industrial revolution where land was taken up, systems were improved and the wealth of the farming population increased. The population increased and there was a spell of prosperity. Because of the industrial revolution there was an agricultural revolution which, until 1870 or 1880, was a system of consistent progress. Then the prairies were mined and the horrible Vanderbilts constructed railways to take the grain out of the prairies, bringing it over here. Then we entered a period which, apart from wars, set the countryside and farming back enormously.
The great enthusiasts for the world market might reflect on the misery and poverty of the pampas in Argentina, the plains of the States and Canada and agricultural areas in this country, right up to the last war. The great open market did not seem to bring many blessings to the agricultural populations of the world. We should reflect on that when we look at the great explosion of world trade that is to come.
One can easily see what has happened in Eastern Europe because of our lack of thought, or the lack of preparation in those countries for any transfer to a free market system or democracy. One of the worst situations exists in the Ukraine. I am on the Council of Europe and we listened to a speech from the Ukrainian member detailing the real situation of unemployment in the Ukraine. He reckoned—and he produced figures to prove it—that 40 per cent. of the population were living in poverty and destitution. Some idiots suggested, as we did—and it is still suggested in Russia—that in 500 days Russia could be transformed into an open market economy. That is just not true; it is madness. It will take at least 50 years for Russia to reach that stage. One only has to visit the Eastern European countries, particularly

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Russia, to see that all enterprise has been killed. Most of the people have been so accustomed to direction that they do not understand what to do in a free market situation. Because we thought it could be done quickly, we have turned many such people against us and against democracy. They long for a socialist autocracy in which at least they were fed and looked after. We should not look for tremendous results from a great explosion of production in the world unless we can do something for the people who will be displaced from their jobs.
The near east countries like Poland and Hungary, which I know quite well, will progress quite rapidly. They could probably cope easily with the agricultural countries of the European Union by the year 2000 because they start with a low base. I have a couple of friends who farm in Poland. They are getting on quite well, working hard and trying to overcome the problem of a non-existent system. They cannot obtain fertiliser unless they get a lorry and go to Germany themselves to find it. But they pay good wages for their country, just over £50 a week. If we relate that to the price of a tonne of barley—in their case about £95—then they are in a favourable position to compete with wages in this country. Here, the wage for a week is more than two tonnes of barley. They are progressing, and will progress, because there is a residue of enterprise left. They have not been ground down for so long as the Russians have. They will progress quite rapidly. At a guess, they will produce what they were producing (with too many men, and expensively in the Communist period) in less than three years' time. I do not believe that the very high prices are as assured as we seem to think. Certainly world reserves of grain will rise by some 20 million tonnes, a figure I have seen this year. It is not a great deal in terms of what they have been, but there is tremendous potential in Eastern Europe and probably in the United States for an increase in grain production which may well see the present opportunity disappear. So we have to watch that. I understand that in America the Federal Agricultural Improvement and Reform Act (FAIR) will produce some 5 billion dollars a year in straight subsidy to the farmers based on past performance. That will be guaranteed on a slightly declining scale for seven years. What will happen after that is not stated. Support for the dairy industry is to be phased out, slowly, in about three years. Therefore, the present high prices may not last.
In the present situation a great deal of the nonsense of the CAP could be stopped. I could not agree more with those who point at quotas. It is absolute madness that in some cases a quota is worth more than the farm to which it applies. It is absolute madness that we still have the supports for olive oil on which I reported long, long ago when I was chairman. I understand that the situation is still the same. Nothing at all has been done about it. Again, the report refers to fruit. The situation is ridiculous. People pour fruit into the intervention system and there is straight-up corruption, proven by visits. Any sort of fruit will be passed. Farmers do not try to market the fruit or improve it. They produce for intervention alone. The Commission is not tackling these problems. It is tackling wine, and the wine
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industry itself is doing something about it. But the problems are not being tackled very fast. I agree with the committee that it should move a little faster.
On the other hand, one has to appreciate the situation in France, parts of Germany, Austria and other places, where people are desperately worried about the effect on the rural population of entering a fully competitive world system. They will take a great deal of persuading. The noble Lord, Lord Pearson, referring to the number of votes, may be quite right; it may be difficult to persuade people. I believe that facts will persuade them, but it will take time. The report will do a great deal of good in that it will lead people to think about these matters. It will be studied in the Commission and that will be extremely helpful.
I do not believe that we can altogether abandon decent protection for primary producers. Whether they mine tin or produce rubber, tea, wheat, pigs or poultry, primary producers receive a raw deal from the market. The great market is not very good for them. Some system needs to be devised to provide an element of protection. The trouble with the CAP is that the market was not followed; countries tried to go against the market. A system of protection has to recognise and alleviate market factors. The way in which we have done it is to go wholly against the market and try to force an issue. That is why we are landed with the ridiculous system that we have at present.
The Council of Europe has recognised the unease among the various governments of Europe in relation to the situation in the countryside. It is a situation that has always been there. Young people in farming need a job to go to. Jobs in the city are declining. If they are unemployed they get into trouble and the result is crime. They need somewhere to go. Without doubt, jobs in farming will become fewer.
The great cry is that a rural charter be produced and put to governments for their consideration. The essence of the rural charter is simply that you treat the countryside as a whole: you do not let agriculture decline. You do not let the fabric decline without putting something in its place. The Highlands and Islands Development Board has been doing that in this country, and it has been done in other ways. The approach needs to be developed as a definite policy. Of course, it has to be "decoupled"—that is the modern word. But it is an important approach. I believe that is what is meant by "rural integration", the phrase so despised by the noble Lord, Lord Wade.
There needs to be time. I do not believe that the CAP can be reformed in three years. I entirely agree with the report: it will take a little time. This is a good report. It deserves to be studied in Brussels and elsewhere.
5.37 p.m.
Lord Carter: My Lords, like other noble Lords I congratulate and thank the noble Lord, Lord Middleton, and his Committee on producing an authoritative, objective report with excellent analysis on this very complicated subject.
The first and most obvious point to make is that the 10 CEE countries each have their own problems. As the report says, it is a great mistake to treat them as an Eastern bloc. I had the good fortune to visit, albeit briefly, seven of the 10 countries referred to in the report. On each occasion I made it my business to meet farmers, officials and politicians. I was struck by the similarity of many of their problems as they each emerged from the command economy. I was equally struck by the great differences in their agriculture potential, social structure and rural economy. I also noted a very important point which was perhaps not picked up by the committee; namely, the extreme unreliability of many of the statistics quoted from the CEE countries for production and yields. Perhaps I may illustrate that with one brief anecdote.
On a cattle breeding farm in one eastern European country, we were entertained first in the boardroom with the usual hospitality and were told that the yield of the cows on that breeding station was 7,000 litres. I thought that figure was pretty good. When we went outside and looked at the cattle I should have been surprised if they were giving 700 litres. I have never seen cattle in such poor condition. When I managed to extract myself from the hosts and speak to the consultant from Brussels who was with us, I asked what on earth was going on. He said that 7,000 litres was the figure that they used to have to report to the central planners. It is the figure that they are still reporting because their jobs depend on it. That was only a year or two ago.
The committee recognised the wide range in the figures quoted for the possible cost of accession. We know that the figures which are quoted depend entirely on truly heroic assumptions which are made as the basis of the highly sophisticated calculations that follow. That point was well made in the excellent written evidence of Professor Allan Buckwell of Wye College, who said (page 185):
"I draw attention to these aspects of the document, not because I have any reason to suspect systematic bias in the projections, but merely to underscore the highly speculative nature of the analysis conducted which tries to peer 15 years into the future for 25 countries and a dozen commodities".
With regard to the cost of accession, we should not forget that the agricultural budget in the CAP is allowed to grow under budgetary guidelines by 0.74 per cent. of GDP each year. It would be interesting to know whether the Ministry has made any calculations of what that might be around the year 2000 and how much of that allowable increase in the EC budget for agriculture would be available to accommodate the cost of accession.
The other great imponderable is a situation mentioned by a number of noble Lords; namely, the world supply and demand for food over the next decade. Some argue that increased demand from a rising world population and increasing prosperity of certain of the major
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players—for example, China and the countries of the Pacific Rim—will automatically call forth increased supply. That argument is based largely on past experience. Others argue that physical problems of water supply and other agronomic restrictions will inhibit the capacity of world agriculture to meet the increased demand.
Clearly, the accession scenario will be very different, depending on which school of thought proves to be correct. Certainly it would be a rather brave policy-maker who based policy on a purely mechanistic view of food supply and demand. I feel that some degree of caution should be built in. But as all speakers in the debate agreed, the European Commission can hardly be accused of bravery in the way in which it has approached the problem of accession. I think that the committee is excessively polite when it points out (paragraph 77) that:
"We recognise that making rapid progress within the institutions of the Community is difficult".
If it is difficult now with 15 members, what on earth will it be like in a Union of 25 members?
One central problem is touched on by the report but for understandable reasons is not fully grasped. How is all the talk of transition, adjustment, variable speed entry and the rest to be reconciled with the concept of the single market?
The different experience of the UK and Ireland after entry in 1973 is instructive. Your Lordships will remember that the UK had a seven-year transitional period after entry; but Ireland went straight to full CAP prices. The UK had a chance and the time to adjust. Ireland had a sudden almost uncontrollable burst of agricultural prosperity which was followed by a savage adjustment. It was classic boom and bust. In the UK and Ireland that all took place in the absence of a single market in agricultural products.
In the light of that, I find it hard to grasp the concept stated in paragraph 78 that:
"it is possible to envisage joint accession with full integration in individual policy areas being taken on a step by step basis or that accession on an individual basis might only take place once full integration in all sectors is guaranteed".
How can that be? Suppose that the Polish cereal regime is ready for full integration but the Hungarian cereal regime is not. What happens if cereals are to be traded in Europe through a single market? That applies to every commodity in every CEE country. I can offer no solution. But it seems to me that a country by country and product by product analysis has to be concluded in much greater depth than has so far been attempted if we are even to approach a solution.
I was interested to see that the Tangermann bond is once again tempting your Lordships' committee. It is beginning to resemble Banquo's ghost in our various discussions on agricultural policy. I am not sure if a ghost can be described as intellectually seductive but politically impossible, but I fear that that may be the judgment eventually applied to this particular policy nostrum.

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Let me repeat a point that I have made before. The UK should be particularly cautious before advocating the bond approach too enthusiastically. The first version of the bond produced by Professor Tangermann was intended to be explicitly "degressive"; in other words, larger farms, however defined, got less than smaller farms. It was modulation in another guise. That concept could easily be reintroduced and a moment's thought would show that it would not be to the advantage of the UK because of our superior farm structure.
Another central point concerns the structure of farming in the CEECs. My brief visits to seven of the 10 countries convinced me that the biggest obstacle to improving their agricultural productivity has been their self-induced obsession with land reform. One effect of the previous regime was to concentrate farmland occupation in very substantial blocks. Those could have been broken down into smaller but still efficient units of agricultural production while paying the original owners, who could be traced, a rent for their small part of the land. I hope that your Lordships will note the irony of a member of the Labour Party advocating a landlord and tenant system. Perhaps it is yet another aspect of New Labour.
The point was put extremely well in a recent article on Romanian agriculture which quoted the Romanian president:
"In place of the old state cooperatives, the government has passed a law to redistribute the land and return it to the original owners. More than 80% of the arable land is now farmed by private producers. But this transition has created some new problems".
It was pointed out by President Iliescu:
"For nine million hectares of land, we now have 6 million owners. It is very difficult to develop a modern, organised agricultural system with such small farms".
The article continues:
"The government is at present thought to be considering encouraging the creation of larger, private farms in order to achieve more efficient economies of scale … Mr. Tabara [the Agriculture Minister] blames the difficulties of breaking down the former state farms into such small units for the slide of agricultural production the country endured in 1991 and 1992".
The committee's report mentions directing aid towards restructuring and there are two points that occur to me. It would be ironic to say the least if substantial resources had to be invested—they would be resources from the taxpayers in the 15 original member states—in putting back together viable units from farms which had been deliberately broken up in the first reaction to the old regime.
Secondly, the report touches on fraud in paragraph 115. Aid for restructuring would have to be very closely controlled indeed if it were not to be dissipated through fraud and misdirection.
Perhaps I may pick up a few points from the debate. The noble Lord, Lord Middleton, pointed out—as does the report—that the target is accession by the year 2000. That seems to be a very ambitious objective which I should have thought very unlikely to be achieved, particularly if European monetary union is to begin in 1999, because of the complications of the overlap.
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The noble Lord, Lord Reay, quoted the suggestion by Professor Tangermann of the intervention safety net, which would be based on 75 per cent. of the moving average of world prices over five years. It is an ingenious idea but I emphasise that the definition of "world prices" will be absolutely crucial in such a calculation. As we all know, they can be defined in many different ways.
An important point made by the noble Lord, Lord Barber of Tewkesbury, and other speakers, was the degree of hostility to CAP reform in certain powerful member states. We are aware of that. But if we couple that with the fact that 80 per cent. of the work of MAFF is concerned with matters European and all of that is subject to qualified majority voting, it means that CAP reform is likely to be a long, slow task and a policy as splendidly isolated as radicalism is not likely to be very productive.
There were many points made which I should have liked to cover, if time allowed. One is the whole question of import licences and quotas, which I know from my own experience is a sore point with all the CEECs I visited. Another is the whole question of integrated rural policy which the Commission appears to view as a kind of bucolic back to basics. Reference was made to the tremendous environmental and pollution problems in many of the CEECs and the woeful state of almost all of the food processing industries. Mention was made too of the problems in the monetary union—or not as the case may be. Professor Swinbank's written evidence is a tour de force but the reality is succinctly put by Professor Tangermann on page 149 when he says,
"I find it amazing that we are entering into probably the largest experiment in history in monetary and exchange rate policy without even knowing what institutional arrangements will be in existence to deal with it".
After spending almost all of my professional life having to deal with the lunacies of the CAP, I am surprised that the professor is surprised.
Time does not allow for further analysis of the excellent report. The noble Lord, Lord Middleton, and his colleagues are to be congratulated on what I am sure will come to be regarded as a seminal analysis of this important subject. Their description of the CAP for the 21st century in paragraph 122 is an excellent summation of what we should all like to see. We must hope that the report and the discussions that it will engender help to bring that about.
5.52 p.m.
Lord Lucas: My Lords, my noble friend Lord Middleton and his colleagues on Sub-Committee D are to be warmly congratulated on the breadth and depth of the report. It is a great tribute to my noble friend's time as chairman that he should be leaving on this high note, and the quality of the report has been well reflected in the quality of our debate today.
We have heard many excellent speeches, but I was particularly struck by the speech of my noble friend Lord Reay. It was lucid, to the point and eminently "listenable to". I hope that we shall hear him on these

