Lords Sitting of 3 June 1997

Preamble
Reassembling after the Spring Bank Holiday Recess, the House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Ripon.
>Several Lords—Took the Oath or Affirmed.

Antiquities: Illegal Traffic
2.40 p.m.
Lord Renfrew of Kaimsthorn Lord Renfrew of Kaimsthorn asked Her Majesty's Government:
Whether they are content with the position that it is not an offence to import into the United Kingdom antiquities which have been illegally excavated in, and exported from, their countries of origin.
Lord McIntosh of Haringey: My Lords, the Government are concerned about the problem of antiquities which have been illegally excavated and exported from their countries of origin. This a highly complex issue. To have complete control it would need to be an offence to import such material and an offence to have stolen, illegally excavated or illegally exported it. We will be considering this over the coming months, alongside consideration of whether we should sign the 1970 UNESCO Convention and the 1995 UNIDROIT Convention.
Lord Renfrew of Kaimsthorn: My Lords, I thank the Minister for that constructive and thoughtful Answer. Is he aware that France has recently decided to ratify the 1970 UNESCO Convention on the illegal traffic of cultural property; that the United States did so some time ago; and that that appears to offer a legal framework of the kind to which he alludes? I hope that, as he indicated, the Government will give very serious consideration to ratification in particular of the 1970 UNESCO Convention, which will be apposite in view of the Government's recent decision to rejoin UNESCO.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord for his approval of the Government's decision to rejoin UNESCO, which was resisted by his own government for such a long time. He is right in saying that there has been some progress towards signing the 1970 UNESCO Convention. The trouble is that none of these international conventions covers all of the ground adequately. In some ways, the EC directive would be better because it is more precise about the definition of antiquities and works of art. That is one of the particular difficulties with the UNESCO Convention and the UNIDROIT Convention, which is perhaps more immediately relevant than the 1970 UNESCO Convention.
Lord Mowbray and Stourton: My Lords, does not my noble friend's question, in his mention of France,
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beg the question that the first Napoleon possibly brought back to France more than any other country has brought back? Even the great Duke of Wellington, trying to be diplomatic after 1814 and 1815, failed to have more than a fraction restored to the original countries.
Lord McIntosh of Haringey: My Lords, none of the international conventions to which we have referred today would be retrospective in its action and therefore none would solve the problem to which the noble Lord referred.
Lord Boyd-Carpenter: My Lords, will the Government bear in mind that many great treasures have survived solely by reason of being exported from their country of origin? Will the Government be very careful not to sabotage that process along the lines suggested in my noble friend's Question?
Lord McIntosh of Haringey: My Lords, the answer is the same as I gave to the noble Lord, Lord Mowbray and Stourton: none of these conventions would be retrospective in its action. The noble Lord is correct in saying that in certain circumstances there is more chance of conservation in a museum than on site.
Lord Rea: My Lords, is the Minister completely sure about the legality of the export of the Parthenon Marbles by Lord Elgin?
Lord McIntosh of Haringey: My Lords, we are not referring forwards but back to a discussion that we had two weeks ago. It is not correctly the subject of the present Question. Whatever decision we take about the UNESCO Convention, the UNIDROIT Convention or further enforcement of the EC directive, none would affect the position of the Parthenon statues.
Baroness Trumpington: My Lords, bearing in mind the substance of this Question, will the Minister agree that unless something is done and that one of those directives is followed, infinite damage will be caused to our art dealers, who enjoy a worldwide reputation for good business practice?
Lord McIntosh of Haringey: My Lords, the Government are certainly concerned about the reputation of the UK art market. The problem is that there is a criminal element which is often outside the official organisation of the UK art market. If those criminals are allowed to get away with it, that causes damage to the art market as a whole.
The Earl of Lauderdale: My Lords, will the Minister tell the House what is the broad scope of the conventions which he suggested the Government may be signing in the near future?
Lord McIntosh of Haringey: My Lords, I think that that is a tall order, especially if one considers that the UNIDROIT Convention itself is probably half an inch thick. But in principle the UNIDROIT Convention in particular is concerned with control over illegal

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excavation, theft and illegal export of antiquities. Those are the important considerations to which I referred in my first Answer.
Lord Campbell of Alloway: My Lords, without derogation from the good name of the art dealers, will the Minister consider the introduction of a period of perhaps three or four weeks between the publication of the catalogue and the sale? That then provides an opportunity for the countries from which goods have been stolen—I do not say "exported"—to make their claim. Will the Minister also consider the circumstances of the recent failed prosecution in the Knightsbridge Crown Court?
Lord McIntosh of Haringey: My Lords, the noble Lord makes an interesting suggestion; but I think that normally there are at least three or four weeks between the publication of the catalogue and the date of the sale. Therefore, if the noble Lord's objective is to be achieved, that time may need to be extended. Effective action on the second matter which the noble Lord raised, which I believe refers to the Bullrush case concerning antiquities from Egypt and China, would require implementation of certain sections of Part I of the Criminal Justice Act 1993. The Government are considering that matter and my department is in discussion with officials of the Home Office.
Lord Inglewood: My Lords, is the Minister aware that Scotland Yard's view is that to introduce the provisions of the Criminal Justice Act 1993 would be of considerable advantage in helping to end the abuses which we are discussing? Does he agree that it would be in everybody's best interest to get on with that as quickly as possible?
Lord McIntosh of Haringey: My Lords, as I indicated in my previous answer, we agree that it is desirable that criminal elements, which are responsible in the case to which reference was made, should not be allowed to damage the reputation of the UK art market. For that reason, officials from my department are in discussion with officials from the Home Office. The Secretary of State for National Heritage will be in contact with the Home Secretary on that matter.

Speech Therapists: Equal Pay
2.48 p.m.
Lord Ashley of Stoke Lord Ashley of Stoke asked Her Majesty's Government:
Whether they intend to support the principle of equal pay for equal work for all speech therapists, following the settlement by the Department of Health in the case of Dr. Pamela Enderby and Lesley Cogher.
The Minister of State, Department of Health (Baroness Jay of Paddington): My Lords, I am delighted that the first oral Question which I am answering as a Minister should be from my noble friend,
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with whom I have worked so closely. My noble friend may, of course, be assured that we support the principle of equal pay for work of equal value where it has been proved.
My noble friend will be aware that the cases of Dr. Enderby and Mrs. Cogher, which were settled in March after protracted legal proceedings, are the tip of a large and complicated iceberg. The new Government are considering the possible implications of those cases for other claims for equal pay lodged by speech therapists. This dispute has dragged on for more than 10 years. We are now looking at all the possible options as we assess the position on the legal cases which are still in progress.
Lord Ashley of Stoke: My Lords, is my noble friend aware that that is the kind of answer that we did not receive until recently? It is really positive and constructive. I love opposing and criticising but in the light of that reply I have merely one question to ask. If the Government really support the principle of equal pay for equal value—and that is the principle on which Dr. Enderby won her case—will the Government agree to pay all speech therapists accordingly?
Baroness Jay of Paddington: My Lords, I thank my noble friend for his kind remarks about the positive nature of my first reply. I hope that he will be equally pleased to know that representatives of both sides in the issue have agreed to hold exploratory talks later this month, without prejudice for legal reasons, when the details of the cases will be discussed.
Baroness Turner of Camden: My Lords, can my noble friend the Minister tell the House how much taxpayers' money the last Government spent in opposing such cases for over 12 years instead of negotiating a reasonable settlement with the union which would always have been open to them? Further, in view of the recent successes achieved by Dr. Enderby and her colleague, will my noble friend give consideration to ensuring that these speech therapists are entitled to back pay in respect of the losses they have sustained during the 12 years they have been waiting for a successful conclusion to such cases?
Baroness Jay of Paddington: My Lords, I am sorry to have to tell my noble friend that the total as regards legal defence costs in such cases so far amounts to around £1 million. So far as concerns retrospective payments, I am sure that they will be the subject of the preliminary talks which, as I said in response to my noble friend Lord Ashley of Stoke, it is proposed to hold later this month.
Lord Quirk: My Lords, does the Minister agree that fully trained speech therapists like Professor Enderby, formerly Dr. Enderby, are a very special and valuable resource and that one of the ways in which their lot could be relieved, as well as the issue of equal pay, is the support of a cadre of well-trained speech therapy assistants to whom could be delegated some of the work that is reconstitutive after the properly expert therapists have made the appropriate diagnosis?
Baroness Jay of Paddington: My Lords, I am grateful to the noble Lord for his suggestion. As he said, Professor Enderby is an extremely distinguished member of her profession with an exceptional international reputation for both academic and practical work. I shall draw the noble Lord's suggestion about additional support to the attention of my honourable friend the Minister for Health in another place who is looking in detail at the practical outcome of the issue.
Baroness Cumberlege: My Lords, as the Minister was critical of the previous Government's action in contesting this case, would she like to assess the costs of the 1,000 withdrawn cases which were being promoted by the MSF and which the courts decided were no longer pertinent? Further, in her supplementary reply to her noble friend Lord Ashley of Stoke, was the Minister suggesting that this Government will be retrospectively compensating people for the Government's failure to foresee the future'?
Baroness Jay of Paddington: My Lords, I thank the noble Baroness for those points. As I said in response to my noble friend, the details of such settlements, both for individuals and for the profession as a whole, are under general consideration and will be the subject of the preliminary talks, without prejudice, this month. I understand that there are still 1,500 cases remaining to be settled. Therefore, the question of their position will obviously be of crucial importance.
Lord Ashley of Stoke: My Lords, I rise simply to point out that I forgot to declare my interest in the matter as I am president of the Royal College of Speech and Language Therapy. I apologise to the House for that omission. However, is my noble friend the Minister aware that we will be monitoring the negotiations as they continue?
Baroness Jay of Paddington: My Lords, I am absolutely sure that my noble friend will, as always, be acutely observant of everything that the Government are doing.
The Countess of Mar: My Lords, does the Minister agree that it is especially important for children to be able to communicate properly? Does she also agree that there is a dearth of speech therapists and long waiting lists of young children needing their services? It is important that any problems children may have should be dealt with as quickly as possible as soon as they are diagnosed. Can the Minister expedite any negotiations so that young people are encouraged to train as speech therapists and thereby ensure that the number of such waiting lists can be cut?
Baroness Jay of Paddington: My Lords, I am grateful to the noble Countess, Lady Mar. Of course it is important that children should be helped as early as they can be through the professional activities of speech therapists. However, the relationship of that issue to the question of the pay claims is not direct. I shall draw the suggestions of the noble Countess for practical change
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in the profession to the attention of my honourable friend in another place who is examining the question. I agree with the noble Countess that this longstanding dispute about pay has cast rather a pall over the profession of speech therapy and may have contributed to the problems she described.

School Playing Fields
2.55 p.m.
Lord Dormand of Easington Lord Dormand of Easington asked Her Majesty's Government:
To what extent they consider it will be possible to restore the number of school playing fields which have been sold in recent years.
The Minister of State, Department for Education and Employment (Baroness Blackstone): My Lords, it would not be practical to restore those playing fields which have been sold in recent years. But we intend to ensure that playing fields which schools and their local communities need are not sold in future. My right honourable friends the Secretary of State for Education and Employment and the Secretary of State for National Heritage are discussing this as a matter of urgency.
Lord Dormand of Easington: My Lords, is my noble friend the Minister aware that those of us who are interested in the problem very much appreciate the new thinking on the sale of playing fields? However, if necessary, would the Government consider introducing legislation on the matter, although I appreciate that there would be difficulties associated with it? Is my noble friend further aware that the previous Government's disastrous record of selling literally hundreds of playing fields was opposed by the Sports Council, the Central Council of Physical Recreation, the National Playing Fields Association and many other organisations? Therefore, I hope that the Minister will realise that when the Government do take action they will receive overwhelming support.
Baroness Blackstone: My Lords, I am most grateful to my noble friend for his remarks. Yes, of course, I am aware of the concern on the part of many of those organisations which are concerned with sporting activities for young people about the previous government's record in selling off school playing fields. I believe my noble friend is aware that to ban all sales of school playing fields would require new legislation. With my right honourable friend the Secretary of State for National Heritage, we are looking at ways of ensuring that all school pupils have access to proper sports facilities. Perhaps I may add that proper sports facilities are more than just grass playing fields. We are also looking at ways to improve sports facilities generally for all types of school; for example, indoor facilities and all-weather pitches are particularly important for schools on restricted sites in built-up areas.
Lord Henley: My Lords, does the Minister accept that this is quite obviously a matter which would be best

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left to the schools and the LEAs? Further, will the noble Baroness give the House an assurance that no school or LEA will be prevented from selling off surplus—and I stress the word "surplus"—playing fields where that money could then be used for proper educational advantage for the school or the LEA?
Baroness Blackstone: My Lords, I believe the noble Lord opposite is fully aware that LEAs are free to dispose of school playing fields which they own in the same way as they are able to dispose of any other assets, provided that their schools continue to meet the requirements of the school premises regulations and that the needs of those schools and those of the local communities that they serve are properly met. That is what we aim to ensure.
Lord Howell: My Lords, as my noble friend the Minister has just indicated, most of the school playing fields were sold off in defiance of the school premises regulations, as amended in 1996. Therefore, will she give an undertaking that there will be a thorough review of those regulations, bearing in mind the fact that school use and community use should be written into them? Will my noble friend also bear in mind the fact that there is no provision to provide playing fields for any children aged eight, which is now an anachronism? Further—and most important in the minds of some of us—despite what my noble friend said about indoor facilities, most of the national games are played on God's good grass, which is under-prepared, not properly maintained and in many cases is a scandal and danger to the players. Will my noble friend the Minister kindly take all those matters on board in her review of the situation?
Baroness Blackstone: Yes, my Lords; we are examining all the options. However, perhaps I may pick up one of the questions raised by my noble friend. My department is particularly keen to encourage schools to work closely with their local community. Many schools already actively welcome local people making use of their facilities, and we want to build on that. Before considering any land as surplus, schools really should look carefully at the needs of the communities that they serve.
Lord Addington: My Lords, in view of the remarks of the noble Baroness, does she not agree that it might be appropriate to consider under what circumstances a playing field that is reasonably well maintained can be considered to have no benefit to either a school or a community? A well-maintained turf can always be used for some form of sporting activity, but unfortunately if a house is built on it it can never be used again.
Baroness Blackstone: My Lords, of course it is important to look at possible uses of all school playing fields. There may, however, be some occasions where it makes sense for a school to sell off a piece of land which is not terribly suitable for use as a playing field and then reinvest any proceeds it may make from that sale in the provision of alternative school sports facilities. That is one of the things we shall be encouraging.
Baroness Masham of Ilton: My Lords, does the Minister agree that drug abuse and alcohol abuse among young people are a serious problem and healthy alternatives such as sport are of vital importance? Will she also consider that aspect and ensure that schools which now have no facilities are provided with good facilities in the future?
Baroness Blackstone: My Lords, of course we all need to address the serious problem of drug abuse. Some young people who have been seriously addicted to drugs may not find it easy to take part in active sports. We shall examine ways in which we can encourage young people who are at risk in this respect to participate in other more healthy activities than taking drugs.
Lord Taylor of Blackburn: My Lords, many of us are delighted with the answers that my noble friend has given this afternoon because they are much better than those we were given before. When my noble friend is considering this matter will she take into account not just the community but also the Sports Council and also local planning authorities as they can all play an important part in the preservation of playing areas?
Baroness Blackstone: My Lords, I am most grateful to my noble friend. The Sports Council now maintains a register of recreational land. That will provide us with a useful database covering all sports fields and not just those attached to schools.
The Earl of Clanwilliam: My Lords, will the Minister take into account in her deliberations the document entitled The State of Play which was published by the National Playing Fields Association for whom I speak, which referred to the school premises regulations? Will she also consider a new category of protected recreational open land for playing fields and children's playing spaces?
Baroness Blackstone: My Lords, in the review that we shall undertake with the Department of National Heritage we shall of course take note of what has just been said. We shall consider all the reports to ensure that we can benefit from their recommendations.

Mobile Phones and Pagers: Use in House
3.3 p.m.
Lord Dean of Beswick Lord Dean of Beswick asked the Chairman of Committees:
What are the rules governing the use of pagers and mobile telephones in the Chamber and within the precincts of the House; and whether he will refer this matter to the Administration and Works Sub-Committee of the Offices Committee.
The Chairman of Committees (Lord Boston of Faversham): My Lords, at present the rules governing the use of mobile telephones forbid their use only in the Refreshment Department; they advise noble Lords who

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use them in other areas to do so discreetly. There are no corresponding rules governing the use of pagers. I believe that the rules should be strengthened. I shall bring this matter to the Administration and Works Sub-Committee for consideration at its next meeting. I think the only rules likely to find favour in your Lordships' House would be ones which were quite strict.
Lord Dean of Beswick: My Lords, I am grateful to the noble Lord the Chairman of Committees for that objective Answer. However, he must be aware of an incident that took place in another place just before the election when the Speaker had to intervene as regards the use of a pager which gave one person an advantage over other people with whom he was dealing. Is the noble Lord aware that I am glad he is considering introducing strict rules in this matter? Will he ensure that, whatever takes place, standards in your Lordships' House are maintained and that we should make personal interventions and not become dominated by those who bring pagers into the House and use them to the disadvantage of other people? When he has considered the matter will the noble Lord explain his decision to the House to enable us to accept it as I believe that his decision would carry much more authority if it had the acceptance of the House?
The Chairman of Committees: My Lords, I am grateful to the noble Lord, Lord Dean of Beswick, for raising this matter. He will forgive me if I do not comment on what has happened in another place because it would he rash for Members of your Lordships' House to do so from either of these two Dispatch Boxes. As regards your Lordships' House, I am not aware of any of the difficulties which have arisen in another place having arisen here. However, I do not believe your Lordships would look kindly on the use of pagers to prompt noble Lords, if I may put it that way—who are well equipped and need no prompting from outside—on the part of any supporters who may be outside the Chamber.
Lord Winston: My Lords, I am grateful to the noble Lord the Chairman of Committees for his reply. Does he accept that for a number of your Lordships to have a pager or a radio telephone of some kind is a vital link when one may be on call or for other emergency purposes? Can we have the noble Lord's assurance that these may be used in designated places with discretion by Members of this House?
The Chairman of Committees: My Lords, the noble Lord, Lord Winston, makes a valid point. Those are the sort of considerations that I hope will be considered by the Administration and Works Sub-Committee of your Lordships' House. There probably is a place for mobile telephones and pagers. In a sense pagers are a little more difficult in that the bleeping ones I suspect would not be acceptable to your Lordships, at any rate in the Chamber, whereas the vibrating ones might be acceptable in order possibly to remind noble Lords that they have not returned home to dinner during some of our more exciting debates. I do not wish to give the
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impression that I am wholly in favour of the vibrating types. One would have to be a little careful which pocket one put them into. I do not wish to trouble your Lordships with personal details of my habits, but I carry keys in two of my trouser pockets and coins in one of those two. I suspect that a vibrating pager might cause an unwarranted jangling sound if it went off as one rose to the Dispatch Box.
Earl Russell: My Lords, in the light of the noble Lord's previous remarks I shall not ask him to comment on the remark of Madam Speaker when a pager went off in the Chamber of another place. She said that it should not have been brought into the Chamber in that condition. But, purely coincidentally, might this House agree with that view?
The Chairman of Committees: My Lords, as always the noble Earl, Lord Russell, tempts in the skilful way in which he puts his questions. Being skilful he will therefore appreciate why I shall not be drawn down that particular path. Without making any comment at all, I must say that I have some sympathy with what he has said.
Lord Cocks of Hartcliffe: My Lords, when the noble Lord the Chairman of Committees refers the matter to the sub-committee will he urge it not to take the easy way out and employ expensive consultants to produce a report which will tell it what it already knows?
The Chairman of Committees: My Lords, I am sure that, as always, any committee of your Lordships' House will take into account what the noble Lord, Lord Cocks of Hartcliffe, says. I certainly undertake to do so. Consultants have already been used as part of the exercise, which is outside the scope of this Question, but fortunately they were not too expensive.
Lord Monkswell: My Lords, the Chairman of Committees referred to the Administration and Works Sub-Committee. I presume that its consideration would involve the precincts of the House rather than simply the Chamber. Am I right in thinking that the Procedure Committee of this House determines the rules which apply within the Chamber?
The Chairman of Committees: My Lords, it is possible—possible, although not necessary—that the Procedure Committee will have a role. However, the Administration and Works Sub-Committee has the prime role. If that committee decides to make recommendations, they will be considered by your Lordships' Offices Committee. If the Offices Committee decided to make recommendations, it would report them to your Lordships, who make the ultimate decision.
However, I am inclined to agree with the noble Lord, Lord Monkswell, to this extent. Noble Lords are not only concerned as regards the Chamber but, I suspect, also about the Prince's Chamber, the Peers' Lobby and the Library. The noble Lord, Lord Renfrew of Kaimsthorn, is concerned about that matter, and is in consultation with the librarian. I am grateful to the noble

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Lord for chairing a working group considering some of these matters. I believe that those are points to be considered in due course.

