Lords Sitting of 9 June 1997

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

Local Authorities: Release of Capital Receipts
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
When the £5 billion capital receipts of local authorities will be made available to them, and whether they will discuss with the local authorities the phasing of the release of this money, both to assist the building of new housing units and to reduce unemployment in the building sector.
The Parliamentary Under-Secretary of State, Department for the Environment and Transport (Baroness Hayman): My Lords, the Local Government (Supplementary Credit Approvals) Bill lays the basis for the Government's capital receipts initiative. The Government will ensure that any resources released are available to local authorities to use in support of priority schemes which represent good value for money and meet key objectives. These objectives will be set out in a consultation document which will be available shortly and will be sent to the local government associations, local authorities in England and to other interested parties.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for that Answer. Is the noble Baroness aware that it satisfies some in your Lordships' House from all round the Chamber, including myself, who persistently pressed the previous Government to put such a policy into operation to enable local authorities to provide more housing for rent? Is the Minister aware that had the previous Government continued with the policy that they inherited there would have been approximately 600,000 more houses available today to let to people who are in trouble and who need low cost rented housing that is usually provided by local authorities?
Baroness Hayman: My Lords, I am well aware of my noble friend's longstanding concern in this area which is shared by many local authority associations and individual local authorities. We are anxious to reverse a policy which caused great damage both to the construction industry and to the interests of people in this country who are living in inadequate housing.
Viscount St. Davids: My Lords, what are the implications for the public sector borrowing requirement of the release of these funds?
Baroness Hayman: My Lords, we have always recognised that these plans had public expenditure
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implications. We are committed to the phased release of capital receipts from council house sales, and equally to prudent economic management.
Lord Barnett: My Lords, will my noble friend clarify that reply? Is she saying that the Treasury has approved this measure and that it will not count against the public sector borrowing requirement, or that it will and the phasing will mean there will be only a small amount each year for many years?
Baroness Hayman: My Lords, the phasing is one of the issues on which we shall consult.
Noble Lords: Oh!
Baroness Hayman: My Lords, I am glad to have thrilled those on the Opposition Benches. I point out to my noble friend that the manifesto commitment clearly indicated that there were public expenditure implications and therefore we would have to consider the phasing of the release of these assets. I remind my noble friend that the manifesto commitment stated that,
"capital receipts from the sale of council houses received but not spent by local councils will be reinvested in building new houses and rehabilitating old ones. This will be phased to match the capacity of the building industry and to meet the requirements of sound economic management".
Lord Ezra: My Lords, will the noble Baroness kindly confirm that when the funds are released a due proportion will be made available for the improvement of existing housing stock because at least 10 per cent. of it is in urgent need of repair? There is no way in which new houses can be found to replace these old and inadequate houses.
Baroness Hayman: My Lords, I very much take the noble Lord's point. We have to consider the priority areas for spending which will certainly include plans for badly needed repairs to dilapidated stock.
Lord Bruce of Donington: My Lords, will my noble friend confirm that the effect of this step on the public sector borrowing requirement in the immediate future will be nil; and that it will take some little time for the expenditure on wages and various other factors of cost to filter through in detail to the consumer market, by which time unemployment will have been reduced and there will be further taxation revenues exactly because of the Government's new steps?
Baroness Hayman: My Lords, my noble friend is absolutely right to point out that there is an important additional benefit as well as the housing benefit involved in the proposal; namely, it can feed into our strategy to reduce unemployment and to get a skilled workforce back to work, which in turn will generate receipts in terms of income taxation.
Lord Skelmersdale: My Lords, can the Government explain how they can solve the basic conundrum that in general those local authorities with the most capital receipts have the least need for housing?
Baroness Hayman: My Lords, it is a conundrum, but we believe that it is possible to solve it by having a

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balanced strategy which looks at both the areas where the receipts have been generated and those with the most housing need and balances the two demands.
Lord Stoddart of Swindon: My Lords, is my noble friend aware that she should not take lectures from the wastrels opposite about public expenditure bearing in mind that the expenditure on housing will be highly desirable expenditure whereas the party opposite used thousands of millions of pounds to no good use, not least on the BSE crisis which they brought about themselves?
Baroness Hayman: My Lords, I shall certainly note my noble friend's advice. I am sure that I can have plenty of lectures from this side of the House before I need to listen to that side.
Lord Bowness: My Lords, perhaps I may return to the problem to which the noble Lord, Lord Skelmersdale, referred. How do the Government propose to overcome the problem that in general where there is the greatest need there are the least receipts and vice versa? Will the Minister confirm that her balanced strategy does not involve taking away receipts from those authorities which have generated them? In some instances the spending of those accumulated receipts will reduce the authority's income by the interest lost. If that happens, does she envisage that it will lead either to higher council tax or to greater levels of government grant to those authorities?
Baroness Hayman: My Lords, we do not envisage that we shall be talking about greater levels of council tax. If noble Lords will consider the proposed enabling Bill, the mechanism is through supplementary credit approvals. They will allow us to make exactly those rational decisions about distribution between areas where the receipts were generated and those with the greatest need for housing.
Lord Dean of Beswick: My Lords, I am rather surprised that the noble Viscount, Lord St. Davids, asked the Minister to explain what effect the proposal would have on the public sector borrowing requirement. When I asked the noble Viscount a similar question from the other side, he could never answer it.
Baroness Hayman: My Lords, I am not sure that I should intervene in private grief.
Lord Hayhoe: My Lords, will the Minister reply to the specific question asked by the noble Lord, Lord Barnett, about whether there was Treasury approval for this change; and if so, for how much?
Baroness Hayman: My Lords, if noble Lords opposite think that the Chancellor of the Exchequer was not aware of what was in the Labour Party manifesto, they are deceiving themselves. The exact scale and timing of the expenditure has yet to be settled. In advance of that settlement, I am unable to give the precise figure to the noble Lord.

Quota-Hopping: IGC Discussions
2.46 p.m.
Lord Lucas: My Lords, on behalf of my noble friend Lord Pearson of Rannoch, I beg leave to ask the Question standing in his name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what they hope to achieve at the Intergovernmental Conference with regard to quota-hopping under the common fisheries policy.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, under the previous Administration, the number of quota hoppers in the UK fleet rose to 160 vessels. The last Government tabled a protocol for discussion at the Intergovernmental Conference. That proposal has met with no support from other member states. Moreover, it would not have provided any quick solution, nor removed any quota hoppers from the UK registers. This Government attach great importance to achieving progress on this issue. We are striving to secure the best possible deal before the conclusion of the IGC. This includes provision for economic links between those who use our national quota and our local fishing communities.
Although quota-hopping has attracted a lot of public attention in the run-up to the IGC negotiations, it is only one of the problems facing the UK fishing industry. We need to work with our industry, the Commission and other member states to build a long-term future for the fishing industry which both conserves fish stocks and meets the interests of the fishing communities. This Government are committed to a thorough overhaul of the common fisheries policy.
Lord Lucas: My Lords, is the noble Baroness aware that her right honourable friend the Prime Minister said in a letter dated 28th April of this year to the Scottish Fishermen's Federation that,
"Labour has not ruled out withholding agreement at the IGC if the conclusions are unsatisfactory".
Is that still the position? Will the matter of quota-hopping be on the formal agenda for the IGC or merely discussed at the margins?
Baroness Symons of Vernham Dean: My Lords, I am aware of what my right honourable friend the Prime Minister said. That remains the position.

Bahrain: Human Rights
2.50 p.m.
Lord Avebury Lord Avebury asked Her Majesty's Government:
What discussions they have had at ministerial level with Bahrain, and whether their policy of encouraging democracy and human rights extends to Bahrain.
Lord Carter: My Lords, my honourable friend the Minister of State for Foreign and Commonwealth

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Affairs, Mr. Derek Fatchett, met the Bahraini ambassador on 15th May and the Bahraini minister for communications and transport on 20th May. Human rights issues were discussed. My right honourable friend the Secretary of State for Defence met the Bahraini under-secretary for defence on 28th May. As my right honourable friend the Foreign Secretary made clear on 12th May in his mission statement, we will encourage the pursuit of democracy and will put human rights at the heart of our foreign policy. That policy will apply equally in our dealings with Bahrain. We will continue to have regard for the many other aspects of our long-standing relationship.
Lord Avebury: My Lords, I am very glad to hear that Answer. Does the Minister recall that in 1973 a partially democratic constitution was granted by the emir providing for two-thirds of the parliament to be democratically elected but that in 1975 the emir abrogated that constitution and has ruled by decree ever since? Will the Government seek to persuade the rulers of Bahrain, with the help, if possible, of their European Union partners and the United States, that the leaders of the opposition who are now detained without trial should be released and that they should enter into discussions with a view to reintroducing the 1973 constitution after a lapse of 22 years?
Baroness Symons of Vernham Dean: My Lords, I am afraid I have had a rather heady cocktail of vaccinations. I apologise to the House. The noble Lord, Lord Avebury, raises questions in relation to the role of the UK Government and the restoration of democratic government in Bahrain. We are discussing these matters. I do not think that any of my noble friends would dissent from the view that we should like to see the pursuit of democratic principles throughout the world, and that the same applies in Bahrain. However, we must show mutual respect for traditional forms of government. As the noble Lord will know, the shura, the consultative system, is long-established in the Arab world. It is not for us to dictate the form and time-frame for political change. However, the noble Lord may be assured that we will encourage the Bahraini Government to pursue wide-ranging consultation in determining Bahrain's political future.