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subjects again. I am sure that in the course of what I hope will be a relatively short reply I shall miss many points made by noble Lords. I shall read Hansard and reply in writing to any points that I omit.
The principal problem that we experienced in replying to the report was finding sufficient variants on the word "agree". To our mind the case for reform is unanswerable. The present CAP creates major distortions in the EU economy; it holds back European agriculture by making it more difficult for industry to compete in world markets, as my noble friend Lord Wade of Chorlton said; and, as my noble friend Lord Stanley of Alderley said, it creates domestic inefficiencies. It is also expensive for consumers and taxpayers.
An interesting report was published last week by the Institute of Economic Affairs. It included a recalculation of the net cost to this country of the common agricultural policy. It came out with a figure of £6.4 billion per year. That is not something with which we disagree; it is very much within our range of estimates. I can understand how that net cost to consumers troubles my noble friend Lady Wilcox.
Without reform, the European Union will in due course be unable to meet even its existing commitments under the General Agreement on Tariffs and Trade without building up new, unsaleable food surpluses. The European Commission, in its report on strategies for developing relations between the European Community and the associated countries in central and eastern Europe, concluded that the CAP in its present form is not an option for the future. That applies, even given all the uncertainties detailed by the noble Lord, Lord Carter, such as the information that he obtained on his grand tour and the difficulties highlighted by the noble Lord, Lord Mackie of Benshie, when he mentioned the plight of the population generally in the CEE countries. We certainly do not want to find ourselves looking at a system which will increase food prices in the CEE countries for people who are already badly off. The noble Lord, Lord Carter, with his usual perspicacity, outlined the difficulties which would come from trying to combine the CAP, the single market, 10 new countries and umpteen different products. It is clear to him and to us that the devil is in the detail and I am delighted that it is also clear to the noble Lord, Lord Carter, that the devil is not in the landlord.
The report of the European Commission reflected well on some of the messages that we have been pressing with the Commission. Like the committee, we are concerned that the momentum of that exercise should not be lost.
Perhaps I may turn briefly to the associated area of the Europe agreements. The reality is that with agricultural goods market penetration so far has been poor. It is vital that those trade concessions are further liberalised. The European Union claims to be firmly committed to the concept of enlargement. But it must accept the practical consequences of such a commitment and send signals which encourage rather than frustrate. Having said that, I am conscious that my noble friend Lord Mottistone pricked that balloon for me when he
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mentioned the subject of soft fruit. I do not want to say too much on that; my noble friends north of the Border would blow me a raspberry if I did. But we are conscious that we need to make proposals here and hope that we can make proposals beneficial to both the European Union and its CEE suppliers.
I turn briefly from burying the CAP to praising it. The CAP had its roots in the need post-war to create stability and food security in Europe, and we should recognise that in that it has largely succeeded. I do not go along with my noble friend Lord Mottistone in blaming the entire thing on the French and "DG666" as it may be. Whatever we feel about the CAP, the need for the European Union to have some system of regulation for agricultural support is clear. All European countries are committed to supporting farming and rural life.
As was said by the noble Lord, Lord Barber of Tewkesbury, the Germans have a strong emotional attachment to their pattern of small farms and to the communities and environments that it has produced. They are also strongly influenced by green issues. The French take enormous pride in their food industry, quite reasonably. They have a mission to produce and export. They want to see their countryside used and inhabited.
We ourselves are not immune from those emotions. As was mentioned, particularly by the noble Lord, Lord Brain, in reference to the Welsh, we support our hill farmers to such an extent that they are now totally dependent on that support and will be for the future. We do that to support their way of life and the countryside that they have created.
Perhaps compared with the French and the Germans we take what we believe to be a clearer view of the benefits of markets and the disbenefits of subsidies. We see the benefit that comes from separating agricultural support from environmental and social support and of having policies that are clearly directed to the ends one seeks to achieve. But we must recognise that with so much emotion, with so much at stake and with such diversity of interests we will always need the framework of the common agricultural policy to set the rules and to see fair play.
We want to achieve not the destruction of the CAP but its reform. We want to promote an efficient, prosperous and outward-looking agricultural industry able to operate in increasingly open world markets. To achieve that we are pressing for progressive reductions in EU support prices and the removal of production-linked payments which we hope will lead to the reduction of withdrawal and destruction of produce and the other deleterious aspects of intervention. That will in turn permit the removal of the supply controls; for example, the milk quota and set-aside, which are currently applied to keep CAP costs down. Those changes will benefit European Union agriculture, whether "EU" means a community of 15 or a larger community extending to the east.
My noble friend Lord Reay and the noble Lord, Lord Barber of Tewkesbury, among others, correctly drew attention to the underlying mood in France and Germany. Those countries have enormous affection for

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the CAP and a determination to keep it as it is. I do not share the apocalyptic vision of the CAP of the noble Duke, the Duke of Somerset, and my noble friend Lord Pearson of Rannoch. Just as King Canute's courtiers were tamed by the tide, so our partners in Europe will, by the force of events, come to realise that the policies that we are advocating are the right ones. We feel that, however long and tiresome that process may be, we shall come to the right answer in the end.
Lord Pearson of Rannoch: My Lords, surely the noble Lord has mixed his metaphor. Surely the tide is Europe. King Canute eventually had to withdraw. Surely that is the position which this country is up against. We are Canute and we are up against the tide.
Lord Lucas: My Lords, my noble friend is right. We are Canute. We are the King who realises that he cannot withstand the tide and must take the necessary action of retreating up the beach to deal with it. The courtiers are our friends in Europe who are trying to assure us that Canute has only to tell the tide to turn and it will do so.
Perhaps I may give the noble Lord, Lord Barber of Tewkesbury, a little comfort on one question. He mentioned reports that the proposed cut in arable area payment is about to be aborted. Cutting aid is not easy, but I am confident that when the Agriculture Council returns to the subject later this month Ministers will recognise the logic of the Commission's proposal. I hope that I do not have to swallow those words in a month's time.
We fully agree with the Committee that there are considerable advantages at home and in the World Trade Organisation for mapping out the required changes early. As the committee's report neatly and correctly notes, it is unfair to expect the central and eastern European countries to move towards a CAP which is effectively a moving target. As the noble Lord, Lord Brain, said, they are also faced with a block on inward investment and domestic entrepreneurship as a result of that uncertainty. We also feel that the Community will strengthen its hand in the next round of WTO negotiations on agriculture if it has a clear vision of its future market-led agricultural policy.
There are great benefits to the course which we are advocating, but there are of course potential disbenefits too. Taken by themselves, and if implemented too quickly, such reforms would be likely to result in unduly rapid changes in the countryside and a risk in some areas of a declining rural population. That would not be acceptable to us, let alone to our partners in Europe. A reformed CAP is therefore likely to require a period of transition, perhaps with some temporary financial assistance to help farmers to adjust to the new situation. It will certainly require a greater emphasis on social and environmental schemes.
I should like to make a number of points about such schemes. First, we are already familiar with them and within their limitations they appear to work well enough. As the committee says, a good measure of subsidiarity is required. Such schemes have to fit closely the needs and cultures of the particular communities that are to benefit from them. That point was highlighted by
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the noble Lord, Lord Beaumont of Whitley, when he mentioned rural shop rate relief. Clearly, that applies in this country and would be totally inappropriate as a European policy. However, as I pointed out earlier, a strong Community-level structure will be required to ensure that aid is properly targeted, minimising abuses and market distortions. My noble friend Lord Clanwilliam mentioned organic farming. That is an area in which we would hope that such policies would bite. We would support them. Indeed, we are lending such support at the moment.
There may be some scope for a change of name as the common agricultural policy moves in that direction. The noble Lord, Lord Beaumont of Whitley, might prefer it to be the "Common Holistic Environmental and Agricultural Policy"—or CHEAP, which I do not think that it would be. Others might prefer it to become the "Common Agricultural Rural Policy", which would enable my noble friend Lord Pearson of Rannoch to "carp" at it. I am sure that the Liberal Democrat Party would like to go further and make it the "Common Rural and Agricultural Policy", but I shall leave that matter to the Liberal Democrats.
The committee concludes that,
"The Commission and the Agriculture Council must act with the utmost urgency to begin the process of reform".
I think that we can say that the debate has already begun. European Union Agriculture Ministers are already debating the future of the beef regime and, with it, the balance of support between the beef and arable sectors. The Commission has promised proposals on the future of the milk sector during 1997. We know that the Commission is actively pursuing the mandate given to it by EU heads of state at the Madrid European Council to extend analysis of the likely impact of enlargement on the agricultural sector.
Progress has been painfully slow and late and may well continue to be that. There is a great deal to be done. The noble Lords, Lord Gallacher and Lord Carter, mentioned the agrimonetary review and EMU as having an effect in that area. We shall need to be steadfast in our determination to press the case for reform. We shall need to listen carefully and sympathetically to the ambitions which our European partners have for the CAP. We shall need to present proposals which are well researched, logical and lucidly expressed. In other words, we shall need to follow the example set by Sub-Committee D.
Lord Middleton: My Lords, I thank noble Lords who have participated in this debate. I am touched by the kind words that have been said. I am grateful to my noble friend Lord Lucas for his kind words and for the manner in which the Government received our report. After listening to my noble friend, I am confident that the UK Government will continue to give the lead among member states in the drive towards the enlargement of the European Union and the reform of the CAP, which is a prerequisite.
Our report concentrated on CAP reform as one of the chief obstacles in the way of the accession of the CEE countries. Of course, there is much preparatory work to

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be done in other areas of policy, not least the reshaping of the institutions. However, our brief was to study the co-ordination of the agricultural policies and in particular the Commission's strategy document.
I believe that the Commission is thinking along the right lines. Manifestly, it is anxious about the response from the Council of Ministers to any proposals which are radical enough to be effective. In that endeavour Mr. Fischler and his staff will need all the help that they can get. I commend the report to the House.
On Question, Motion agreed to.