European Communities: Select Committee
3.11 p.m.
The Chairman of Committees: My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That a Select Committee be appointed to consider Community proposals, whether in draft or otherwise, to obtain all necessary information about them, and to make reports on those which, in the opinion of the Committee, raise important questions of policy or principle, and on other questions to which the Committee considers that the special attention of the House should be drawn;
That, as proposed by the Committee of Selection, the Lords following be named of the Committee:

L. Ashbourne,

L. Barnett,

L. Bridges,

L. Elis-Thomas,

L. Geddes,

L. Gisborough,

L. Haslam,

B. Hilton of Eggardon,

L. Hoffmann,

L. Hussey of North Bradley,

L. Kingsland,

L. Marsh,

B. Ramsay of Cartvale,

L. Reay,

L. Tordoff (Chairman),

L. Wallace of Saltaire,

L. Walpole,

B. Williams of Crosby,

L. Willoughby de Broke;

That the Committee have power to appoint Sub-Committees and to refer to such Sub-Committees any of the matters within the terms of reference of the Committee; that the Committee have power to appoint the Chairmen of Sub-Committees, but that such Sub-Committees have power to appoint their own Chairman for the purpose of particular enquiries; that two be the quorum of such Sub-Committees;
That the Committee have power to co-opt any Lord for the purpose of serving on a Sub-Committee;
That the Committee have leave to report from time to time;
That the Committee and any Sub-Committee have power to adjourn from place to place;
That the Committee have power to appoint Specialist Advisers;
That the Reports of the Select Committee from time to time shall be printed, notwithstanding any adjournment of the House;
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That the Minutes of Evidence taken before the Committee or any Sub-Committee from time to time shall, if the Committee think fit, be printed and delivered out;
That the Minutes of Evidence taken before the European Communities Committee or any Sub-Committee in the last session of Parliament be referred to the Committee; and
That the Committee do meet this day at a quarter-past four o'clock.—(The Chairman of Committees.)
On Question, Motion agreed to.

Science and Technology: Select Committee
The Chairman of Committees: My Lords, I beg to move the second Motion standing in my name on the Order Paper. In doing so, I must apologise to your Lordships for a printing error on the Order Paper six lines from the end of the Motion where the word "from" has been omitted. The sentence should read,
"That the Committee have leave to report from time to time".
With your Lordships' permission I shall arrange to correct that at a later stage.
Moved, That a Select Committee be appointed to consider science and technology and that, as proposed by the Committee of Selection, the following Lords be named of the Select Committee:

L. Carmichael of Kelvingrove,

L. Craig of Radley,

L. Dainton,

L. Dixon-Smith,

L. Flowers,

L. Gregson,

B. Hogg,

L. Howie of Troon,

L. Jenkin of Roding,

L. Kirkwood,

L. Perry of Walton,

L. Phillips of Ellesmere (Chairman),

L. Porter of Luddenham,

L. Soulsby of Swaffham Prior,

L. Tombs,

L. Winston;

That the Committee have power to appoint Sub-Committees and that the Committee have power to appoint the Chairmen of Sub-Committees:
That the Committee have power to co-opt any Lord for the purpose of serving on the Committee or any Sub-Committee;
That the Committee have leave to report from time to time;
That the Committee and any Sub-Committee have power to adjourn from place to place;
That the Committee and any Sub-Committee have power to appoint Specialist Advisers;
That the Minutes of Evidence taken before the Committee and any Sub-Committee from time to time shall, if the Committee think fit, be printed and delivered out; and

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That the Committee do meet on Tuesday 10th June at half-past ten o'clock.—(The Chairman of Committees.)
On Question. Motion agreed to.

National Health Service (Private Finance) Bill [H.L.]
3.13 p.m.
Baroness Jay of Paddington: My Lords, I beg to move that this Bill be now read a second time. The purpose of this short Bill is clear and specific. It is to break the gridlock in the NHS building programme which we have inherited. This Government want to see new hospitals built and the Bill before your Lordships today ensures that NHS trusts have powers to enter into PFI contracts. If enacted, the leading banks will have the confidence they need to provide funding for the most advanced hospital development projects. Building work can then begin as part of this Government's commitment to renew the National Health Service.
The Bill should also be seen as a first important step in our programme to develop new forms of public/private partnership—of which PFI is one model. These proposals were set out in a 12-point plan in our business manifesto which was so resoundingly endorsed at the general election.
Clearly, the NHS needs high quality facilities in order to deliver world class services. The private finance initiative has the potential to provide some of these facilities hut, regrettably, not a single major PFI hospital deal has reached financial close since the initiative was introduced in 1992.
The Government have always accepted that the principle of PFI is a useful one. In theory, under PFI the public sector does not pay to build a hospital; it pays for the delivery of a specified building to agreed quality standards. No payment is made until the building is provided. This is a concept whose benefits the public and private sectors have been quick to recognise.
But in practice PFI has manifestly failed to deliver the goods. A number of small schemes have been brought to fruition—for car parks, accommodation blocks, and so on—but the urgently needed major hospital building programme has been stopped dead in its tracks. Time and money have been spent wrestling with what seem to be apparently insurmountable problems.
The new Government draw no pleasure from the fact that the previous Administration were unable to make PFI work in the NHS. The people who suffered most were the patients in need of treatment, and the doctors, nurses and other health professionals who tried to work in inadequate facilities. In the past I have described in your Lordships' House attempts to make PFI work as "unproductive chaos".
But PFI need not be unproductive or chaotic; it can, if properly used, offer the NHS an important way of building hospitals. That is why the Government gave their manifesto commitment to overcome the problems that have plagued PFI in health at a national level. However, to achieve this we need to make changes. For
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this reason, we have said that we will set priorities between projects, saving time and expense; we will seek a realistic allocation of risk between the partners to a project; and we will ensure that best practice is spread widely. My honourable friend in another place, the Paymaster General, has announced a rapid review of the present arrangements across the whole of government, taking as his starting point our 12-point plan for partnership which was in our business manifesto. The review, which is being carried out by Mr. Malcom Bates, chairman of the Pearl Group and a former member of the Treasury's PFI panel, has been widely welcomed by people active in the private finance world.
To complement this work, my honourable friend in another place the Minister of State, Mr. Alan Milburn, has announced an overall review of the workings of PFI in health. In the Department of Health we are committed to end the delays, sort out the confusion and develop new forms of public/private partnership that will work and protect the interests of the NHS. Noble Lords will be extremely concerned to learn that Mr. Milburn has discovered that to date £30 million has been spent by individual NHS trusts on legal and financial advice and other consultancy fees—without a single major contract being secured. In future much of the necessary expert advice will come from within the NHS. This should be quicker and save the money which has previously been spent on expensive consultants' fees.
Naturally, my honourable friend will be listening to the views of those closely involved with the PFI from both the public and the private sectors. The objective will be to identify how to make the best use of skills and expertise from both sectors.
The legislation before your Lordships today will remove the most significant obstacle in the way of the major pathfinding schemes. There is no lack of general support or interest from the financial community for PFI in health. Leading financiers who met the Secretary of State soon after his appointment expressed their willingness to provide the backing for PFI contracts in the NHS. But the banks are concerned that there may be some doubt about whether NHS trusts can legally enter into PFI contracts. The Department of Health's own legal advice is clear: the National Health Service and Community Care Act 1990, which sets out trust powers, gives those trusts the power to enter into PFI contracts. However, it is true that PFI is not explicitly named on the face of the Act, and the banks remain concerned that they may not be able to recover their money if, at some point in the future, PFI contracts are found to be ultra vires the trust.
The banks have been chastened by their problems in other sectors and are unwilling to take what they perceive to be an excessive and unnecessary risk without further legislative cover. The possibility of a statutory instrument has already been explored with them, but it is clear that this would not resolve their concerns.
In the circumstances, primary legislation is necessary, and the Bill before your Lordships removes any doubt about the power of an NHS trust to enter into contracts under the private finance initiative. The banks concerned have seen and agreed the wording of the Bill and have

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made clear that it satisfies all their outstanding concerns. As a result, they will be prepared to lend into the leading schemes once the Bill is enacted.
In retrospect it might have been much more sensible—and probably much more productive—if this issue had been resolved at the same time as the National Health Service (Residual Liabilities) Bill which was considered in your Lordships' House about a year ago. However, the new Ministers at the Department of Health have been assured by officials there that this particular stumbling block was only recently identified as a serious issue. Perhaps the expensive consultants missed an obvious trick. However, we are where we are, and this short Bill is now necessary to get things moving on hospital building.
Clause 1 of the Bill provides that the powers of an NHS trust include power to enter into agreements which are certified by the Secretary of State as externally financed development agreements, and specifies the circumstances in which the Secretary of State may give a certificate to that effect.
Clause 2 allows any corresponding provision made by Order in Council in respect of Northern Ireland to be subject to the negative resolution procedure.
It will be apparent from the brevity of the Bill we are considering today that this is a straightforward and uncomplicated piece of legislation. It fulfils a manifesto commitment and its purpose is transparent: to remove any doubt about the power of an NHS trust to enter into contracts under the private finance initiative.
This Government are determined to get hospitals built rather than simply to talk about getting them built. I remind your Lordships that no hospitals planned under existing PFI schemes have yet reached financial close, let alone been built. By enacting this legislation we will then be able to start constructing the new facilities which the NHS so badly needs, and make clear our commitment to nurture and strengthen the health service.
This is a practical and essential measure. It will bring reality to what has sometimes seemed fantasy. I commend it to the House.
Moved, That the Bill be now read a second time.—
(Baroness Jay of Paddington.)
3.21 p.m.
Baroness Cumberlege: My Lords, although the Minister and I had a short skirmish at Question Time, this is my first formal opportunity to welcome her to the Dispatch Box. I do so with great pleasure—not only as one of the Government's Ministers for Health but also as the Deputy Leader of this House.
I know that the Minister and her colleagues do not have a great deal of patience with the hereditary principle, and this is certainly not the moment to enter that debate. However, I cannot help thinking that her most distinguished father must have passed on some very useful and relevant genes. That was evident when the noble Baroness, as deputy leader, with great mastery, summed up the fifth day of the debate on the Queen's Speech.
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I congratulate the noble Baroness and her colleagues on choosing as their first piece of legislation this Bill—which I am informed is word for word the Bill drafted by the previous government, in fact lifted straight from the "must do" pile of our administration.
It is none the worse for that, but it does place me in a dilemma, for although I am well aware that the role of the Opposition is to oppose, with this particular Bill I am in wholehearted support. However, it is the support of members of the Government that concerns me, since in the past they vigorously opposed the private finance initiative.
My noble friends and I, particularly my noble friend Lady Anelay of St Johns who will sum up for these Benches—and I take the opportunity of also welcoming her to the Front Bench—will wish to probe the intentions of the Government. And we have good reason, for only on 2nd April, two months ago, Mr. Chris Smith, in his statement following publication of the Conservative manifesto, said:
"further promotion of the PFI can only lead to the privatisation of clinical services in the NHS".
Does the noble Baroness agree with her Cabinet colleague? If so, as she is promoting the Bill, where does she believe that the measure leaves the issue of clinical services within the NHS? Or perhaps the Minister applauds the perspicacity of the Prime Minister in appointing Mr. Smith to the Department of National Heritage, a department which is not so much concerned with the future but has responsibility for the preservation of old, redundant buildings.
When I became chairman of the Brighton health authority, 80 per cent. of the floor area of our 16 hospitals had been built in the last century. It was an issue I was determined to tackle. I failed. My successor failed; as did the one after that, and the one after that. The task is now in the capable hands of the noble Baroness, Lady Emerton, who as an advocate of the PFI has the very real possibility of achieving at the Royal Sussex County Hospital buildings suitable for modern medicine and fit for the next century. I wish her every success in her endeavours.
Brighton's history is not unique. All over the land promising young consultants were appointed in the knowledge that a new hospital was about to be built and yet have been lucky to see the foundation stone laid before their retirement party. The frustration has been considerable, and has often soured local relationships as people felt betrayed or did not understand the internecine intricacies of the Treasury mind. Fifteen years ago rigidity and red tape were the rule book.
The private finance initiative—our initiative—allows the NHS to by-pass these Treasury constraints and to harness the expertise of the private sector in the design, construction, maintenance and provision of buildings in order to deliver better quality patient care and better value for money.
As a result, 71 NHS PFI schemes have been approved since the launch of the scheme, bringing in private sector capital amounting to £626 million. Of those, 43,

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with a capital value of £317 million, have reached contract signature stage—32 have been completed and 11 are still under way.
Larger schemes are now starting to reach contract signature: the Norfolk and Norwich new hospital project, with a capital value of £194 million, was signed in November 1996, although it has yet to reach financial close.
A further 150 schemes with a total capital value of about £2.1 billion are testing private finance options. They include 22 schemes worth over £10 million each that have got as far as appointing a preferred bidder. Their combined capital value has been some £1.7 billion.
But despite these considerable successes, it would be disingenuous of me to admit that there have not been some complications. On 21st May last year, when I introduced the Second Reading of the NHS (Residual Liabilities) Bill, I stated that any residual liabilities would be transferred to the Secretary of State. Although that has been the custom and practice throughout the life of the NHS, contractors were still unsure and wanted the Government, through legislation, to remove any element of doubt.
This we sought to do, albeit both we (the Government of the day) and the then Opposition thought it to be unnecessary—a point very forcefully put by the noble Baroness, Lady Jay, during the debate. But that was before the banks became concerned. Their concern was generated by the activities of some councils. It will not surprise the House to know that these were Labour councils such as Hammersmith and Fulham. Those councils sought, with public money, to gamble on the money markets. The banks caught a cold and were justifiably wary that they should not catch another. Hence the necessity for this further piece of legislation. Bearing in mind that we now have a new Labour Government, I have some sympathy for the banks' concerns.
Anthony Hilton, the City editor of the Evening Standard, on 14th May drew our attention to the fact that here is a new Government on their best behaviour, yet willing to invent spurious reasons to impose a retrospective windfall tax on companies which have acted in good faith and within the law. It hardly bodes well for a committed and reliable partnership between the Government and the private sector; and this before the rigours of governing have been felt, and before the trade unions, always strong in the NHS, have reasserted their power. In three or five years' time things could look very different. So what guarantees can the Minister give to PFI partners that there will be no dawn raids on their assets, and no retrospective legislation or confiscation of their investment—for I am sure the experience of the past three weeks will not provide much comfort?
Currently the Government are reviewing the private finance partnership schemes. One Minister is quoted in the Financial Times of 14th May as saying:
"We want to see which are the priorities, region by region, for major capital projects and then test them to see whether they are susceptible to PFI".
Nicholas Timmins, the much respected public policy editor of the newspaper, goes on to report that Ministers stood by their,
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"absolute cast-iron manifesto guarantee that clinical services will not be handed over to the private sector in any of these deals".
However, Mr. Timmins then goes on to say that the review has yet to decide whether radiology and pathology are to be included in the definition of clinical services which the private sector will not be allowed to take over. "We will have to wait and see", one Minister said; it remained "a grey area" which was still to be resolved in spite of a vigorous attack during the election campaign by Mr. Blair, then Leader of the Opposition, on plans by Sheffield's Hallamshire Hospital to include such services in its private finance project.
Perhaps the Minister could tell us who is right: a health Minister tackling the day-to-day realities of trying to run the NHS or the Prime Minister trying to win an election campaign. Bearing in mind this contradiction among Ministers, it is imperative that the Bill should clarify matters, but it does not. Clause 1(5) states:
"'facilities' includes—

(a) works, buildings, plant, equipment or other property; and

(b) services".

But, my Lords, which services? Can the Minister list them for us? For with the new Labour Government in power, we need to know.
Another area subject to procrastination and delay is the future of London's healthcare, for the Labour Government are undertaking yet another review. London's history is littered with countless reviews of its hospital services. The policy document, Making London Better, set out clearly the future healthcare needs of Londoners, the specialty services required, the issues surrounding world-class research and the paucity of primary care. In her speech on 13th December 1993 the noble Baroness introduced an Unstarred Question debate. She said:
"My Question is simply a plea for an end to uncertainty".— [Official Report, 13/12/93; col. 1221.]
I agree. Is it not time to get on with the job and ensure that those who seek to build their careers in London's centres of excellence get some security and certainty and to let Londoners know where they stand? Will the Minister tell us what the effect of a review upon a review will mean, both in years of delay and additional costs? How patient are patients expected to be before they see their services enhanced? How patient are private sector partners expected to be? Has the Minister in charge of the review met them and given assurances that the London review will not put back schemes in progress or about to start? What impact will further delay have on the costs of schemes, both for the private sector and for the taxpayer? The noble Baroness will know better than most the numbers of inquiries that have taken place into the health needs of Londoners. She will know the urgency of putting the existing plans in place. In 1993 she was impatient for progress. Where is this new dynamic Labour, about which so much is written? Are they simply a government of reviews?

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Finally, we heard the Prime Minister say during the visit of the President of the United States that this Government are practical, not ideological. That is to be the new way. But to be practical, people who are ill are not really concerned about who built the hospital, who washes the sheets or even who pays the clinical staff, so long as doctors, nurses and all other staff are efficient, skilled and caring.
We were harassed, when in government, by the totally untrue assertion that we were privatising the NHS—which we were not. The new Secretary of State for Social Security, when she was health spokesman, said that the PFI was an initiative for privatising the health service. It is not. It is a means of improving the NHS, which was and still is our sole aim.
But if the Government (as the Labour Opposition) thought that the PFI was a means to privatise and that they were and are the only defenders of the NHS, we are right to ask: "What is this Government's purpose for the PFI'? What is their philosophy?". There seems to have been no thought put into the direction of policies. The Minister owes us an explanation. Surely the NHS is founded on a great ideal. Its philosophy is an ideology. It is absurd to think that the NHS can be wholly pragmatic. At its core is a belief that the health service should be free at the time of need and that its sole criterion should be need. These principles cannot be abandoned—dismissed as mere practicalities. The NHS is motivated by idealism. Without it, it will surely perish. Perhaps in her summing up the noble Baroness could address this most important of all issues, because it is a fundamental matter, relevant not just to today's debate but to the long-term future of the NHS—for we all know that without a vision, the people perish. Pragmatism is simply not enough.
3.35 p.m.
Baroness Robson of Kiddington: My Lords, I join in the congratulations to the noble Baroness, Lady Jay, on her arrival at the Dispatch Box. I have known her for a number of years and I am aware of the amount of time she has devoted to the health service. We could not have a better representative in her place. It is also a quite unusual experience for me to hear the Minister's immediate predecessor and the new Minister in this House in such perfect agreement about two Bills. I realise that the Bill before us today was produced and ready to go on the statute book had not the election interrupted the procedure.
However, I wish to question why it has been necessary, within the period of one year, to have two Bills. I understand why the first was introduced. It was because there was no assurance to any contractor about the residual liabilities that would arise if a trust collapsed. The reason for the present Bill is largely that one could envisage a position where a trust became no longer financially viable. If the Secretary of State closed it down, he would have to pay back the liabilities to the constructing company or the consortium running the hospital. So one could envisage that the bankers would be worried that the Secretary of State would not close
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the trust down and therefore would not become liable for the trust's debts. We can understand why the Bill has come about.
The first Bill went part of the way. But the need for the two Bills in such a short time gives rise to a certain amount of scepticism about the viability of the PFI as it relates to the provision of hospital buildings. The question arises of whether the scheme was properly thought out before it was introduced.
When the private finance initiative was first introduced in 1992, it was publicised as a source of additional finance for the NHS over and above publicly financed projects. However, in the 1995 Budget the previous Chancellor announced a planned reduction in NHS capital spending of 16.9 per cent. in 1996–97, 5.4 per cent. in 1997–98 and 6.9 per cent. in 1998–99. That made it clear that the PFI is no longer additional finance for the NHS; it is now a substitute for Treasury funding.
So far as I know, no one in this country has subscribed in a democratic way to the proposal that the PFI should replace Treasury funding in the NHS. There may be a case to be made that the PFI would be cheaper and more efficient for the NHS, but, in my view, the case has not as yet been proved.
What worries us is that it is clear that the PFI saves the Treasury money on capital projects in the first instance. But it saddles the NHS with revenue expenditure over a period of 25 to 30 years. That is a long time in the life of a hospital and in the health service. In the end, the burden falls on the taxpayer. It may reduce the PSBR but it will certainly increase taxes in the long run. I ask the Government whether they will increase the revenue allocation to the trusts by the amount that they will have to pay, year in year out, as a rent for the building they occupy. There is also the danger that the length of the contract is likely to create rigidity in a service that we all know to be in need of flexibility as further advances are made in the delivery of health care. We therefore look forward with great interest to the publication of the Malcolm Bates report on 13th June.
I turn now to the Bill itself. Clause 1(3)(a) states that,
"in his opinion the purpose or main purpose of the agreement is the provision of facilities in connection with the discharge by the trust of any of its functions".
Subsection (5) says that "facilities" include,

"(a) works, buildings, plant, equipment or other property"; and

(b) services".