Financial Services: Legislation
2.52 p.m.
Baroness Turner of Camden: I beg leave to ask the Question standing in my name on the Order Paper. In putting the Question, I declare my interests. My trade union has many members working in the financial services industry. In addition, I was until last month chairman of the PIA ombudsman council and am currently chairman of an organisation known as the Financial Services Forum, concerned with independent financial advisers.
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The Question was as follows:
To ask Her Majesty's Government with whom they intend to consult concerning the proposed new regulatory regime for financial services, and what timetable they have in mind.
Lord Haskel: My Lords, my noble friend's interest and expertise in financial services are well known. She will be aware that much consultation took place with practitioners and consumers during our time in opposition. Proposals emerged in favour of consolidation and integration. Work is now in hand to take those proposals forward, and there will be opportunities for all to contribute to the process. The transfer of responsibility for banking supervision to the Securities and Investments Board will be covered in the Bank of England Bill, which will be introduced this Session. The Government plan to publish a draft Bill to reform the financial services regulators for consultation in the first half of 1998.
Baroness Turner of Camden: My Lords, I thank the noble Lord for that response. Is he aware that many people working in financial services fully support the notion that there should be a thorough review of regulatory systems, many of which are fragmented, confusing and not consumer-friendly.
The industry is very complex. The unions involved came together in a body called the Alliance for Finance and would welcome the opportunity to have some input. Will there be a White Paper, with an opportunity for this House to have some input? I am well aware that there are a number of noble Lords on all sides of the House with experience and expertise in financial services.
Lord Haskel: My Lords, no decision has yet been taken regarding a White Paper. However, there will be plenty of opportunity for consultation. Indeed, the noble Baroness may have noticed that in today's Financial Times it is reported that my right honourable friend Mrs. Ann Taylor, the Leader of the Commons, says that she is keen to allow standing committees scrutinising legislation to receive submissions from outside bodies.
Lord Ezra: My Lords, will the noble Lord kindly indicate whether it will be the intention, following on from the supplementary question asked by his noble friend Lady Turner, to simplify the new regime? Does he agree that the existing regime is far too complex? Will the Government bear in mind that the simplest way of operating control of financial services is to make a distinction between wholesale operations, which are the work of professionals, and retail operations, which involve members of the public?
Lord Haskel: My Lords, it is the Government's intention to separate retail and wholesale regulation. The purpose of the reform is to simplify and streamline the whole system of regulation so that it can be more responsive and effective in the 21st century.
Lord Marsh: My Lords, does the noble Lord accept that there is a wide-ranging argument relating to the

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whole future of regulatory authorities in general and some fundamental issues, of which financial services are one part? Is the discussion of financial services likely to take place against the background of a general review of some of those issues and of how regulation works in modern society?
Lord Haskel: My Lords, the Government are committed to statutory regulation. They are keen that the City of London should retain its pre-eminence but that the public interest should be at the heart of regulation. Proper and clear accountability should be apparent. We do not suggest an overbearing bureaucracy but a more efficient and effective regulator to adapt for the modern financial world.
Lord Campbell of Alloway: My Lords, is it proposed that the sanctions for breaching the regulations should be civil, criminal, or an amalgam of both?
Lord Haskel: My Lords, that will become apparent when the Bill is published.
Lord Dean of Beswick: My Lords, is the Minister aware that when the Financial Services Bill passed through this House, Labour's Front Bench spokesman warned the Government that its provisions would not be sufficient to achieve the objective and that that comment, like others, was totally ignored?
Lord Haskel: My Lords, I was not a Member of this House at the time; however, I can well imagine that such comments were made. The Government are now setting out to put such matters right.
Lord Mackay of Ardbrecknish: My Lords, it appears from the replies that a little more preparation should have been done before the Chancellor of the Exchequer made his premature announcement. Will the Minister confirm his statement that a draft Bill will be published early in 1998? Does that therefore mean that a full Bill will not be presented to Parliament until the 1998–99 Session and will therefore not appear on the statute book until 1999? Is not that length of time ridiculous? Will it not lead to the equivalent of planning blight in the regulators that already exist as their people move on to new pastures in the knowledge that, some time towards the end of the century, the shutters will come down on their current jobs?
Lord Haskel: My Lords, as I said, the banking regulation Bill will be presented to the House during this Session. The Government plan to publish the draft Bill on financial services regulation for consultation in the first half of 1998. There will be some delay in the financial services regulation. However, the Government are anxious to present their proposals. In their Plans for Business presented during the general election, their commitment to reorganising financial services
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regulation was clearly stated and they want no misunderstanding as to the fact that they intend to proceed.
Lord Peyton of Yeovil: My Lords, given the proposed delay in introducing financial services regulation, are we to take it that the Government are actively engaged in the search for comprehensibility, and that they accept that comprehensibility in this field is a virtue?
Lord Haskel: My Lords, the Government are consulting with the practitioners and the public. The public are committed to having pensions and all kinds of financial services and it is difficult for them to change from firm to firm. It is for that reason that the Government are anxious to consult with the public and with the practitioners.

Privileges: Select Committee
3 p.m.
The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That the Committee for Privileges be appointed and that as proposed by the Committee of Selection the following Lords together with the Chairman of Committees and any four Lords of Appeal be named of the committee:

L. Allen of Abbeydale,

L. Campbell of Alloway,

L. Carter,

L. Cledwyn of Penrhos,

V. Cranborne,

L. Glenamara,

L. Jenkins of Hillhead,

L. Mowbray and Stourton,

L. Nathan,

L. Richard (L. Privy Seal),

L. Strabolgi,

L. Strathclyde,

L. Weatherill,

V. Whitelaw,

L. Wigoder;

That the Committee have power to appoint sub-committees and that such sub-committees have power to appoint their own chairman; and
That the Committee have power to co-opt any Lord for the purpose of serving on any sub-committee.—(The Chairman of Committees.)
On Question, Motion agreed to.

Procedure of the House: Select Committee
The Chairman of Committees: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That the Select Committee on Procedure of the House be appointed and that as proposed by the Committee of Selection the following Lords together with the Chairman of Committees be named of the committee:

B. Anelay of St. Johns,

L. Brougham and Vaux,

L. Browne-Wilkinson,

E. Caithness,

L. Carter,

L. Chesham,

V. Cranborne,

B. David, E. Ferrers,

L. Fraser of Carmyllie,

L. Gladwin of Clee,

B. Hamwee,

L. Harris of Greenwich,

L. Irvine of Lairg (Lord Chancellor),

B. Jay of Paddington,

L. Jenkins of Hillhead,

L. Mackay of Clashfern,

L. Richard (L. Privy Seal),

Ly. Saltoun of Abernethy,

B. Scrota,

L. Skelmersdale,

L. Strathclyde,

V. Tenby,

L. Tordoff,

L. Weatherill,

B. Young.—(The Chairman of Committees.)

On Question, Motion agreed to.

Firearms (Amendment) Act 1997 Compensation Scheme
3.1 p.m.
The Parliamentary Under-Secretary of State, Home Office (Lord Williams of Mostyn)The Parliamentary Under-Secretary of State, Home Office (Lord Williams of Mostyn) rose to move, That the draft scheme laid before the House on 3rd June be approved [1st Report from the Joint Committee].
The noble Lord said: My Lords, the draft compensation scheme which we are debating today has been laid under the terms of Section 18 of the Firearms (Amendment) Act 1997.
The Government accept the need to pay compensation to those firearm certificate holders and registered dealers whose high-calibre handguns become prohibited by the 1997 Act. The draft scheme which we are debating today offers fair compensation for the weapons that will become prohibited and the ancillary equipment used only in connection with those weapons. Subject to parliamentary approval of this scheme, the hand-in period for the weapons can begin on 1st July, with the appropriate payments starting to be made from that date.
I shall briefly explain how the scheme is intended to operate. Before the hand-in period begins, certificate holders and dealers will receive full details of the final scheme, together with application forms and advice on where and when to surrender their weapons. They must
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complete the appropriate form in respect of their weapons and equipment and hand it to the police at the time of surrender. Individuals will have a choice of three options. They may choose to accept a flat rate of £150 for each weapon. Alternatively, they may choose a standard rate for their weapon from the list of published values at Annex A of the scheme, which contains the majority of the most commonly held large-calibre handguns. If they do not wish to accept the flat rate payment, and if their gun is either not on the list at Annex A or is markedly different from those that are on the list, they may choose the third option. That means submitting a claim supported by an independent valuation or other evidence corroborating the value of the items surrendered.
Similar arrangements will apply to dealers and they will be able to claim under any of the three options. However, they will be able to claim under the third option even though their stock may already be listed at Annex A. That is because the second option reflects second-hand values while dealers' stocks will either be new or second-hand and have a higher retail value. I shall say more about the details of the values in the lists in a moment.
The weapons must be handed over to a designated police station, as specified by the chief constable for the force area concerned. Special arrangements will be made with dealers because of the number of weapons they will have in stock.
Similar arrangements will apply to expanding ammunition and to ancillary equipment which can only be used in connection with firearms that become prohibited. The corresponding values are set out in Annexes B, C and D of the draft scheme. That is in accordance with the requirements of Section 17 of the 1997 Act and Section 16 in respect of expanding ammunition. The equipment will not itself become prohibited but the Government accept that where it cannot be put to any other use, such as for rifles or other legitimate uses, then compensation should be paid.
The claim forms will initially be checked by the police, who will then send them to the Firearms Compensation Section (FCS) of the Home Office, where they will be processed as quickly as possible. The FCS has been set up to handle claims for the 160,000 high-calibre handguns that will become prohibited and to deal with the claims for ancillary equipment. Fifty staff have been recruited and trained and the target is to deal with all claims within 18 months. The majority of the straightforward claims under options A and B will of course be dealt with quickly. A computer system has been introduced to ensure that each claim can be dealt with thoroughly and without delay and with the minimum of paperwork having to be created.
Once the claim has been settled and the claimant has no further interest in the guns or equipment, the FCS will issue disposal instructions to the police force storing the weapons and equipment and they will be destroyed in accordance with the local force practice. In a very few cases some weapons or equipment may be retained by police forces for training purposes or taken for public display in museums.
I now turn to the details. Sections 16 and 17 of the Act make clear that the weapons and ancillary equipment must have been in the claimants' possession on or immediately before 16th October 1996, the date of the previous Government's announcement of their response to Lord Cullen's report. The draft scheme uses the values of weapons and equipment in the period immediately before that date. The values listed in Annexes A, B and D reflect the advertised prices as new in the trade journals at that time minus 25 per cent. for normal depreciation. These are the notional prices that we believe individuals might have obtained had they sold their guns or equipment at that time.
For individuals who submit independent evidence of the retail values of their guns and equipment and claim under option C, the FCS will normally pay out the retail value less 25 per cent. to reflect normal depreciation.
For dealers who submit independent evidence of the value of their stock and claim under option C, the FCS will normally pay out the cost price plus 25 per cent., which is a fair reflection of the return which they could have expected had the stock items been sold on. My officials have had contact with a number of gun dealers whose views have been taken account of during the preparation of the draft scheme. However, we have used published or advertised values of guns and equipment as they appeared in trade journals and other sources rather than simply the values cited by one or more of the dealers consulted. I believe that that is the best way of obtaining fair values for both claimants and ultimately the taxpayer.
There will be some concern about the position of dealers, gun clubs and others who will suffer losses as a result of the ban coming into effect. This was debated at length in this House during the passage of the Bill and it was decided at that time that such losses should not fall within the terms of the Act. The draft scheme therefore enables dealers and others to be compensated only for the weapons and certain ancillary equipment which they hand in; it does not extend to business losses, nor to equipment used in the manufacture of prohibited guns or ancillary equipment.
It may be helpful if I make clear the position on small-calibre pistols. These do not form part of the draft scheme because they are not prohibited by the Act. It is the Government's intention that there be a free vote in another place and, if the firearms Bill is eventually passed, then this category of handgun will also become prohibited.
In that expectation, certificate holders and dealers who own small-calibre pistols may hand in those weapons voluntarily to designated police stations at the same time as other handguns are surrendered. They will have to complete an application form, which will be processed by the FCS, and they will receive ex gratia payments for those weapons and related ancillary equipment. Details of these payments are available in the Library of the House and will be circulated to all claimants at the same time as the details of the compensation scheme itself. The values of these ex gratia payments have been calculated in exactly the
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same way as for the main lists—that is, on the basis of market values in the period immediately prior to last year's statement on 16th October. If the Bill is passed, the ex gratia list would become a formal scheme in its own right. That, however, is not the subject of today's debate but a matter for debate during the relevant stages of the Bill.
We believe that this draft scheme is fair and that it will properly compensate the legitimate owners of prohibited weapons and related equipment. On that basis, I commend it to the House. I beg to move.
Moved, That the draft scheme laid before the House on 3rd June be approved [1st Report from the Joint Committee].—(Lord Williams of Mostyn.)
3.10 p.m.
Earl Attlee: My Lords, I do not feel that there is an insurmountable difficulty with this compensation scheme. However, there are one or two points of concern and some assurances are required from the Minister.
We have debated the related primary legislation ad nauseam. I do not propose to repeat the arguments. However, the provisions of this legislation do not enjoy a favourable cost-benefit analysis. The Minister has already answered my written Parliamentary Question concerning records that will be kept of the compensation expenditure which will be incurred under the 1997 Act and the Bill currently going through another place. The Government may rest assured that in about 18 months' time we shall ask the Minister questions about crime with handguns and whether good value for money has been obtained for taxpayers' funds.
The scheme itself is obviously designed to ensure that the maximum number of shooters go for the A or B schemes, as so carefully described by the Minister. I am sure that, on reflection, most shooters will go for the B scheme, even if they feel the valuation to be slightly on the low side. However, they may be deterred if they think that their compensation payments will be a long time in coming. On the other hand, if they are confident that they can hand in their hardware and obtain compensation within 30 days, they will not want the anguish of the option C scheme, as it is fraught with unavoidable difficulties and delay. That will sit conveniently with the new Government's policy on late payment of invoices and the statutory right to interest. I understand that the provisions will apply equally to the Government themselves.
The Minister may claim that there may be questions of identification of weapons. He may be right. But he will be aware that a shooter who attempts to defraud the scheme will leave himself open to prosecution for serious offences and the authorities will have good quality evidence. Will the Minister give an undertaking that all option B compensation payments will be made within 30 days? If 30 days is not long enough, what will the period be?
The list of guns under the option B scheme is not so comprehensive as in the original scheme. Bearing in mind the desirability of having the maximum number of guns come under the option B scheme, why are there no