Oil and Gas Installation Decommissioning: Select Committee Report
6.7 p.m.
Lord Craig of Radley Lord Craig of Radley rose to move, That this House take note of the Report of the Science and Technology Committee on Decommissioning of Oil and Gas Installations (Third Report, HL Paper 46).
The noble Lord said: My Lords, perhaps I may start by saying that I am sorry to learn that the Minister responsible for energy matters is indisposed. I wish the noble and learned Lord, Lord Fraser of Carmyllie, a speedy recovery and welcome the noble Baroness, Lady Miller of Hendon, in his place.
The inquiry which was originally set up just over a year ago proved to be particularly timely. There have been significant changes affecting the exploitation of our oil and gas reserves around the United Kingdom since the subject was considered by the Select Committee on Energy in another place in 1991. In May 1995, a couple of months before our call for evidence was issued, the Department of Trade and Industry circulated for comment a consultative document entitled Abandonment of Offshore Installations and Pipelines under the Petroleum Act 1987. That was shortly followed by the highly publicised Greenpeace campaign against the sinking of the "Brent Spar", a floating oil tank and never a fixed installation, in the deep waters of the Rockall Trough off north-west Scotland. Our inquiry was not a post-mortem into the "Brent Spar" episode, although inevitably there were useful lessons to be drawn from the difficulties which arose.
Before I comment on our findings and recommendations, I should like to put on record my heartfelt gratitude to all members of the committee who gave me and our clerk, Mr. Vaughan, such marvellous encouragement and backing. We were very fortunate to have the experience and knowledge of our two co-opted members, the noble Lords, Lord Lewis of Newnham and Lord Tombs, and of our specialist adviser, Sir Anthony Laughton, Fellow of the Royal Society and a world renowned oceanographic consultant. Dr. Bradshaw, the committee's special assistant, also made a most valuable contribution. Both Mr. Vaughan and I were on our maiden run as committee clerk and chairman. I am most
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grateful for the forbearance and unfailing support that we received. Mr. Vaughan passed his overture performance with flying colours.
Our thanks are of course due to the many witnesses who responded both verbally and in writing to our calls for evidence. Some committee members visited the "Beryl Alpha" platform owned by Mobil North Sea Limited. We were most ably looked after by our hosts, who included the Beryl area manager, Mr. Neil Duffin, and Mr. Andrew Sneddon, their senior staff environmental engineer. We are most grateful for all the trouble taken to make this very well organised visit so worth while and informative.
As an aside, "Beryl Alpha" is a 90-minute helicopter ride from Aberdeen. It stands in 120 metres of water and weighs in excess of 520,000 tonnes. It is far from being the largest North Sea structure. It is mainly fabricated in concrete and when decommissioned will almost certainly have to be left permanently in place, apart from the topsides which will be lifted off and brought to shore for disposal.
The scale of development of the North Sea's oil and gas reserves is now massive. There are approximately 440 rigs in the entire North Sea, half of which lie in the UK sector. Many of these lie in the relatively shallow waters of the southern North Sea, and modern floating cranes and barges are man enough to lift and remove these shallow sea structures to shore for dismantling when they have been made redundant. The problems we face lie with the 50 or so massive deep water installations in the hostile environment of the northern North Sea, together with the large amount of pipelines (around 10,000 kilometres in the UK sector alone) and the oil and mud pile cuttings which are a necessary concomitant of oil drilling.
Our report describes the various types of structure and the ways in which they could be dealt with on decommissioning. As noble Lords will have noted, there is much in our report which has been welcomed and supported by the Government in their formal response. They will have been able to take account of our recommendations in their guidance notes for oil and gas installations following the consultation process they initiated some 18 moths ago. I hope that in her response to the debate the Minister will be able to bring us up to date with this document.
One of our principal recommendations, after careful thought and discussion, was that it would not be right to rule out of consideration the possibility of sea disposal of a structure. Would it not be perverse to rule out sea disposal before considering any of the factors for an installation which has been in the sea for half a century or more? Indeed, some of the very heavy gravity structures like "Beryl Alpha", which rely on their massive weight and grouting to the seabed to hold them steady during their working lives, will never be removed.
The arguments we heard for and against disposal at sea and our conclusions are fully set out in our report, so I shall not rehearse them now in detail. The key point is that, whatever option is selected, it should be based on an open and transparent selection of the best practicable

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environmental option, or BPEO for short. This concept, which was devised by the Royal Commission on Environmental Pollution in 1988, states that all possible options should be investigated and compared; all factors should be considered in comparing the merits of these options; the whole process should be conducted openly and incorporate consultation with interested parties; and the process should be flexible and take account of past experience. Wise words, and the Government deserve full support in upholding this line of approach.
Some witnesses suggested that the case-by-case approach would not take account of any cumulative effects of the decommissioning process. However, because there is such a variety of rigs and installations, and because decommissioning operations for large structures in the difficult waters of the North Sea are still in their infancy, we recommended that the case-by-case approach proposed in the IMO guidelines of 1989 and the Government's own draft guidelines should be maintained. Perhaps for the avoidance of doubt the phrase "case-by-case" should, I submit, not exclude considering the cumulative effects of disposal operations.
We further recommended that the Government should seek to restore international agreement and extend international guidelines to cover pipelines and wastes arising from drilling operations based on a BPEO approach. Without international consensus it would be very difficult for the oil and gas industry to make long-term plans or to estimate the costs of decommissioning—clearly not a satisfactory prospect for them. I shall be interested to learn what progress has been made in this important area.
Let me now turn to two points where the committee and the Government do not appear to be quite of the same mind. The first concerns the committee's recommendation that for any deep sea disposals planned in the future the Government should define the criteria for an ecologically acceptable area in the UK waters within which, subject to BPEO analysis, they will allow the sinking of installations. We believe that the expense of identifying several different sites and the difficulties for government (and hence the operators) of getting widespread public and international acceptance of a number of sites point towards trying to find and select a single suitable one. Moreover, the ongoing cost of the necessary monitoring of disposals would be greater if more than one site were to be used.
In their response the Government acknowledge the possibility of reusing a selected site, but then argue that it would not be sensible now to define one ecologically acceptable area for the disposal of installations and rule out the possibility that other sites could be more suitable in a particular case. In the light of the Natural Environment Research Council's report commissioned by the Government and chaired by Professor John Shepherd, I hope that the Government will think again about their attitude to our recommendation. The Shepherd group found that:
"the global impacts on the environment and on human health of the deep sea disposal of a structure such as Brent Spar would be very small, roughly equivalent to the impacts associated with the wreckage of a fairly large ship".
In the light of that finding, I do not think that our approach is totally incompatible with the Government's present thinking. Our recommendation does not preclude an exception being made if a particular installation had to be disposed of elsewhere; for example, if for technical or other reasons it would be best to topple it on site. However, an extreme example does not mean that the majority of those selected for sea disposal should not be sunk in one location. Any step which removes uncertainty and extra cost must surely be considered favourably.
My second point refers to the Government's rejection of our recommendation that in situ remains of an installation should be marked by a light or buoy. I acknowledge the Government's point that the function of a buoy is to mark a hazard to navigation and that submerged remains of decommissioned structures will be marked on charts. However, our recommendation came from evidence which we received from the Scottish Fishermen's Federation. It pointed out that there is a real hazard to its members who may be capsized if their nets are snagged in underwater remains, even those at the legally allowed 55 metres or more below sea level. I hope that the purest argument about the navigational purpose of a buoy will not be allowed to override the fishermen's real concerns about hazards to their safety.
Finally, although we did not go so far as to make it a formal recommendation, I wish to draw the attention of the House to the problem of long-term liability for remains. When we asked Mr. Eggar, the then energy Minister, about that he stated in evidence that after consultation with the oil industry the Government had come to the conclusion that the liability should be left with the industry. Of course, one can understand government being uneasy about taking that on, but I believe that there is a real issue here which must be gripped some time in the future.
It is not too soon, as we start to see rigs being decommissioned and face the prospect of some of these structures remaining in situ for perhaps hundreds of years, to be giving the matter more active thought. Nor should we overlook the 10,000 kilometres of pipelines lying on the seabed and the large piles of drill cuttings and other wastes. Those could become sources of longterm pollution, perhaps ever more troublesome than the abandoned structures themselves.
Today's industry is financially sound and strong, but will its successors in title be equally well founded? Ultimately the risks inherent in abandoned facilities may affect the health and safety of human lives. Government will not be able to avoid shouldering some responsibility for safeguarding international safety at sea. Requiring today's owners to pay government a sufficient sum to insure against a potential liability some time in the future would seem to be a prudent course of action.
In commending the report to the House, I wish to conclude by underlining our support for the concept of the best practicable environmental option when considering and approving the choice for disposal of installations. Your Lordships should remember the importance of the key word "practicable" in this

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concept. Only by that broadly based approach will the other factors—technical, engineering, human safety and, of course, cost—be properly weighed in the balance when reaching a decision on disposal.
At the end of the day there will be a measure of human judgment in that decision. Risks, where they are quantifiable, can and should be measured, but some cannot and those with the greatest experience and scientific and engineering knowledge of the structures and their hostile environment are those whose advice should be given greatest weight by Ministers who have to approve and, if necessary, defend their decisions in public. I beg to move.
6.24 p.m.
Lord Campbell of Croy: My Lords, I wish to thank the noble and gallant Lord, Lord Craig, for his clear and comprehensive introduction of the report and its main conclusions. I shall make some observations which I hope will be helpful because, in general, I agree with what is in the report.
Offshore oil and gas still form a comparatively new industry for the United Kingdom. The oil was first discovered only 26 years ago in 1970 and the first oil was extracted from the seabed only 21 years ago in 1975. I venture to make my modest contribution to the debate because I was closely involved in those early days; I was Secretary of State for Scotland from 1970 to 1974 when oil was discovered in the North Sea. The Department of Energy was not created until 1974. Later I served in a non-executive capacity with a major oil company which has been the operator of one of the largest fields in the North Sea. I retired some time ago but I still follow offshore activity with close interest.
The structures which pose the difficult problems are the platforms. At times they are referred to as "rigs" but that can be confusing. Drilling rigs used for exploration are mobile and move around in their work. They are not rooted to the seabed when their working lives come to an end. The top sides of platforms, consisting of the operating and living quarters supported above the surface, should be removable when no longer needed without great difficulty. However, the jackets, which in the North Sea are mostly steel structures but a few are of concrete, are another matter. Some in the deeper water are gigantic and their eventual fate will need very careful consideration.
The core legislation in this country was the Petroleum Act 1987. Some of us took part in the debates in this House during the Bill's passage. At that time I was chairman of the Advisory Committee on Protection of the Sea, a non-governmental organisation with international membership. The principle enacted in that Act was that each redundant structure should be considered as a separate case, as recommended by the International Maritime Organisation. Later guidelines from the British Government have confirmed, elaborated and clarified procedures. Guidelines have also been formulated on water clearance to be left above partially removed installations. For reasons of safety and navigation, clearance of at least 55 metres of water
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column must be left on the United Kingdom shelf. The smaller platforms in shallow water are likely to be removed completely. I understand that in the North Sea about 10 have already been taken out of commission in that way.
We should remember that oil provinces discovered offshore before those in the North Sea—for example, in the Gulf of Mexico and in Lake Maracaibo in Venezuela—were in relatively shallow waters. When their first platforms became redundant they could be removed completely without great difficulty. In contrast, the most productive fields in the North Sea were in much deeper water and the latest technology from American and international companies, and advances in that technology in the early 1970s, were required to build the giant platforms which were needed.
The fields now being developed west of Shetland are in even deeper water. Fixed platforms of even greater size to serve them are not practicable. Other sophisticated techniques are being devised; for example, special vessels on the surface controlling operations and the remote control of installations on the seabed. Those systems are less likely to raise serious problems on abandonment of the fields and that augurs well for the future. It is also consonant with the IMO's recommended standard that from 1998 onwards all new installations should be demonstrably removable when they are redundant.
The subject of decommissioning and disposal became front-page news last summer with a chapter of the unfinished saga of "Brent Spar". Unfortunately, the impression was given by the media, unintentionally, that that was an example and a precedent for the disposal of platforms. "Brent Spar" was referred to continually as a platform, which it is not; nor is it a rig; it is a storage buoy, floating and moored to the seabed. It does not contain drilling or other equipment for operating a field. Its purpose was to store oil for loading into visiting tankers.
Furthermore, there have been very few of those floating storage buoys on the British Continental Shelf. I believe that there has been only one other. However, platforms, of which there are about 150 on the British shelf, are standing on the seabed, many pile-driven into it, although some recent ones have a flexible tension-leg system. Their main functions are different and the storage of oil—the whole purpose of "Brent Spar"—is not one of them.
The disposal of "Brent Spar" raises special considerations which do not necessarily apply to platforms; for example, in relation to residues in its tanks.
Another mistake made widely last year was in reporting that the "Brent Spar" was to be dumped in the North Sea. On hearing one such statement in a BBC broadcast I telephoned immediately to point out the error. An apology was made and I was told that the mistake would be corrected in future bulletins. I find it sad that in a maritime nation, which we are, the difference between sinking an object to a depth of a mile or so in the deep Atlantic Ocean, far from land, as was the plan, and discarding it in some 400 feet of water in the North Sea is not sharply apparent.