The word "services" gives cause for concern as it could include clinical services. I am aware that the Secretary of State made a promise in his address to the Royal College of Nursing annual conference that clinical services would always be the responsibility of the NHS. But the Bill does not make that clear. I do not doubt the word of the Secretary of State, but he will not always be there and once this Bill is on the statute book it is there. It should make perfectly clear what is included in the word "services" provided by an outside consortium. Probably at Committee stage we shall return to the matter in order to clarify that the word "services" does not include clinical services.

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Another concern under the Bill is the question of accountability, when most services, including cleaning and catering, are run by the developer and the clinical services are provided by nurses and doctors. For many years now the NHS has employed outside contractors to provide some of those services but there was never any doubt that ultimate responsibility rested with the trust or the district hospital which were accountable for all the services they provided, whether contracted for or provided by themselves. Where does accountability rest under the PFI scheme? Is the housekeeper accountable to the consortium and the clinical staff accountable to the NHS trust? It does not take a lot of imagination to see that such a system could be open to great friction. We should like an assurance from the Government that the ultimate responsibility and accountability still rests with the hospital trust.
For those reasons we suggest that the Bill should be time limited while further research is undertaken and some experience gained in the working of the new system. The title preferably should be changed to the National Health Service (Private Finance) (Temporary Provisions) Bill.
3.44 p.m.
Lord Marsh: My Lords, the noble Baroness, Lady Cumberlege, expressed surprise that this Bill should come from the Labour Party. I suspect that it will be a bigger surprise to some members of the Labour Party. Some of the more hysterical comments heard recently—in the past 24 hours those on Camelot, for example—do not help in terms of getting confidence when trying to deal with the private sector. All I can hope is that the conversion to entrepreneurial capitalism—that is basically what it is—will spread. I am sure that it will. I look forward to hearing the speech of the noble Lord, Lord Monkswell, supporting it.
The noble Baroness, Lady Robson, unfortunately voiced doubt about the principles of the Bill. I certainly hope that it will not be a temporary Bill. I hope that it will grow wider in its application, because I believe that the principle is a very important one.
The NHS problem is part of one of the biggest and least publicised problems facing this country. There has been massively inadequate investment in public sector infrastructure, both in terms of capital and maintenance, over a century. One of the problems of parliamentary democracy is that the pressures of the "Today" programme and the inexorable approach of the next election are not conducive to systematic long-term investment programmes. All the pressure on government is to deal with matters of the moment, and in a democracy it is foolish to believe that a government can take a long-term view or stick to it if they do. Some of our most famous and prestigious hospitals are a classic example of the effects of that.
I remember when I first became chairman of the special trustees of Guy's Hospital and walked round that hospital. Parts of it were a slum; yet it was one of the great hospitals of the world. I remember visiting my mother in the Brook Hospital in Woolwich with a wife who had grown up in the Middle East and had never
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before been inside a National Health Service hospital. She gibbered at the sight of patients on stretchers with nurses walking beside them holding blood bottles in the air and going down open corridors between the buildings. That was during the period when we not only had a private health service insurance but we had two.
This is a very good Bill indeed. I have heard it described by some people who are worried about the cost as "mortgaging the future". In my view that misses the whole point. There is nothing wrong with borrowing and repaying over a long period. There is an international market in sovereign debt using interesting financial instruments called Brady bonds which has already done more for the third world in terms of direct support than have all the resolutions of the UN put together. Over the years I have bought eight different houses. The first five of them were all financed by 25-year mortgages. Most people in this building would have done the same. It is a perfectly sensible thing to do. I believe that the Bill can make a significant contribution to more efficient and cost-effective investment within the National Health Service.
In support of that claim I should like to advance two main arguments. It is the result of a system (which has very good factors—I am totally in favour of parliamentary democracy for most of the time), not the result of lack of keenness on the part of Ministers, or that one political party wants a lousy national health service and one wants a very good national health service. No matter which party is in power, the government of the day inevitably will face problems with the public sector borrowing requirement every few years. Every time that happens, a Cabinet committee is formed and the Cabinet begins to discuss cutbacks. Prior to privatisation, under both governments—I served in the public sector under both governments—the first target was always the nationalised industry investment programmes. That was not because it was a sensible place to start but because it has the minimum short-term impact on the voters. It is politically much easier to cut investment and maintenance than to undertake almost any other fiscal measure in the hands of the government. In the longer term, the effect is always higher maintenance costs and in due course massively increased replacement costs. That is the problem in the National Health Service: the sheer scale of the investment required in bricks and mortar and the cost of maintaining it afterwards.
The involvement of private sector finance in a joint venture will not end that practice. All Chancellors will continue to look at the public sector to see where they can cut the investment programme because the punters will not notice it as they do other things. It will, however, make it much more difficult for governments to come in and take short-term measures. It was easy when there was a chairman of a nationalised industry—I speak from personal experience of this—to introduce what used to be known in the trade as the "lunch table directive". The Minister invited one to lunch and for the first time there was a decent bottle of wine available. He explained that it was all the chairman's responsibility, but then he would press enormous problems when he came to deal with the next thing you

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needed in the running of the business. It will make cutting investment more difficult and less frequent, and will therefore provide a degree of stability in the programme, which is as important as the actual amount of money involved.
My second argument is that civil servants and public executives are not the best people to run what are essentially large and complex commercial projects. I do not want to be misunderstood on this point. I have the highest regard for the intellectual ability of the vast bulk of civil servants. I was lucky enough to learn a great deal from a small number of extremely eminent and able civil servants. But the public and private sectors have different cultures; they attract different people. There is no regular movement between the public and private sectors either way because they call for different skills and experience.
I spent five years heading up a nationalised industry which consistently lost £0.5 billion per year, as it had done under virtually all my predecessors. I enjoyed the job immensely; slept soundly each night, and in due course received a knighthood for my achievements. When I moved into the private sector I found myself heading up two very different start-up situations—companies whose capital involved other people's money and all of it at risk. Fortunately, both of them eventually made it and became profitable. However, for the first two years I spent a lot of time in the wee small hours wondering whether we were in danger of trading while insolvent and whether we should pull the rug. That is the sort of pressure that concentrates the mind and which is absent from the public sector. That is not a criticism; it is just a big difference.
A year ago I resigned from the chairmanship of Guy's Special Trustees—not to be confused with the trust. I had a group of extremely able colleagues, professionally qualified, effectively managing a portfolio of about £150 million which Guy's had inherited over the years. We were asked if we would provide pump-priming finance for phase three of the rebuilding of Guy's. After much discussion we agreed to provide £25 million for a project with an agreed end price of £60 million.
I shall not go into all the details except to say that some of the professionals who were working for nothing for Guy's Special Trustees were far more frequently right than were the people who were managing the project. But what happened? I do not know what the figure is today; the noble Baroness may be able to tell us. But the last I heard was that it was not £60 million; it was £150 million, and still going north. That is a sad and complex story which, frankly, can only be described as a near total shambles.
I do not believe that the Bill will produce perfect project management in the National Health Service; there is imperfect project management in the private sector as well. But I have no doubt that the principles which underlie the Bill—the direct involvement of private sector management and private sector capital sharing the financial risk—would have made the Guy's phase three saga far less likely and probably would have prevented it because those financing the project would
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have moved in much faster. This Bill is important in principle. I hope that that principle spreads, and I wish it well.
3.55 p.m.
Lord Winston: My Lords, first, I apologise for the second time in two weeks for having to leave early. I shall not be able to hear the Minister's summing-up at the end. Some time ago I agreed to give a lecture in Boston and must catch a plane from the airport tonight. Secondly, I must declare an interest in that I am a practising clinician at a London teaching hospital and have some limited personal knowledge of the PFI in that we are trying, and have been for some two years, to arrange a PFI for the transfer of Queen Charlotte's Hospital to a new building on the Hammersmith Hospital site. In a way that is a small project which is covered financially and will clearly give significant savings to the health service and improve delivery of services. Yet that PFI has so far taken two years to reach the present stage and is not yet agreed. Hopefully it will be.
Clearly one must support the Bill. It is an important initiative of the Government to push the PFI forward in this limited way. However, like a number of your Lordships I have always had strong reservations about the private finance initiative. While I totally respect the knowledge of the noble Baroness, Lady Cumberlege, in relation to genetics and agree with her comments on father and daughter, I remind her that in the debate on 21st May last year when the PFI was raised, she did not address any of the issues that I and a number of other noble Lords raised indicating anxieties about the PFI, which still stand.
Of course, our buildings are often in disarray. Perhaps I may distract your Lordships for a few seconds. I am reminded of the first time I went to the Hammersmith Hospital, which was then making its own radioisotopes for research. One of my colleagues was a senior consultant who was in the business of injecting a short-life isotope—it had a life of seven minutes—into a patient to image the parathyroid glands. That had to be done on the medical ward two floors up.
The isotope was made in the cyclotron building, dropped out of the window into a waiting fishing net below and handed to a cyclist who cycled across a courtyard, handed it to a PhD student who climbed a stepladder over a wall and dropped it into another net. It was then wound up by a fishing rod to the second floor where it was injected into the patient with at least four minutes to spare. I understand that the isotope worked very well and the patient survived, obviously with a little less radioactivity because of the time it took to deliver the drug. Hospital buildings are higgledy-piggledy, and that will always be in the nature of health service buildings.
The fundamental problem with the PFI is that it is a form of hire purchase agreement. Whether or not we like it, it is a way of avoiding the public sector borrowing requirement. Who can borrow cheaper than a government? Clearly, when a private financier is involved there must be some form of profit. The anxiety

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of many noble Lords, which I share, is that here we have an example of where we might be hocking the family silver over a long period of time. It is clear also that it is an expensive process. In Hammersmith we have seen £30 million spent already on legal costs and so forth. It creates considerable delay, often with much needed projects. Thank goodness the Government have decided to press ahead with this limited measure this afternoon.
I agree with the noble Lord, Lord Marsh, that there is nothing wrong with a mortgage. However, one must shop around to make sure that one obtains the cheapest possible terms for the mortgage. That encourages delay once one enters the private sector and that is a problem.
I agree with the noble Baroness, Lady Robson, who made some important points. One of the issues I should like to pick up is the length of contracts. We must recognise that health service needs change increasingly rapidly because of the nature of technology. It is important that contracts are not put in place which, over a period of 20 to 30 years, become obsolete and end up being a millstone around the neck of a hospital, a trust or a health authority.
There is also a clear risk of fragmentation because of the financiers' need for profitability. Although that issue does not need to be directly addressed in the Bill, nonetheless I hope we look at it when we consider the issue of the provision of services—that they are maintained on the basis of need—when we come to the Committee stage of the Bill. With the PFI it is important that there should be careful planning to ensure evenness of distribution of health service resources.
I was amused by the remark of the noble Baroness, Lady Cumberlege, about the heritage. It seems to me that the heritage is not about the past but about the future. It is about planning for Britain's future. If there were ever a case for the PFI it would surely be more appropriate in some ways for the national heritage than for the National Health Service.
There is great concern among many academics about academic medicine. As your Lordships will know, and as has been pointed out repeatedly, the universities are in very cruel straits indeed because of the difficulty of raising money for important capital projects such as laboratories. Those services are hand-in-hand with the health service. They provide 10 per cent. of our medicine in hospitals. It is vital that in the future that aspect is protected within the PFI. I agree with the noble Baroness, Lady Robson, about lines 20 to 25 of the Bill with regard to the provision of services. What is meant by a "clinical service"? Are pathology services clinical? Of course they must be because they look after patients. So are radiology services and operating theatres. However, there is a risk that unless we look at this point very carefully they could be privatised in the wrong kind of way. That has to be taken account of at the Committee stage of the Bill.
It is sensible of the Government to move forward in this limited way. I am grateful to hear that they are to make progress because at the present time it is urgent that we get on with outstanding projects as this issue is causing a great deal of concern among clinicians and all support services throughout the country.
4.2 p.m.
Lord Jenkin of Roding: My Lords, I am left in some doubt as to the degree of support of the noble Lord, Lord Winston, for the Bill. He has declared himself enthusiastic that the Minister and the Government have brought it forward but most of his speech seemed to damn it with less than faint praise. We shall watch with interest the amendments which he and his noble friends move at the Committee stage.
The noble Baroness, Lady Jay, gave an altogether too down-beat account of the progress of the PFI to date. I hope to be able to offer some comment as to why I think it would have been totally unrealistic to imagine that in the course of two or three years a large number of fully fledged schemes would have come on stream. It is not that kind of operation. Like the noble Lord, Lord Winston, I must declare an interest as the chairman of a National Health Service trust. It has undertaken one or two very limited PFI schemes but was frustrated in one rather larger scheme because it was impossible to get both sides to agree the terms.
I can deal with the Bill very briefly. It has a very limited purpose which was outlined to the House by the noble Baroness. If one takes Clauses 1(1) and 1(2) together, one has the whole purpose of the Bill, which is to ensure that the Government can certify an externally financed development agreement. Indeed, an externally financed development agreement becomes one only when it has been certified by the Government. It is rather like that splendid little clerihew quoted by Sir Robert Megarry in his wonderful book Miscellany-at-Law, in which he lampooned modern legislation:
"If anything shall seem
Then the Minister may deem;
A Certificate of Demption
Shall provide complete exemption".
It may be necessary, but the Bill is a wonderful example of that. I would have said the same had it been my noble friend on the Front Bench introducing it.
I wish to make three short points about the PFI and its relevance to the Bill. The noble Lord, Lord Marsh, referred to the cultural difference between the public and private sector. I should like to develop that argument a little further. My second point is that the Government have a need, having regard to almost everything that has been said by the Labour Party about the PFI over the past four years, to set out to build the confidence of the private sector that they now mean what they say. Thirdly, I wish to refer briefly to the problems which my noble friend mentioned arising from the London NHS review.
First, on the clash of cultures, I do not think it is even now appreciated how profound are the differences in the cultures of the National Health Service and of the private sector. That became apparent to me many years ago when I was Secretary of State and led delegations of health industry businessmen to foreign markets in order to try to boost the sales of British products in those markets. I found that many of the industrialists who were selling abroad did almost no business with the National Health Service and that, correspondingly, many of the firms which had got themselves well dug

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in to sell through the various purchasing arms of the National Health Service found themselves quite incapable of doing any business in any other market. One had a complete division. It made a profound impression on me as to just how unique is the NHS in the culture it adopts towards buying. The procedures are totally different, the processes are different and the requirements and standards are different. This meant that some firms which were big in the UK were unable to do any business overseas.
I have seen exactly the same phenomenon in the field of urban regeneration. Over the years a succession of initiatives by governments to try to build partnerships, often with considerable success, have had to overcome these huge cultural differences between the public and the private sector. If one looks at the considerable successes of City Challenge, one had different financial regimes between local authorities and private developers, different decision-making processes within the two different organisations and different timescales within which they operated. One saw the steep learning curves that were necessary. That is the point about PFI here. The noble Baroness, Lady Jay, totally ignored that in her opening remarks apropos the criticisms of the lack of progress with PFI.
People have had this steep learning curve. That has nowhere been better stated than in a paper that was read to the Royal Society of Arts last January by John Owens, a very distinguished chief executive of the Royal Infirmary of Edinburgh NHS Trust. Referring to the clash of cultures—I am happy to adopt the phrase of the noble Lord, Lord Marsh—he said:
"PFI forces the NHS and the private sector to recognise that there is a lack of understanding of one another's accounting procedures. Within the NHS, Trusts have been slow to recognise that it is no longer a bureaucratic process involving Health Authorities, the NHS Executive and Treasury before being given Public Sector funding. The Trust now has to persuade the private sector that their project is a viable long term case. In a number of projects, the private sector has withdrawn, not convinced that the business case assumptions and health authority support are viable in the long term".
If the noble Baroness has not already done so, I recommend that she reads Mr. Owens' paper because I believe that it is an extremely valuable critique and comment on the way that PFI has been working. However, there is a more recent article by a private sector lawyer seconded to the Government's PFI initiative, Mr. David Anderson, who is with Nabarro Nathanson. This article has only just been published. He said,
"I believe that the extensive work carried out to date, which can properly be described as both groundbreaking and pathfinding, has firmly established a position where the issues are not only understood, but are capable of practical solution in the light of direct experience".
Therefore, I believe that the Government have taken over PFI at a very fortunate stage. The learning curve is now largely behind the NHS and the private sector. I shall be bitterly disappointed if projects do not now come forward a good deal faster than they have done in the past. I apologise for the lengthy quotes, but they seem to express admirably an enormously important point about building understanding.
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I can deal with my second point much more briefly. Labour's recognition of the merits of PFI, like so much else in the policy of New Labour, is a very recent and a very abrupt change of stance. Nonetheless, I suppose that it is welcome for all that. My noble friend mentioned one recent criticism. Two years ago the party opposite wrote,
"We will …do our utmost to discourage the signing of such contracts".
That was in a document called Reviewing the NHS which was published two years ago, in June 1995. I welcome the fact that the Labour Party has now been persuaded of the merits of PFI. But I say this to them. It will need to work hard to convince hard-headed businessmen of that. The Labour Party will need to show that it understands the process of transferring risk from the public to the private sector because in the last resort that is what PFI is about. The private sector comes in, accepts the risk of designing, building and operating under a contract and if things go wrong it is the private sector which will carry the can. The NHS itself has found this process quite difficult to grasp. I ask the Government to give a firm commitment that they will be prepared to help and encourage that learning process so that it can go forward.
Finally, perhaps I may say a word about the London review. As of today, we know astonishingly little about what is in the Government's mind on this matter. Trusts and health authorities in London are being led to believe that it is not going to be another Tomlinson; that it will need to be a fairly speedy review; that the review will be a selective process, although it is totally unclear as to what is going to be selected. Many aspects of the NHS in London will not be covered by the review. I understand that the noble Baroness's honourable friend, Mr. Alan Milburn, is going to be in charge and that he is going to be advised by an advisory panel, but who are they to be? We simply do not know.
The relevance of that to this Bill is that the Government face a special challenge in London. It will be difficult both to conduct a review, presumably of decisions which have already been made or which are in the pipeline, and at the same time to keep the private sector PFI parties to the various negotiations going on all over London on board during the review process. I beg the Government to understand that that will be quite a difficult thing to do. If they are committed to a review, I suppose they must have one. But it could result in some very valuable potential PFI projects being abandoned as the private sector looks to less uncertain corners of the country in which to make its contributions.
All that is in addition to the more general obstacles to which I have already referred—the cultural change and so on—and I urge the Government to recognise the need for some solid assurances. Perhaps I may not inappropriately point out that every time Ministers are criticised from behind about a matter such as PFI, that undermines the credibility of what is being said from the Front Bench. No doubt the party opposite is well aware of that.