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Luger or Webley handguns listed in the option B scheme? They are extremely common makes. Why go to the trouble of valuing each one? I should have thought that they would have been included, since the Minister has just claimed that his list included the majority of handguns. It might be helpful to the House if the Minister could provide an explanation.
There is a problem with paragraph 10 of the scheme, which reads:
"However, individuals may only claim compensation under Option C for guns, expanding ammunition or equipment which arc not listed under Option B, or for guns which arc so listed but which have been adapted or customised"—
I repeat, adapted or customised—
"in such a way as to significantly increase their value".
What happens if a collector has a handgun which is on the option B list and is not adapted or customised in any way but still has great historical value, with very good provenance?
I come to my final concern. Shooters will reluctantly accept the need for the legislation, or at least its inevitability. However, they will be very unhappy with the thought that their handguns, which they bought for perfectly legal sport, could end up being issued to a third world army. Logic suggests that there may be well over 1.000 Browning 9mm pistols. I understand that they are generally known as the Browning Hi-Power. Personally, I shall continue to use one, but noble Lords will be relieved to know that it is currently safely locked up in the armoury at the TA centre and also belongs to the Secretary of State for Defence. But I digress. Such a large quantity of handguns would be quite attractive to export.
Presumably, given that a firearms certificate is required for any pressure-bearing component of a firearm, a certificate is still required, even if the owner has sawn the handgun into two parts. If that action were taken, I do not think that any offence would have been committed. So the question is: will a shooter be able to render his handgun unusable but complete, hand it in and then receive full compensation under option B? If he could do so, it would be reassuring for the shooting community. I look forward to hearing the Minister's reply.
3.16 p.m.
Lord Swansea: My Lords, I shall be fairly brief. This is the first time that I speak from these Benches, which I occupy as a direct result of the Bill which gave birth to this scheme. I am glad to see that the Government are offering what appear to be some sensible prices for many pistols and accessories in common use, plus some others which may not be popular for target shooting. However, although the list appears at first sight to be comprehensive, it is in fact confined to pistols in current production, including replicas of earlier models. I can find no reference to earlier models, such as Luger, Mauser, Walther, etc., except for a brief mention under "Miscellaneous" of the Walther PPK—one model only. However, under "Magazines", there is a comparatively large section devoted to only a limited number of
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Walther models and only one mention of magazines for the Luger pistol. Of other types of pistol or their magazines, there is no mention.
It may be that the list is based on the current manufacturers' prices for pistols in current production, which may be deemed to be in "as new" condition. It may be difficult to put an exact price on older pistols, as so much may depend on their condition, but it might be of help if some older models had a "bracket" of values which they might be presumed to have had.
Finally, before long we shall be faced with a further Firearms (Amendment) Bill relating to pistols of 22 calibre, which the present Government intend to prohibit altogether. Following the presumed passage of that Bill, we shall again he faced with a similar order, relating to pistols of that calibre. Your Lordships may be forgiven for thinking that that is a somewhat untidy way of doing things.
3.19 p.m.
Lord Stoddart of Swindon: My Lords, the two previous speakers from the Back Benches dealt with the detail of this scheme. They did so extremely well and therefore I do not need to expand on their remarks. But, unlike the noble Earl, Lord Attlee, who seems to believe that this matter has been discussed ad nauseam, I do not think that such is the case. I believe that every time the matter is raised the arguments against the legislation should be made, and I shall make them. In fact, the scheme does not give scope for increasing or altering the range of compensation. That is a great pity. But, as I said, it gives the opportunity to return to the sheer injustice of the Firearms (Amendment) Act 1997.
I find that the public have a more balanced view of legislation as the distance in time from the awful tragedy of Dunblane increases. The Government should take that into account. The public increasingly appreciate that the Act and now this order undermine every principle of justice as it is understood by reasonable people. The Act imposes a collective punishment on tens of thousands of innocent people, guilty of no crime, for the actions of a single madman who would not have been in possession of legal firearms if a senior policeman had not failed in his judgment and duty. If that is repeating something ad nauseam, then I shall repeat it ad nauseam. That is what happened and that is what caused this grave injustice.
The Act is unjust because it kills a sport and a pastime enjoyed by decent, respectable, law-abiding taxpayers from all walks of life. It imposes fines—I shall explain why—on thousands of people who have done no wrong. They are fined because the full market value of handguns will not be paid. The full market value of handguns is the market value before 16th October and not at or after it. Many people will therefore be fined because they will receive a lesser value for their firearms than they otherwise would.
The Act takes away the livelihood of many businesses without proper compensation for loss of trade and business. This House, shooters and the traders who will be disadvantaged by the order will be interested to know that the defeated Tory MPs who voted to refuse dealers

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and manufacturers proper compensation for loss of trade will themselves receive compensation for loss of office by means of a resettlement grant which will give them at least 50 per cent. of their final salary; indeed, many will receive 100 per cent. of their final salary of £43,000. People may care to take note of that and, indeed, that the former Secretary of State for Scotland will receive, in addition, 25 per cent. of his ministerial salary by way of severance pay.
Therefore, those who brought in this Act are receiving compensation for loss of trade, so to speak, which they denied to the people who sell and manufacture guns. The minimalist payment under this order cannot possibly compensate owners of handguns, clubs and businesses for their tangible losses, let alone for the mental anguish of being demonised and insulted. They will not easily forget the Goebbels-esque tactics used to cast them in the role of potential killers and to make them social pariahs in order to rush unjust legislation through Parliament.
There is now the prospect—we heard about it again from my noble friend, who is a decent, quiet man—of a new firearms Bill being introduced and that will compound what the existing Act has already done. There can only be anger and cynicism when we see a situation where the only men and women who can possess guns are those in blue uniforms and criminals. Who can blame law-abiding gun owners and traders for feeling embittered. I understand their feelings even if others do not. They know that they have been sacrificed on the altar of political expediency and personal political survival—which did not come off; I call that poetic justice. They also know that there is no guarantee that further massacres will not take place by whatever means and that gun criminality will not increase rather than decrease.
We have to vote for the order because it provides some sort of compensation. But I repeat: I believe that the Bill was a bad Bill; it was an unjust Bill; it was an outrageous Bill; and I look forward at some time, even in the distant future, to its repeal.
3.26 p.m.
The Earl of Onslow: My Lords, I echo totally what was said by the noble Lord, Lord Stoddart. My noble friends on the Front Bench have absolutely nothing to be proud of over this issue. They penalised a large and legitimate section of the community because they panicked and hoped to get back into office. But they panicked and failed to get back into office.
The Front Bench opposite, having got into office, should have shown some magnanimity and said, "We do not have to follow the same form of panic". But they have gone down the same road and made the matter even worse. Some of us are in the minority; some of us feel that we should stick up for minorities to enable them to follow their lawful pursuits and hobbies. There is something cloying and unattractive about the whole of the firearms Act, which was the Act of a man who attempted to despoil English habits to be sure that he was re-elected as Secretary of State for Scotland. He failed to appease; he only panicked.
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The Bill was bad. However, I suppose we have to vote for compensation, though none of us should be anything other than ashamed of the way that Parliament behaved in its panic over minorities.
3.27 p.m.
Lord Burton: My Lords, perhaps I can ask the Minister three short questions in the light of what he said. First, he said that 50 staff had already been trained to help the police in regard to the handing in of weapons. Are those the people who will also carry out the valuations? It would be remarkable if that were so and they could be trained in such a short time. The revised list only appeared on 3rd June. If those are the people carrying out valuations of pistols, will there be any appeal? And, if so, what form will it take?
Secondly, are the police satisfied that they can implement the instructions that Parliament are about to give them in the required time? I have considerable doubts and the police themselves may have apprehensions.
Thirdly, how will those who live some distance from a central police station comply, particularly under option C? For instance, the owner of a weapon may live in the western or northern isles and it may take two or three days to reach the central police station in Inverness.
Earl Attlee: My Lords, I listened to the contributions of the noble Earl, Lord Onslow, and the noble Lord, Lord Stoddart of Swindon, with some interest and I agree with their feelings.
Noble Lords: Order!
Earl Attlee: My Lords, I must ask them, if we had kicked the ball into touch in the last Session—
Noble Lords: Order!
Lord Stoddart of Swindon: My Lords, I do not believe the noble Earl, Lord Attlee, can speak again unless we re-open the debate and the noble Earl, Lord Onslow, and I are permitted to reply to the questions which the noble Earl obviously wants to ask us.
Baroness Blatch: My Lords, I must take some blame for the situation that has arisen. I thought that the noble Earl, Lord Attlee, asked whether, before the noble Lord sat down, he could pick up a point that had been made. My understanding has always been that one can intervene on a point if one prefaces the intervention with, "Before the noble Lord sits down".
3.30 p.m.
Lord Rodgers of Quarry Bank: My Lords, it is probably for the convenience of the House if I intervene at this point as the List of Speakers indicates, not perhaps to engage in the rather fiery exchanges which we have heard but to say that I understand the strong feelings which the Firearms (Amendment) Bill originally aroused. Although I do not intend to follow the noble Lord, Lord Stoddart of Swindon, in going