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The saga is unfinished. "Brent Spar" is still lying in a fjord, the Norwegian Government having extended the period originally agreed to July 1997. Shell has received 30 outline plans for its disposal from 19 contractors and consortia. Those plans include both sinking in the deep ocean and dismantling on or beside land. The second option entails many additional health and safety factors.
As paragraphs 3.41 and 3.42 record, in decommissioning, attention must be given to drill cuttings, which are likely to include oil and chemicals. They are normally produced by drilling processes and collect in piles or layers at the feet of platforms. They could be sources of contamination if not neutralised. They could be stirred up and spread when the bases of platforms are being uprooted for removal.
I should like to make a few comments on the effects on sea fisheries. While platforms are in place, there are no-go zones around them, usually of a radius of 500 metres. Fishermen's organisations are greatly concerned about the effects of decommissioning on their fishing operations, not only from the stumps or abandoned lower sections of structures but also from the chemicals, oily cuttings and pipelines. I believe that the last two can he neutralised; for example, by removal or covering over. On structural remains left on the bottom and well below the surface there will inevitably be controversy, although they are likely to be authorised only in deep water.
I shall try to convey what I believe is the attitude of fishermen's organisations. The Scottish Fishermen's Federation, to which the noble and gallant Lord referred, represents about half the tonnage of all British fishermen and is certainly a very influential body which I believe normally takes sensible views.
It has been pointed out that the remains of a platform can form an artificial reef which can encourage the multiplication of fish. That has been effective in other parts of the world in shallow waters. However, I suggest that that is appropriate only in certain areas of our Continental Shelf.
The reason for that is that an important part of our fishing fleet—the boats that trawl for demersal fish on or near the seabed—would find the truncated structures to be additional obstacles. There are already wrecks of ships forming obstacles whose locations fishermen must know and take into account. Those fishermen would not welcome more obstacles on the seabed likely to damage their fishing gear on what had been productive fishing grounds in the past. In other words, avoiding obstruction to their normal fishing methods is as important to them as increasing the numbers of fish by creating artificial reefs.
I am speaking mainly of the larger boats—those which form the substantial core of our fishing fleet and make voyages of several days, often travelling far from their home ports. Those not engaged in the specialised pelagic fisheries of herring and mackerel are bringing to market the white fish which swim near the seabed; for example, cod, haddock, whiting and flat fish. Their fishing operations involve movement. Their engines propel them so that their trawls or seine nets are extended and pulled behind them. They are looking for
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straight fairways where they can have a clear run of 1,000 metres or more without impediment. That is very different from rod and line fishing from a seaside pier.
I have kept in touch with fishermens' organisations for many years on this and other subjects. Perhaps it is fitting for me to speak on these fishery considerations today. I established a body bringing together fishermen's organisations and the offshore oil industry and others expressly to examine jointly the swift course of developments in the North Sea when oil was first being discovered way back in the early 1970s and when I was the Secretary of State concerned. I believe that, with full consultation, acceptable solutions can be found to suit different parts of the sea and the seabed. That can be done within the policy of authorising decommissioning separately for each individual case, a policy which I continue to support.
6.37 p.m.
Lord Gregson: My Lords, I too thank the noble and gallant Lord, Lord Craig of Radley, for his very able chairmanship of the sub-committee which produced this excellent report. I also thank the clerk to the committee for the determined way in which he kept us to the subject.
What intrigued me most about the inquiry was that when we started it, the proposed disposal of the "Brent Spar" was a recent event and the considerable antagonism associated with it was still in recent memory. As the inquiry proceeded, the calm and detailed examination in the committee room showed slowly but surely that the protagonists were not so far apart compared with the rhetoric which was generated at the time of the "Brent Spar" problem.
In giving evidence, Greenpeace accepted that concrete structures could be disposed of at sea since they in fact mimic the materials of the seabed but they need to be thoroughly decontaminated before disposal. As that concrete is half the mass of the rigs in the deeper waters, it makes a very large inroad into the problem of disposal. However, it thought that the remaining steel parts and steel rigs should be brought ashore and recycled for scrap.
Later in the inquiry the offshore operators fully accepted the need for decontamination, and so we are really concerned only with the disposal of the deep water steel rigs and components.
Personally, I can see no ecological problem with disposing of steel in the deep sea since many billions of tonnes are already under the sea as a result of two world wars and many thousands of shipwrecks, with no apparent damaging effect. In fact, steel is protected in deep water because oxygen is excluded. A fine example of that is the images which were generated by Bob Ballard when he investigated the "Titanic" and several other vessels in the sea. In fact in many cases the structures were almost as good as when they were launched, probably better.
In fact, only last week, in the journal Nature, four international papers were published which proposed the introduction of iron into the world's oceans in order to

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encourage the growth of plant life, which would increase the food potential and absorb carbon on a massive scale to counter the greenhouse effect.
On the other hand, there is a growing shortage of steel scrap due to the changes in the manufacturing process of steel production—the so-called "minimill process" which is rapidly spreading throughout the developing world. Those minimills are fed entirely from scrap and avoid the costly and large-scale smelting of iron from iron ore. There is, therefore, a strong case for recycling the steel from the off-shore rigs. As the noble Lord, Lord Campbell, said, several of the shallow rigs have already been brought ashore and recycled.
Unfortunately I am highly suspicious of the £3,000 to £4,000 per tonne quoted by the off-shore operators for bringing scrap from these deep-water rigs ashore to be recycled, especially when one considers that a scheme is being proposed to salvage some of the many U-boats scuttled in deep waters after the Second World War, in order to recover the scrap for recycling.
I believe that much more work needs to be done to determine the feasibility of recycling steel from the deep water rigs. It is apparent to me that, given a reasonable degree of compromise, the problems of disposal of off-shore rigs can be solved. I believe that this report points the way.
6.41 p.m.
The Earl of Selborne: My Lords, like the noble Lord, Lord Gregson, I was a member of the Select Committee which undertook the inquiry. I join the noble Lord in expressing gratitude to the noble and gallant Lord, Lord Craig of Radley, for the way in which he chaired the committee and especially for the way in which he introduced the report today. As my voice is rather suspect tonight, I can be very brief because the noble and gallant Lord has said really all that needs to be said.
I should like to return to a very fundamental issue and it is one which informs the whole debate as to how one disposes of installations, be they rigs, platforms or whatever. First, when we come to dispose of such installations, should we always take the best practicable environmental option (BPEO)? Secondly, if we determine that BPEO is appropriate, then how, on a case-by-case basis, do we set about determining what is BPEO?
The first and fundamental issue arises from society's legitimate right to say that some areas of the globe are no-go areas. Whatever the assessment of risk and the assessment of environmental damage of alternative actions, we may decide, despite the fact that this might be the best practical environmental option, that: "We, society, in our wisdom determine that you shall not dispose of rubbish or no longer-needed installations in those areas". I suppose, when thinking where such areas could conceivably exist, one might think in terms of those cultures which use such areas for burial or they could be areas where sacred graves are located. Although there may well be sensible reasons for burying
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waste in those areas because they are deemed by society to have a value which transcends the assessment of an economist, they become no-go areas.
I suppose that it is therefore conceivable that society might determine that the bottom of the ocean—or, indeed, all oceans—should become such areas. Indeed, during the kind of fiasco surrounding the debate on the "Brent Spar" there were indeed just such proponents. Presumably such proponents said that on no account should we ever again dump our waste at sea. I assume that they would have taken a more extreme view than Greenpeace took in evidence to us. They would have said that even those concrete installations could no longer be dumped at sea.
Of course we see a movement in that direction, although it has to be admitted that it is nothing like as fundamental. In a few years' time we shall no longer be allowed to dump our sewage at sea. Some people will still believe that the best practical environmental option would be to do just that. Indeed, those who have read the report on soils of the Royal Commission on Environmental Pollution recognise the great damage that will be caused by critical loads unless we manage to take the metal out of sewage. Nevertheless, we have in that instance, and for reasons which I still find difficult to understand, taken the view that sewage can no longer be dumped at sea.
However, I do not believe that society is anywhere near ready yet to contemplate the dire consequences of saying that no waste of any kind should ever again be dumped at sea. The implications for the exploitation of the marine resource would be quite horrendous. It would follow from that that many of the exercises that man undertakes when securing his livelihood would simply become impossible. Therefore, I believe that it is reasonable to assume that this fundamental approach—although people are quite entitled to debate it—is not one that society is anywhere near to sanctioning. It is clearly right and correct, as the report recommends, and as Professor Shepherd's committee recommended, that BPEO should be determined.
Then we have the issue as to how precisely one determines what is BPEO. Everyone must recognise that the exercise undertaken by the owners of "Brent Spar" was a fairly poor example of the implementation of BPEO. I shall not go into that because our report was not about "Brent Spar" although, as the noble and gallant Lord, Lord Craig of Radley, reminded us, clearly it was bound to be influenced by that episode. The report by Professor Shepherd which was undertaken on behalf of the Natural Environment Research Council was specifically about the "Brent Spar". I believe that that report makes it quite clear in what respects BPEO was defective.
The clear essential to be undertaken by physical scientists, engineers, economists and lawyers and others who undertake BPEO is to agree first of all a methodology on risk assessment. Unless there is an agreed methodology, there will always be arguments about the basis upon which the assessment is to be made. Then, on the basis of that agreed methodology, one needs to undertake a full assessment of the

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problems, the risks and the environmental hazards, as the noble Lord, Lord Campbell of Croy, reminded us, to such interests as fishing and others. All those interests must have the opportunity to check the data and engage in the debate. When the Royal Commission on Environmental Pollution defined the concept of BPEO it was clear that there simply must be full transparency, as the noble and gallant Lord reminded us. Without it, one cannot undertake a proper, clear review and, without it, people cannot possibly be expected to have any confidence in the views of "experts". Everyone must feel that he is entitled to contribute to the debate.
The only area where anyone could put a knife between our report and that of Professor Shepherd is in our wording of "case-by-case" as opposed to "cumulative". I believe that the noble and gallant Lord dealt with the matter quite clearly. There is nothing in undertaking a case-by-case appraisal which suggests that one cannot also bear in mind the cumulative effects. Indeed, the Government's response to our report makes that very clear. I believe that it is perfectly appropriate for the cumulative effects to be considered on a case-by-case basis.
What then for the future? Clearly, before any new installations are put into the North Sea or elsewhere, we expect a cradle to grave environmental appraisal to be essential. No doubt there will be far greater transparency, openness and a shared consensus on the methodology involved in the future. However, I suspect that there will still be a role for confrontation. After all, it is perfectly open for members of society—perhaps some people would call them extremists, whereas others would say that they were ahead of their time—to wish to change people's attitudes to the basic principles under which we normally operate and behave.
There will be some people who believe passionately that we have a duty not to dump our rubbish and especially not to do so at sea. I hope that I may declare that I do not count myself as one of those people. I believe that there are still very good reasons, not least when considering the impact on human health and safety and, indeed, the impact on the terrestrial environment, why we should allow the options still to remain. However, I accept that confrontation will remain with us if we wish to allow people to put forward their point of view that, one day, we should no longer be allowed to dump our waste at sea.
6.50 p.m.
Lord Nathan: My Lords, I add my thanks to the noble and gallant Lord, Lord Craig, who chaired the sub-committee. He kept us all in order which is not easy in a committee containing so many varied talents. It was easy to branch out into interesting but irrelevant matters. However, our chairman, with his charm and firmness, brought us back to the main purpose of the inquiry. The report, its form and its relevance to the matters under consideration, owe much to his excellent chairmanship.
I was interested to hear what the noble Earl, Lord Selborne, just said about dumping waste at sea. Many years ago I was chairman of the sub-committee of the European Communities Committee which studied the
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question of dumping waste at sea. We came to the conclusion to which the noble Earl has referred; namely, that that was a perfectly proper course to adopt. It has since been found by others not to be an acceptable course to adopt, and accordingly it is not now adopted. Therefore when we considered the matter we are presently discussing I felt a certain familiarity with some of the problems that we examined. I find the matter extremely interesting.
Many years ago, as a member of the Royal Commission on Environmental Pollution, while undertaking a study of marine oil pollution I visited the Forties Field and the oil rigs. I, and I believe also my colleagues, were greatly impressed by the absence of pollution from operations and the abundance of fish sheltering there. In the course of this present inquiry, we discussed the importance and difficulty of dealing with drill cuttings. That raised for me new concerns. We were advised that cutting piles was likely to be the major source of hydrocarbon release from decommissioning operations. Apparently over time natural processes form a relatively inert top layer or cap over cutting piles. Therefore the process of removing, dismantling or toppling the main structure might break the cap and release hydrocarbons and other chemicals. Indeed, even the removal of the jacket above the pile might cause changes in currents and result in such releases. If the structure is removed, piles of some 100 feet in height will not only be a peril to fishermen and gear, but will result in extensive pollution if they are disturbed by fishing operations.
These are not issues which arose—and they could not arise—in connection with "Brent Spar" about which there was so much publicity. I believe there is little public knowledge about those matters yet they are clearly of the first importance in the whole subject of decommissioning, not least because the process of the removal could be held up until problems of dealing with drill cuttings have been resolved. We have made recommendations about research. In their response the Government have stated that they have commissioned research into the subject. That stemmed from an international meeting in 1995. I should be interested to hear the Minister tell us what progress has been made in the research which has been commissioned, and when it is expected that an outcome of the research will be available. I should also be interested to hear whether the Government are pressing for an early reply. For the reasons I have mentioned, I believe these are matters of great importance.
I turn for a moment to current licensing arrangements, on which we took certain evidence. We were told by many witnesses that "cradle to grave" design procedures were now well established. The Minister, Tim Eggar, told us,
"We probably ought from the very beginning of looking at the installation of these platforms, to have asked the issue of decommissioning to be designed in, but that has been done for the last decade or so".
I should be grateful if the Minister could help us on that matter because I believe there is some confusion on this important point.