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Over the years the NHS has survived only at the cost of under-investing both in new facilities and in maintenance. There can be few trusts—certainly mine would not be one of them—which do not face a huge backlog of maintenance. Though new investment in recent years has risen sharply—and this is a point which it is fair to make because it is now running at over 60 per cent. higher in real terms than when I first became Secretary of State for Health 18 years ago—there is still a long way to go before we have a properly housed and equipped National Health Service.
That the PFI is now seen by all parties as the best way forward is solid gain, and in its small way this Bill is a welcome reflection of that fact. But recognising and enthusiastically embracing this new culture will be an essential ingredient if PFI is to yield the level of new investment which is needed. I hope that we shall see in future a little more of that than we have seen today.
4.16 p.m.
Lord Addington: My Lords, I speak on this Bill on the grounds that one of the projects concerned is the removal of the Norfolk and Norwich Hospital from its current site in the middle of Norwich to a greenfield site at Colney. That goes against what was said by the Minister of State in the Minister's department in another place when he referred to a project in Swindon. In referring to the health service and the project in general he used these words:
"It is clearly important that such a major proposal secures the confidence of the local people. As far as possible, open details should be made available to people in the area about the nature of the proposal. It is not the consortium's national health service; it is not even the trust's national health service; and it is not mine. It is the people's national health service, and we should never forget that—[Official Report, Commons, 15/5/97; col. 272.]
The people of Norwich are beginning to think that somebody had forgotten. This point is not aimed generally at the current government, but at all those who have been involved in the process.
Tonight, at 7.30 p.m., at a meeting of Norwich City Council a motion will be tabled which condemns the siting of the new hospital. It will be backed by the controlling Labour group on the council, with the full backing of the Liberal Democrat opposition. There are no Tory members on the council. The motion is:
"To request an urgent review by the new Government of all decisions made with regard to new hospital provision in the Norwich area. This review to be held in public and 'transparent' in all details, including finance. The review to consider environmental impact, sustainability and access issues as well as economic impact".
At one point a petition containing 18,000 names was raised in a few days. That is approximately 10 per cent. of the population of Norwich. That petition was presented to the local health authority. In those circumstances something must have gone very seriously wrong. Going back over 10 years, the conclusion in effect—and it has been mentioned by many people in this debate already—is that it takes a long time to get new capital projects built. Indeed, the noble Lord, Lord Marsh, struck that nail squarely on the head by saying that no one liked shelling out for such projects. Over 10
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years reviews have been carried out, and a split site was favoured, moving from the one city-centre site to the new site just outside Norwich.
After a series of changes, in 1992 it was agreed that everything should be moved without public debate and a public review process. It was agreed that there should be a new, extremely large hospital on a greenfield site outside the city centre. However, the site and the hospital have now "shrunk", and dramatically so. Not only are we to lose two hospitals in Norwich—the West Norwich and the Norfolk & Norwich—but they are to be replaced by a hospital with about 200 fewer beds.
There has not been any public consultation. Whenever changes have been made, it has been on the authority of a public inquiry which said that there should be a split site. The current site of the Norfolk & Norwich is slap in the centre of the city. Indeed, it is just under half a mile from the main bus station in Norwich. Anyone who looks at a map of Norfolk will see that Norwich appears to be at the centre of a spider's web of roads. Norwich has very good public access and very good public transport. It is said that one of the reasons for siting the hospital outside the city is that that will allow far better car parking facilities.
Salt has been rubbed into the wound of public disquiet in the area because it has recently been proposed that a new centre on the existing site could be developed at considerably lower cost—at anything up to £100 million less—and that underground parking could be provided. The Member of Parliament for Norwich, South (Charles Clark), pursued the issue throughout the election campaign and was finally told that the compensation that would be required (given the existing legal commitments with regard to the site) would be so great that it might outweigh even those savings. I have been confirmed in my original opinion that this Bill merely removes the last legal objection to acquiring the finance and the vires.
People are very bitter. I have run through the argument to try to amplify the fact that the people of the area do not feel that they have been consulted. There is tremendous resentment in the area. It has been estimated that about one-third of the population of the county lives within a 10-mile radius of the city centre. It has been estimated that nine out of 10 people now have a hospital within easy reach. However, the proposal is for a greenfield site that will require new roads and new building. That will take economic activity away from the city centre, which at the moment is scarred by unused potential building plots.
Surely the Government should take advantage of this opportunity to state whether they intend to establish a process whereby any major change to a PFI project must be subject to at least some form of public debate. Without that, there will be a series of disgruntled people, feeling that they have been badly treated and who are often ignorant of the decisions that were taken. Regardless of the medical benefits, what has happened in this case has left a very bad taste in the mouths of the people of the city of Norwich. They feel that local opinion and local democracy have been totally ignored.
4.23 p.m.
Viscount Ullswater: My Lords, I understand from the major contractors who are involved in leading PFI health projects that the Bill is to be welcomed. It sets out to achieve the objective of clarifying the power of NHS trusts to enter into contracts for major projects which are externally financed by the banks or other funding institutions which will not be providing services themselves. The power to enter into PFI contracts was missing from the legislation setting up the NHS trusts and has been of concern both to them and to the providers of the finance for some time.
Perhaps I may refer to the contract which has already been brought to your Lordships' attention and which is perhaps one of the biggest. My noble friend Lady Cumberlege mentioned the building of the £194 million Norfolk & Norwich hospital in the county in which I live. That project has not reached financial close and has not been started. The noble Lord, Lord Addington, clearly demonstrated some of the problems that arise when one is unable to go ahead with such capital projects when they are first agreed. When such projects do not proceed, local people often decide that the location is not right and we then encounter all the problems that the noble Lord outlined.
Public sector capital funds are always scarce and have to be rationed across the whole range of government departments—so much so that long-awaited and long-promised new developments, despite the massive hospital building programmes of the 1980s and 1990s to date, are still in the Treasury queue. The noble Lord, Lord Marsh, correctly commented on the length of the queue of public sector projects in the generality and on the size of the problem for the NHS in particular. However, the PFI allows the NHS to bypass or to jump the Treasury queue as long as the project is financially viable and has a private sector partner.
The Government have announced that they intend to conduct a speedy review of all PFI across government, to be conducted by the Paymaster General. I am pleased that they are prepared to put this sensible piece of legislation before Parliament even before the review has been completed. The speed with which this Bill has arrived makes me believe that it was unfinished business from the previous Administration. Indeed, we have had confirmation of that from my noble friend Lady Cumberlege. There is no harm in that. The new Administration have made favourable noises about public/private sector partnerships, and if the review is to identify obstacles in the way of the PFI and ways in which the process might be streamlined, I welcome it.
The Bill will cover major projects which are externally financed. However, I am advised that it will not cover a deal where the private sector contractor is financing the project from its own resources. Many of the smaller PFI projects which have already been let involve the building contractor or service provider funding the project on the strength of its own balance sheet. The Secretary of State would not be able to
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grant a certificate under Clause 1 for such projects because they would not satisfy the requirement under Clause 1(3)(b) that,
"a person proposes to make a loan to, or provide any other form of finance for, another party in connection with the agreement".
If there is no "other party"—just the trust and the service provider which is funding the project from its own resources—the certificate could not be granted. Perhaps the Minister can assist me and tell me whether my interpretation is correct. If it is, is that the approach on which the Government are now set? If the public/private partnership approach is to be used for the full range of projects within the health service, I believe that it must be capable of applying to small as well as to larger projects.
Having said that, I welcome the Bill. I hope that it will be given a warmer welcome than the somewhat dour comments that have been made about it today and I hope soon to see it on the statute book.
4.28 p.m.
Lord Dean of Beswick: My Lords, I rise to support the Bill. Other noble Lords have already explained it and what it entails. I thought the Opposition spokesman, as we must now call the noble Baroness, Lady Cumberlege, a little uncharitable in going wide of the Bill and attacking people who are not in the Chamber to defend themselves. She said that one of the main reasons why the Bill had had to be brought forward was the behaviour of some Labour local authorities. That would be the case—wouldn't it?—because there are not many Conservative local authorities left to misbehave although some have done so in the past. I believe that the noble Baroness actually used the word "confiscation"—she certainly implied it—with regard to what local authorities might do with their money.
To put the record straight, the biggest act of financial brigandage this century was perpetrated by the Conservative Government under the leadership of the noble Baroness, Lady Thatcher, and her Chancellor of the Exchequer, the noble Lord, Lord Lawson. Quite cheekily, they purloined £3 to £4 billion of water assets from local authorities without any compensation. I did not hear any shouts from noble Lords opposite in defence of local taxpayers to whom that money belonged. I believe it is on record that one Member of this House on the other side who said that the money ought to go back to the local authorities was the former Secretary of State for the Environment whose memorial service is sadly being held tomorrow. I refer to Lord Rippon who at the time was Geoffrey Rippon. In the other place the action of the Thatcher Government was deplored by the former Prime Minister, Mr. Edward Heath. He also said that the money should be returned. It was only £3 to £4 billion. I believe that the noble Baroness should be careful in speaking about financial probity. That was a disgraceful act on the part of any democratic government.
I also worry about cost. It is well known that a delayed start in building costs an enormous amount of money. I believe that the noble Baroness, Lady Cumberlege, quoted the figure of £2.1 billion.

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The figure that I have before me is £2.7 billion. That covers 146 schemes in the pipeline, including 23 that are worth over £25 million each. I believe that the Opposition spokesman teased my noble friend Lady Jay about the fact that action should have been taken before now. Who stopped it? The noble Baroness, Lady Robson, nailed that when she asked why these clauses were not in the Bill of last year. That was a Conservative Government Bill. Why were they not put into the Bill? It was apparent then what was emerging. The cost of delay in starting £2.1 or £2.7 billion of building contracts must be enormous.
An enormous sum of money has been squandered because this Bill has been delayed for 12 months. However, I welcome it because of what it will do for the building industry as well as the health service. Members from all sides of the House have asked why more money is not spent on the infrastructure and why capital receipts from council housing have not been released. The new Government will do it. I hope that no Member on the Benches opposite will ask why it was not done when the previous Government were in power. The implication is that when noble Lords on these Benches were in opposition they held up schemes. That is absolute nonsense.
I differ from those who say that any new hospital that is built, including services, should be totally privatised. I put this view as a layman. I do not believe that it is my party's view. I do not want to see a situation where treatment following clinical diagnosis is withheld on the basis of a view put forward by a financial adviser to a trust who sits in an office. One often came across this in local government. I believe that in Manchester I gained some distinction for running a good ship. If one had let the city treasurer run Manchester there would not have been much advancement because, like most economists and accountants, he always found a case for not spending extra money. If one wants to progress one must spend a lot of money. There is need for enormous sums of money—I do not know where they will come from—to put right the infrastructure of the health service. I believe that we are starting on the right track.
When one talks of wasted money or money that has gone west one thinks of what has been lost in computer scandals, what has been lost in the West Midlands as a result of something similar and the final report issued only a few weeks ago on overspending in the former Yorkshire Regional Health Authority which went quite beyond the needs of the National Health Service. Quite a chunk of that money was paid over by officers of the regional health authority to take account of the negative equity in the sales of their houses when they moved. They were taking money from the health service in Yorkshire to pay for more expensive houses elsewhere. That was being done for consultants. The sum involved was three quarters of a million pounds. I raised the matter in this Chamber some time ago. I asked why all this money had gone west in the health service. As far as I am aware, no appointed members responsible for that policy—I am not referring to officers—ever
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appeared in court. I had more than a shred of suspicion that successive Secretaries of State for Health might well have been indemnifying individuals in the health service against the due process of law. Certainly, there were some very strange dealings in the incorrect spending of money in the National Health Service. It may well be that that will be looked into in a different context. I put forward a one-clause Bill that would have allowed for people in quangos who were found guilty of spending money to which they were not entitled to be surcharged like local authority members. However, on the appointment of the noble and learned Lord, Lord Nolan, naturally I withheld that Bill. However, I hope that matters of that kind can be looked into. I am convinced that the three cases that I have mentioned in Wessex, the West Midlands and Yorkshire are the tip of the iceberg. That is three instances out of 14. What happened in the other 11? They were never tested and no one ever inquired into them.
I understand that £2.1 billion of work will be put in hand. I hope that that occurs as quickly as possible without the building industry overheating for the reasons that I have given. The buildings are needed for patients and the buildings will provide work. I hope that because of the sums of money involved strict financial control over these contracts will be maintained. One knows that in very high value contracts the figures to be paid on completion are out of all proportion to those envisaged when the contracts are let. I hope that that facet will be looked at carefully. Having said that, like other noble Lords I welcome the Bill and look forward to the Committee stage when Members of your Lordships' House may agree variations, but the sooner the measure goes through the better.
4.38 p.m.
The Earl of Home: My Lords, I first declare an interest. I work in Deutsche Morgan Grenfell, a bank that advises various consortia involved in projects that may go ahead as a result of this proposed legislation. It was one of the banks that expressed the gravest reservations about the vires of the National Health Service trusts to enter into these contracts.
Like my noble friend Lady Cumberlege I am grateful to the noble Baroness, Lady Jay of Paddington, for introducing this Bill so early in the Session. It will enable several highly desirable projects to proceed through the PFI. Likewise, I am pleased that there is an all-party approach to the principles of the Bill which I hope will lead to its speedy enactment.
I was interested to hear the Minister say that she had supported PFI for some time. When the noble Lord, Lord Eatwell, was Front Bench spokesman for the party opposite he referred to the PFI as "probably fictitious investment". I trust that, so far as the Government are concerned, that somewhat flippant attitude to what is a serious topic is now firmly buried and consigned to the pages of Hansard and of history. Without being over dramatic, the projects which will benefit from the enactment of the Bill will

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considerably increase the efficiency of healthcare in this country and thus reduce suffering sooner than would have been the case had the project been financed purely through public funds.
Although PFI is thought to be a complicated subject, its basic principles are perfectly straightforward. They are all about who should take what risk and, having established that, who is empowered to take that risk. It is perfectly fair for investors, banks and financial institutions to seek clarification on who is empowered to sign what. Indeed, it should be helpful for the Government to know who is responsible for what element of each project. In the same way as government must safeguard public funds, we in the private sector and in the bank must safeguard our depositors' funds and not put them and shareholders' money at undue risk. I am very pleased that the principles of the Bill provide a needed clarification to enable the trusts to sign these contracts.
The Bill is a good start. It will enable a significant sum of money to be raised. But I believe that a lot more could be done. It is not appropriate today to debate the wider aspects of PFI when the vires of local authorities to enter into transactions will have to be addressed. That must be the topic of further legislation, for their powers have already been challenged in the courts. However, I hope that that problem will be addressed by Mr. Malcolm Bates in his study and we all look forward to its results.
I further hope that it will recognise that many factors are common to all these projects. In the past, there has been a tendency to reinvent the wheel with each new set of advisers, investors, lawyers, bankers and government officials. As has been pointed out, that has been an expensive exercise, but each new project creates new case history. As my noble friend Lord Jenkin of Roding pointed out, it has enabled practitioners to move further up the learning curve. Nevertheless, large amounts of money have been set aside and there is impatience among sponsors and investors, as well as within government, to get on with it.
It should be possible to work out which problems are common to which projects, be they roads, prisons or hospitals—and I have been involved in all of them—and then to develop an umbrella template which would cover most of the answers to those problems which are currently addressed on an individual basis. Under that umbrella template, a further template could then be added to cover hospital schemes, for there are many similar characteristics to any new build hospitals. I am well aware that good work has already been done on that by the Private Finance Unit in the NHS. It has identified possible standard terms for certain commercial and financial agreements.
However, under my proposal, a second template could then be developed to include parts of hospital schemes. There is, for a financier, almost as much work in bringing to fruition a £1 million scheme as in undertaking one worth £100 million. It is simply
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not economic for many institutions to become involved in the smaller schemes. But many of these smaller schemes—for instance, specialised eye units and chemotherapy units—in the £1 million to £5 million range are highly desirably and could possibly be ring fenced as regards financing. That will, however, happen only if they can be made to be not too time consuming and therefore the maximum conceivable number of common elements must be identified and standardised.
There is another way. One could find a sufficient number of common factors for the smaller schemes, which could then be lumped together to make a large package in a manner similar to the general purpose lines of credit, which are made available under the Export Credit Guarantee Department. They could still adhere to the European rules on competitive procurement. Likewise, a more detailed template to cover the smaller schemes could be formulated. Healthcare is not just about building shiny new large hospitals. Small facilities are particularly important, especially in rural areas. While each individual small scheme may not seem particularly large in terms of money, the totality adds up to a great deal. In order to allay any fears that the British Medical Association may have on this topic, I emphasise that I am not here talking about the privatisation of clinical services, nor indeed the extension of PFI into clinical services. I am here simply talking about the capital cost of bricks and mortar related to the smaller schemes.
While a general review of PFI is desirable, a short time has been given to Mr. Bates to conclude it. It cannot cover the common ingredients of the schemes to which I refer. If PFI is to be used to good effect for healthcare, more detailed discussion is needed between government and the practitioners if we are to turn theory into good practice. I know that the banking and the legal industries are keen to make PFI work and, as practitioners, we are more than willing to sit with those from the Treasury and whomever the noble Baroness, Lady Jay, wishes to nominate from the Department of Health to work out the details of the templates to which I have referred. I believe that it would be time well spent now and that it would save a lot more time and frustration in the future.
4.46 p.m.
Baroness Seccombe: My Lords, I wish to begin by declaring, an interest, though not a financial one. I am deputy chairman of Nuffield Hospitals. We have 34 acute hospitals countrywide caring for people in the private sector. Recently we completed agreement with the Royal Surrey Hospital Trust for the construction of a new Nuffield Hospital in Guildford. The contract contains initiatives for a new and exciting co-operation between the trust and Nuffield Hospitals.
Looking back on my childhood, I remember hospitals as dark, miserable and rather frightening buildings. Of course, once inside, the devotion, dedication and loving care shone through, even though I must admit that there was a stricter regime in those days. Tidiness of bed-making seemed to be high on the list of priorities. Most of the buildings were relics

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of the Victorian age. Even though upgrading has taken place, one can never get away from the fact that they remain harsh, grim and dark.
Those were the hospitals which the NHS inherited. During the past 50 years, enormous sums have been spent on rebuilding and refurbishing. Indeed, the past 10 years have seen the completion of more than 750 schemes, each costing more than £1 million. But there has to be a balance as regards how funds are spent. Money put into buildings cannot be used for other worthy causes and priorities have to be set out. However, I believe that for patients it must be so much more agreeable to enter a hospital which is light and welcoming. It must also be of great benefit to all those who work in hospitals to have better amenities. I am sure that, for example, they will welcome not having draughty corridors or having to take patients into the open air on the way to and from surgery.
It is even more important that hospitals become centres of excellence, with the latest hi-tech equipment necessary for today's treatments. We all know of towns where the debate on the longed-for new hospital has ranged from excited expectation to mere despair, as the project queued for Treasury agreement. The private finance initiative was begun by the previous government to alleviate the problem. It applies only to buildings and non-core services, with the NHS retaining the freehold of the building. Of course, it provides an opportunity for the private sector to apply flair and expertise in the design and construction of the buildings required by a trust for its particular needs. Many schemes are in the pipeline—71 have been approved, bringing in private capital of more than £600 million, including last year an injection of capital for major schemes at Leeds, Amersham and, indeed, the hospital in Norwich about which we have heard this afternoon.
However, the whole initiative has not progressed as quickly as was envisaged. It is a new process which brings together private capital and NHS trusts. But doubts were raised as to the underlying powers of the trusts to enter into those financial arrangements. I believe that no one expected such doubts to emerge and I am sure that they were not intended. Therefore, it was natural that action should be taken and the previous Government promised legislation to ease the situation. Therefore, I am delighted to welcome this Bill and also, of course, the Government's conversion to the principle of PFI.
The Bill recognises the contribution that can be made by the private sector to the development of facilities for the NHS. I was interested to note from the briefing that I received from the BMA that it has withdrawn its main reservation, as it accepts,
"that the PFI may be important in attracting additional financial resources into the Health Service".
I hope that this important, short Bill will have a speedy passage on to the statute book. It will enable and encourage the conclusion of many projects. That can only be of benefit to local communities and, indeed, the economy of the country as a whole. I look forward to hearing from my noble friend Lady Anelay of St. Johns as she takes up her new place on the
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Front Bench. I congratulate the noble Baroness, Lady Jay of Paddington, as she embarks on her first Bill as a Minister. I wish her and the Bill all success as the Bill proceeds through this House.
4.52 p.m.
Lord Rea: My Lords, I thank my noble friend for explaining so clearly the purpose of this short Bill. I hope that she is right to predict that the log-jam or gridlock as regards some PFI projects will now break up and that some of them will start to get going.
In some parts of the country, there will be great relief if that occurs. However, some projects will not receive the whole-hearted support which perhaps the Minister would wish from the populations concerned. In that regard, I refer to the remarks made by the noble Lord, Lord Addington, about Norwich and I am thinking also of the next phase of development at Barnet General Hospital. That will allow the further dismantling of Edgware General Hospital, which is a hospital well situated in the midst of a population which contains many under-privileged people. If the development goes ahead, those people will have to travel much further for their acute and emergency services. Similarly in Norwich, as the noble Lord, Lord Addington, said, by moving out of the city the hospital will be more difficult to reach for the 40 per cent. of the citizens of Norwich who have no car. The new car park will be of little use to those people.
However, it seems that both projects are so far along the road of planning that it will be very difficult to reverse them now. Nevertheless, I feel that the anxieties of the populations concerned, who will be deprived of their local hospitals, must be addressed. I know that Norwich City Council and the citizens of Edgware would certainly be grateful for this.
As most noble Lords have said, this debate allows us to consider whether the whole PFI initiative is necessary or wise. The Government are in favour, as am I, of good forms of public/private partnership in the financing of a variety of enterprises, not only in the NHS but in many other fields—universities, roads and rail schemes, although that is not so much the case now that the railways are privatised—but there is still some call for public finance in that area.
The main reason for the need for those public/private partnerships is to avoid increasing the public sector borrowing requirement. But as several noble Lords said in the debate which took place about a year ago on the residual liabilities private finance initiative legislation, it may not always be the most appropriate method of private finance for the NHS. That is not only because the support services provided by the consortium or firm concerned will then be out of National Health Service control but there is also that grey area which the noble Baroness, Lady Cumberlege, mentioned where those support services impinge on clinical services so that one is not quite sure where the divide comes.
There is also a worry because it is a costly way to obtain capital for building solid assets. I realise that such talk is probably anathema to the Treasury, which