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through the Second Reading debate, I want to make some passing remarks about the Bill's progress through its various stages. Although I and most of my colleagues on these Benches supported the Bill and took the view that it should go further, we did so on a free vote. Experience suggests that it would have been better if the previous Government had chosen to proceed first with a White Paper and widespread consultation before publishing the Bill. But that is part of history and I would not wish to go further with that today.
My colleagues and I were deeply concerned at all stages that there should be fair and adequate compensation of all those disadvantaged by what I think was exceptional legislation. Your Lordships will remember that my noble friend Lord Lester of Herne Hill moved an amendment at Report stage on 4th February to provide a compensation scheme for firearms dealers. The amendment received a large measure of support from all sides of the House and was indeed carried by 121 votes to 110. That decision was ultimately reversed in another place but I want to put it on record again that we felt at that time and indeed feel now, although it is not a time when we can proceed on the issue of substance, that wider compensation should properly have been paid. That view was shared on all sides of the House, including what were then the Labour Benches in opposition.
I wish to ask the Minister two questions. It may be that I either missed what he said or in one case misunderstood what he said. I do not know whether he referred in the course of his remarks—if so I missed it—to the total cost of compensation now assumed under the scheme. As the noble Baroness, Lady Blatch, will recall, it was originally anticipated that the cost of the Bill in compensation would be £25 million to £50 million. But that figure was raised to £150 million in view of amendments which the Government made to the Bill in another place. Can the Minister say whether that is the present estimate of the cost of the legislation and the compensation scheme or whether some revised figure now applies?
With regard to my second point, I may have misheard what the Minister said. I do not believe for a moment that he can follow the practice sometimes followed by Ministers in the previous Government of reading out a speech prepared for another place. However, I understood him to say, in referring to the further Bill to deal with small calibre pistols, that there would be a free vote in another place. If the noble Lord did say that, are we to understand that there may not be a free vote on the Government Benches in your Lordships' House? It would be helpful to know exactly where matters stand. For our part, although this is anticipating a Bill which is not before your Lordships' House, we will propose on these Benches a free vote as we did on the previous occasion.
I very much hope that the compensation scheme, given its shortcomings in terms of breadth, will nevertheless do something to mitigate the consequences of the Bill. That having been said, I give it my blessing.
3.34 p.m.
Baroness Blatch: My Lords, as is the convention of the House, we will support the scheme. But there are, nevertheless, a number of questions which have already been posed in the course of the debate and I shall add my own. I look forward to the Minister's reply to them.
Perhaps I may first express disquiet about the compensation scheme that is before us today. The first tabling of the scheme was on 22nd May. On 3rd June that was withdrawn and another scheme was laid. There was no explanatory memorandum and no indication to the Front Benches, the Cross-Benches or others that that had happened. It was impossible to see why it had changed. In fact I spent many hours with one scheme in one hand and the other scheme in the other hand literally going through them line by line to find out what had changed and why. I followed that up with telephone calls to officials and was given an explanation. However, it was my right honourable friend in another place, David Maclean, who put down a Question for Written Answer. He received a detailed Answer, of which copies were circulated this morning. That gave a run-down which was inconsistent with the explanation which I had been given by telephone. This was not satisfactory. I even understand that the copy which I was assured on Saturday was the latest copy already has a correction to it. There were many mistakes in the first edition and there were mistakes in the second edition. I understand from many of my noble friends who have not spoken today but who came to see me this morning that there are significant omissions from the scheme. It is right that we should have an explanation of that. Indeed, some noble Lords arrived today with the original 22nd May copy because they were not aware that a substitute scheme had been tabled on 3rd June.
I understand and support the encouragement of claimants to use as much as possible option A, which is the flat rate, or option B, which has listed valuations. Like my noble friend Lord Attlee, I believe that as far as possible people should be encouraged to go for the option A or B scheme. My noble friend Lord Attlee pointed to some interesting anomalies. On option C, the conditions under which one can apply are narrow and restrictive. An interesting example was drawn to my attention. I refer to a modern-day well-known general who has added to the antecedents of the ownership of a gun and added to the interest of a gun and therefore to its value on the open market. But there is no accommodation for that additional value to be considered. If the gun has not been modified or customised in any way, option C is not available to take into account any enhancement which might arise as attached to the history and/or the ownership of the gun. It would be helpful to know whether there will be flexibility for claiming under option C.
Where are the guns to be handed in? There is an issue here of distance. With regard to rural Scotland, rural Wales and parts of rural England, if the chief constable writes to the individual who has a licence for the weapon and stipulates where the weapon must be handed in, for some people there will be considerable inconvenience as considerable distances may have to be travelled. I suspect that there is no compensation for

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that. Will there be any flexibility or will any effort be made to make it easy for people who will have to hand in their weapons?
When will those who surrender their property be paid? This point was made by my noble friend Lord Attlee. It would be helpful if we could have from the Minister an assurance that there will be a defined period—30 days is probably a reasonable period—for those where there are no complications; either a flat rate application under option A or a list rate under option B. It would be helpful to know that the administration is such that people will receive compensation in good time, and if there is any delay, that it should be paid with interest.
There is an interesting and essential point on which we must be assured and that is disposal; the methodology for that and how long the weaponry is to remain at the collection points in police stations. Are police stations physically set up to accept these small arsenals which will build up as the weapons come in? It is important that there is no scope for theft. It is not far fetched to say that there must be no scope for selling these weapons overseas. I say that because I understand that there is a fairly recent case where a policeman in receipt of weapons has been selling them. So that is a point that needs to be addressed. That scope should be eliminated by whatever method of disposal.
Storage will be important and we would like to be assured on that. I believe that my noble friend Lord Burton raised a point about administration. We are talking about 21 days' time when letters will go out and people will begin to bring in their weapons. Are we entirely satisfied that all the administration, record keeping and verification systems and everything else are in place? It would help us to know that the police are ready, happy and entirely satisfied with the arrangements that have been put in place. Can the Minister tell us what is the reaction of the police to the fact that in 21 days' time this scheme will be implemented?
I was posed an interesting technical question. I understand that some people may well have de-activated their weapons by simply slicing them in two, making sure that they cannot be fired, either for the purpose of their own conscience or to assure other people that the weapons will not be used. Can we be assured that if the weapons were de-activated for good reason and the certification and everything else are in order they will be compensated for those weapons?
I repeat the question asked by the noble Lord, Lord Rodgers of Quarry Bank, about costs. Is it the Government's intention to confirm the costs that were estimated by the previous Government or do they have revised estimated costs? Perhaps I may add to that by asking the Minister for his estimation of the costs of the proposed extension to this Act of Parliament when it includes a total ban on handguns.
This is an interesting question: are police stations exempt from health and safety requirements, especially in regard to the disposal of powder, primers etc.? If not, do they each hold licences for such purposes? It is my
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understanding that health and safety regulations require that premises are licensed as a magazine. Police stations will need to issue a recipient competent authority document to each person who surrenders powder, primers or mixed explosives. Another question was posed to me, and I put it to the Minister. Why is it that 38 special round nose head lead has disappeared from the third draft that we see before us? There are no clearance kits and no pistol rests.
As regards the Bill to outlaw all handguns referred to by the Minister, I accept absolutely that this is water under the bridge and that it was a manifesto pledge for a Bill to be put before Parliament. My understanding is the same as that of the noble Lord. Lord Rodgers of Quarry Bank—that there will be a free vote—and I assume that that will be the case in both Houses of Parliament. It would be helpful to have that clarified.
Even at this late stage, and especially because there is to be a free vote as opposed to a whipped vote, I ask that serious consideration be given—here I am four square with the noble Lord, Lord Stoddart of Swindon—to a large number of law-abiding citizens, both able and disabled people, who have been seriously disadvantaged already by the Act of Parliament. These people will be very much disadvantaged by any extension of the ban on handguns. Disabled people particularly will have no sport to pursue at all and for many of them there is no substitute sport. Able-bodied people can pursue all kinds of other leisure activities; but many disabled people for whom shooting is a lifeline will be totally denied that sport. If the noble Lord, Lord Howell, were here, I know that he would want to make this point; namely, that in this area, as far as I can recall from the record, we achieve in this country more medals at the Commonwealth and Olympic Games than other people do in many other sports all put together. It is a serious consideration that these people, as a result of the Bill which is being brought forward by the Government, will be denied that sport.
If the questions posed in this debate cannot be answered satisfactorily, it must be for the Minister and the Government themselves to consider withdrawing the scheme for correction and/or modification. But if assurances can be given—that is what we are looking for—which will ensure a fair deal (which is what the previous Government promised) for all those who are affected by the passing of the Firearms Act, I shall invite my noble friends to support the scheme.
3.46 p.m.
Lord Williams of Mostyn: My Lords, I am grateful for the detail which has been put before your Lordships in examining this draft scheme. The draft is complicated and detailed because it covers payment out of public funds of something of the order of £150 million. As I observed in opening, we need to look for fair values for the guns and other items surrendered. There must be safeguards that the hand-in arrangements work smoothly. We need to make all payments legitimately as soon as possible and we have to dispose of items carefully in the interests of public safety. We believe that this scheme, properly operated by sensible people, can meet those criteria.