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As has been said, the International Maritime Organisation guidelines require that after 1st January 1998 no structure should be installed unless the design and construction are such that entire removal upon abandonment or permanent disuse would be feasible. That guideline falls far short of requiring any particular course of action to be taken, or indeed any action at all. Yet public expectation in the light of that guideline must be that the structure will be removed. The comment of the Minister which I have quoted reinforces that assumption.
It might be thought that the precise steps to be taken at the end of the structure's life would be prescribed in the original licence to install; but in further evidence the Minister seemed to feel that this was inappropriate as the long timescales indicated the need for flexibility as to the steps to be taken. Accordingly, determination of what is to happen about decommissioning would only be decided when this was to take place. I accept that this is a dilemma; but it seems to me that there would be much advantage in incorporating into the original licence full programmes for decommissioning which would be subject to public debate, according to BPEO as indicated by the noble Earl, Lord Selborne, and based upon the then known factors. There should be liberty for either the company or the Government, subject again to public debate, to consider proposals for amendment or radical change if circumstances at the relevant time were substantially different.
For all the good intentions of the companies and the Government, public confidence in each is at a low ebb particularly in relation to assessment of risk. It is risk which lies at the root of the need to decommission in an acceptable manner. A recent report issued by POST (the Parliamentary Office of Science and Technology) quotes University of East Anglia research which indicates that few people trust advice on environmental risks given either by government (the figure is 7.6 per cent.) or companies (the figure is 12.8 per cent.). Therefore I believe that public acceptance of further exploration and production can only be envisaged if there is public involvement as to decommissioning. Promises by government and companies will be of little use. The positive response of the Government to the report is encouraging but there remains much to be done. I very much hope that the Minister will say what the Government will do—and I wish this most of all—and when.
6.58 p.m.
Lord Dixon-Smith: My Lords, I add my thanks to the chairman of the committee which produced this report. The noble and gallant Lord not only kept us in order but he also—this has not yet been commented upon—worked us to a strict timescale as he was under pressure to complete the report with limited time available in which to do so. It was hard work to keep us all in order. I also wish to place on record my thanks for the co-operation of the oil industry at large in this inquiry. The industry was most helpful to us all.
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When I look outside this building I see a river that is lined with stone, concrete, brick and reinforced concrete from here almost down to its mouth. I can think of endless coastal towns protected by reinforced concrete sea walls. None of that causes any particular problems in the environmental field. Yet suddenly last summer a proposal to drop a large reinforced concrete structure into the deep ocean became a matter of high public controversy. One has to ask how this can be. How could what was thought to be a fairly straightforward, non-controversial matter suddenly expand into a major row? Fifteen months later, "Brent Spar" is still moored in a Norwegian fjord and time is running out. Of course that is a slight over-simplification of the story. Not least of the important issues in the report is how we handle matters in the future so that that kind of problem does not arise again. "Brent Spar" may not be a platform, but it is a precedent. It is a forerunner of 20, 30 or 40 years during which similar situations can arise.
For me, an important aspect of the report is not simply the environmental issue of how to dispose of those platforms. It is how to set about avoiding such controversies in the future; it is about public information and public knowledge; it is about bringing together the different approach which comes from commercial interest and public interest. In that instance the problems were exacerbated by an unfortunate inaccuracy in a statement by Greenpeace which was inevitably played up by some of the less responsible elements of the media. However, by the time that crisis arose it was too late to try to counter the argument with the real facts because public attitudes, which were conditioned by apathy initially, had not been prepared in any way. We have already heard mention of the suspicion of the public about government statements. In cases like the "Brent Spar" it is necessary to apply what I call a slow process of education. In that instance the real damage is to Greenpeace's future credibility; but that is a separate issue.
We need to be aware of the international aspect of environmental matters and green politics. In the final analysis what brought "Brent Spar" back to that Norwegian fjord was not the activity and action in this country but the consumer action in Germany and, more importantly, the rising tide of violence occurring there. We need to be aware that we are not discussing simply a national problem in all these issues but an international problem, and one with which we have to deal.
The best practical environmental option—it is a system which I support—in the case of "Brent Spar" was not known in detail to the public. The facts were not secret but they were unrevealed and had not been drawn to the public's attention so that again it was possible to play on public fears and to produce an unreasonable reaction. Indeed, one factor that arises is that public acceptability has to be considered as part of the best practical environmental option. The other lesson that we have to learn—it is not exclusively in this field that we have to learn it—is to trust the public with accurate facts and information. If we are not prepared to do so, we have to accept that this kind of crisis will

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arise from time to time. This will be a long-running saga over a considerable period in the future. We must expect similar incidents to arise as time passes.
Another important aspect of the report is the need for the developing co-operation that already exists as regards future pipelines. We are discussing clearing platforms and the seabed. That is perfectly reasonable. However, those pipelines have a very different life and future from platforms. Platforms are established to deal initially with specific fields. As drilling technology develops, so the capacity of those fields develops. The platforms will continue in production for rather longer than was initially envisaged when they were built. Pipelines were built and installed to serve those platforms. But once they are installed they can then serve other fields which are developed subsequently.
The pattern of development has been to develop first the large fields which will stand the high investment required. That includes investment in the pipelines. However, on the back of that development smaller fields which are otherwise uneconomic to develop will be brought on-stream. We need to have particular regard to the fact that economic circumstances may well change over time. Small fields and small pockets of oil under the sea which are uneconomic at present are likely to become economic at some point in the future. If in our keenness to clear structures away we clear pipelines out of the way, we shall almost certainly guarantee that there will be no access to many of those small fields which are uneconomic at present. If the pipelines are preserved, much of the infrastructure necessary to make it possible to develop those fields will already be in place. We need a different approach on the issue of pipelines from the pure issue of disposal of rigs.
I shall revert to "Brent Spar" to this extent. This crisis and—if the noble and gallant chairman will forgive my saying so—this report arose out of the controversy that was generated by public ignorance; and that is where I wish to conclude. The best practical environmental option must include public acceptability. But public acceptability and public opinion are valid only if the public are well and accurately informed. Whatever else we do, we must take care to ensure that that takes place in future.
7.8 p.m.
Lord Haskel: My Lords, perhaps I may add my compliments to the noble and gallant Lord, Lord Craig, on this study. As he told us, this is the first report that he has led as chairman and I must say that it was a delight to work under his leadership. Like the noble Lord, Lord Dixon-Smith, it is also to his credit that this is one of the quickest reports that the committee has ever produced. The noble and gallant Lord, Lord Craig, has given noble Lords the background to the report, and so there is no need for me to cover that ground again.
However, it will be interesting to look at some of the events that have happened since. Some time has passed since we reported in February and, as other noble Lords have said, in May an expert group from the National Environmental Research Council also reported on the decommissioning of "Brent Spar". It confirmed many of
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our conclusions. It agreed with us that disposal at sea was an option, and that the global impact would be minimal. The group also agreed that there should be a case by case consideration of the disposal and that the cumulative effect must also be taken into account. Most importantly, it also agreed that the best practical environmental option procedure should be followed in decommissioning operations.
I agree with the noble Earl, Lord Selborne, and the noble Lord, Lord Dixon-Smith, that one of the most important recommendations in our report concerns the consultation procedures in our paragraphs 4.10 to 4.13. In those paragraphs we are anxious that the best practical environmental option procedure should be open and transparent. Other noble Lords have made that point and so did the NERC report. We emphasise that the assessments should be open to peer review and that each case should be judged on its individual merits. Any proposed decommissioning should be announced in advance, and submissions from interested parties should be welcomed. It is important that the consultation should not simply be a public relations exercise; it should be capable of altering the identified best practical environmental option.
What was our reason for this? Our reason was the belief that the row over the disposal of the "Brent Spar" was partly caused by the secrecy surrounding the way the BPEO decision was taken. I agree with the noble Lord, Lord Dixon-Smith, that the secrecy was interpreted by the public as not taking their concerns into account. Unfortunately, the DTI added to the aura of secrecy by considering its discussions with Shell as "commercial in confidence". In reality, it was largely a matter of risk assessment. The DTI approved of sea disposal as the BPEO and then compounded the public's suspicion by attacking Shell for changing its mind at the last minute. I seem to remember government Ministers referring to Shell's directors as "wimps" for changing their minds.
The Government must realise that an important part of a BPEO decision is public acceptability, because people do not just automatically believe the Government any more. Politicians are losing out to consumers, as the noble Lord, Lord Dixon-Smith, told us. Shell understood this and, perhaps a little late, acted accordingly. The Government did not and were suitably made to look incompetent.
A further reason for openness is contained in the recent report by the consultants, Wood Mackenzie. They point out that the taxpayer will carry much of the cost of disposal and decommissioning by virtue of tax allowances. Wood Mackenzie estimate that in some fields this could amount to as much as 70 per cent. of the abandonment expenses. The noble and gallant Lord, Lord Craig, told us about the number of installations to be decommissioned, so the amounts of money involved are huge. Wood Mackenzie estimate that total decommissioning could cost about £8.7 billion. At a time when government tax revenues are seriously below estimate, this is an important consideration.

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However, I am sure that the Government have learnt their lesson and that the Minister can reassure us on this. In their observations on our report in paragraph 2 they state:
"Events surrounding the disposal of the Brent Spar oil storage installation have emphasised the need for a clear, public understanding of the issues involved and the way in which decisions are taken".
That this is right has been proved by further events. The noble Lord, Lord Campbell, told us that recently several structures had been satisfactorily decommissioned by moving them onshore for recycling or re-use. He also told us that "Brent Spar" is unique because of its size and design and how Shell publicly called for ideas to decommission the "Brent Spar". Shell received hundreds of responses, many imaginative and some less so. Some suggestions were that future installations should be left in situ and turned into anything from a gambling casino to an offshore wind farm. Other ideas involved recycling parts of the structure for oil storage tanks onshore or as sea defences on the east coast or as fish breeding tanks.
There are many ingenious ideas as to how "Brent Spar" can be brought onshore into a dry dock or floated in a horizontal position to ease dismantling. One suggestion is that it should be cleaned up and, with the installation of a wind-powered generator, turned into a desalination plant to produce fresh water. On 1st November, there is to be the first of several conferences where 30 of these ideas will be discussed.
However, an interesting development could extend the life of the rigs. Companies are emerging which specialise in extending the productive life of mature oil fields. These firms have lower operating costs than the large oil companies and can operate profitably on lower volumes. That has an impact on depletion and tax, but extending the life of the offshore fields allows more time to develop new and cheaper ways of dealing with the platforms.
The point I wish to make is that by such openness, not only has there been more understanding of the issues involved, but also the possibilities of the best practical environmental option have been widened from only considering contamination of air, land and sea to possible alternative use, recycling of the installations or extending their working life.
As other noble Lords have said, there is a large element of judgment in the concept of the BPEO. Opening the process to public discussion and scrutiny should ensure rigorous and rational consideration of the facts. It will help in the disputes between industrial companies and the environmental lobbies because ultimately a solution has to be found. This openness should assist the Government in regulating matters.
As we progress and discover new ways of extracting fuel, there will always be new risks to ourselves and to the environment. We need to be open about this trade-off between risk and progress. I agree with the noble Earl, Lord Selborne, that nowadays for technical progress to succeed it needs the confidence of the public. I hope that this debate will help to reinforce that.
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It would be a welcome reward for the hard work of the committee and the clerks. I am most grateful to all for being such helpful, pleasant and willing colleagues.
7.17 p.m.
Lord Soulsby of Swaffham Prior: My Lords, I too add my congratulations to the noble and gallant Lord, Lord Craig of Radley, on chairing the investigation. I joined the sub-committee not at the beginning but when it was about a quarter of the way through. As with all such investigations, there is a massive amount of data to digest. I admire the noble and gallant Lord's ability to make everyone digest it in the most appropriate way.
It is only two decades since we started drilling and recovering oil and gas from the seabed in the North Sea, often on the Continental Shelf, mostly less than 50 metres down but sometimes in much deeper waters. At present, there are of the order of 440 steel and concrete installations, of which 219 are in the UK sector. We learnt from the UK Offshore Operators Association that there are sufficient reserves to sustain significant levels of production of oil and gas for at least a further 20 years.
However, eventually—as with all fossil fuels—the supply of oil and gas runs out. Then the installations must be decommissioned and possibly disposed of. I am sure that all Members of the House have the booklet of the UK Offshore Operators Association which states that some 50 fields will be decommissioned in the next 10 years at a cost of approximately £1.5 billion. This is at present, and will be a major engineering and environmental challenge, as the report of the Select Committee states. Indeed, the committee has been an opportune study to bring together the present objective information and opinions on that information about decommissioning, as well as the more subjective opinions of those concerned with environmental and health issues.
The report will serve as a landmark in providing the basis of action in each case of decommissioning to decide the best practical environmental option (BPEO), especially for installations in the North Sea where difficult problems pertain and where large and heavy units are in deep water—compared with the decommissioning of shallow water installations, as in the Gulf of Mexico, where to date some 900 installations have been decommissioned. The BPEO includes an economic component as well as technical feasibility and the effects on the environment.
I was particularly drawn to the environmental issues and to the comments in the various evidence on the effects of decommissioning on the marine biota. This has been the concern of environmental groups such as Greenpeace, Friends of the Earth and others. However, I believe that NERC, the environmental research council, in its evidence, set the minds of many, and certainly my mind, at rest as to the minimal impact that deep sea disposal would have on the marine biota at depths of 2,000 metres and below where deep sea disposal is planned.
At that depth waste would move, it is stated, in a horizontal manner and to a large extent not vertically because of a main thermocline at 1,000 metres. The