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lumps into the public sector borrowing requirement both capital and revenue or recurrent expenditure. But I suggest that it may be time now for a rethink to consider that and to consider whether we should not require public sector borrowing to have separate capital and revenue elements. I know that that has often been discussed before. It would allow greater leeway in the field of capital expenditure. If a water-tight business project could be drawn up for capital expenditure, that would seem to be a perfectly sensible reason to increase capital expenditure under the PSBR.
It has been said that the PFI is mortgaging our future. The noble Lord, Lord Marsh, and other noble Lords have justified that and have said that that is not a bad thing. Like many of us, the noble Lord, Lord Marsh, has bought several houses on a mortgage. In this House there may be some who are lucky enough to have a tied cottage or a stately home. I wish that I was one of those because I certainly have bought more than one house on a mortgage. But it is a perfectly acceptable way to raise money, provided that the asset will be realisable at the end.
It has been said by a number of people, and in particular by my noble friend Lord Winston, that in the provision of health services things change very rapidly. It may be that a hospital which is built now will be redundant in 10 years' time. However, I suggest that architects may wish to think very seriously about that. They have thought a lot about making hospitals flexible according to their different kinds of clinical use. I suggest that they may have to think about building hospitals in such a way that they could be converted easily into something totally different—for residential or commercial use or as community centres and so on. But it seems to me that, regarding solid bricks and mortar investments, we could borrow money more cheaply on the international market as a government than can be raised through the private sector.
As for the costs of servicing the hospital and the facilities, they will still have to be met every year whether the enterprise is publicly or privately financed. If the project is privately run, then a profit must be made out of taxpayers' money. I just wonder whether that is what the Government really want to see. In many cases, where services have been contracted out by existing hospital trusts, the result has not always been a happy one. The use of a "flexible", often part-time, low-paid workforce has often led to a lowering of standards. I suggest that when a minimum wage is introduced the charges for such services will probably rise, so that the competitive advantage of commercially contracted out support services may well become less.
I agree that the Bill is necessary for the current projects that are waiting impatiently for the starting gun. However, I hope that the operation of the PFI in these projects will be carefully evaluated and that in future the PFI will only be used where a clear
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advantage to taxpayers can be demonstrated over the whole period of the contract, and not simply because the immediate cost appears to be less.
5 p.m.
Baroness Eccles of Moulton: My Lords, I should like to start by adding my congratulations to those already offered to the noble Baroness, Lady Jay. Our paths have crossed, shall I say, in the health service on a number of occasions and I have the greatest admiration for her knowledge and ability. I should first add my name to the list of those speakers who have also declared an interest, in that I am chairman of a west London health authority. A number of PFI schemes are under way or already completed in that part of the city.
It might be helpful if I say a few words about some of the background to capital investment in the health service. Within the public sector, the NHS has historically had a narrow and restricted approach to capital investment. Local government and the university sector have had greater freedoms to use private sector money and have had the associated powers to borrow. The approach of the health service has been more cautious. This can be extended to its overall financial management where over the years it has had a good record of living within its allocated funding without accumulating debt.
However, as a result of that traditional, rather unimaginative approach to capital investment, neither the costs of capital nor the potential to create funds for new buildings through the sale of surplus land holdings were sufficiently taken into account. A notable exception to this approach has been in general practice. Traditionally, GPs, as independent contractors, have had a well-established pattern of using private sector funds for capital investment in GP premises development. Further, over the past 20 years or so, the closure of the large, long-stay institutions for elderly people and people with learning disabilities, as well as for psychiatric patients. has depended heavily on non-NHS funding to provide capital for high quality, small residential units, offering standards of privacy and a quality of life which are often far better than those previously offered in the NHS. Moreover, for frail elderly people the enormous growth in the independent nursing home sector is another example of the NHS utilising third-party capital funds. There are also numerous partnerships with housing associations and other non-profit-making groups where their ability to access capital has enabled them to work in partnership with the health service, thus providing truly excellent facilities for some of the most vulnerable groups in our society.
We are all aware that the purpose of the PFI when applied to the health service is to inject additional capital money into the NHS to tackle the considerable backlog of out-of-date unsuitable buildings and equipment. However, experience gained while working up the schemes—in other words, the learning curve, which has already been referred to by my noble friend Lord Jenkin—has inevitably revealed some problems

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which it would have been difficult to anticipate but which nevertheless need to be taken into account if the initiative is to be effective and enduring.
One of the obstacles that has emerged has been dealt with by this Bill; another is the matter of risk, which was mentioned by my noble friend Lord Home in the context of banking. In order for the capital sums involved to be excluded from the public sector borrowing requirement calculations, the private sector was required to assume a substantial proportion of the risk involved. If the private sector funders were to take such large risks they would have had to charge premiums so high that any potential benefit would have been negated.
The residual liabilities Act, to which reference has already been made, was passed last summer and goes some way to reduce the commercial risk as it allows the Secretary of State to deal with insolvent trusts. However, if reasonable rates of return on the capital employed are to be achieved, the sharing of risk between the health service and the consortium providing the project must be sensibly applied.
Another problem, but one which, if properly organised, could also be a virtue, is the management of facilities. The issue has already been extensively dealt with by the noble Baroness, Lady Robson, but I have a slightly different slant to put on the subject.
The large PFI schemes tend to be bid for by consortia. These can be made up of a number of companies supplying different services. Part of the deal is that members of the consortium take over the provision of some or most of the non-clinical support services such as catering, domestic services, estate management, car parking, and many others, on a long-term basis. It is important to note that this provides part of the return on the investment and is part of the process of transferring risk.
The virtue can be in services more effectively and efficiently provided. However, the problem can be that the management of the trust concerned has lost direct control of those services and has closely and continually to monitor their quality. It means that there is a different management role, with managers becoming performance approvers rather than service managers—a skill that needs to be learnt.
When the PFI was first introduced into the NHS—and this is another aspect of the learning curve—there were doubts about whether people at local level would have the maturity to balance the risks and benefits of large capital projects in both financial and non-financial terms, and so a complicated, highly centralised and lengthy process had to be embarked upon. That has contributed to the length of time it is taking to sign off the contracts for the big schemes. It would be a help if some of the preliminary procedures could be streamlined. That would save both time and some of the excessive costs which fall both on the lead parties in the consortia and the trusts. That point has already been made, but I should like to emphasise that a great deal of learning has had to be done as the PFI has taken a grip in the health service.
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The health service cannot operate efficiently without adequate sources of capital funding. One source is recycling—for example, through the sale of land no longer needed by the health service—but this will never provide enough and sources of new capital will always be needed. The PFI is becoming established as one of those sources and through the benefit of experience it must be made to work properly.
The very short Bill before us—indeed, I do not believe that I have ever seen a shorter one—will remove an obstacle which has emerged as work on large PFI schemes has continued. I hope that the Bill will progress through all its stages as speedily as possible and be on the statute book very soon.
5.8 p.m.
Lord Monkswell: My Lords, I rise to speak in the gap but I do so in response to the noble Lord, Lord Marsh, who referred to me as speaking later in the debate and as obviously being in support of the Government. Therefore, I felt that if I did not speak it would be seen as an indication that I do not support the Government. Perhaps I may confirm to the House that I do support the Government. I congratulate my noble friend the Minister on the very effective way that she explained the purpose of the legislation which is aimed at clearing up a mess left by the previous Government. In saying that I must point out that the reason we are so desperately in need of infrastructure investment in the National Health Service is because of the paucity of that investment during the past 18 years of the previous Administration.
Lord Jenkin of Roding: My Lords, I took over as Secretary of State in 1979 following years when investment in the National Health Service had fallen by over 30 per cent. Since then it has increased in real terms by 60 per cent.
Lord Monkswell: My Lords, my time is short. We have had 18 years of Conservative government. If they had invested prudently and used some of the labour that was available among the 1 million people who were unemployed over and above the figure who were unemployed at the time of the previous Labour Government, the National Health Service infrastructure might not be in such a poor state. However, I have been diverted from the remarks I was hoping to make.
I am glad that my noble friend Lady Jay is now our deputy leader in the Lords. It is worth pointing out that the new Labour Government have committed themselves to abolish the internal market in the National Health Service. In doing that the risks associated with new hospital building programmes are much reduced. One of the unfortunate effects of the internal market that the previous Government developed was that it put at risk the activity of hospitals and health authorities. If GPs and other referring units decided to use the internal market to make savings and diverted their patients to other hospitals there was a risk that a hospital could go

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bankrupt. Getting rid of the internal market removes that risk. I hope that as a result the costs of the PFI capital schemes will decrease. We need to recognise that this is very much in the way of a bridging loan operation. It will take some years to turn the ship of state round to arrive at a situation where public activities are carried out for the benefit of every citizen of this country rather than for the benefit of a few. It is within that context that I am glad to confirm that I support the Government and I support the Bill.
5.12 p.m.
Lord Ezra: My Lords, like a number of other noble Lords who have spoken I declare an interest as I am chairman of a company which supplies energy management services. We are providing such services under PFI arrangements to a number of hospital trusts on schemes which are much smaller than those we are talking about. I am glad to say that those arrangements are working well to mutual advantage.
The purpose of the Bill before us is limited. That was made clear by the noble Baroness, Lady Jay, in introducing the debate, and by the comments of other noble Lords who have spoken. It was inevitable that in the course of our discussion wider comments would he made on the PFI arrangements, particularly with regard to the NHS trust hospitals.
I am glad that the Government have moved fast in setting up the inquiry led by Mr. Malcolm Bates which will report on 13th June. Therefore we shall have time to take note of some of the recommendations he makes before this Bill has gone through all its stages. I hope, however, that we shall have a full and early opportunity—once that report has appeared and the Government have commented on it—to debate the wider issues, many of which have been touched on today.
I wish to comment on some of those wider issues. Many of the issues touched on were raised in the excellent report of the Treasury Committee of another place in the middle of last year. That was a basic report which no doubt the Government—as did the previous Government—will take serious note of. I wish to mention a number of the issues which other noble Lords have referred to and to highlight them for our future debate and discussion.
First, there is the question of whether PFI schemes are a substitute for or additional to public expenditure. There is no doubt that when they were initially introduced by the previous Government—as my noble friend Lady Robson remarked—it was made clear that they were intended to be additional to public expenditure. However, it has now emerged that there is a major element of substitution—as the last Red Book issued by the previous Government has shown—and a progressive planned diminution of public sector investment in the health service. Therefore we must recognise—presumably the noble Baroness will confirm this, unless there has been any change of
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policy on the part of the present Government—that this is the policy. That makes the PFI all the more important.
Another issue that arose, and was referred to by the noble Baroness in her introductory speech, was the question of prioritisation. There is a fear—this was mentioned in the Treasury report—that the way in which these schemes are being negotiated in a rather ad hoc way could lead to projects which are not necessarily the most desirable projects at a particular time. That is an important issue which needs to be looked at. It raises the whole question of a strategic approach to the provision of additional health services, which in turn raises the question of whether this should be done on a national or a regional basis.
My noble friend Lord Addington referred to the real problems which have arisen as a result of the long delay and the many changes introduced in the Norfolk hospital project, which is one of the projects that is meant to be going ahead as a result of this Bill. That touches on the question of how these projects are planned, what sort of strategic review is undertaken before they are launched and what sort of public consultation is engaged in. There is much more to be done in that area.
The noble Earl, Lord Home, made some important remarks from the point of view of the financial sector. He pointed out that the costs of financing smaller schemes are almost as much as the costs of financing larger ones. I agree with him. As regards the projects my company is involved in, we have had to find the money ourselves. It was too difficult, too costly and too time consuming to go to the marketplace. The noble Earl made a valid point which I hope will be taken up; namely, that a number of the smaller schemes could be grouped together and that a consortium of financial institutions could be persuaded to provide the money for these grouped schemes. However, in order that the schemes can be grouped together there has to be a strategic appraisal. They have to be identified and there needs to be much more co-ordination than presently exists.
There is also the question of the procedural delays under the present arrangements. These are considerable. I have talked to friends in the financial sector. They are of the opinion that these are possibly initial delays and that as we get into the swing of things and as things are sorted out projects may go through faster. Nonetheless—I refer again to the remarks of the noble Earl—the concept of templates to abbreviate the time taken in the negotiations would be particularly helpful. Time costs money in these negotiations. Here I wish to dwell upon a point raised by the noble Baroness, Lady Jay, when she mentioned the vast amount of money that has been spent purely on consultancy fees. I in no way run down the consultants. They have probably provided all that they were asked for. However, I do not believe that the way in which the schemes are being negotiated now by the trust hospitals is the most effective. I consider it most unlikely that the normal financial staff in NHS hospitals would be capable of undertaking the kind of

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negotiations about which we speak. Inevitably they would have to undertake it through consultancies and financial advisers.
If we had some form of strategic approach, and if we had on a regional basis a common pool of personnel skilled in these negotiations, then the problem could be reduced in its cost and made more effective in its practice.
Associated with procedural delays are the large tendering costs. I know of firms which have decided that so long as those costs are incurred with no certainty of business at the end, they would not wish to engage in any more of those processes. We need to find ways to reduce the cost and delay.
My noble friend Lady Robson, and the noble Lords, Lord Winston and Lord Rea, made the important point regarding the speed with which medical health developments are moving on the one hand, and the fact that a number of major projects have to be entered into by their very nature for a period of 15, 20 or 25 years. As a result of changes not only in medical technology and skills but also shifts in population and demand, what happens if part way through the costly enterprise launched into in good faith turns out to be no longer as relevant as it had been? That again comes back to greater flexibility and a more strategic approach, perhaps lumping together larger schemes, and not only smaller ones, to mitigate the problem.
Finally, assessment of benefits as between public and private funding took up a lot of the time of the Treasury Committee. I remember a time when the Treasury was adamant that there could be no replacement for public funding because it was so low cost. The fashion has now changed. It has demonstrated, certainly to its satisfaction, that the reverse is true and that although public funds cost less, nonetheless the efficiencies of the private sector more than compensate for that cost. I find it difficult to believe that the Treasury was either absolutely right the first time round and/or the second. The whole issue requires much more consideration, as the Treasury Committee recommended.
In summary, I was much struck by one of the remarks made by the noble Baroness, Lady Jay. She said that the Government were intent on exploring various ways in which the public and private sector could come together. Whether the solution is simply to adjust the existing PFI, or to think of some alternative which could operate in parallel, remains to be seen. I strongly recommend that consideration be given to some regionalisation of the planning of the investments. That is in line with the proposals put forward by the King's Fund with which a number of noble Lords may be familiar. Such an approach can produce different ways in which public and private finance can be brought together. It would make for greater flexibility. It should enable speedier processes and reduce costs in negotiation. I very much hope that as a result of our consideration of this short Bill, which certainly deserves our support, the Government
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will take note of these wider considerations and that when we have the longer debate we can air those issues at greater length.
5.25 p.m.
Baroness Anelay of St. Johns: My Lords, this has been an interesting and somewhat lively debate. I note that the noble Lord, Lord Winston, is no longer in his place. When he managed in one story to combine an isotope, fishing rods, a bicycle and nets, I wondered whether he was discussing PFI or introducing a new game of consequences in your Lordships' House.
Earlier, my noble friend Lady Cumberlege welcomed the objectives of the Bill and gave it her wholehearted support. Other speakers from these Benches have echoed that sentiment. The Bill comes from a "must do" pile of our recent Conservative Government. Like my noble friends, I can also welcome the objectives of the Bill. So is this afternoon one of unrestrained joy for me? Not quite, my Lords. I cannot help wondering whether this Bill is the first but not the last example of the Labour Government implementing our policies without really believing in them. I suspect it is.
The problem is that if you do not believe in the principles upon which a policy is based you cannot be trusted to sustain those policies. That always matters, but especially so in this case. Those who enter into PFI agreements need to be confident of long-term government support for the principle underlying PFI. Otherwise they simply will not become involved. And the ability of the National Health Service to continue to develop healthcare provision will be damaged.
So far, under the encouraging but watchful eye of a Conservative Government, PFI has been a success story overall for the NHS. Indeed, despite some of the stories cited on the Benches opposite, I shall quote local examples of how it has been a success. As my noble friend Lord Ullswater made clear, before PFI was introduced many deserving NHS projects had to queue up at the Treasury for scarce public sector capital funds. Despite the massive hospital building programme undertaken by Conservative Governments since 1979, many towns had to wait years for new developments. PFI has started to change that.
My noble friends Lady Seccombe and Lord Jenkin of Roding referred to the rather steep learning curve faced by the National Health Service as it grappled with the opportunities offered by PFI. That process is mainly behind it now, so it can begin to develop in strength on PFI projects. And there are indeed success stories to be told. In my area, St. Peter's Hospital, Chertsey, owned housing which had been condemned. I use the word "housing" loosely. It was 50 year-old hutted accommodation. The hospital made an arrangement with a housing association whereby the properties were renovated and 180 new units created which are held on a 125-year lease. Nursing staff and doctors now have excellent new accommodation, and St. Peter's has obtained a £5 million property build at no cost to the NHS. We may talk about large or small sums. That may sound a small sum to a financier but it was an important advantage for my local NHS.

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We can see that PFI should certainly not in itself threaten the public service nature of the National Health Service because it should apply only to buildings in which National Health Service professionals work and to non-core clinical services. The NHS retains the freehold of the buildings but the private sector applies its expertise in the design, construction, maintenance and provision of building support services in order to deliver better quality and better value for money—the kind of provision so well described by my noble friend Lord Home.
However, despite all the advantages which PFI contracts can bring, the Labour Party in opposition failed to recognise them. Indeed, it is on record as rejecting on more than one occasion PFI funding on ideological grounds. At the Labour Party conference on 1st October 1996, Chris Smith said:
"Labour is totally opposed to the use of the Private Finance Initiative".
And in 1995 Labour's final pre-election NHS policy statement, Renewing the NHS, stated on page 26:
"We will …do our utmost to discourage the signing of such [private finance] contracts".
Yet in May the Labour Government announced a speedy review of the PFI across government in order to recommend how the whole process could be streamlined. Today they introduce this Bill.
Labour really has to make up its mind once and for all about PFI contracts. If the Government do not support the PFI wholeheartedly in the future they are committing themselves to making up the £300 million capital shortfall from extra taxation. Will the Minister tell us where the Government stand now on PFI? Can she guarantee that they will take the same view in two years' time, given their change of mind over the past two years? And do the Government now accept that PFI does not lead inexorably to the privatisation of the NHS? Patients and professionals deserve to know that there will be a degree of stability in the Government's policy on this issue—a stability that Labour has failed to show in recent years.
As the Minister pointed out earlier, the Bill is intended to clarify the powers of a National Health Service trust to enter into private finance initiative contracts, setting out that PFI contracts will be certified by the Department of Health in writing, and identifying the criteria a contract should meet.
Naturally I appreciate the value of Clause 1(3), which prescribes the circumstances in which the Secretary of State may give a certificate. But the Minister will have to forgive me for introducing another note of cynicism. I remember all too well the Labour Government's love of bureaucracy in the 1960s and 1970s. Too often it acted as a dead hand on innovative development. It was used as a tool to give national direction to levelling down standards instead of providing a quality guideline which still nourished and encouraged the spread of good practice. Will the Minister reassure me today that this Labour Government will act any differently when tackling the question of whether or not to give a certificate under the Bill?
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While in government we always took seriously the views expressed by the BMA. I am sure the Minister will do the same. When the Secretary of State grants a certificate, will he take account of the resolution passed by the BMA at its annual meeting last year that proposals for a PFI scheme should not extend into the privatisation of clinical services? I note the statement made by the Secretary of State to the Royal College of Nursing congress on 19th May. But can the Minister assure us that this will be the Secretary of State's position on the subject in the foreseeable future, or at least beyond the results of the PFI review?
In a brief circulated to noble Lords before the debate, the BMA voiced its concern that the willingness of the private sector to become involved in a new building project could increasingly influence whether or not that project goes ahead. Our Conservative Government were keenly aware that the likely future impact of PFI agreements on the future shape of hospital provision in the UK should never be ignored. What is the Minister's assessment now of the likely impact of PFI contracts on the future shape of hospital provision in the UK? Indeed, what is the planned nature and size of hospital provision in five years' time? Above all, I should like to be convinced that the Minister intends to do more than merely implement our policies just for the time being and that she is prepared to espouse the principles which underlie them. I look forward to hearing what I hope will be her convincing arguments.
In the meantime, like noble friends on these Benches and other Members of the House I welcome the Bill and hope that it will soon be on the statute book.
5.34 p.m.
Baroness Jay of Paddington: My Lords, I am grateful to all noble Lords who took part in the debate for their thoughtful examination of the many issues raised by this short Bill. I am also extremely grateful for the personal welcome extended to me by many speakers, and particularly for the generous remarks of the noble Baroness, Lady Cumberlege. I, too, welcome the noble Baroness, Lady Anelay of St Johns, to her new role on the Front Bench. Although I do not want to begin our relationship across the Dispatch Box by quoting in a rather negative way from previous debates on this subject, because she drew attention to quotations from others previously perhaps I may draw her attention to my most recent comment on the subject in this House, namely, in the previous Bill on the private finance initiative, when I said categorically:
"We on these Benches support the principle of joint public/private partnerships and the potential for spreading risk on major capital ventures".—[Official Report, 21/5/96; col. 740.]
That was my position then; it is my position now; it will be my position in the future.
Today's debate has given a clear signal that concern for the fabric of the NHS is shared on all sides of this House. As always, it was informed by the great personal knowledge and experience that noble Lords regularly bring to this kind of topic—although I was a little concerned that some noble Lords had perhaps not read New Labour's business manifesto. That would not of