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I am grateful to the noble Earl, Lord Attlee, for his courtesy in giving me notice of his questions. He promised me that he will be returning to this matter in 18 months' time and I have no doubt at all that he will make good his promise. I cannot assure the noble Earl that all payments will be made in 30 days. The training programme has been undertaken—I shall return to the detail in a moment or two—on the basis that payment shall be made as soon as reasonably possible. It is simply not possible to give an undertaking, and I do not, on the basis of 30 days because we simply do not know the rate of take-up of the scheme and one cannot possibly say that all arrangements will be in order and all payments made within 30 days.
The noble Earl raised the question of historical weapons. There is possibly an exception there that he might like to consider with those whom I know are as well informed as he relating to historical weapons under Section 7 of the Act. Both the noble Earl and the noble Lord, Lord Swansea, raised the question of specific weapons, in particular Lugers and Webleys. As I believe they both hinted, the scheme has been drawn up on the basis that it relates to modern guns. Lugers, Webleys and the others mentioned are no longer manufactured, and they were deliberately omitted. I believe that the noble Lord, Lord Swansea, pointed out that the condition of such guns is critical. In fairness to the owners of the weapons, it is only right that such guns should be separately valued and claimed under option C. I hope that the noble Earl will consider that to be a prudent step, bearing in mind the difficulty of valuation of weapons that are not currently in production. That is the reason for the distinction in the scheme. That means that a claimant who owns a Luger, Webley or a similar weapon is allowed to get an appropriate payment for the gun that he or she is surrendering.
The noble Lord, Lord Swansea, also inquired about delay. Since they are the lawful entitlement of those who surrender weapons under the regime introduced by Parliament, the payments should be made as soon as it is sensibly possible. The earlier part of the scheme should be relatively easy to operate, and one hopes that payments can be made within a reasonable time.
As they recognised, both the noble Lord, Lord Stoddart, and the noble Earl, Lord Onslow, addressed not the scheme but the principle behind the Act. Your Lordships will forgive me if I do not respond to them, except on this basis: they approach the matter—neither of them may thank me for this—perhaps on the basis of the libertarian Left and the libertarian Right. I recognise that there are arguments of principle here, but those arguments of principle have long since been disposed of in your Lordships' House. I do not take away from the value of the argument; I simply observe that what we are doing now in response to the passage of a Bill under a predecessor government is to give effect, by way of a technical scheme, to the will of both Houses.
The noble Lord, Lord Burton, raised the question of appeals. We would not expect there to be an appeals procedure. We would expect police officers to be as sensibly flexible as they can be in dealing with arrangements for those who may have to travel long distances. We know, from even the quickest scrutiny of
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the Act, that it is a requirement of law that the mechanism of handing in weapons should take place at designated police stations. Again, I have every faith that chief officers of police will be as reasonable as they can be in meeting reasonable requests for flexibility.
I dealt with one question which the noble Lord, Lord Rodgers of Quarry Bank, put to me, but he then popped a fly over my nose which was so infinitely seductive that I feel obliged to answer it. The Government's present intention is to have a free vote in your Lordships' House.
The Earl of Balfour: My Lords, perhaps I may ask the Minister one question. Some years ago my keeper died. His rifles were not on my certificate. The police themselves took those rifles into a firearms dealer. I was not allowed to carry them the seven miles to the firearms dealer. Will the Minister consider the point that in certain circumstances it might be better for the police to uplift the guns rather than for the person involved perhaps to have to drive a considerable distance, possibly without the right transport facilities?
Lord Williams of Mostyn: My Lords, I am most grateful for that intervention which reaffirms and underlines a point that I made earlier—that police officers try to be of assistance to members of the public. I am sure that the noble Earl's observation and suggestion will be borne in mind by senior police officers who will see what they can reasonably do to help.
The noble Baroness, Lady Blatch, asked a number of questions, some of which were overtaken by my earlier answers, as she acknowledged. She was particularly concerned about the scheme and how it might work in practice. As the noble Baroness will know, training for the scheme was put in hand a long time ago, in the earlier months of this year. Some parts of the scheme ought to be easy to operate, for reasons that noble Lords have indicated. The rest of the scheme depends on expert assessment. We are content that sufficient progress has been made: first, that the scheme can be up and running on the date specified and, secondly, that it will run with reasonable efficiency.
The noble Baroness specifically asked whether there had been consultations with ACPO and ACPO(S). I can reassure her that there have been full consultations and that, to the best of my knowledge, police officers in the senior ranks are content with the liaison that has been carried out between the Home Office and those senior ranks.
Lord Burton: My Lords, the Minister referred to ACPO. Does what he said relate to ACPO (Scotland) also?
Lord Williams of Mostyn: My Lords, the noble Lord must have misheard me. As I was referring to the noble Baroness, Lady Blatch, I looked at her as I spoke and I must have dropped my voice. I said "ACPO and ACPO(S)". I am afraid that we fall into jargon too often and that I am as guilty as some. I ought to have referred to ACPO (Scotland).

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The noble Baroness, Lady Blatch, asked me a distinct question about whether police stations would have to be licensed as magazines. She asked me further distinct questions, not all of the details of which I managed to catch so perhaps she will forgive me if I write to her on those detailed questions. They are not details that I am putting to one side, but your Lordships may think that those questions are of quite a fine detail of which I should be certain before giving a categorical response.
We believe that this is a fair and balanced scheme. It will not satisfy everyone. It ought to be acceptable to taxpayers, for whom we are the custodians of public funds, and it ought to be acceptable, we believe, to the majority of claimants—that is, acceptable on the financial basis, not on the basis of principle for which the noble Lord, Lord Stoddart, so valiantly contends. I commend the scheme for the approval of this House.
On Question, Motion agreed to.

EC Tobacco Regime: European Communities Committee Report
3.56 p.m.
Lord Reay Lord Reay rose to move, That this House take note of the Report of the European Communities Committee on The EC Tobacco Regime (13th Report, Session 1996–97, HL Paper 73).
The noble Lord said: My Lords, I should like to start, if I may, by warmly congratulating the noble Lord, Lord Donoughue, on his appointment which, so far, I have not had the opportunity to do on the Floor of the House. The noble Lord has many friends and admirers of his manifold talents in all parts of the House and I am quite confident that his new post will give him the opportunity to acquire many more, particularly if he proves to be an energetic and effective promoter of reform of the common agricultural policy.
The occasion of this report by the European Communities Committee of your Lordships' House was the publication by the Commission of its report to the Council on 18th December last on the common organisation of the market in raw tobacco. In the light of that report, which is due to be followed by implementing legislation, Sub-Committee D decided to hold an inquiry into the subject, necessarily brief because of the approaching end of the Parliament. We are grateful to all those who provided us with written evidence: to Professor Marsh of Reading University, an old friend, for his wise and expert advice, and to our Clerk, Mrs. Mary 011ard, for her excellent work on a report which I am sure noble Lords will agree is forceful and readable. I myself am most grateful also to my colleagues who served on the sub-committee.
The Commission's report gives a full and, in the view of Sub-Committee D, eventually damning description of the nature of the current tobacco regime within the EU. The European Union, with 4.6 per cent. of global production in 1994, ranks as a the world's fifth largest raw tobacco producer. This production is spread over eight member states of which Italy and Greece are by
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far the main producer countries with, in 1995, 39 per cent. and 36 per cent. of Community production respectively. Spain and France follow with 13 per cent. and 8 per cent. respectively, and the remaining 4 per cent. is produced in decreasing order by Germany, Portugal, Belgium and Austria.
However, this tobacco is generally of poor quality and is sold for very low prices—although there are exceptions to this general rule, notably in the case of some Greek oriental varieties. The majority of it goes to countries where, in the words of the Commission,
"living standards are so low that the quality of the tobacco smoked is less important than its price".
Production therefore has to be sustained by subsidy or premium and then kept in check by quota. The cost of these subsidies to the EU's budget is about 1 billion ecu or about £ ¾billion a year. These subsidies account on average for no less than 80 per cent. of the revenue received from tobacco production by tobacco producers throughout the Community.
The rationale for the regime, as the Commission explains, is social. Tobacco is a labour-intensive crop, requiring an enormous number of hours work a year, and is typically grown in the Community on very small family holdings, the area planted to tobacco averaging no more than 1.1 hectares per farmer. There are some 135,000 tobacco farmers largely with family workforces, and in addition about 30,000 workers in tobacco-processing depend on local production. There are often few evident alternative economic opportunities in areas where tobacco is grown and without subsidy the farms would no longer be viable. The Spanish Embassy informed us that in Spain 15,000 were employed in tobacco production in disadvantaged areas where unemployment could be as high as 30 per cent.
The outlook for the future is even bleaker than the present depressing situation. Yield per hectare has hardly increased over the past ten years yet the prospects for mechanisation such as has taken place for example in the US, or indeed any investment to improve efficiency, is negligible. Holdings are too small and capital is likely to be lacking. It is also to be doubted whether the incentive to raise either quality or efficiency exists. As the commission says in its report, under the current subsidy regime a producer does best if he grows a low-quality, high yielding variety that entails the least cost and effort. Meanwhile, low wage cost competitors in Africa and Asia are expanding their production, raising quality and increasing market share. All of this leads the Commission to conclude that the European Community's subsidy-dependent tobacco sector is doomed unless the quality of tobacco produced in the Community improves.
Perhaps at this point I should say a word about health. In the eyes of many tobacco is an undesirable crop which causes damage to human health, and on those grounds alone should not be subsidised. The Commission, like many national governments, promotes anti-smoking measures. The contradiction between these policies was reflected in a widely-publicised disagreement prior to the publication of the Commission's report between the two commissioners responsible respectively for agriculture and social

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affairs. It is nevertheless true that no one in the Community would have his access to tobacco curtailed if Community production withered or collapsed as a result of the withdrawal of subsidies. The market would simply be supplied from elsewhere, so the desirability of subsidies can be addressed as well on other grounds.
Having reached the conclusion that it should do something to meet the problems of the sector, and in particular to raise the quality of tobacco produced in the Community, the Commission proceeds to discuss what it has in mind.
Having dismissed the idea of disengagement from support altogether and various other largely dirigiste options, such as the encouragement of fruit and vegetable production or forestry, it puts forward its preferred scenario. In this the premia for tobacco would be modulated according to quality with a fixed element designed to provide a minimum income and a variable element related to the purchase price designed to encourage the production of more expensive varieties.
No change is proposed in the levels of subsidy or the volume of quota so the cost of the regime would not fall. The variable premium would be distributed through producer groups. The Commission also suggests measures to encourage farmers to leave the sector voluntarily: either the buying up of quota or the issue of saleable bonds paying an annuity, each over a seven to 10-year period. It also proposes other measures, including making the quota scheme more flexible.
MAFF suggested to us that the Commission's preferred scenario had some merit in so far as it would introduce for the first time a degree of market sensitivity into the regime. In our view, however, the measures discussed by the Commission stop a long way short of what is required. For one thing, they pay insufficient attention to likely pressures to decouple aid from production in the next World Trade Organisation round. Tobacco, with its high level of subsidy, is a particularly vulnerable sector. They also ignore the problem of how tobacco production within the countries of Central and Eastern Europe may be incorporated into the regime. Current tobacco production in Poland, Hungary and Slovakia would add about 20 per cent. to the EC total production. If and when the next WTO round starts—which I believe is due in 1999—or the countries of Central and Eastern Europe accede to the European Union, the tobacco regime will once again need to be replaced.
The Commission's proposals are also open to criticism on internal grounds. First, it is hard to see what would be achieved by encouraging producers to produce better quality tobacco, even if such efforts were successful, if producers were no more competitive and no less subsidy-dependent growing those varieties than they are today growing cheaper varieties. Secondly, the plan to pass responsibility for administering variable premia to producer organisations, while it might serve to conceal, would not mitigate the extremely bureaucratic nature of the Commission's proposals and would remove the Commission further away from a position where it could control fraud. In our view, that would constitute on the Commission's part an extremely
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undesirable abdication of responsibility for the distribution of Community funds, for fraud has in the past bedevilled the regime.
Perhaps even more importantly, Commission efforts to encourage farmers to leave production are likely to be in vain, as they have been in the past, for the simple reason that any incentive to leave production is likely to be outweighed by the incentives which will continue to be offered to stay in production. Few, if any, funds will be available for such a programme after the subsidies have been paid for.
We would like to see tobacco subsidies and quotas phased out over a period of 10 years or so and a commitment made to do so now. This was also the position of the last Government—the previous Fisheries Minister called the regime "crazy"—and I hope to hear today that that is the position of the Government now. Money so saved could and should be used to ease the transition of those involved to a more profitable economic life. We are emphatically not saying that these communities from one moment to the next should have all public support withdrawn from them. We are very much aware of their degree of dependence on subsidy. But the Community's funds should be spent on ways to end, not perpetuate, this dependence. It is not up to the Commission either to select or reject alternative economic ways of life for these communities.
The Directorate-General of the Commission with responsibility for agriculture sometimes behaves as if it was vying to be the last bastion of the command economy left on the European continent. But local infrastructures can be improved. We saw a great deal of merit in the idea of a saleable bond with annuity attached which could provide the farmer with the means to establish himself in another economic career while providing an income in the meantime.
At the moment the prospects for reform do not look very promising. In calling for reform in the Council of Ministers the UK Government have had support only from Sweden. Tobacco-producing states actively support the regime. The Italian Embassy informed us that it was against any radical reform or any inducements to abandon production; indeed, it wanted the entry of new producers to the tobacco sector to be encouraged. It was suggested to us that other member states who were not producers feared that they might lose their own favourite support schemes under the CAP if they started to attack the tobacco regime. The Government for the time being at least can expect to find themselves in a small minority, but we hope that that will not cause them to lose heart.
Our opposition to the continuation of the EC's tobacco regime is adamant. Indeed, at one point we go as far as to describe the regime as a scandalous waste of taxpayers' money. But perhaps I should put this opposition to the EU's tobacco regime into the context of our attitude to the CAP as a whole. For as long as I have been aware of its work, Sub-Committee D has wanted further reform of the CAP to make it market oriented with a phasing out of support prices and a consequent disappearance of the need for production controls, including quotas and set-aside. The subcommittee has examined plenty of subsidised regimes