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conclusion of NERC is that many pollutants would be extremely diluted by the time they reached the surface waters and there would be no damage to the environment, fish or human health in that area. The deeper one goes, the more tenuous are the links with the surface and with areas below 2,000 metres there is little connection between the two. NERC suggests, therefore, convincingly to my mind, that deep sea disposal would pose no threat to commercial fisheries.
A suggestion from the Joint Nature Conservation Committee is that if disposal at sea were indeed the best practical environmental option, one deep sea water site should be chosen instead of dumping rigs all over the place. In such a case there is an opportunity to investigate a site to be used. The present scientific evidence is that it would lead to little or no pollution. In any case a single site could be kept under surveillance and monitored over a period of years.
There are situations where the marine disposal of installations, appropriately cleaned up, is beneficial to the marine biota in the formation of the reefs. The concept of "rigs to reefs" has been frequently practised in the Gulf of Mexico to great advantage.
All those points were made and were well received by the Government, with the exceptions mentioned, and by environmental groups. An important outcome of the report, mentioned by the noble Earl, Lord Selborne, the noble Lord, Lord Dixon-Smith, and others, is the transparency that is necessary in the decommissioning process to determine the best practical environmental option.
I believe that that has had an effect on the "Brent Spar" situation. I am sure that noble Lords have received from Shell an invitation for 1st November to practise a transparent opinion as to what should happen to that rig. The "Brent Spar" rig has very much focused our interest on this issue. It may well be that when the history of deep sea oil rigs and their disposal is written, it will be the signal marker of the start of a process of doing more research, which needs to be done, on the disposal of rigs in a deep sea situation. It is important that there is transparency and that people of many opinions have the opportunity to express interest in this issue.
7.25 p.m.
Lord Gisborough: My Lords, I am amazed at the fuss made about the prospect of toppling fully prepared rigs into the depths of the ocean. There must be thousands of ships littered over the sea bed, all ill-prepared for sinking, many in shallow water, sinking with hazardous cargoes, full oil tanks and often stuffed with ammunition. Certainly there is nothing to be happy about, but they do little damage to the environment and it puts into perspective the sinking of a fully prepared rig into very deep water well out of the way of any underwater activity.
There is, however, no technical reason why even structures in our deepest waters in the north of the North Sea need to be toppled. I base that view on public comments made by offshore heavy lift contractors that such structures can be lifted, removed and returned to land, even those made of concrete.
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Structures in shallow water are already being brought to land. That is being done in accordance with International Maritime Organisation regulations that all structures in less than 75 metres of water and weighing less than 4,000 tonnes must not be toppled but must be decommissioned and returned to land. That relates predominantly to the structures in the shallow southern North Sea. For instance, platforms have already been successfully removed from the BHP Hamilton Esmond field and the Conoco Viking field, and the Shell Leman BK platform is currently being removed. Furthermore, Esso is currently removing the "Odin" platform, which I understand to be in some 80 metres of water.
We must weigh the consequences of toppling structures, with the remote possibility of damage to the environment, against the prospect of bringing the structures ashore for decommissioning and thereby creating employment opportunities and having the advantage of enabling materials to be refurbished and recycled and thus overall reducing the depletion of natural resources.
It is important for us to realise the opportunities available for decommissioning rigs in this country and the advantage to the British economy, as well as ensuring that our seas and oceans are not environmentally disadvantaged.
On the face of it, cost might be considered the vital issue here. Ignoring any environmental issues, it may seem less costly simply to topple the structures than to bring them ashore and dismantle and recycle them. The main cost of bringing structures ashore lies with the removal and lifting of the structure from the seabed. The cost of dismantling equates with the value of the surplus parts, such as scrap, generators and so on.
Yards are therefore able to stockpile rigs and have a reservoir of work with which to keep their labour force occupied. Dismantling is therefore a valuable industry both economically and for the creation of some 500 jobs in one yard, provided there is a reasonably steady flow of rigs. Because a reservoir of rigs can be held at very little cost, those jobs can be fairly permanent.
If the structures are returned to land, the UK economy will receive a cost benefit from the job creation aspects and the material recycling savings. I have seen figures indicating that over 99 per cent. of materials are recycled from the structures brought back to land. So there is a strong case to be made that there are overall cost benefits and savings in bringing the structures back to land. I am told that the potential tonnage of material exceeds 10 million tonnes and the market value of onshore disposal is in the region of £3 billion. Those figures conflict with other figures mentioned; but whatever the figures are, they are very big.
The main onshore disposal yards are in the north east, which is why I am taking part in the debate. There is a large facility on the River Tees, in the north east of England, which can receive and successfully handle a significant proportion of the platforms that will need to be decommissioned, and there are other yards of rather less capacity. The Tees facility is large and well located for access from the sea and is in an area well away from

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housing. It is also located in an area where unemployment is very high, yet the skill base required is readily available.
There is one serious competitor to the UK yards; namely, Rotterdam. There are also smaller yards in Norway and on the Tyne. With the desperate need for jobs in the north east, it is vital that the UK should aim to be a leader with the North Sea dismantling industry. There is therefore a strong argument against cluttering our seas and ocean beds with rotting structures and toward the option of maximising UK job creation and material recycling. I have no doubt that future generations would certainly support that view.
7.31 p.m.
Lord Redesdale: My Lords, I too thank the noble and gallant Lord, Lord Craig of Radley, not least for on almost all occasions reminding us that this report is not just a synopsis of the events that took place regarding the "Brent Spar" but looks at the wider problem. It would be wrong to assume that the report was not prompted by the "Brent Spar" and the reactions to its disposal, but it has brought to light a much larger problem which will take many years to solve.
I hope the Minister will forgive me if I focus my contribution on the Government's response. On first reading the Government's response, I could not help but see it as an extremely positive and indeed generous document. However, I suspect that I am becoming quite cynical and I had to read it a second time. I was then struck by the fact that, although it is positive in nature, there are very few concrete plans and set financial commitments regarding future disposals of oil and gas sea installations.
I was heartened to see that the Government have accepted the idea that the best possible environmental option should apply to each individual rig. But I believe that there is an inherent danger associated with that; namely, the cost. As the noble Lord, Lord Dixon-Smith, pointed out, there must be as much information as possible made available about these installations and their disposal and I feel that only through open government will the public come to accept their disposal at sea. However, as anybody who has taken part in a planning inquiry—say, between a county council and a supermarket—will know, those with the most money will have the loudest voice.
I echo the sentiments of the noble Lord, Lord Gisborough. Coming myself from the North East, I feel that it would be wrong not to recognise the financial viability of bringing these structures to the North East to be scrapped. A very large industry will probably grow up in the North East and also in Norway to look at the options for disposing of the rigs. However, financial considerations should not be our only focus.
I was interested to note in the report that the differences between the options of disposal are not paltry. The difference between taking the cheapest and the most expensive option runs into billions of pounds. Indeed, on individual rigs the difference can run into hundreds of millions of pounds. It would be wrong to consider cost as the ruling factor.
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With that in mind, when I re-read the Government response I felt slightly apprehensive. Discussing drill cuttings, on page 10, paragraph 32(b), the Government put forward the objective:
"To present a review of what have so far been estimated to be the effects of such cuttings piles"—
I come to the important part—
"(including but not limited to the environment)".
Obviously, the environment should not be the only factor taken into consideration. However, cost could easily outweigh the environment in many cases. This is where the Government must make the strongest stand. The best practical environmental option is a fairly movable feast. It is an artificial solution that will be set by the government of the day and the institutions.
I must admit that I entered the Select Committee feeling that dumping at sea was morally the wrong option. After noting the evidence that was given, I echo the view of the noble Earl, Lord Selborne, that dumping at sea should not be ruled out. In fact, in some cases that might be an environmentally sensible option.
But I also believe that it should be seen not as the first but rather as the last option. Financially it might be more expensive to bring many rigs to shore but their effect on the sea bed in the long term could be more detrimental. The changing nature of the financial position was pointed out by the noble Lord, Lord Gregson. The value of the scrap metal may change dramatically in the next few years. It would be ironic if, in the future within our lifetimes, we see salvage operations to recover oil rigs dumped in the deep sea undertaken because of the rigs' scrap metal worth.
Looking at the dumping option, I was surprised—this was brought about by the visit to Aberdeen—when the DTI indicated that its cradle-to-grave scenario in clearing the sea floor meant that it was looking at taking the structures off the sea floor and bringing them to the surface. That is where the guidelines stopped. It was a separate consideration from their next destination. That is perhaps the fundamental flaw which underlined a great deal of our discussion.
When looking at the scale of options, it is hardly surprising that many designs of oil rig are not considered worth shifting. But perhaps it is a measure of our arrogance that half a million and even one million tonne structures were put on the sea bed with, perhaps at most, a 30 to 40-year life span, which might in some cases be extended. It is quite possible that those concrete structures will be there for hundreds of years in the future if, as is quite likely, they are left without their topsides.
Another problem brought out by the report, which will be a legacy for the future long past the removal of the rigs themselves, was the matter of drill cuttings. Drill cuttings were not seen as a major problem when we started our inquiry. Indeed, I had no idea that they existed. The drill cuttings themselves are the detritus of the drilling process. Oil was pumped down into the wells to make sure that the drilling took place smoothly. The drill cuttings were then dumped over the side. It is interesting now to see some of the models of oil installations put on display by the oil companies with

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very large amounts of drill cuttings built about their base. It will be interesting—this is a problem which has not been addressed to a great extent—to see at what point the structures can be removed. The drill cuttings are seen to be environmentally unstable if they are shifted; but, if the platforms themselves are to be cut off right at the sea bed, one will have to shift the drill cuttings. It is possible therefore that the platforms will have to be cut off above the level of the drill cuttings.
I was surprised also, as I believe the noble Lord, Lord Nathan, pointed out in his speech, at how little research has been done into the drill cuttings themselves. A large amount of oil is trapped in the drill cuttings. There is of course an argument to say that it has not done a great deal of damage so far and therefore can be left; but it is also a fact that we are leaving on the sea bed a legacy for the future that may have serious environmental consequences over the long term.
I believe that the report gives a balanced viewpoint. The environment is dealt with adequately. There is obviously a compromise between the practical considerations, the economic viability in relation to moving structures, and the environmental considerations. However, the report points out that removing what has been placed on the sea bed over the past 30 years is a long-term consideration. It will be up to this Government and future governments to make sure that it is not an issue that is ignored.
7.41 p.m.
Lord Dubs: My Lords, I too join in congratulating the Select Committee on producing an excellent report and the noble and gallant Lord, Lord Craig, on steering the committee to such an effective outcome. The report was good. It was clear and dealt with a difficult issue, though it was so effective that it made the issue seem less difficult than perhaps it is. The report will lead to more sensible, open and informed debate in the country—at least I hope it will. Though I was not a member of the committee, I learnt a great deal from reading the report and the supporting evidence.
I should also like to thank the many organisations that I approached for information, not to challenge the report but to update myself on what may have happened since it was published last February. Those organisations included individual oil companies—BP, Shell, Amoco and Kerr-Mcgee—the United Kingdom Offshore Operators Association and Greenpeace. They were all extremely helpful, as was the report of the Natural Environment Research Council published in April 1996 to which many noble Lords referred.
I should like to declare an interest in that I had the opportunity of visiting the United States this summer as a guest of the consortium of oil companies that operate in the North Sea. It gave me a chance to learn about the operation of oil companies in the United States and in particular a chance to look at the Gulf of Mexico where I visited one of the rigs. Of course, the situation in the Gulf is somewhat different—the waters are shallow, water extraction is easier bar the occasional hurricane, and the waters are less stormy.
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I had the opportunity to discuss with people from the oil industry the "rigs to reefs" project, which is certainly popular with sporting fishermen in that it seems to be an effective way of enabling them to do their fishing and possibly—though this has not been proved—increase the actual amount of stock available. I do not know whether that would work in the North Sea; opinions differ on that. I should have thought that it would be worth doing a little more research to find out whether there is any potential for doing that in the different waters that exist in the North Sea.
Earl Bathurst: My Lords, perhaps the noble Lord will allow me to intervene. At the time of "Brent Spar" a letter appeared in one of the newspapers written by a deep sea diver who knew about these matters. He said that where there is the wreck of a ship that has sunk, there are fish. If an oil rig such as "Brent Spar" or any other oil rig settled on the sea bed, there would be even more fish. That appears to relate to what the noble Lord opposite was saying and may well be right.
Lord Dubs: My Lords, I appreciate what the noble Earl says. Though the conditions in the North Sea are different and sporting fishermen may find it difficult to enter such deep waters, it may be worth pursuing in the way of marine research to see what the outcome could be. Incidentally, I was surprised on my visit to the United States to learn that exploration is not allowed offshore in Florida, California or Alaska. That is prevented every year by an addition to the Appropriations Bill that goes through Congress. It is odd that that should be the case when one considers the dependence of the United States on imported oil and the low prices that exist there. But that is one of the oddities that one discovers when looking at the situation in other countries.
Though the report is primarily concerned with the North Sea, looking at the situation globally it relates also to the Gulf of Mexico and offshore installations in the Far and Middle East. Perhaps therefore the lessons that we are learning today will have a bearing on how we tackle the environment and the environmental difficulties in other parts of the world. However, I shall confine myself to North Sea oil.
North Sea oil and gas are vitally important to our economic future. That is not the specific subject of the debate but perhaps I may make the comment in passing that I do not believe that over the past 17 years, as a country, we have derived the full economic advantage that we should. However, that is not necessarily a dispute with the oil companies but a dispute with the Conservative Government and the way that they have handled the situation.
In reading the report I was astonished at how many different government departments and agencies had some involvement with decommissioning. I counted 17 different government departments and agencies, quite apart from the interdepartmental Decommissioning Policy Review Committee. There is therefore much government interest in the subject. But whether 17 different departments and agencies are the best way of focusing attention on the matter I do not know. The