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course apply to my noble friend Lord Monkswell, who made a helpful intervention in response to the noble Lord, Lord Marsh.
I therefore re-emphasise that the Government are determined to sort out the problems that have afflicted the PFI in the area of health, and the private finance Bill that we are considering today is tangible proof of that commitment. It confirms that NHS trusts have power to enter into PFI type contracts and therefore opens the door to major hospital building programmes. Bricks and mortar will result, and a particular result will be the two principal PFI schemes that are ready to go, in the Norfolk and Norwich hospital mentioned by noble Lords and another major project at Dartford and Gravesham. Banks have confirmed that enactment of this legislation will enable them to lend so that these hospitals can reach early financial closure and building can go ahead.
The noble Baroness, Lady Robson, raised various substantial general points about PFI. She also raised the specific issue as to whether there was a need for this additional legislation following the earlier concerns we had about the residual liabilities Bill and other matters. I was grateful for the intervention of the noble Earl, Lord Home, on this subject. I can confirm to the noble Baroness that the banks concerned had genuine worries about the nature of the ultra vires of NHS trusts and, although it may seem a rather heavy-handed way of proceeding, primary legislation was needed to make sure that those particular financial agreements were made.
Baroness Robson of Kiddington: My Lords, perhaps I may intervene. I do not believe I ever said that I had doubts about the Bill being necessary. I said it was a pity that we had to have two Bills and that they could not have been taken at the same time. The legislation could have been thought out a little more carefully.
Baroness Jay of Paddington: My Lords, in that case the noble Baroness and I are entirely at one. As I am sure she will recall, in my opening remarks I said that I, too, thought it might have been more sensible for the Bills to have proceeded together. I was a little concerned that she felt this was too heavy-handed a way to approach the problem. I understand now that that was not her concern. However, I am nonetheless grateful to the noble Earl, Lord Home, for making the points he did from a specifically banking perspective. I am particularly grateful that he offered further help in regard to working with the Department of Health to bring these projects to fruition more quickly. I am sure that is an approach which my honourable friends who are concerned with some of the individual projects will want to take up.
The noble Lord, Lord Addington, raised specific points about the development in Norwich. I understand his concerns about local public consultation. I will raise those points with my ministerial colleagues. I can only say to him, and indeed to my noble friend Lord Rea, who raised similar concerns, that I am genuinely surprised if their suggestion is that the general response to any new hospital development in any community would be unenthusiastic. However, I know that there
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have been particular problems in Norwich—although I also understand that the local community health councils have endorsed the proposals as they stand. As I say, I will take up the specific concerns of the noble Lord, Lord Addington.
Lord Addington: My Lords, I understand that there may be some areas of agreement; however, there is certainly great public concern about the way this matter was handled and the way in which, in this particular case, account was not taken of the wider issues involved and not merely the site. That is the main point of concern.
Baroness Jay of Paddington: My Lords, I am grateful to the noble Lord for making the point even clearer, and I shall take it up again with my colleagues at the Department of Health.
Another point was raised by the noble Viscount, Lord Ullswater, who feared that the Bill would not cover the situation where private contractors found themselves paying from their own resources rather than receiving a loan. I am advised that, although that is the correct reading of Clause 1(3), Clause 1(6) provides that nothing in the Bill affects the validity of an agreement between a trust and a private contractor which does not have a certificate. The validity of the small scheme which does not qualify for a certificate is therefore unaffected. Apparently there is clear legal advice that trusts are able to enter into contracts without a certificate and the certificate process provides concrete reassurance to the banks which are funding the larger schemes. If there is anything further on the point which the noble Viscount would like to raise I shall be delighted to write to him.
Other more general points raised concerned the general scepticism—as I think I can call it—of noble Lords opposite about the overall confidence of the financial community in the new Government's determination to develop public/private partnership schemes and our real conversion to and interest in that as a profitable way forward for the National Health Service. The points were raised by several speakers, including the noble Baronesses, Lady Cumberlege, Lady Robson and Lady Anelay, as well as the noble Lord, Lord Jenkin of Roding. I can only remind your Lordships of the commitments that were given in the Government's business manifesto in the election to which I referred. I remind the House of the 12-point plan on the PFI and the specific understandings between the new Secretary of State and the banks about the schemes that we have discussed and the general enthusiasm of the private sector for the reappraisal by my noble friend the Paymaster General of the whole area of policy which has been widely considered. As I told your Lordships, it will be readily available and, as the noble Lord, Lord Ezra, suggested, it will be the subject of a more general debate at that time.
The whole question of clinical services is very tricky. It was raised by the noble Baroness, Lady Cumberlege, and others. I wish to take this opportunity to reaffirm the Government's clear commitment that we shall not allow clinical services to be included in the private

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finance initiative or in the public/private partnerships as they develop. Under the previous administration, there was some discretion as to whether core clinical services could be included in PFI. Under this administration, there is none. Core clinical services are excluded. However, we acknowledge that there is an on-going debate about some of the definitions of clinical support services. It is undoubtedly a grey area, and several noble Lords raised the question of pathology and radiology, as well as other so-called support services. We have given a clear undertaking to look at the detail. It is part of the investigation by my honourable friend Mr. Milburn into the issue of PFI and health services, but we have never been in any doubt about the principle.
I say with the greatest respect to the noble Baroness, Lady Cumberlege, that I was intrigued by the number of questions on the issue which she raised with me this afternoon. I thought she raised appropriate questions about the definitions of clinical support services and I was intrigued because they were familiar to me. I asked many of the same questions myself a year ago when we debated the National Health Service (Residual Liabilities) Bill. The difference is that we are now determined to sort the problem out. My honourable friend Mr. Milburn is urgently considering those questions in his general review and I am confident that he will throw constructive light on the problematic area. We shall then be able to reach workable and acceptable clarity on the issue.
Baroness Cumberlege: My Lords, perhaps the Minister would give way. I am grateful to her for being so clear in describing some of the issues raised this afternoon and for giving clear answers. However, when we were tackling them, as the noble Baroness said, when it came to radiology, pathology and some of the support services we were clear that if the local people wanted them to be part of the scheme we would seriously consider it and probably accede to it. From what the noble Baroness said this afternoon, I understand that her Government are far more ambivalent about it. I am still not sure whether radiology and pathology are part of the PFI schemes. She described them as "a grey area". When shall we know the results? People who work in the services find the uncertainty hard to cope with. With us, there was a clear line; but from what the noble Baroness said this afternoon, I think it is a fudge.
Baroness Jay of Paddington: My Lords, I have genuinely described it as a grey area because that is what I see it as being at the moment. I understand the noble Baroness's concern about a speedy resolution of the question; but without being disrespectful I can only say that it is somewhat surprising that the same questions should be asked by her this afternoon as I myself asked from her position last year. Very little conclusive work seems to have been done by the experts in the field to guide the new Government. That is precisely why my honourable friend Mr. Milburn is conducting his urgent review. I can be sure that it will throw a constructive light on the matter and we shall then be able to reach workable solutions. That is taking
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place within the first month of the Government taking office, and to press us at this point for clarity on something which has been confused for such a long time is perhaps a little inappropriate.
Baroness Cumberlege: My Lords, I am sorry to come back again. I agree that the position is confused, but when we were in power it was clear what our line was. It depended on the will of the local people working in the service. I understand that that is not the case now with the new administration and that the matter has been thrown back into the pot. As I said, it is a fudge.
Baroness Jay of Paddington: My Lords, this is the third time that I say it but obviously with no great clarity: for us it is still a grey area. If the noble Baroness suggests that under the past government there was great clarity, all I can say is what I said in response to the noble Baroness, Lady Anelay of St. Johns. I do not wish to quote extensively from debates we had on the subject almost a year ago, but with precisely the same questions—and that is why I raised the point then with the noble Baroness, Lady Cumberlege—the same answers were given as I have given this afternoon. The clarity may have been in her mind, but it was not clear in the policy laid down. If the noble Baroness disagrees, perhaps we may return to the point later. I apologise if she feels that mine is a wrong interpretation, I do not wish to use extensive quotations from the Official Report.
Perhaps I may return to another issue raised by the noble Baroness, Lady Cumberlege, and the noble Lord, Lord Jenkin of Roding. Both were concerned about the equally difficult issue of health services in London, which is just as problematic as the area of clinical support services. With respect to both speakers, although the PFI clearly has implications for the future of services everywhere in the country, questions on London are not the subject of the Bill today. When the details of the review process for the London situation are announced by the Government I look forward to discussing the points raised by the noble Lord, Lord Jenkin, about membership of the review body and so on.
The noble Lord, Lord Ezra, rightly drew attention to the authoritative report of the Treasury committee in another place last year. He was right to be concerned about the prioritisation of projects under the PFI. The Government are concerned to pursue the issue on the basis of a strategic approach. We agree that that is necessary, particularly as a way of avoiding the types of consultancy costs to which the noble Lord referred, as I did in my opening remarks. My honourable friend Mr. Milburn wishes to deal with much of the work in the NHS now and we shall want to look at the useful suggestion of the noble Lord, Lord Ezra, of placing some of the issues within the context of the regional structure of the NHS.
Overall, I wish to reassure him that the NHS projects which are considered within the PFI will go ahead only if they demonstrate value for money, are affordable by the NHS and are explicitly supported by the relevant health authorities because they meet identified health

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needs. The private sector will not dictate the capital programme of the NHS, although I hope that it will be a partner in our strategic approach.
In conclusion, I apologise if I have not dealt with all the points that noble Lords raised. If there are substantive points, I shall write to them. I am confident that the co-operative spirit which greeted the Bill in your Lordships' House will be matched by practical support from the financial community. I hope and expect that what the noble Lords, Lord Marsh and Lord Jenkin of Roding, described as "a clash of cultures" will be replaced by productive joint enterprise. The NHS then can become a signpost toward successful public/private partnerships in the future. I believe that the Bill will begin that process.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Pharmacists Bill [H.L.]
5.50 p.m.
Baroness Flather: My Lords, I beg to move that this Bill be now read a second time. I bring this Bill, which is even shorter than the previous one, contrary to what my noble friend Lady Eccles said, before your Lordships in the interests of protecting the public but also in the interests of protecting the reputation of some 40,000 pharmacists.
First, however, let me say how pleased I am to see the noble Baroness, Lady Jay, on the Government Bench opposite. It is a pleasure to be able to see her as I talk to her on this occasion. I believe that that is the only advantage so far of being in opposition.
The purpose of the Bill is to ensure that when a pharmacist's misconduct or criminal conviction is proved to the satisfaction of the Statutory Committee, which is the disciplinary committee of the Royal Pharmaceutical Society, that committee has the power, where appropriate, immediately to suspend the pharmacist from the register in order to protect the public, and indeed also when it is in the best interests of the pharmacist himself or herself.
This is a single issue Bill. It does not change anything except in regard to the power to suspend with immediate effect a pharmacist who should be suspended in the interests of protecting the public. At the present time that is not possible. Such a power was given to the GMC in 1970 after the notorious case of Dr. Petrov, who was dispensing controlled drugs to all and sundry. He was stopped from dispensing controlled drugs but continued to dispense all the other substances which did not come under the description of controlled drugs. The power was given to the GMC as a result of that case. I hope that in the case of pharmacists it will not be necessary that someone should put the public at risk before this matter is taken on board.
At this stage, I should declare an interest, however vicarious. My husband has been for the past seven years the chairman of the Statutory Committee of the Royal Pharmaceutical Society. He was appointed by the Privy
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Council, is independent of the Royal Pharmaceutical Society and is a QC, a Bencher of the Inner Temple and a deputy High Court judge.
Under Section 11 of the Pharmacy Act, it is expressly provided that a direction that the pharmacist should be suspended,
"shall not take effect until the expiration of three months from the giving of notice of the direction".
So he has three months of working normally. Granting three months' grace before erasure of his name is almost certainly because Section 10 of the Act allows a person aggrieved by a direction of the committee a right within three months to appeal to the High Court against that direction. He has the right to appeal within three months. It is also important to note that, whenever an aggrieved pharmacist appeals to the High Court, Section 11 of the Act provides that the direction appealed against shall not take effect until the appeal is determined or withdrawn.
It is not unknown for pharmacists to put in an appeal just before the three months are up and then withdraw it after a number of months. That can give those pharmacists who have been found wanting by the Statutory Committee—indeed, who have been convicted perhaps in the courts as well—up to one year in which to continue to practise normally in the pharmacy.
I am sure that your Lordships will not feel happy that you, your families or children might go to a pharmacy where there is a pharmacist who is dispensing medicines quite normally but who would not be able to practise if this power existed. Moreover, if he has been doing something unacceptable, he may even be doing more of it because he only has one year in which to continue to do it. After that time he will surely be suspended and he may be taking advantage of that situation to dispense the kind of drugs which may not come under the description of controlled drugs but are nevertheless dangerous.
This particular power has become even more urgent since the recent passage of the Pharmacists (Unfitness to Practise) Act 1997. At this point I should like to take a moment to mention Michael Shersby, a Member of the other place, who died very suddenly on 8th May. He took that Bill through the other place before it came to this House. It is very sad for me to remember that he and I had agreed to take through this Bill jointly, myself in your Lordships' House and he in the other place. It is a matter of great sadness to me personally as well as in my role as a Member of this House that he is no longer with us.
The Pharmacists (Unfitness to Practise) Act allows for immediate suspension. The anomaly exists only in the case of the Statutory Committee, which has no power to give a direction of immediate interim suspension. There have been a number of cases in which my husband has felt very concerned about this matter and has spoken out publicly within the Council. Perhaps I may offer one or two examples just to give the flavour of the problem.
There was a locum pharmacist dealing controlled drugs from her place of work for her partner. There have been a number of cases in which pharmacists have exercised

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little or no proper control over controlled drugs. Quite often that type of case involves the disappearance of drugs of addiction known to have entered the pharmacy. That is quite often explained as having been due to the export of those drugs but more usually they find their way onto the black market. An unusual situation is where a pharmacist feels that he knows better than the doctors and will continue to make suggestions contrary to what the doctor may have prescribed. A pharmacist may make serious errors when dispensing, not because of physical impairment—that will now be dealt with under the Pharmacists (Unfitness to Practise) Act—but because the pharmacy itself operates in a muddle and confusion. Lastly, there is a category of sheer wickedness: pharmacists who sell drugs for profit to drug addicts without prescriptions. They are small in number but nevertheless it is a very serious issue when it comes before the Statutory Committee.
The protection of the public must be of paramount importance. But also the reputations of the 40,000 pharmacists deserve to be protected. The fact that pharmacists, bad or indifferent, may go on practising for up to one year in spite of their activities having been brought before the Statutory Committee, their guilt having been proved and the Statutory Committee having felt that they should not be practising, does no good for the reputation of the profession of pharmacists.
I hope that the House will consider this issue. It does not affect any other matter in the Pharmacy Act, which is due for a full review, but that will require government time. I hope your Lordships will consider this single point and take action as quickly as possible through the means of this Bill. I commend the Bill to the House.
Moved, That the Bill be read a second time.—(Baroness Flather.)
6.1 p.m.
Baroness Cumberlege: My Lords, I start by congratulating my noble friend on bringing this item before your Lordships' House and on her unquestioned commitment to the safety of the British people. As this is a Second Reading, I should like to pay a tribute to the pharmaceutical profession—40,000 men and women, the vast majority of whom contribute greatly to the health needs of this country's population. They are a huge source of advice and help not only to the worried well but also to those suffering from self-limiting conditions.
I have been told that on average every woman goes into Boots the Chemist at least once every three weeks. That is a huge exposure and presents unparalleled opportunities for promoting good health and education. It is a responsibility that many pharmacists in thousands of outlets take seriously, as the comprehensive display of information and literature testifies. But it is not so much the written word as the sympathetic, professional approach that is so valued by people in the high street.
My noble friend Lady Flather, in her clear exposition of the Bill, said—as was also said by my noble friend Lady Gardner of Parkes when she took her Pharmacists (Fitness to Practise) Bill through your Lordships'
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House—that, as in all walks of life, there are some who fail themselves and some who fail their profession. They must be dealt with—pour encourager les autres and to safeguard the public. In his helpful brief Mr. Gary Flather, whom we have heard is a Queen's Counsel and also chairman of the Statutory Committee of the Royal Pharmaceutical Society, clearly sets out the necessity for a measure of this type, as was also highlighted today by my noble friend.
We on these Benches strongly support the principle that lies behind the Bill and agree with its objectives. However, I understand that there may be some problems as to its current drafting in that it may not achieve my noble friend's desired intention. But that is a matter for the Minister and her legal advisers.
My second point concerns appeal against a decision of the Statutory Committee and the fact that immediate action should be taken. As the Bill is currently drafted, that appeal would be to the High Court. When we were discussing the Pharmacists (Fitness to Practise) Bill, we were keen to ensure that the appeal mechanism would be distinct from the courts, leaving the possibility of judicial review. The appeal mechanism is designed to ensure speedy decision-making without adversely affecting the rights of the individual.
The problem relating to appeals in the Pharmacy Act 1954—which is the Act to be amended in order to enable the provisions in this Bill—is that it can take nine months to a year before an appeal is heard. If that appeal is successful, the pharmacist concerned will lose a considerable amount of income. Perhaps my noble friend would like to consider that point.
Lastly, I understand that a recent judgment (on 14th February of this year) before Mr. Justice Ognall reinforced the view that the Statutory Committee should have powers to impose sanctions which are less than an order that a name should be removed from the register. Thus powers of suspension for a specified period, or perhaps in the case of a corporate body powers to impose financial penalties, would greatly assist the flexibility of the disciplinary machinery. There may be advantages in having a range of sanctions so that the sentence more accurately fits the crime. But that is another matter which my noble friend may like to consider.
Finally, I congratulate my noble friend once again and thank her for bringing this important matter before your Lordships' House and for her commitment to the safety of the public. I wish her every success in her endeavours.
6.5 p.m.
Baroness Jay of Paddington: My Lords, I too thank the noble Baroness, Lady Flather, for so clearly explaining her reasons for bringing this Bill before your Lordships' House. I thank also the noble Baroness, Lady Cumberlege, for her authoritative remarks on the issue.
The concern of the noble Baroness, Lady Flather, for the immediate protection of the public in cases of alleged misconduct by practising pharmacists is both understandable and welcome in principle. If I may say so, that concern reflects the noble Baroness's overall