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under the CAP, but never have we come across an example of such a large amount of taxpayers' money being used to maintain the production of a commodity so unwanted by the market. In our view, the regime represents a travesty of natural economic life, and consequently requires a remedy far more drastic than anything currently proposed by the Commission. Despite unfavourable signs in the short term, we hope that that is something it will eventually receive.
Moved, That this House take note of the Report of the European Communities Committee on The EC Tobacco Regime (13th Report, Session 1996/97, HL Paper 73)— (Lord Reay.)
4.10 p.m.
Lord Bruce of Donington: My Lords, the House will be grateful to the noble Lord for having introduced this short, pungent and excellently produced report. It reflects not just on the abilities and diligence of the noble Lord, here and in the European Parliament where he and I served together for some time, but also on the individual members of the committee.
When I first read the report I was amazed to find the final opinion stated in terms which might almost have come direct from me in my most moderate mood. The noble Lord paraphrased it, but I must savour the mood of the moment as I read the paragraph in detail. It states:
"In our view, the subsidy of tobacco production in the European Community is a scandalous waste of taxpayers' money. The entire system of premium payments is designed to sustain production at costs which the market is not prepared to meet. Far from solving the social and economic problems of the areas which it purports to assist, it keeps small scale tobacco growers in poverty and isolation and makes no attempt to help them discover more satisfactory employment opportunities. The tobacco sector is a hole in the ground into which money is being poured with no thought for the long-term prospects of those involved in it. The tobacco regime needs fundamental reassessment".
At my most eloquent, I could not have put that better. No reader of this brief, pungent report could reasonably come to any other conclusion.
We must decide, ab initio, how important the matter is to us. Occasionally we have to have regard to the interests of the UK. I trust that those who are fervent European citizens will pardon my regard for the UK, at any rate for the purposes of this debate. The financial aspect has been dealt with many times. Through the good offices of the Government I have been able to obtain the up-to-date figures in the preliminary draft general budget overview which has recently come into my possession.
The days are long since past when one could obtain a detailed European budget. There was a time, shortly after 15th May, when one could obtain detailed budgetary particulars of all items of expenditure. I am sure that noble Lords are aware of title B 117 of the budget.
I suggest that the financial side is of some significance. We have it on the authority of Her Majesty's new Ministers that there will be the utmost economy in expenditure; and that we shall be iron in our will to keep public expenditure within what are
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considered to be prudent financial limits. In fact we have set limits to the expenditure that we shall countenance, and I suppose that my noble friend Lord Barnett, who unfortunately is not with us at the moment, would echo that to the last word.
At present British taxpayers—those paying tax on purchases, excise duties, customs duties and income tax—spend net through the European Communities £3.5 billion on the official structures and legislation of Europe. I hear no sharp intakes of breath at the enormity of that expenditure. In fact, that it is any burden on the British taxpayer has not even been mentioned. Apart from the expenditure of £3.5 billion being important to the British people, whatever form of direct or indirect taxes one pays, let us narrow it down and find out just how much the tobacco regime is costing UK taxpayers who derive no benefit whatever from it.
Noble Lords will be aware that the noble Lord, Lord Boyd-Carpenter, in particular, has articulated on many occasions over the past five years about the costs being borne by UK taxpayers as a result of the wasteful expenditure of which the committee has given a just description. In case there is any illusion that the Commission has been able to improve the figure over the years, let me give extracts from budget title B 117. In 1994, wicked expenditure under this useless heading cost the European Community £994 million of which £170 million was borne by British taxpayers. In 1995, the figure was £812 million of which £122 million was borne by British taxpayers. In 1997 the figure was £760 million of which £114 million was borne by British taxpayers. For 1998, as I was able to find eventually from a detailed examination of the overview so kindly provided by the Treasury, the expenditure is due to be £746 million of which £113 million will be borne by British taxpayers.
The question for us to decide is whether this matter is important. I am well aware that in certain sections of the House—I can now see the Liberal Benches in front of me rather than to the side of me—there will be an objection that the subject should be raised at all; that to do so is somehow indelicate, anti-European, and anti-Community. Perhaps the only way to obtain the approval of our colleagues in Europe is meekly to accept all this, even to express pleasure that we should be honoured by having to bear the expenditure. Perhaps they will wish us to increase it in order to preserve good relations with Europe and to be able to have a place at the top table. Perhaps we shall be able to do that—
Lord Beaumont of Whitley: My Lords, perhaps the noble Lord will wait until the spokesman from these Benches speaks. He will then discover that I intend to say absolutely nothing of the kind and that I entirely agree with everything that he says.
Lord Bruce of Donington: My Lords, I am overwhelmed with the genuineness of the support which, I am glad to say, I knew I was receiving from the Conservative Benches and, to some extent, from my own. However, to be able to conquer the Liberal Democrat Benches is a victory indeed!

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Let us get down to the serious aspect: is it important or not? If it is important what are we going to do about it? My old chief, Aneurin Bevan, always used to say,
"Silent suffering evokes no response".
My suffering is indeed vocal and loud and I hope that it may attract some support.
The difficulty is that this report is the result of a transition period. The evidence was heard by the members of the committee in February this year, before the change of government. The report was printed in March, before the general election. But, of course, the election might have gone the other way. What is therefore interesting is to discover whether there has been a change of opinion since. Let us make no mistake, according to the committee the position of the Commission is under very severe challenge.
The report rightly deals with the Commission's dismissal of the various alternatives put to it by members of the committee as well as by Her Majesty's then Government. Presumably, they are shared by Her Majesty's present Government, although we shall hear later about that. One of the options dismissed, according to paragraph 21 of the report, is gradual disengagement from support of the tobacco sector. Another option dismissed was area aid payments. The disadvantage that the Commission identifies with the system of aid per hectare is the difficulty of checking areas. It can say that again! It has been flying helicopters about and conducting aerial surveillance, but still the damned elusive Pimpernel cannot be photographed.
Direct income support seems to be one way of converting a social need into some kind of amelioration, but the Commission rejected that. I pray your Lordships give sight to paragraph 23 of the report, which states:
"The Commission also expresses doubts about the 'social and political acceptability' of an 'extraordinary situation in which farmers would be financed by public funds provided that they did not farm'".
They are already doing it! Set-aside payments are made to other sections of the farming community, which in 1994 amounted to £612 million in the United Kingdom alone. This sudden objection in principle to aid repatriation is a little mysterious. Naturally, we would expect objections from the eight other member states named by the noble Lord, Lord Reay. The simply reason is that they are the ones getting money for nowt. They would not object, would they? Indeed, how can one amend the CAP without a unanimous vote to do so? On the face of it, that would appear to be very difficult. The noble Lord, Lord Donoughue, in reply to the report on behalf of his ministry, is not very hopeful. I shall not read out the relevant passages. They are expressed in a surfeit of moderation of which he would disapprove. Nevertheless, he does not hold out much hope.
What hope would I, as a Member of your Lordships' House, wish to be made available? It is very simple. I believe that the leader of my party, the right honourable gentleman the Prime Minister, is right when he says that we should be more concerned with people than with institutions. He has the ball at his feet. If the Prime Minister goes to the general Council, as established under the treaty, or to the European Council,
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or elsewhere, he will be in a position to exert his authority by direct talk with the people themselves over the heads of the bureaucrats in Brussels who seem to believe they can do anything they like without reference to anyone. I believe that the ball lies at the feet of my right honourable friend the Prime Minister and I for one am confident that he will use it to the utmost, not only with the public at large but in the moribund meetings of the Council of Ministers whose agendas are largely dictated by the Commission and received by other Ministers with a degree of acceptance which would not find ready appreciation within any democratic society.
4.27 p.m.
Lord Harris of High Cross: My Lords, I have great pleasure in taking part in this debate on an outstanding report. In one respect, the noble Lord, Lord Bruce, was uncharacteristically modest when he quoted the cost of the European Union at £3.5 billion as the net cost. I thought that we had been taught to say that the net cost was an understatement because the gross cost, which is perhaps twice as much, includes a lot of money that we pay to the Union and it pays back to us for things that we would not think worth doing with our own money. But otherwise, the noble Lord gave a good account of himself, as usual.
I wish to take the opportunity to compare two documents: the report of our sub-committee and the report from the Commission to the Council. The contrast is one of chalk and cheese. The document from the Commission is larger and weightier. It is verbose; it is full of gobbledegook; it contains a great deal of technocratic mumbo-jumbo; and it is special pleading. Of that there is no question. As I tried to work through its pages, forwards and then backwards, I asked myself who would read this stuff if they were not paid well to do so. Would any student take this document and work his way through all the stuff about flue cured, light air cured, dark air cured, Basmas, Katerini and Koulak? The Commission has experts in tobacco—they have all this useless expertise at their fingertips to ornament this report. It is really not worth devoting time to perusing it.
Now I turn to this document by Members of your Lordships' House. I looked at who were the 11 Members. As far as I can tell, there is not a declared smoker among them. They know nothing about air cured, flue cured and Basmas tobacco. There is not even an economist among their number, as far as I know. And yet the committee has produced a report which would do credit to a Ph.D student. It is an outstanding piece of economic analysis and argumentation.
There is only one false step in the report, which comes at paragraph 39 where it states:
"Our view has not been greatly coloured by considerations of the harm done by tobacco to human health".
The last sentence of paragraph 39 states: "Nevertheless, considerable political will will be required if radical reassessment of the tobacco regime is to be achieved and sensitivity to public health arguments—no matter how ill-founded—could assist in creating it".
Therefore, there is a suggestion to play up the health issue. That is rather naughty. We did not need paragraph 39 in such a good report.