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Select Committee report recommended that the DTI should continue as the lead department and that seems to be sensible.
Other Members of the House drew attention to the differences between the northern, middle and southern sectors of the North Sea. For a long time it has been the policy that in the southern and central parts disposal should be on land because of the shallow waters and smaller rigs. The issue therefore concerns the 70 or so rigs that exist in the northern sector of the North Sea where conditions are more difficult and that is the main focus of our debate. Though they may be the minority of all the installations, I understand from the report that they cover nearly two-thirds of the weight of all the installations in the North Sea. In terms of disposal therefore they represent the larger part of the problem.
Perhaps I may mention in passing that a couple of weeks ago I had the chance to visit a floating rig (a floating platform)—Kerr-McGee's "Gryphon" rig in the North Sea. I was impressed by the concept of a ship acting as an extraction platform. It seemed to me to have many advantages in terms of decommissioning. When I put that to people from the oil company they said, "That is easy. When we want to decommission we simply sail the boat away to the North of England or wherever for disposal if it cannot be used at another site for extraction". I notice that other oil companies are beginning to look at that as a model for further work and that in itself is interesting. Whether it would be sustainable in the harsher climate in the West of Shetland, I do not know; but given the depth of water it may be one of the interesting options for the future in that area.
I looked with interest at the report and the costs of decommissioning. There are various estimates and they are very high. But we must bear in mind that a substantial part of the cost of decommissioning will be offset against taxes. Any savings in decommissioning will therefore be beneficial to the Exchequer and to the public purse.
I welcome the approach in the report to public consultation and openness and noted the various recommendations in relation to ensuring that the public should be better informed with regard to what is happening; that documentation should be made available; and that there should be adequate consultation allowing interested parties to make submissions about proposals for decommissioning. I suppose one could say, with the wisdom of hindsight, that had such an approach been in place earlier some of the controversy regarding "Brent Spar" might not have happened or, at any rate, would have been less heated. But where there is ignorance, emotions can run very high—on the basis of supposition rather than on fact. One of the lessons we have learnt, a point to which many noble Lords have referred, is that public opinion is important. We may not always agree with public opinion but in a democracy we ignore public opinion at our peril. One of the key conclusions is that we have to do our best to bring public opinion on board in terms of any of the approaches.
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I am pleased that the Government supported the committee's recommendation that there should be an acceptable decommissioning plan at the design and placement phase covering disposal and removal. I understand that in the lifetime of a platform or rig technology may change and improve and so it may well be that one has to work out the best practical environmental option for decommissioning towards the end of the life of the structure. But it would be a good thing if every new structure had a decommissioning plan worked out which could be brought into being or a better one developed towards the end of the life of such a structure.
I am glad the Government have said that in future they will not approve any decommissioning proposal unless and until they are satisfied that all possible options for the re-use of infrastructure have been thoroughly investigated and shown to be impractical. I also note that the IMO guidelines suggest—perhaps they have more force than a suggestion—that on or after 1st January 1998,
"no installation or structure should be emplaced on any continental shelf … unless the design of the installation or structure is such that an entire removal upon abandonment or permanent disuse would be feasible."
When Mr. Eggar, the energy Minister at the time, appeared before the Select Committee he was not totally clear about the implications of the IMO guideline and seemed to be leaving his options open. Perhaps that was because Ministers always like to leave their options open or because he wanted to allow for the possibility of such a thing as a "rigs to reefs option" being applied in the North Sea. Perhaps we shall hear more when the Minister replies.
The important point is that the oil industry has undertaken to remove all structures from the sea unless the Government say otherwise. That policy has been accepted by all the oil companies. Nevertheless, we are still in a very controversial area. The noble Lord, Lord Dixon-Smith, described graphically what happened not so long ago in terms of public outcry about the proposal to sink "Brent Spar" in the Atlantic. He referred vividly to some of the action that took place in Germany where there were threats of violence against Shell petrol stations. Perhaps the effect of the report and the period for reflection will have calmed matters down but certainly the Select Committee has said that sea disposal should remain an option for thoroughly cleaned structures. That must be a sensible conclusion.
I notice that both Greenpeace and Friends of the Earth oppose any disposal at sea. My understanding is that Greenpeace is opposed in principle to anything which may have an adverse effect on the marine environment and therefore is against the disposal of anything in the seas and oceans. One must have sympathy with its concerns, but for obvious reasons I find it difficult to go along with such an absolute position.
It might well be, as the report indicates, that bringing a structure on-shore could cause more environmental damage than sinking it at sea and there might be health risks to any of the people involved in dismantling such a structure. For example, I understand that there is asbestos on some of these structures and that while

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asbestos in the water is inert, asbestos when dealt with on-shore might cause
dangers, possibly unacceptable dangers, to persons dealing with it. Therefore, I would not take an absolute position on the matter.
I regret that Greenpeace has done so, although I think that public opinion will always be nervous about disposal in the sea unless we can inform the public much better than we have in the past. However, Greenpeace has argued in favour of a co-ordinated approach regarding on-shore decommissioning, claiming that it would be economic and therefore could be developed as a skill. It juxtaposes that with case-by-case policies advocated by the oil industry.
I do not think that they need be alternatives. It seems to me that case-by-case policies have quite a lot to commend them. But, given the widespread agreement that installations from the southern part of the North Sea will be disposed of or decommissioned on shore, a co-ordinated approach will inevitably be developed by the oil companies. Therefore I do not think this should be seen as an alternative to treating the more difficult decommissioning proposals on a case-by-case basis.
The Shell company has said that the decommissioning world will not be the same again following the "Brent Spar" episode. I know that it has had many bids for disposal in reply to its request and it is now considering some 29 to 30 bids on a long shortlist. Those will be considered against the original deep sea option which Shell still regards as the BPEO.
Can we learn anything from the "Piper Alpha" tragedy? Most of the structure is still in the water but the accommodation block has been recovered, which shows that technically it can be done. I understand that the DTI will continue monitoring to see whether it can pick up anything by way of environmental pollution coming from the rig. I hope it will continue monitoring because that will add to the information we have available.
The question of leaving concrete legs and bases has been adequately dealt with by other noble Lords. The view is that they can be left quite safely provided they do not damage fishermen's lines or commercial fishing lines. In the view of the fishing industry, partial stumps could be dangerous.
I suspect that, save in the most exceptional circumstances, the long-term future is that all rigs will be decommissioned on-shore. I say that taking into account the views of the oil companies, the experience of "Brent Spar", the IMO guidelines and public opinion and political pressure. I am not saying it should not happen; I am not saying it is impossible. I suspect that in the real world most installations will be decommissioned on-shore.
North Sea oil is bound to make an important contribution to our economic future. The report will help us better to understand the environmental impact of such developments and enable us better to cope with any environmental damage that may be caused. I warmly commend it to the House and to organisations outside.
7.58 p.m.
Baroness Miller of Hendon: My Lords, perhaps I
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may begin by apologising on behalf of my noble and learned friend Lord Fraser of Carmyllie who is unable to be here today. I know that he would have enjoyed replying to this most stimulating and interesting debate but, regrettably, as the noble and gallant Lord, Lord Craig of Radley, told us, he is indisposed and returned from hospital only yesterday. I know I speak for the whole House in wishing him a speedy recovery—and certainly no one hopes more than I do that he will soon return to the Dispatch Box.
In their response to the committee the Government have formally welcomed the report which is the subject of our debate today. We wish to take the opportunity of expressing our gratitude to the noble and gallant Lord, Lord Craig of Radley, and his colleagues for producing such a valuable and comprehensive document. Indeed, if anyone comes to me asking me where they can learn about the subject of decommissioning offshore installations, a subject on which I myself have been compelled to take a crash course in the past few days, I can tell them from personal experience that they can do no better than to look at the committee's excellent report.
The decommissioning of offshore installations on the United Kingdom Continental Shelf is not a new area of activity. The legislation which provides the statutory framework for considering decommissioning decisions received Royal Assent in 1987. Since then, under the terms of the Petroleum Act 1987 the Government have approved 12 decommissioning programmes. But the events surrounding the frustrated disposal of the "Brent Spar" oil storage and loading buoy during 1995 have brought the subject of decommissioning into sharp focus.
The Select Committee intended its report to be a contribution to the on-going debate in the aftermath of the "Brent Spar" affair. As the noble and gallant Lord, Lord Craig of Radley, told us, although the report is not in any sense an inquiry into the "Brent Spar", it nevertheless highlights lessons which can be learned.
We entirely accept that in the future the public should be in no doubt about the basis upon which decisions have been taken. As my noble friend Lord Soulsby said, Shell shares that view, as it has indicated in the past few days.
Decisions will continue to be taken on the basis of the best practicable environmental option—the BPEO. That process, which was originated by the Royal Commission on Environmental Pollution, is crucial to the way decisions are made.
The BPEO procedure ensures that the best available relevant factual information is identified. All possible solutions are reviewed. The comparative assessment takes account of technical feasibility, health and safety, environmental factors, including cumulative effects, economic factors and the interests of other users of the sea.
My noble friend Lord Selborne spoke in some detail about the BPEO. I know that he will be pleased to note that we continue to believe that that approach is the one

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most likely to achieve sensible and balanced conclusions reflecting the particular issues raised by each decommissioning proposal.
My noble friend Lord Dixon-Smith said that public acceptability should be part of the BPEO. It is not part of the BPEO, but it is not ignored. Ministers must take a view on the public acceptability of any particular decommissioning programme. The final decision takes account of all the relevant factors and is taken in a transparent manner. I know that the noble Lord, Lord Haskel, will be pleased to hear that.
That is what we mean by a scientific approach. It is the cornerstone of all we do on decommissioning. It was the basis of our decision not only on "Brent Spar" but on all the other decommissioning proposals which have been made to us. We are grateful that the committee has endorsed the approach. It has recommended that the Government's guidelines should state explicitly that the BPEO procedure must be followed in decommissioning operations.
Last year, my right honourable friend Tim Eggar, then Minister for Industry and Energy, asked Professor John Krebs, Chief Executive of the Natural Environment Research Council, to establish a group of scientists and engineers with the task of examining the scientific evidence. Their job was to look at the potential environmental impacts of the disposal of large offshore structures, using the "Brent Spar" as an example.
That group of very distinguished experts, chaired by Professor John Shepherd of the Southampton Oceanography Centre, published its report on 22nd May 1996. The group has attempted to set the environmental impacts of the deep-sea disposal of decommissioned installations in context, mostly by comparison with natural and man-made analogues. We agree that it is a useful aid to understanding.
Its view is that the global impacts on the environment and on human health of the deep-sea disposal of a structure such as the "Brent Spar" would be very small—roughly equivalent to the impacts associated with the wreck in the deep ocean of a ship of 30,000 to 50,000 tonnes with its tanks pumped out.
It also concludes that the available evidence indicates that the environmental impacts of the deep-sea disposal of a structure such as the "Brent Spar" are not large enough to be a crucial factor in the selection of the best disposal options or for that option to be excluded from consideration.
That conclusion is rather similar to a somewhat broader one reached by Dr. Gordon Picken of the University of Aberdeen in evidence to the committee. Dr. Picken says (HL Paper 46-I, page 215, paragraph 14):
"If decommissioning is carried out according to the existing International Maritime Organisation guidelines and international conventions, there would be no strong environmental imperatives, from an ecological point of view, that would highlight options that would be totally unacceptable. The environmental gradient is neither long nor strong. There is therefore no clear-cut need, on ecological environmental grounds, to carry out options which are technically demanding, risky or expensive, in order to reduce or eliminate potentially significant environmental impacts. They do not exist".
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We accept that this is a broad theoretical generalisation. A comparative assessment in each case will tell us whether it is right or not. The important point which we must never tire of making is that we are looking for sensible decisions which protect the environment. But those decisions must be advised by sound science.
The best practical environmental option provides an appropriate and well-tested vehicle. We must not make decisions solely on the basis of emotion.
The committee made important recommendations in relation to the restoration of international agreement. The Government agree that the re-establishment of international consensus is an important goal. We are working to achieving that. Perhaps I may take a few moments to relate where those international discussions now stand.
The OSPAR Convention is a regional convention for the protection of the marine environment in the north east Atlantic area, including the North Sea. At the meeting in June 1995 of the contracting parties of the OSPAR Commission, a majority of parties—but without the agreement of the UK and Norway—agreed upon a moratorium on the disposal at sea of decommissioned offshore installations pending preparation of a draft decision to ban the disposal of such installations for implementation by 1997.
Under the rules of procedure of OSPAR, the UK and Norway are not bound by that moratorium. It has no binding legal effect on those countries which voted against it. The resolution is a political gesture. It has no practical effect. Those countries which voted for it have in their waters relatively light installations in shallow water similar to those in the southern part of the UK sector of the North Sea. Such installations are required under international guidelines to be entirely removed. We have made it clear that the BPEO for such British installations is likely to be disposal on-shore.
The large concrete installations may need to remain in place. If that is shown to be the BPEO, and if there are safeguards for navigation, fisheries and the environment, it should be allowed.
The heavier steel installations in deep waters are those for which options other than disposal on land must be maintained. We are not saying that such installations will be disposed of at sea; but we are saying that it is not sensible to exclude the option from consideration. The BPEO will show the way.
However, international discussions have moved on since the summer of 1995. We have made progress in OSPAR to the extent that the other contracting parties have expressed a willingness to reach agreement on the basis of consensus. That is a welcome development.
An ad hoc working group on the disposal of offshore installations will be meeting early in December to seek a way forward. It will prepare a draft OSPAR decision for consideration by OSPAR Ministers at their meeting in June 1997.
In those discussions officials will continue to press our view that the environment is best served by the identification of the BPEO. If sea disposal is agreed to