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determination to maintain and achieve high standards in healthcare. All those who have taken part in discussions and debates with her both inside and outside your Lordships' Chamber have long been aware of her concern.
I am sorry that I was not personally involved in the debates in the last Parliament on the Pharmacists (Fitness to Practise) Bill, but I have of course read your Lordships' deliberations, with great interest. I understand that the noble Baroness sees the Bill before us as an extension of those provisions.
The Government recognise, as does the Royal Pharmaceutical Society, that there is a need to be able to suspend a pharmacist immediately in circumstances of alleged misconduct. Our concern is that the Bill before the House today does not contain all the elements that are necessary to achieve that satisfactorily.
As your Lordships know, pharmacists play an important part in the front line of primary healthcare today. Safe and accurate dispensing is the cornerstone of the pharmacist's role. The increasing complexity and potency of modern medicines mean that it is even more important that high standards in pharmacies are upheld. Those factors make it all the more important that appropriate disciplinary procedures are in place which protect the public and also protect the rights of the pharmacist.
Your Lordships will of course recall the provisions of the Pharmacists (Fitness to Practise) Act, introduced by the noble Baroness, Lady Gardner of Parkes. The Royal Pharmaceutical Society of Great Britain considered then that ill health among its members which might threaten high standards of practice should be dealt with separately from matters of discipline which are dealt with by the society's statutory committee, as the noble Baroness explained when introducing the Bill.
The new Act gives the society, through a health committee, powers either to suspend or to impose a conditions of practice order on a pharmacist whose competence is impaired due to physical or mental ill health. There is provision under the Act to suspend a pharmacist immediately if the health committee considers that to be necessary for the protection of the public.
The noble Baroness, Lady Flather, intends that similar powers should be available to the statutory committee in disciplinary matters. This Bill proposes an amendment to the 1954 Pharmacy Act that would allow immediate suspension of a pharmacist. It does not, however, indicate what the effect of suspension is intended to be or what terms would govern a suspension.
The present powers of the statutory committee are related to inclusion on the Register of Pharmaceutical Chemists or removal from that register. What is now proposed by the noble Baroness suggests that what is intended is immediate removal from the register.
In our view there is a fundamental difference between the terms of the Bill before your Lordships and the earlier Pharmacists (Fitness to Practise) Act. This Bill does not provide for a satisfactory appeals mechanism
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to protect the pharmacist who is to be suspended from immediately being prevented from practising his profession.
Your Lordships may recall that the earlier Act includes provisions specifying the effect of suspension and interim suspension orders and makes provision that any period of immediate suspension pending appeal on health grounds is for a strictly defined and limited period of time. An immediate suspension order ceases to have effect after 12 weeks from the day on which the order is made; or, of course, if an appeal is heard earlier the decision of the health committee that the pharmacist should be suspended for a period of up to three years is then either confirmed or overturned. A pharmacist has 28 days within which to appeal against a decision of the health committee, so it is incumbent on the society to be able to make early arrangements for an appeal to be heard. The society understands that it must be able to do this in order to ensure the continued protection of the public, and in this way the pharmacist's interests are protected as well as those of the public.
The noble Baroness's Bill makes no similar provisions for those who might be suspended by the statutory committee. It does not state a date on which the suspension period ceases. This would mean that the pharmacist suspended in this way would be unable to practise until the normal appeal process against a decision of the statutory committee has been gone through. As the noble Baroness will know, under this procedure a pharmacist may wait for up to three months before he lodges an appeal. He must also wait for a slot for the case to be heard in the High Court. It is of course possible, but I am advised unlikely, that such a hearing could be expedited. It is more likely to take up to a year to be held.
In our view the balance of protecting the public and protecting the pharmacists' interests would not be satisfied as they are by the earlier Act. Indeed, it has been suggested that it is questionable that the proposals, as drafted, comply with Article 6 of the European Convention on Human Rights. With your Lordships' permission, I shall quote from the article:
"In the determination of his civil rights and obligations or of any criminal charge everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law".
However, as I said earlier, the Government recognise the need for amendment of the powers of the statutory committee and the noble Baroness's proposal to extend the powers of the committee is welcome in principle. I know that the society is also supportive of the proposal that the statutory committee should have additional powers. However, as I hope I have explained, we do not believe that the proposals of the Bill are adequate to achieve the limited provision with which it seeks to deal. We also accept the view of the pharmaceutical society that a number of other aspects of the provisions governing the powers of the statutory committee could also usefully be reviewed in a general way.

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For example, Section 8 of the Pharmacy Act 1954 refers to,
"misconduct [which] …renders the …guilty person unfit to have his name on the register",
and unless the statutory committee finds this degree of misconduct to have occurred, it has no sanction or powers. On the other hand, the disciplinary provisions for other health professionals, such as doctors, refer to "serious professional misconduct", and give the relevant disciplinary body jurisdiction to determine what penalty should be imposed including, but not limited to, removal from the professional register.
It is clear that the society needs to have powers to deal with conduct which is not acceptable professionally, particularly where it is motivated by commercial rather than professional interests. Although this conduct may well be serious, it will seldom be so grave as to render the responsible person totally unfit to practise his profession by being struck off the register.
We all understand that as the role of the pharmacy in healthcare develops the society is anxious to develop adequate mechanisms to enable the profession to set and maintain high standards and to ensure compliance with those standards. These are necessarily very broad issues which should be considered carefully. Over the coming months the society intends to discuss proposals for a comprehensive review of the disciplinary provisions, including the provisions in the Medicines Act which deal with bodies corporate which own pharmacies. It will wish to seek the views of the various interested parties both within the profession and outside it and then to discuss them with the Department of Health. It is at that stage that it may make proposals for changes to the jurisdiction or disciplinary powers of the statutory committee. We would then look carefully and sympathetically at any proposals for legislation that emerge.
In the light of the society's desire for a comprehensive review of the provisions relating to disciplinary matters and because we feel that the disciplinary proposals before us in the Bill are flawed for the reasons I have tried to give, I am afraid that the Government cannot support the Bill. I am sorry to disappoint the noble Baroness, whose concerns we appreciate, but we feel that her Bill only begins to address one of the changes which may need to be introduced. We think this may require more fundamental reappraisal. The Bill before us is an attempt at what one might describe as piecemeal reform. We feel, as does the Royal Society, that it is not really in the best interests of patients or of pharmacists.
6.15 p.m.
Baroness Flather: My Lords, the Minister has read a very interesting brief. I am sure that she has not had as much opportunity as I have had to familiarise herself with the subject. Therefore, I shall try not to bear any ill will towards her. I am not only disappointed. I am rather surprised by what I felt was something of a
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tautology that came out in her brief. Unfortunately, my pen ran out of ink part way through and I could not take as full a note as I should have wished of the enormously lengthy reasoning as to why pharmacists who are a danger to the public should not be removed from the register with immediate effect.
The noble Baroness referred to an independent tribunal and to human rights. What is the point of setting up a statutory committee? What is the statutory committee? Is it some kind of an arm of the Royal Pharmaceutical Society? Is it some kind of an arm of the pharmacy profession? I thought it was an independent tribunal. The chairman is certainly independent. I do not know about other members because they are appointed by the council. They are neither lay nor independent. But it is meant to look after the profession. It is meant to keep an eye on what is going on in the profession. It was set up by the Pharmacy Act 1954.
I told your Lordships of the example of the General Medical Council. It too had no right to remove a doctor from the register with immediate effect. We are not talking about removing every person who comes before the statutory committee. It is simply giving the discretion to a committee which has been appointed specifically to protect the public. If we had no committee, there would be no need for anything. Whatever happened would happen. However, the GMC received its powers in 1970 in piecemeal legislation because that became necessary for the protection of the public. No one can say that it is logical to have piecemeal legislation, but this matter is long, long overdue. Every other health care profession has this right vested in its disciplinary committee.
What else have I heard? The noble Baroness referred to appeals to the High Court. Such appeals do not take three months. That is the maximum period in which a person may lodge an appeal. He or she can lodge the appeal as soon as they leave the statutory committee building. We have heard that the process may take up to a year. It may well do. However, they have been found guilty. The case against them has been proved. Every other person who has a case against them proved may have to accept the penalty until the appeal. If you have to go to prison after the Crown Court, you will go to prison. Then you have an appeal and you may be let out. I am pleased to see the noble and learned Lord, Lord Archer, indicate his agreement. It is something to which we are all subject. If we are found guilty of an offence, we are punished for it. We can then appeal but we must wait until the appeal is heard. As I have said before, this happens only in cases where the statutory committee appointed by the Privy Council to oversee the profession feels that it is necessary. The whole of the statutory committee is behind this so-called piecemeal legislation.
If the appeal is successful that is no reason not to give the right to the statutory committee to remove someone from the register. I beg your Lordships' pardon. The Minister said that she wanted that clarified. It is not a removal from the register. It is called "immediate interim suspension", whatever that means. That is the exact term.

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We heard something about a judicial review. All of us in this place have that right and it is our greatest protection in this country from any kind of administrative injustice. There will always be the right to judicial review. My noble friend Lady Cumberlege mentioned the case of Boots. It was collecting scripts and taking them to be filled and then returned. The Royal Pharmaceutical Society felt that that was misconduct by Boots but it lost the case as inevitably it would because it was not misconduct. My husband gave a minority judgment in that. He did not agree with the majority, all of whom were pharmacists. At one point the judge in his judgment said that he could do no better than to read from the chairman's statement.
All these are red herrings. There is absolutely no reason whatever why this matter cannot be dealt with immediately. If the department felt that there was some defect in the drafting of this very short Bill, I am sure that it could have taken a hand and carried out some improvement itself. But the department has not done so. It has taken no interest in this matter. If there is to be a review of the Pharmacy Act, according to the statement of the secretary and registrar of the Royal Pharmaceutical Society, it would take 18 months to two years. I believe that that figure is optimistic. With their huge programme of legislation, will the Government find time for a review of the Pharmacy Act? I believe that they will not.
I received a letter yesterday from Mr. Ferguson who is the registrar and secretary to the Royal Pharmaceutical Society. He states in his letter that there is no question of representations being made to the Minister opposing the Bill. That is supposed to be the pharmacists' position. That is the best information that I have. He further says that he can confirm that the society's council supports the principle of the statutory committee having the power of interim suspension in appropriate circumstances. Therefore, there is no question of the society speaking against the Bill which would secure that end. That is supposed to be the official position of the society. If it has made separate representations to the Minister, which do not tally with what I have just said, I cannot speak for it. But I am very surprised that such a respectable organisation as the Royal Pharmaceutical Society should speak in different ways to the Minister and myself.
The Minister made a point about the ill-health situation being dealt with separately. That was long overdue. I am surprised that that bit of piecemeal legislation was allowed to go through this House by the then government. The society did not object to it. If anything was piecemeal, that piece of legislation was. But it was allowed to go through.
What else can I say in support of this Bill except to suggest that the chairman of the statutory committee is deeply concerned about not having this particular power. As I have said before, and as all noble Lords know, 99.9 per cent. of pharmacists are above reproach and work to the great satisfaction of everyone. But there is that 0.1 per cent. who should not be dispensing for up to a year when they have been found guilty by the statutory committee and found to be seriously lacking in the qualities that a pharmacist should have to continue
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practising and dispensing normally. If your Lordships feel happy about that situation, I certainly do not. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Poverty Traps
6.25 p.m.
Earl Russell Earl Russell rose to ask Her Majesty's Government what measures they are contemplating to reduce poverty traps which prevent people getting off benefit and into work.
The noble Earl said: My Lords, Oscar Wilde claimed that he could resist anything except temptation. Today I am trying to do a little bit better. When I tabled this Unstarred Question I did not realise that the Prime Minister's speech of yesterday would be dumped right in my path as I begin the debate. But I have already had one bite of the cherry of welfare to work. The Minister knows my general views on it. I am going to try not to cover that ground again, but instead to cover ground on which there may be rather wider areas of agreement.
The welfare to work programme will obviously not be enough for what any government must now have in mind. As we have been told many times, it is budgeted to take 250,000 people off benefit and into work. But if one compares that with the total number of people on benefit it is not very large. I believe that the total number of people on benefit is still just over 5 million. Therefore, it is a greater number than the total population of Scotland. Of those last published figures, 1,495,000 are classified as unemployed. The Minister and I may agree a suspicion that the figure is a little bigger. So clearly we need to do something beyond welfare to work to encourage people to come off benefit and back into work.
In opposing any particular change to the welfare state, I do not want to make out that everything in the garden is lovely and that there is nothing to change. We are to have tomorrow the launch of the citizens' commission on the welfare state published by Community Care. I had intended to draw on that in some detail, but I was told at the very last moment that since it is embargoed until 12.30 tomorrow afternoon, I can only refer to it in general terms. One finds in the voices of the users a very strong sense that the notion of the dependency culture is a myth; that benefit levels are simply too low to encourage any such thing; and that the demonising of welfare claimants, which goes with that sort of rhetoric, has created a very considerable depth of anger repeated in vernacular language which, even if it had not been embargoed, I could not have repeated in your Lordships' House. The word that occurs over and over again is "trapped". Once on benefit it is simply too difficult to get out.
In addressing the matter I hope that I shall be speaking with the agreement of some voices within the Government. Yesterday the Prime Minister said,
"I am asking social security ministers to look at all the key benefits and apply a simple test—do they give people a chance to work or do they trap them on benefits for the most productive years of their lives'?"
I hope that he told his Chancellor of the Exchequer that that is an objective that cannot be met without spending a certain amount of money.
I would like to congratulate Mr. Martin Taylor on his appointment to review the poverty trap. I read with pleasure his interview in the New Statesman last week. I could not improve on his words. He said,
"Alleviation of poverty is a moral imperative, but a system which encourages people to stay in quasi-poverty or just above it, rather than dragging themselves up because it gives them no incentive to climb out, is also failing a moral test".
That is the general framework from which I approach the subject.
How exactly to tackle poverty traps is a highly technical question. I do not expect agreement on every point because there will never be any such thing. I should like merely to make a few suggestions, some of which I hope may be found helpful. If I do not spend time on the issue of a minimum wage, it is because I think that here I would be preaching to the converted; I shall therefore save a few words. If I talk about tax thresholds, I shall be preaching to the converted again. However, there is a difference here between the Government's inclination to a lower tax rate of 10 per cent. and the advice that we have received that taking people out of tax altogether works better. I shall not press that although it could be investigated with more statistical information than I have at my command. However, I should like the Minister to investigate one question or possibly pass it to Mr. Taylor. I refer to whether there is a case for reversing the measure introduced by the Thatcher government of making benefit income taxable. People who are in and out of work and on and off benefit find it a very bumpy ride, especially since tax tends to be demanded in a lump sum in arrears. It also much reduces the amount that they can earn in a new job before they begin to pay tax. That matter would be well worth considering.
Among other possible measures worth thought is one of our proposals. I refer to the merging of income support and family credit into a single low-income benefit so that the abrupt bumps and jumps of the taper can be smoothed out. I would hope that the effect would be rather like that of having a ramp instead of stairs for wheelchair users, especially with passported benefits which would not need all to kick in at the same time. In discussions of those benefits I hear over and over again about the importance of free dental care. The loss of that has caused very strong feeling.
I also recommend—again from our proposed measures—the use of the social fund for deposits to enable the homeless to take up rented accommodation and to begin to look for work. I owe that idea to the Minister's colleague in another place, Mr. John Battle, who on one occasion was going home from Parliament at one o'clock in the morning when he met a young man bedding down
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under the arches at Charing Cross. Mr. Battle asked the young man. "Why aren't you in work? What went wrong?". The man said, "I am in work, but I don't get my first pay cheque for two weeks. I can't afford a deposit, so I am sleeping under the arches and then going to work every morning". Not all of us have the guts to do that; so we might help a little bit there.
I turn now to the tapers and to the combination of tax and the family credit taper, the housing benefit taper, the council tax benefit taper and so forth. According to the Social Security Advisory Committee in 1995—I do not think that these figures are grossly out of date—over half a million people had marginal deduction rates of more than 70 per cent., with a few having deduction rates as high as 97 per cent. If I may coin a phrase, that is squeezing the poor until the pips squeak—and that is a problem that we might do something to stop. A certain amount of easing of the tapers, which are exceptionally steep by international standards, could help, as could some investigation of a mortgage benefit, possibly financed from the abolition of MIRAS which is obviously on its way over a period of time. Homelessness tends to handicap the search for work.
Over and over again the Community Care report reveals strong feelings among people who are trying to care for a sick relative but who cannot get enough assistance to do that and are faced with the prospect of putting their relative into permanent institutional care at vastly greater cost to the state than if they were looked after at home. On that subject, Mr. Dick Francis, who is not famous as a social critic, described the welfare state as guilty of a fish-faced blind eye. He was talking about the lack of help for incapacitated wives. It is a point which may deserve thought.
I have listened a good many times to the noble Baroness the Minister talking about the pressure on the partner of an unemployed person. That is a subject of quite incredible complexity. I was interested in a suggestion for a partner disregard which was made by the Social Security Advisory Committee in its 1995 paper on the role of incentives in the benefit system. That might be a practical way of allowing a partner to go on working without having to pay benefit to Mrs. Cedric Brown if she chooses not to work. I can think of no other way. If the Minister can think of better ways, I shall be pleased to hear about them. It is a thorny problem and I wish her luck with it.
I hope also that there will be some liaison with the Department for the Environment and Transport about the problems of getting to work. Normally the figures that we are given about poverty traps leave out the cost of getting to work but in a number of areas, which are regrettably without any public transport, there is no way of getting to work except by car. Our candidate for Falmouth and Camborne spoke at our last conference with some eloquence about the extreme poverty experienced by people on income support in Falmouth and Camborne who have to run cars or otherwise become unemployable. I should like to think that there would be some consultation with the Department of Social Security before rail lines or bus services are withdrawn. I do not know whether that is possible, but I hope that it is.
I hope that we shall be able to alleviate many of these problems as we achieve more progress towards the objective of equal pay. It is too early to question the noble Baroness in her capacity as Minister for Women, on which I congratulate her, but I shall be questioning her over the next year or two on how progress towards equal pay is advancing and I hope, as I am sure we all do, for good news.
That is a list of measures worth starting with. A different series of issues is involved when we consider questions relating to single parents. The first speech I made as party spokesman on this brief was on a Motion introduced by the noble Baroness, Lady Turner of Camden, whose contribution I look forward to hearing in a little while, about helping married women to enter the labour force should they wish to do so. That is exactly right. That is my position and will remain so. I understand that single parents are to he "encouraged"; I am very glad that there is to be no compulsion. However, there is a faint potential for ambiguity in the word "encourage" and I hope to hear that ambiguity dispelled.
If we are to consider the real questions about single parents it is well worth looking at the 20 countries studied by Professor Jonathan Bradshaw and others which makes real comparisons possible. His key variables are interesting. He finds that child care costs have the closest relationship with the employment of lone parents; that no countries have low child care costs and low levels of lone parent employment; and that the United Kingdom has the most expensive pre-school child care of any of the 20 countries. That is an understatement of Professor Bradshaw's findings. Only four countries out of the 20 achieved even half the cost of UK child care. Those are startling figures. If one takes simple crude prices, only three countries, Ireland, New Zealand and the United States, have about half our costs. If one calculates on the basis of a proportion of average earnings, one adds Spain. It still means that 15 out of 20 countries studied do not have child care half as expensive as ours. Those are surely striking figures. If 1 were a Government looking at them I would not try to encourage demand for child care. I would first try to improve supply. I would also look at the hours for which it was available.
I was extremely glad to hear in the Prime Minister's speech that the Government were going ahead with the policy of making schools open after hours. These are our clothes and I am delighted to see them worn. I am also delighted that the Prime Minister says that much more can be done to make work and family life compatible. That is something I will be urging on the noble Baroness but I am sure that she will not need it. One keeps hearing—it must stop—about people who are dismissed from their employment for taking time off to care for sick children. I understand that this can he very inconvenient to an employer, but in the world as it is coming to be, if that happens we may not have a labour force at all. That would be even more inconvenient to an employer. In particular, I hope that the Minister for Women will make it her business—I think that it should he—to ensure that men are not dismissed from employment for taking care of sick children, which is
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everybody's business, and that at least, perhaps by way of guidance, nobody so dismissed shall be found guilty of voluntary unemployment.
In addition to these child care problems, single parents have all the same ordinary bottlenecks that others face in trying to get off benefit. They have all the same problems of tapers, especially with housing benefit. It is also shown by the comparative study that we are one of only eight countries among the 20 where a person pays full rent and local taxation at half average earnings. The replacement rate as one comes to income out of benefit is the highest in all the countries studied. Those seem to be the real matters that keep single parents out of work. If one does not tackle those all the encouragement in the world is worth nothing. If one encourages single parents into work without relieving the bottleneck it is like squeezing a tube of toothpaste without remembering to take off the top. If I can assist the Minister to take off the top I shall be happy to do so.
6.44 p.m.
Baroness Turner of Camden: My Lords, I apologise to the House for the fact that because I arrived late today I did not put down my name, but I gave notice that I intended to speak. I welcome the opportunity to participate in the debate initiated by the noble Earl. I hope that the new Government will address the problems to which he has referred. Although everyone appreciates that it is not possible to do everything at once obviously expectations are very high, particularly among those concerned with poverty and its effects upon some of our fellow citizens.
I welcome the commitment in my party's manifesto to look at the interaction of the tax and benefits systems and to try to promote work incentives. The noble Earl has dealt with that in detail in his opening speech. This is important in the effort to deal with poverty. No one supports what has become known as the dependency culture. I am inclined to share the noble Earl's view that it is rather a myth. Nevertheless, the proposals to assist lone parents back into work should be welcomed. However, there are problems which may be quite expensive to solve. Often children of single parents live in circumstances where relationships have become broken, often violently. It is important for such children that there should be stability. Lone parents should not therefore feel that they are being compelled into work—often work that may be unsuitable and badly paid. Individual circumstances must be taken into account. After all, we still await the introduction of the minimum wage. Until that is established we are not likely to be able to tackle the culture of dependency. The minimum wage is an important item in the whole argument. Incidentally, I welcome the evidence that the Government are getting on with it and have already appointed Professor Bain, formerly head of the London Business School, to head the Low Pay Commission.
There are at present considerable barriers that prevent lone parents from taking work. Chief among them is the shortage of affordable child care. Moreover, most employers fail to take an enlightened approach to the irregular hours often necessary to provide parenting at an acceptable level. Employers should be encouraged to