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Unfortunately, it will not have any influence on the Greeks or Italians. The Greeks are believed to be the most heavily smoking nation in the world. I do not know whether we have the figures for China but that is the information I have from international sources. The Greeks' expectation of life is well up in the upper decile as, to a lesser extent, is the Italians', who are heavy smokers and who enjoy rather longer life expectations. I notice also that in Italy there has been a ban on the advertising of tobacco since 1962 and yet smoking rates there have continued to go up rather than down.
The Select Committee's report, in particular from paragraph 42 onwards, is devastating and does not put a foot wrong. It says that the Commission wants the Greek and Italian farmers to switch to higher grade tobacco because their low-grade tobacco fetches low prices. But the Select Committee asks why we expect them to be any better at competitively producing higher rather than lower grade tobacco? What is the point of it?
The report goes on to say that the Commission does not consider fairly the possibilities of gradual disengagement. In its wretched document, the Commission talks of disengagement as an instant process, leading to great distress and so on: therefore, it would be politically unrealistic. Paragraph 44 refers to converting the holdings from tobacco into other crops. The Commission says that the tobacco crop is important because it generates high gross profit margins per hectare. Our chaps say that is true but some 80 per cent. of the revenue of the producers is accounted for by subsidy. They ask what is the point of producing a high net revenue if the whole thing is subsidised by the taxpayers, as the noble Lord, Lord Bruce of Donington, told us.
In paragraph 45, the report states that the Commission rejects the disengagement of the Community because the Community market organisation in tobacco might be replaced by national organisation. Our chaps say that that is a jolly good idea and can see great merit in such a development. Of course, we should repatriate those so-called regimes. I do not like this being described as a tobacco regime. "Regime" is a perfectly reputable word. There are health regimes and financial regimes and so on. But we should talk about the tobacco racket and not the tobacco regime. Let it be repatriated and let the countries indulge their liking for tobacco-growing with their own national moneys.
Paragraph 46 states that,
"the Commission acknowledges that solutions to the socio-economic problems …will need to be found outside agriculture. But this is not followed by any consideration of what those solutions might be".
Our chaps say that the serious weakness of the Commission's report arises from the rigidity of the structure in the Commission and that that,
"is a serious impediment to rational policy-making."
If we are being rather harsh, the key issue here is that those indulgences cannot continue indefinitely. They cannot continue because new members will be joining us from Eastern Europe and they include a good many tobacco growers. Moreover, the World Trade
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Organisation, which took over from GATT, is very much opposed to those schemes which support production in that way.
A basic tenet of economic rationality, which I am sure the noble Lord, Lord Donoughue, would acknowledge, is that it is not efficient to give subsidies attached to output, thereby encouraging the continuation of a production which is not justified by being able to find its own market. If you are concerned with social, cultural and other considerations, then you are entitled to give subsidies to individuals and to actual people and to do that in a way which will lead them away from their wrong-headedness and misguided efforts to paths of virtue.
Therefore, terminable subsidies to individuals is one idea. It is a great principle of economics that we acknowledge legitimate expectations. Those wretched farmers, about whom we can work up a great deal of animus, are victims of a system which has led them to believe that they can continue doing what they have been doing for generations with their families at someone else's expense. To snatch the subsidies away from them would be unjust and upsetting. But perhaps we could say, "We will continue paying you for five years", possibly on a reducing scale. Then it is more likely that the farmers will discover for themselves more profitable outlets for their talents. They will find other crops for production which the Commission has mentioned are available. The Commission argues that there are those other prospects to which the farmers could turn but, in the meantime, the Commission continues to pay them subsidies to produce tobacco. The only way in which to concentrate the mind on finding more productive, fruitful and marketable production is to set a term to the subsidies.
Our committee talks about a 10-year period. I believe that five years is sufficient not to frustrate legitimate expectations. I hope to hear that the noble Lord, Lord Donoughue, with his great academic expertise, will go even further than the last Government in treating that kind of activity with the scorn and discouragement which we believe it deserves.
4.39 p.m.
Lord Boyd-Carpenter: My Lords, this has been a very useful debate because it has underlined what is one of the most astonishing situations with which your Lordships' House has been confronted. It is accepted now by all responsible opinion that smoking is dangerous to health and that the more people smoke the more sickness of one kind or another is produced. At the same time, it has emerged that the production of this dangerous commodity has been and is being heavily subsidised at the expense of the taxpayer. How quickly that situation can be reversed is a matter of judgment. However, that it is a situation which it should be the aim of all responsible legislators to reverse surely is beyond dispute. If we are to go on producing something permanently dangerous to health, surely at least we should do so only for a short time and we should make it quite clear that we propose to phase out all subsidy for its production.
4.40 p.m.
Lord Rea: My Lords, prior to the intervention of the noble Lord, Lord Boyd-Carpenter, I was about to say how pleased I was to follow the noble Lord, Lord Harris of High Cross, and to find myself—for the first time ever, I think—in almost complete agreement with everything he said. He was speaking as the champion of the free market. However, we should remember that he is also the chairman or the president of Forest.
Lord Harris of High Cross: My Lords, I am the chairman.
Lord Rea: My Lords, as the chairman of Forest, he also finds this regime insupportable.
With 10 other speakers discussing this short report I shall add only a little from an outsider's point of view. I was not a member of the Select Committee. But as a doctor and as a member of the British Medical Association I do have a particular position on the regime. Considering the short time available, the Select Committee, under the able chairmanship of my namesake, spelt with a y, the noble Lord, Lord Reay, produced a cogent even trenchant report but one that is also constructive. It is not simply a "hatchet job"; it is a careful demolition which considers the structure that is to replace the building whose foundations the committee shows to be so shaky.
I am asked by the British Medical Association to express its support for the Select Committee's report. The association would probably agree with the truth of paragraph 39—which was quoted by the noble Lord, Lord Harris of High Cross—that cutting Community production,
"would not affect levels of consumption …since demand would simply be met by suppliers from elsewhere".
However, I believe the association would go further than the final sentence of that paragraph which states that,
"political will will be required …and sensitivity to the public health arguments—no matter how ill-founded—could assist in creating it".
I agree with the noble Lord that that statement about ill-founded public health arguments is unfair.
While little of European Union tobacco production is consumed in Europe nearly all of it is eventually consumed in the developing world. To say that ending Community production would lead to its replacement "from elsewhere" avoids acknowledging the actual situation in which strong, bad quality tobacco from Europe is currently contributing to the rapidly growing epidemic of tobacco related sickness and death in the less developed world. Not only are we supplying them with a dangerous addictive substance; they also have to pay hard currency for it, although admittedly far less than it costs us in subsidising its production.
As all three noble Lords who have spoken so far said, the report on the regime contrasts with other Commission reports. The noble Lord, Lord Reay, referred to the well known argument between two branches of the European Commission. One talks of ways of reducing tobacco consumption and another talks of ways of propping it up within Europe—not to mention Her Majesty's Government's position where
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the banning of tobacco advertising is only one of a series of measures which will be taken to reduce consumption of cigarettes and other tobacco products. The noble Lord, Lord Harris, is right to say that banning tobacco advertising in itself does not have much effect; it has to be combined with other measures which the Government will bring in.
It is possible, with a slight stretch of the imagination, to compare European Union tobacco production with South American cocaine production or Asian opiate or heroin production. The production of crops of all these addictive substances persists despite the strong opposition of their governments because of the high price which the products command in relation to alternative crops. Efforts to persuade Thai hill farmers or Colombian peasants to grow other crops tend to fail because even if they are subsidised they bring in much less income. The price of the dangerous controlled addictive drugs is artificially high largely because of their illegality and their subsequent scarcity. In the case of European tobacco, which of course is a perfectly legal product, the reward to farmers is artificially high solely because of the regime which is funded by the taxpayer.
It is completely clear to the Select Committee—and to other noble Lords who have spoken this afternoon—that the solution should be to divert the subsidies going to tobacco production to other products or other ways of encouraging alternative economic activity. Unfortunately, however, that is not the way that eight out of 15 European states see it. We are informed that to divert subsidies to growing fruit or vegetables would upset other areas of the CAP. Fruit and vegetables for instance, have their own regime and there is a problem already with surplus production. To give higher subsidies to tobacco growers to divert production to fruit or vegetables would seem unfair to existing farmers who oppose any measures to increase overall European production of vegetables or fruit. However, I suggest—and the Select Committee also suggested—that the answer may well lie in that sort of direction.
As many noble Lords will know, it is interesting that fruit and vegetables are now recognised as not merely pleasant to eat but also, in contrast to tobacco, are highly beneficial in the prevention of cancer and coronary heart disease. If any group of products deserves a subsidy—I know that many noble Lords do not agree with subsidies—or other means of encouragement to consumers, it is fruit and vegetables. I might also add olive oil and some of the other seed based oils which have health giving effects. Olive groves might well flourish in some, although not all, of this difficult terrain. However, that would be a long-term project. Of course, other transformations of land use, with the growth of small industries and the amalgamation of plots that are too small to be viable, would be logical progress.
The Select Committee has put forward its view as to how small farmers who grow tobacco should be gradually weaned onto other occupations. However, all that is some way ahead. The important task at present—and one which the Select Committee report tackles well—is to persuade more European Union states that