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be the best course, a judgment based on scientific evidence will be taken as to whether any materials which remain after cleaning are hazardous.
The OSPAR Convention already provides a tough test. It requires that no permit shall be issued for sea disposal of an installation which contains substances which result in hazards to human health, harm to living resources and to marine ecosystems, damage to amenities or interference with other legitimate users of the sea.
In preparation for the discussions in the ad hoc working group, there are many studies under way to provide evidence against which decisions might be taken. We have already sent copies of the Select Committee's report to all those who will be participating in the discussions. We are sure that they will find it a very valuable source of information. We have also circulated copies of the Shepherd Report.
In addition a study is under-way to identify all removal and disposal options for each of the categories of installation on the UK Continental Shelf. The study will also advise us whether, within the framework of the BPEO concept, a generic removal and disposal option may be appropriate. What we have in mind is consideration of whether we might be able to establish a generic BPEO for any particular category of installation. To take two extreme examples, one might be able to say as a generalisation that concrete installations might remain in place, but that all light installations in shallow water might be entirely removed and disposed of onshore. As my noble friend Lord Campbell said, we agree that new technology, such as floating platforms which are being used west of Shetland will lead to fewer decommissioning problems.
If the generic approach was appropriate it might be possible to use it to reach agreement internationally. It would also be advantageous in practice if it were possible to compare a certain type of installation against its genotype and come to a reasonably swift conclusion that a particular course of action was the right one. However, part of the study is to identify for each category any factors which might make the generic option inapplicable in individual cases, so requiring them to be considered separately.
The London Convention is the global dumping convention. At their 18th consultative meeting in December 1995, the contracting parties of the London Convention considered whether there ought to be a moratorium similar to that in OSPAR. They rejected that proposal. They concluded that contracting parties should apply the convention and the International Maritime Organisation's guidelines and standards in their national practice on a case-by-case basis. They requested the London Convention's scientific group to review the status of the disposal at sea of offshore installations, taking into account current procedures, existing international technical guidelines and standards, and the introduction of the waste assessment framework in the London Convention. The scientific group concluded that existing arrangements were satisfactory but agreed to propose the introduction of a specific waste assessment framework for the disposal at sea of offshore
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installations. When it is agreed, that waste assessment framework will provide an international mechanism for a comparative assessment of options. This is a welcome development which reinforces the scientific approach to decommissioning.
A number of noble Lords, including the noble Lords, Lord Nathan, Lord Haskel, and indeed the committee themselves, have rightly identified transparency and consultation as central to understanding in the decommissioning process. The Government are committed to improvement in both these areas. The exact mechanism of improved communication between the oil companies and the public on the one hand, and between the public and the Government on the other is yet to be decided. Whatever the process will be, we are clear that it must be the best that we can arrange. I am pleased to confirm that we are looking for an open and transparent system.
The last draft of the DTI guidance notes went out to consultation in May 1995 and the consultation period ended in August of that year. The "Brent Spar" affair happened in the midst of that period. We think it is right that we should look at those guidance notes again and take account of the lessons we have learned. There will certainly be revised sections on transparency and consultation.
The noble and gallant Lord, Lord Craig of Radley, asked for an update on the guidance notes. What the guidelines say on consultation will depend to some extent on the outcome of our international discussions. There must be another round of full consultation within the United Kingdom. On that basis, and bearing in mind that the OSPAR ministerial conversation will not be complete before the end of June 1997, it would not be reasonable to expect publication before the end of 1997.
There is little commercial advantage to be gained at the decommissioning stage. The DTI will be encouraging the oil and gas industry to undertake whatever information-sharing and co-operative ventures will reduce costs. We shall certainly be looking for an increased commitment to joint industry funding for research and development where that is appropriate.
The United Kingdom Offshore Operators Association already has a good record in fostering co-operation between its members. For example, it recently joined with the DTI in commissioning an assessment of the environmental implications of the presence of drill cuttings during the decommissioning process. That study is complete. Its results will play an important part in informing future policy in this area.
A number of noble Lords, including my noble friend Lord Campbell, and the noble Lord, Lord Redesdale, raised this point. They will be keen to learn that the Select Committee recommended that further research should be undertaken. An initial scoping study has been completed recently which has identified a range of options for dealing with drill cuttings. Further research will be undertaken and I hope that will be some reassurance for the noble Lords and particularly the noble Lord, Lord Nathan, and the noble Lord, Lord Redesdale.

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Research is important for the development of future policy and operations. It is vital that we ensure that the best use is made of both past and future studies. Oil and gas companies, commercial consultancies, universities, the research councils, and Government all have their part to play. It is important that all these efforts are co-ordinated and that existing co-operation should be improved.
I should like to mention some of the very interesting points that were raised during the course of this debate. The noble and gallant Lord, Lord Craig, and my noble friend Lord Selborne mentioned (and I am pleased to agree with them) the case by case approach. That will include consideration of the cumulative effects of what we are doing.
The noble and gallant Lord, Lord Craig, and indeed my noble friend Lord Soulsby also mentioned the single grave site. We believe it is unlikely that the number of deep sea disposals will be high. It is possible that the site chosen for the "Brent Spar" will be suitable as a single site but it would clearly be sensible to satisfy ourselves on that point as the cases arise.
The noble and gallant Lord, Lord Craig, also asked about the long term liability. We are ready to discuss any proposal that the industry may wish to make. We recognise the need for provision to be made in those circumstances where, for example, a large concrete installation in deep water may remain in place, and I agree that it is never too early or too soon to be considering this matter. The DTI will be discussing this with the offshore industry.
The noble and gallant, Lord, Lord Craig, also mentioned the importance of buoys. The important thing we need to remember is that any remains of decommissioned installations will be marked on the charts. Fishermen are required to carry such charts with them and they will therefore be in a position to avoid any of the remains.
My noble friend Lord Campbell also spoke about fishing. I would like to acknowledge the role that Lord Campbell of Croy played in establishing the Fisheries and Offshore Oil Consultative Group. The group enables both the fisheries and the oil industries to share their problems and to meet the challenges. I agree with him that solutions may be found which suit all sides, but we should recognise that the area which may be denied to fishermen is probably very small indeed.
The noble Lord, Lord Nathan, spoke about a cradle to grave plan for offshore installations. Regulations administered by the Health and Safety Executive require that the design of all installations should include consideration of decommissioning so that it may be accomplished safely. In addition, the DTI will require companies to demonstrate in their field development proposals that they have taken account of the entire decommissioning process and indicate what their outline plans are for removal and disposal at that stage. However, detailed proposals will be determined by the best practical environmental option at the end of the structure's life.
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My noble friend Lord Soulsby of Swaffham Prior referred to the rigs and reefs programme in the Gulf of Mexico, as indeed did the noble Lord, Lord Dubs. I was interested that the noble Lord, Lord Dubs, took advantage of his holiday in America to find out a little bit more about it. As regards that programme, we are considering the matter. It may be that the benefits conferred by the warm waters off the Gulf of Mexico will not necessarily arise in the North Sea. That matter must be investigated—
Lord Campbell of Croy: My Lords, perhaps I may point out that I was talking about the professional fishermen and not the sporting fishermen. We must put our professional fishermen first in the North Sea.
Baroness Miller of Hendon: My Lords, I thank my noble friend. The noble Lord, Lord Haskel, mentioned technical advances and was right to comment on the recent achievements of the offshore industry. They are significant. I am certain that, when he returns to the House, my noble and learned friend Lord Fraser will be happy to bring the noble Lord up to date on the skill and quality within the industry. I shall certainly point that out to my noble and learned friend.
My noble friend Lord Gisborough mentioned the IMO guidelines and the fact that they refer to removal rather than to disposal. We expect all the light platforms to be brought to shore because that is the BPEO on such installations. My noble friend also pointed out that the fact that platforms can be lifted does not mean that the balance of advantage will show that they should be lifted. That too will depend on the BPEO. I agree with my noble friend and acknowledge the contribution that has been made to our economy by the yards in the north east of England and elsewhere.
The noble Lord, Lord Redesdale, said that, although the DTI leads the decommissioning policy, many other departments, including the Department of the Environment and the Health and Safety Executive, have a strong interest in the final fate of the disused installations. I have never found the noble Lord to be cynical but I was surprised by some of his remarks today. I believe that the report is positive and we recommend it. The Government's response is positive and I believe that all who read it properly can see that. I suggest that the noble Lord has another little look at it and thinks again.
Lord Redesdale: My Lords, I mentioned the fact that I found the report positive but said that it was not very concrete in its proposals for the future. If the Minister can indicate that the Government will carry out all the proposals I shall be happy.
Baroness Miller of Hendon: My Lords, I am sure that the noble Lord does not expect me to comment in that respect at this moment. We welcome the report and I believe that we are going ahead on practically every part of it. As I listened to the noble Lord it appeared to me that he did not agree with all of the report.

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I do not believe that the noble Lord, Lord Dubs, was correct in suggesting that my honourable friend Mr. Tim Eggar did not understand very much about the feasibility of removal: he understood it very well indeed. It must be technically possible but the BPEO will always be the way to guide any decisions.
I conclude by saying that we welcome the committee's report. It is an important and timely contribution to the debate on decommissioning which was given an impetus by the events surrounding "Brent Spar" during the summer of 1995. The Government acknowledge that further steps are needed in transparency and consultation. We are committed to the scientific approach to decision making, which takes full account of potential effects on the environment as a whole. We are continuing to press home that point of view in all our international discussions. When the international discussions are concluded, we shall be in a better position to issue guidelines for industry.
Meanwhile, we remain committed to taking decisions on a sensible basis. The committee's report reinforces our commitment to that approach. I thank the committee again for all its hard work in producing the report and I thank the noble and gallant Lord, Lord Craig, for chairing the committee.
I hope that I have answered the concerns which the noble Lord, Lord Dubs, raised towards the end of the debate. If not I shall write to him. Before I sit down I wish to make one short comment. I believe that the report is first class and we welcome it. I did not think that the discussion was to descend into anything political and I was amazed that the noble Lord believed that after l 7 years of Conservative government there is something wrong with our economy. We inherited the title "The poor man of Europe" and now we are a country which everyone emulates.
8.24 p.m.
Lord Craig of Radley: My Lords, we have had a
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most interesting debate. It has been generally positive in tone, which is notable, and that I welcome. I thank the Minister for her remarks and for accepting our report in such a strong and positive way. I am grateful for the contributions from all members of the committee and from other Members of your Lordships' House. We have had some interesting contributions.
The noble Lord, Lord Campbell of Croy, spoke of the industry being young. When it comes to the disposing of installations it is positively in its infancy. I was rather distressed to learn that it will take so long to issue the guidelines on how to carry on the disposal. It makes the gestation period of the elephant seem meteoric.
The "Brent Spar" has figured greatly in our discussions and no doubt it may hit the headlines again. However, as so many noble Lords have stressed, openness is an important part of the ongoing business of educating and informing the public. Research was mentioned by several noble Lords and I am sure that their points were well made.
I do not wish to prolong the debate and I thank all those concerned, in particular for the kind remarks which noble Lords made about my chairmanship. I am grateful and I commend the report to the House.
On Question, Motion agreed to.

Channel Tunnel Rail Link Bill
Reported from the Select Committee with amendments; the amendments ordered to be printed; Bill ordered to be printed as amended; a Special Report made and ordered to be printed.

London Local Authorities Bill [H.L.]
Returned from the Commons agreed to with amendments; the amendments considered and agreed to.
House adjourned at twenty-six minutes past eight o'clock.