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take a more positive attitude to parenting. Some enlightened employers have for years provided a child minder's allowance to staff with parenting responsibilities. Such initiatives should be encouraged; and certainly such so-called perks should not be taxed. Most single mothers are not so by choice. Some have become so because their husbands have left them or they have had to get out of violent relationships. Despite the existence of the CSA, maintenance payments are often unreliable. The previous Government indicated an intention to abolish one-parent benefit and the lone parent premium in means-tested benefits for new claimants from April 1998. I very much hope that the new Government will not proceed with the proposed cuts. One parent benefit has the advantage of being non-means-tested and therefore is similar in that respect to child benefit. It is easy to administer and provides security of income.
There is already a substantial amount of evidence to indicate that the levels of benefit are themselves inadequate. The removal of one parent benefit lends support to the notion fostered by the previous Government that single parents are responsible for all kinds of social ills, from the soaring crime rate among young people to inflated welfare bills to be paid ultimately by citizens who have managed to live in more traditional and conventional family circumstances. Of course, this is unfair. Many single women struggle hard to bring up their children, often with little assistance. Most can be regarded as low income families with all that that means in terms of poor diet, as highlighted in the paper published recently by the National Food Alliance. There are now about one million single mothers, most of whom have not willingly sought their underprivileged status. I therefore welcome the Government's stated determination to help these women. I believe that provided child care is available and women do not feel pressurised into unsuitable and low paid work the new proposals will be of assistance to many. But there will be transitional problems, and that is why I make a plea for the retention of one parent benefit. Good quality care is not cheap, particularly in this country. Many single mothers want to work but are caught in the benefits and child care trap. The Government have raised hopes of a new beginning and a more enlightened and humane approach. I await with interest the Minister's response.
6.49 p.m.
Lord Henley: My Lords, my noble kinsman Lord Russell has provided a fairly meaty dish for the Minister to get her teeth into when she answers at the end of this short debate. I shall be relatively brief and try to keep my remarks to the 15 minutes recommended by the Companion to the Standing Orders.
I start by offering my apologies to the noble Baroness for the absence of my noble friend Lord Mackay of Ardbrecknish. The noble Baroness missed him on her first outing, but I am sure that in due course both she and my noble kinsman will have opportunity aplenty to exchange arguments with my noble friend, as they have done from different parts of the Chamber over previous
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years. For the present, the noble Baroness will have to make do with me. However, she and my noble kinsman will remember that when they came to their social security briefs—the noble Baroness sitting where I am today—I was then, if I may put it this way, the "whipping boy" in social security. Therefore, I offer my commiserations and my congratulations to the noble Baroness on the position that she holds.
I also offer the noble Baroness sympathy. She and her party will find the whole task of tackling the growth in social security expenditure much harder than the pious statements of Opposition—that is, of course, if they really are committed to controlling growth in the social security budget. I remember that when some time ago my right honourable friend Peter Lilley, then Secretary of State for Social Security, published the document entitled Growth in Social Security Expenditure, the noble Baroness was somewhat dismissive and felt that a growth in the economy would take care of most of it. I should like to look at her precise words on some of those occasions because they might make fairly interesting reading.
The real question before us, as put by my noble kinsman, is just what we can do to encourage people back into work, whether by means of making adjustments to the taper or whatever. The question that we must ask, and the answer that we must have, is exactly what steps the party opposite is contemplating not only to reduce the poverty trap but to reduce social security expenditure over a wider front.
I do not believe that the noble Baroness and the Government can complain that they have not had time to address these matters. It is some five years since a commission on social justice was set up under the chairmanship of the noble Lord, Lord Borrie. It reported in 1994, but we do not seem to hear much about it now. It would be interesting if the noble Baroness could tell us how that report has influenced their thinking and to what extent the ideas put forward in the report will be developed by the party now in government.
I suppose that we must turn to the Government's manifesto, which was put forward before the election, to see exactly what they are proposing in terms of social security reform. The manifesto is fairly thin on these matters. We obviously hear about welfare to work and how a welfare-to-work budget will be introduced within two months of the general election. We have heard that that will be met and there will he a Budget on 2nd July. Therefore, I suppose that it would be right for us to wait until July to hear the details of the so-called "windfall tax" in order to see how it will operate and exactly what it will do. From my portfolio in education and employment, together with my noble friend in social security and others representing the Treasury, I look forward to debating those matters some time after 2nd July.
There are other references within the manifesto. We hear about an imaginative welfare to work programme to put the long-term unemployed back to work and to cut social security costs. However, again, there are no details whatever. We also hear about putting lone parents into work and how the minimum wage will

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remove the worst excesses of low pay and be of particular benefit to women while cutting some of the massive £4 billion benefits bill by which taxpayers subsidise companies which pay very low wages. If the national minimum wage is set at a relatively high level it will cost jobs. That is a matter which the noble Baroness must address and which the party opposite must deal with.
As regards the imaginative welfare-to-work programme and exactly what is proposed, the noble Baroness will remember that on 19th May we had an exchange on those matters. The point that my noble friend Lord Mackay of Ardbrecknish wished to have addressed was the extent to which the stick or the carrot would be adopted in terms of the welfare-to-work programme. I believe that my noble kinsman is very "unkeen" on the stick and would like to see much more carrot. During the weekend we heard that major announcements would be made about the degree of compulsion that would be introduced into a welfare-to-work programme. In the Prime Minister's announcement on Monday, we heard nothing new whatever. The Daily Telegraph stated that it was all "motherhood and apple pie".
According to those interviewed by the Daily Telegraph and others, it is pretty clear that simple encouragement and tinkering with the taper will have little effect. Therefore, can the noble Baroness expand a little on what is proposed and say to what extent there will be either a stick or a carrot, or both? In reply to my noble friend Lord Mackay on 19th May, the noble Baroness, Lady Blackstone, said:
"it is desirable to ensure that all young people who are currently unemployed, particularly those who have been unemployed for a long period of time, should be not just encouraged but given a little carrot and perhaps a tiny stick to make sure that they benefit from what is being provided".—[Official Report, 19/5/97; col. 144.]
It would be beholden on the noble Baroness to tell us just how much there will be a stick and to what extent there will be a carrot.
We accept the basic premise put forward by the party opposite on a number of occasions, as we did when we were in government, that getting people into work and off benefit will in the long term do much to reduce the welfare bill. That is why we are very proud of our record on unemployment during the past few years. We saw a steady fall in unemployment against all the trends in Europe and similar countries. We saw falls over three years, starting earlier in the economic cycle than previously and coming down much faster. I believe that all of that is now at risk. We have the Government's commitment to sign up to the social chapter, which in some way will not be binding—they will pick and choose just which bits they want, but I am not sure how that will be managed. We also have their commitment to a minimum wage, which everyone accepts will cost some jobs although there are arguments about how many. Even the new chairman of the Low Pay Commission, Professor George Bain, admits that he will be surprised if there are not some job losses. Can the noble Baroness tell us just what is proposed? If there is no compulsion, how will single parents be encouraged
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back to work? Yesterday, some people on the Ellesmere Estate were saying that they would go back to work only for a figure in the region of £500 a week.
I wish to ask about reducing the so-called poverty trap, which in effect means lengthening the taper to income-related benefits. I believe that the noble Baroness must accept that that would necessarily increase the number of those in receipt of income-related benefits receiving relatively small amounts. It would, therefore, dramatically increase the administration costs of all income-related benefits. As the noble Baroness will be well aware, the administration costs of income-related benefits are much higher than all others. In addition, it would do much to increase the overall budget. If not that, how will encouragement work? What kind of compulsion will there be? Will there be a much greater degree of compulsion?
I believe that all of that is far too vague. There is no sign that any of it means anything or would yield anything. I very much hope that the noble Baroness can offer some degree of light when she comes to answer.
7 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, I am most grateful to the noble Earl, Lord Russell, for giving us the opportunity to debate this important topic today, and to the noble Lord, Lord Henley, for his kind remarks. I am intrigued that the noble Lord, Lord Mackay of Ardbrecknish, found himself with an alternative obligation but I understand why he might find that more attractive.
Lord Henley: He will be back.
Baroness Hollis of Heigham: My Lords, I am sure he will be and we shall welcome him when he returns. In the light of the Prime Minister's speech yesterday, the debate is especially timely. We all recognise that it is impossible to live a financially comfortable life on benefit. But as an example, to raise all income-related benefits by £5 per head would cost a staggering £1.9 billion, nearly £2 billion.
Therefore, we have two priorities: to ensure that those who are trapped in poverty on benefit yet who can—and almost always want to—work should be helped into work; while at the same time we discharge our responsibilities to support those who are unable to work due to age, disability or caring responsibilities in as decent and dignified manner as possible. In other words, we want to make it worth while for people to make the transition into work and ensure a fair return on extra earnings once they are in work. That means addressing both the unemployment trap and the poverty trap. In this House of experts, noble Lords will know what that means.
Noble Lords will know also that there are no easy solutions to those interdependent problems. The noble Earl, Lord Russell, raised the question of tapers. As the noble Earl and the noble Lord, Lord Henley, will know, a measure which improves the return from moving into

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work will generally also increase the severity of marginal tax rates for those in work. When we provide financial support to boost family income in work, we have to consider the effect on incentives as that help is withdrawn. A sharp withdrawal of in-work benefits leaves little incentive to extend hours or earnings. Yet gradual withdrawal—a slower taper, on which I was pressed by the noble Earl—draws more people into means-testing and increases cost.
There are problems both with a long gradual taper off benefit and with its opposite—a short, sharp taper. These are difficulties accentuated because means testing has grown as a percentage of our benefit expenditure, to my regret, from 17 per cent. in 1978–79 to 36 per cent. in 1995–96, and also because our benefit system is household based. We have constructed the perverse effect that to maximise his incentive to work (by withdrawing pound for pound) we may, as the noble Earl recognised, pull any partner of his in part-time work out of work altogether. Similarly, we urge people to save and then taper their benefit down very sharply for any modest savings they may have.
While reviewing those problems, as we shall do, we must not neglect our duty to protect those who are unable to find work. This Government are committed to maximising opportunities for people to play a full part in our society—and that includes ensuring that work pays enough to be worth while. That is why we have appointed Martin Taylor, the chief executive of Barclays plc, to lead a task force undertaking a thorough review of the tax and benefit systems so they can be modernised and streamlined to deliver the Government's aims of promoting work incentives, reducing poverty and welfare dependency and strengthening the community and family life.
Once we have completed this review, we shall have practical and well considered proposals to further our key welfare-to-work objectives by addressing the barriers that keep people out of work and trapped on benefits. In addition, the Government have announced that Professor George Bain will head the low-pay commission to advise the Government on their minimum wage, not much mentioned this evening. The minimum wage will help to ensure, as we urged repeatedly when we were on the Opposition Benches, that in-work benefit moneys do not go to subsidise the exploitative employer but to help those who have particular difficulties in the labour market, perhaps because of the size of their family.
The debate today has been widespread and knowledgeable. It is a timely debate and one to which I have listened with great interest. But it is clear that it is not simply financial matters which people consider when seeking to return to work. We intend not only to review the benefit system to improve incentives to return to work but, as I have been invited to comment this evening, we intend to introduce a whole range of other measures which will help to get people off benefit and into work.
The noble Earl, Lord Russell, and the noble Lord, Lord Henley, both referred to the New Deal. Our first priority is to get 250,000 young people under 25 off
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benefit and into work or quality training. For too long young people were written off by the previous Government. The Government's New Deal will present real opportunities to each and every young person on jobseeker's allowance to better themselves and to prepare themselves for work.
There will be four routes available to them: a chance of employment, for which we will reimburse the employer £60 per week for six months; an opportunity to work with the voluntary sector; a chance of gaining valuable work experience through the environmental task force; or the opportunity for young people without basic qualifications to improve their skills through full-time study or training, an option never before available to them.
Placements on the employer option and those with the voluntary sector and the environmental task force will offer quality accredited training as well as work experience. That is vastly superior to anything offered by the previous Government, who were only interested in make-work schemes which offered little or no real help to the long-term unemployed. By contrast, the New Deal will allow young people to increase their knowledge and gain in confidence from their experiences on the various options. By improving their skills and standards they will increase their overall employability and they will make themselves more acceptable to prospective employers. We are offering them opportunities—opportunities to move into employment; opportunities to train and opportunities to do genuinely meaningful work in the community and for the environment.
All of these placements will offer quality training or work experience, allowing young people to increase their knowledge and gain in confidence. When we interview young people during the gateway to the New Deal, we shall pay specific attention to those who are particularly disadvantaged in the labour market. Obviously fit, able, confident, qualified young people will usually find their way into work. Others who are less confident, less fit and less qualified often become beached in our society. When helping young people to choose the most appropriate New Deal option, we shall look carefully at special needs; for example, those people for whom English is not their first language or young people with a degree of disability.
However, I must offer a note of warning, and the noble Lord, Lord Henley, pressed me on this matter. These are real opportunities for young people and we expect them to avail themselves of those opportunities for improvement. As the Prime Minister said, there will be no fifth option of a life on full benefit if they turn down those options. If reasonable offers are refused, sanctions will inevitably come into play. The majority of people want to work and will wish to take up one of the four options available. But those who do not will not be able to live off benefit. JSA sanctions will apply for fixed periods of two or four weeks.
For the long-term unemployed who are over 25 we are also offering subsidies of £75 per week to employers willing to provide jobs. That will be in addition to the

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numerous programmes which the Employment Service already runs to assist the long-term unemployed in their search for work.
All noble Lords who have spoken have emphasised that it is not just those who are claiming jobseeker's allowance who may want to work. It is our intention to ensure that the wider unemployed, such as lone mothers who are looking for work, are not forgotten or pushed to the bottom of the pile. Lone parents face significant challenges in taking sole responsibility for the upbringing of their children and in pursuing the best possible standard of living for themselves and their families. I agree entirely with the remarks made by my noble friend Lady Turner to that effect. Most of them do an heroic job.
While the majority of lone parents want to work when their youngest child goes to school, they face extra barriers on moving into work. They have to balance the often competing and conflicting needs of work and family responsibilities against the present scarcity of affordable childcare. Moreover, they lack the support of a partner and of a partner's in-laws. In addition, they often have a low skills base and low self-esteem, combined with limited employment experience. All that can mean that lone parents remain unconvinced that they really can be better off in work.
We believe that lone parents do not feel that a life on benefit can satisfy their aspirations to provide the best possible life for their children; nor that the example of the parent living on benefit for a very long time can be a healthy one for their children. My right honourable friend the Minister of State, Mr. Frank Field, sometimes quotes the example of a child in his constituency who, when asked what he wanted to do when he grew up, replied that he wanted to collect his Giro.
We believe that lone parents want to achieve independence and regain personal control over their own lives. In response to the noble Lord, Lord Henley, I should point out that the offer of work for them is not a problem but an opportunity which they are pressing us to deliver. They know, as we do, that the average difference for a lone parent not in work and one in work is £50 per week. That money can transform the living standards, opportunities and aspirations, and, indeed, the quality of life, for them and their children.
Like the noble Earl, Lord Russell, I too have studied the research of Jonathan Bradshaw. It is entirely right that he should draw to our attention tonight the fact that lone parents in this country face hurdles as regards getting back to work which are higher than those which exist almost anywhere else in Europe. It is our job in the first place to dismantle those hurdles so far as we can and, if not, we must help them to overcome them. To do so, the Government are committed to introducing help and advice from a proactive Employment Service. Once the youngest child is in the second term of full-time school, lone parents will be assisted by developing a package of job search, training and after-school care for their children to help them off benefit. Moreover, we will introduce something that we have never had—a national childcare strategy which will plan provision to match the requirements of the
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modern labour market and help parents, especially lone mothers, to balance family and working life. That will entail after-school care and early years development plans. A key feature will be a substantial expansion in out-of-school childcare, at least £150 million of which will be funded by the National Lottery.
There is one other group that has not been mentioned in tonight's debate but it is one that I know is of considerable concern to your Lordships. They may linger for many years on benefit yet would like to work. I am referring to disabled people. They currently find themselves in two situations. They are either receiving long-term sickness benefits with little encouragement to get back into appropriate work which they may feel they can do or they are registering for work but have some partial incapacity which makes finding work very difficult. That is especially true for what we call the "twilight decade". I have in mind those middle-aged men who may have spent years in quite heavy manual work who may have a partial disability—for example, back trouble or angina—but who, given their health record, together with their age and lack of skills, are unlikely to be offered a full-time job and, if they were, would be unlikely to be able to hold it down. But it does not have to be all or nothing. We shall be looking carefully at the problems faced by these groups and seeking to ensure that the benefit system provides more help for the special needs of those disabled people who are able and who wish to get back into work, whether full-time or part-time.
The noble Earl, Lord Russell, referred to the Citizens' Commission. Like him, I have had the privilege of reading that report in advance of its publication and I found it illuminating. I entirely agree with the noble Earl that it shows very clearly how attached people are to the labour market: they want to be financially self-supporting and do not want to linger in dependency—indeed, the subject of tonight's debate. Too often—and I am sure that the report is right—the welfare system has supported people outside the labour market rather than helping them to participate in it. Our strategy will be designed precisely in that direction so as to help people get back into the labour market.
The noble Earl raised many matters. If I have not answered all of them this evening, I hope that he will allow me to deal with them by letter. In particular, he mentioned the possibility of merging income support with family credit and suggested that we should ease the process. That is certainly a question which Martin Taylor will be reviewing and considering. Obviously we have a very real interest in the matter. However, as the noble Earl will know, there is a problem, given the fact that, unlike income support, family credit for the most part—that is, with the exception of things like earnings top-up—is a family/child-related benefit and, therefore, is not something for which single people are eligible except in pilot schemes. Indeed, there could be a problem, although I am not saying that there would be, of a possible incentive to reduce hours. Nonetheless, that is something that we are actively looking at because, if we could smooth the transition between the two, it would surely be right to do so.

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The noble Earl also asked whether we would consider using the social fund for deposits. That is an attractive idea. However, in the past there seems to have been considerable abuse of the system in that in the previous system, costs jumped from £18,000 a year in 1981 to over £10 million before it was finally abolished. In the light of that experience, we believe that the rent guarantee schemes of voluntary and local authorities continue to prove to be a better and more reliable way forward.
The noble Lord, Lord Henley, referred to the problem of seeking to cap social security expenditure as his Government failed to do. The noble Lord is right: his Government did fail to cap social security expenditure. The reason for that was that social security expenditure grew to subsidise the benefits of the previous Government's economic failure. Those benefits of failure from jobseeker's allowance to income support, to extra money on housing benefit and council tax benefit going to the unemployed amounted to £10 billion in real terms in 1979 but over £30 billion in today's money—a leap of £20 billion in real terms. The response to that is to tackle those failings. We firmly believe that the best way of ensuring a cap on social security expenditure—and, indeed, I hope a reduction in social security expenditure—will be achieved because we are working with the grain of what people want; namely, to come off social security benefits and be able to move into work.
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In conclusion, I have outlined a large programme of measures which we believe will improve financial incentives, help people to increase their employability and make them attractive to prospective employers. People who need financial support while they are looking for work will of course continue to receive it, but we will also be providing a wide range of services which will give them both the skills and the confidence which will in turn help them to return to work.
It bears repetition: this Government believe that, for those able to work, work is the best form of welfare. It is also—and the report of the Citizens' Commission shows this to be the case—what they want to do. As one claimant said, "They"—presumably the previous Government—"have taken away everything that would help you get back into work". While another said, "The worst thing is that they have made people feel that they are not part of society". Then, from a person who was one of the long-term unemployed under the previous Government, "People who have been unemployed for years have all their initiative, self-will and self-worth taken away. Then they expect us to get a job".
We believe and hope that we understand the difficulties that people may face when making the transition back into work. We are committed to providing the active support that they need to achieve that aim. We will enable them to do what they most want to do; namely, escape the path of poverty and get back into work.
House adjourned at eighteen minutes past seven o'clock.