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the current situation is illogical and deeply flawed. As two noble Lords have already said, the report states that it is,
"a scandalous waste of taxpayers' money".
The recommendations of the European Commission were effectively demolished by the noble Lord, Lord Harris. They are weak; they do not go far enough. I hope that Her Majesty's Government will continue to try to persuade at least all the non-tobacco producing states, and eventually some of the tobacco producing states too, to join with the United Kingdom and Sweden to move for a rapid scaling down and replacement of the regime.
4.50 p.m.
Lord Wade of Chorlton: My Lords, I have the privilege to be one of the members of Sub-Committee D. I am most grateful to my noble friend Lord Reay for chairing our investigation into the tobacco regime and for the excellent way in which he presented our report. I am delighted that he has persuaded all noble Lords who have spoken of the excellence of the report and how important it is that we take the issue extremely seriously and encourage the Government to seek to persuade other members who will sit at the table in Europe to do something about it.
Noble Lords have spoken sufficiently about the problems regarding the tobacco regime and the enormous cost both to the European taxpayer and the individual British taxpayer to persuade us that something should be done. It will be more difficult for the noble Lord, Lord Donoughue, to persuade the other member states that something should be done. With the tobacco regime we are confronted with an issue which lies at the heart of some of the problems with the CAP. The policy has been used by individual countries to deal with social problems and problems of backwardness in rural areas. That was neither the basic nor the prime purpose of the CAP.
I shall refer to some issues which are not necessarily set out in detail in the report although we discussed how they might be addressed. The British Government now have to put forward positive proposals to their colleagues—who will not take kindly to any change—which will be just as effective in dealing with the long-term economic problems of those rural areas rather than continuing with a system which does not work. The tragedy of most of the CAP subsidy systems is that they hold those rural economic areas in a poor, dependent state rather than lifting them out of it and progressing to more wealth. The system does the opposite of what everyone believes that it will achieve. That applies not only to the tobacco regime but to the fruit and vegetable regime. The noble Lord, Lord Rea, stated that he would rather have more fruit and vegetables than tobacco. However, the fruit and vegetable regime pays for more fruit which is destroyed than is eaten. Clearly that is as ineffective as a method for producing fruit as it is for producing wealth for the people involved with it.
In this country we have some interesting examples of how we have sought to deal with the issue. Possibly the situation is not as bad. Our Rural Development
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Commission, although not referred to by the European Commission, is an example of how we have been able to tackle specific rural economic problems. The Welsh Development Agency has done tremendously good work in identifying some of the issues which need to be addressed in rural areas, establishing systems of training and re-education. They will be important in developing those economies.
Parts of Italy, Spain and Greece which grow tobacco are extremely poor areas. Many families live together in one house. They share their work; they share the ownership of the land. It goes back to a feudal system. The worst thing we can do is to develop a regime which holds them into that system and does not encourage them to use their own native initiative and entrepreneurship to move out of the system. It will be important to teach them some of the basic principles that we practise in this country. I would rather see our taxpayers' money going into training and the development of new technology than into the production of a crop that no one wants.
The basic problem is that throughout Europe there are pockets of rural areas where there is a lack of a rural economic policy to stimulate growth of the economy rather than supporting a product for which there is no further market. That should be the cornerstone of any proposals which the British Government put to the Commission. We need a positive rural economic policy. Not only shall we be confronted with the problem in Europe as it exists now; we shall be confronted with further serious economic problems within pockets of rural areas if the Community is enlarged. We have to consider infrastructure investment, the development of new technology, and better communications in rural areas, teaching the opportunities provided by a proper education system. If we have a policy which deals with those aspects of the rural communities, we shall have one on which we can build inward investment proposals which can bring finance into those areas.
Another key element is land ownership. Many rural areas of Europe are stuck with land ownership problems which make it difficult to develop the larger units which will be the key to economic success. That issue needs to be considered not only in the context of the tobacco regime but also many other problems.
I believe that the right way ahead is to establish the bond scheme, as the report proposes, and to look closely at the bond scheme's capacity not just to deal with tobacco but many other problems related to the CAP. The bond scheme would give the financial opportunity to bring about the end of the tobacco growing system. I would not be against the five year period put forward by the noble Lord, Lord Bruce of Donington. If people's minds are concentrated on the fact that the tobacco regime will stop, the more quickly they will consider other alternatives. Having been brought up in the agricultural community in this country, I am well aware how quick we are to adapt to changes once we know that they have to take place. If someone cuts off a tap on one side, by God! you work hard to ensure you can open a tap somewhere else which will keep body and soul together. The incentive of a period during which people know that the regime will stop, with a floating

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off period, will make the measure more effective. At the same time we should put forward specific proposals on the basis of the Rural Development Commission and the Welsh Development Agency to develop a rural economic infrastructure which can ultimately attract new investment and encourage new entrepreneurship.
I believe that in this country we have a great opportunity to look more sensibly at alternative crops. I must declare an interest, being involved with Horticultural Research International at Wellesbourne. That organisation can bring tremendous expertise to bear in finding solutions in regard to crops and rotational systems which can maintain the economy of the area without continuing to absorb vast amounts of money.
I am delighted that noble Lords welcome the report. If the Government will act on it, it will be of benefit to a great many people.
4.59 p.m.
Baroness David: My Lords, first, I thank the noble Lord, Lord Reay, for an excellent introduction to the report and analysis of it. I thought that he did it brilliantly, if I may say so. I should like to thank him, too, for chairing the committee so well and getting the report produced in a remarkably short space of time with, it seems to me, a full account of all that we heard and talked about while we were in committee. I also congratulate my noble friend Lord Donoughue on his first appearance in the debate as a Minister in the Ministry of Agriculture.
It has become abundantly clear from the debate that the Commission's proposals are considered totally inadequate to reform the tobacco regime in any substantial or satisfactory way. There was condemnation of that regime by the previous Government. Mr. Baldry, then Minister of State, described current arrangements as,
"a crazy regime and a crazy way to spend taxpayers' money";
and went on,
"there must be a phased ending of the subsidised provision of tobacco".
The response of this Government to the report came only last week. They complimented the committee on its well-presented report—which it certainly is; shared our concern that the Commission's proposals fall far short of what is required; and agreed that if changes of the kind proposed are agreed, further substantial reforms will soon be needed. The Commission makes no provision for future likely pressures from the WTO for the decoupling of subsidies, and seems to ignore the implications for the CAP of the likely enlargement of the Community. Poland, Hungary and Slovakia all grow large quantities of tobacco—a total of 61,000 tonnes, which would be a substantial addition to the 333,000 tonnes which was the harvest in the EU in 1995.
So why is the Commission so timid? The pressure of course comes from the Mediterranean countries which are the big producers—Italy with 39 per cent.; Greece, 36 per cent.; Spain, 13 per cent.; and France, 8 per cent. So it is not surprising that the UK had so little support
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for more radical reforms. Only Sweden was in favour of disengagement from the sector; other member states were apathetic.
It was suggested by MAFF that the non-producer countries like Ireland might be influenced by an interest in the continuation of CAP support in other sectors on comparable social grounds to those applicable to tobacco, and that is no doubt true for other countries too. Another reason was that the tobacco regime is wholly funded from the guarantee section of the European farm guidance and guarantee fund, whereas any structural measures which might provide equivalent social support would require a degree of national funding. So we can look on the Commission's decision as political. It knows that the chances of getting radical reform through at the moment are minimal and therefore funk it. Our committee had very much the same experience when we reported on the fruit and vegetable regime in 1995—another scandalous regime crying out for reform but with very inadequate proposals from the Commission, for much the same reasons.
Of course we appreciate the socio-economic problems that the producing countries have. The noble Lord, Lord Wade, explained that very well. The Commission points out that the reconversion to other forms of employment of 200,000 jobs is not feasible without an extremely high social cost. The fact that so many farms where tobacco is grown are very small and run mostly by the family, often the whole family being dependent on the crop, does not make planning easier. What I still do not fully understand is why, as the tobacco crop has to be rotated, some of the crops grown in the intervening years could not be developed—although I do understand that the alternative crops could be fruit and vegetables, and, as I said, that regime has been condemned by us as scandalous and prone to fraud. We know that a great amount of fruit and vegetables are grown merely to be thrown away, as the noble Lord, Lord Wade, said.
The possibilities of fraud in the tobacco regime were decreased by the 1992 reforms when intervention and export refunds were abolished, premia were limited to provision within a quota and the number of premium rates reduced from 34 to eight, thus simplifying administration and reducing scope for fraud. But there is no doubt fraud still exists. It is significant that neither Italy nor Greece, the biggest producers, have yet, five years later, set up the national supervisory agencies provided for in the 1992 reforms.
What we have discovered in the course of a good many reports is that two commissioners (or even more) do not have a united front and work in harmony—sometimes they do not even seem to know very much about what is going on in the area of the other one—and communication seems minimal. In this case, we have Commissioner Fischler with responsibility for agriculture and rural development, and Commissioner Flynn, with responsibility for employment and health, where Commissioner Flynn argued that subsidies for tobacco production undermined the credibility of the Commission's measures to discourage smoking on public health grounds. The report we are discussing acknowledges the harmful effects of smoking on human

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health and the apparent contradiction between supporting tobacco production on the one hand and promoting anti-smoking measures on the other. But the report concludes that,
"aid to tobacco growers has no impact on the level of tobacco consumption".
I am sceptical. I was reminded of a pamphlet I received the other day from the tobacco industry claiming that tobacco advertising had no effect on teenage smokers. Why, I wonder, do they go on doing it?
It seems a disgrace and brings the Community into disrepute that we should be subsidising to the extent of £800 million a year a crop which has little market value, and spend just £1.2 million on smoking prevention. The Court of Auditors in a special report in March 1994 concluded that, if direct income aid were to be paid to all tobacco farmers equivalent to their annual net revenue based on the 1988–90 average, approximately half the EU budget could be saved. I have heard suggestions which go further. If all the tobacco farmers were bought out and direct aid given to the farmer then in possession for his lifetime and no more, that would be a better, healthier and final solution and end the scandal. I fear this will not happen, but I join in the condemnation of these weak proposals and hope that something better and more radical can be put in their place. I hope that we shall hear that from my noble friend at the end of this debate.
5.6 p.m.
Lord Brain: My Lords, like the other two members of the committee who spoke, I congratulate the noble Lord, Lord Reay, on his chairmanship and on his excellent introduction to our report. The members who spoke dealt with the report very well. I should be repeating a great deal of what they said were I to make a long speech about the report. However, when the BBC has the opportunity of a headline to the effect that the subsidy of tobacco production is a scandalous waste of taxpayers' money, it makes an effort to find somebody to express comments on behalf of the committee.
I happened to be at home, and therefore available on the telephone, the evening before the report was published. So shortly after seven o'clock the following morning I took part in the "Today" programme. In order to present some opposition to the report, the BBC found a Mr. Fernández, a Spanish MEP who has served on the agricultural committee of the European Parliament. I thought it might help the House if I were to report some of the remarks that he made to me and to John Humphrys—and even when I was supposed to reply to John Humphrys!—about the topics. I shall also comment on remarks made by one or two other noble Lords as I do so.
First, Mr. Fernández agreed, as we have said, that this is a social issue. He made no bones about it being an agricultural issue. He said the problem is that 170,000 people rely on the tobacco subsidy to stay on the land in those European states with their families and have no other major means of income. The noble Lord, Lord Rea, mentioned fruit and vegetables. If I were to mention olive trees again, I might hear the noble Lord,
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Lord Bruce of Donington, saying that there is yet again a regime riddled with fraud. There is a problem related to keeping people on the land.
The MEP thought that we as a committee were merely saying, "Pay them for doing nothing", and asking how are they to occupy themselves if we merely pay them? He tried to compare the issue with that of set-aside. I had to tell him that set-aside represents only 15 per cent. of a normal farmer's income, or possibly less, whereas tobacco producers receive 80 per cent. in subsidy.
He also made a comment about our suggestion that the regime would have to be changed when the next World Trade Organisation round took place. He said in effect that the WTO was an American-biased organisation whose aim appeared to be to allow one of the major American manufacturers to buy tobacco of the same quality as that produced in Europe at a much reduced price. I just let that one ride.
However, I would mention this to the noble Lord, Lord Harris of High Cross, concerning a point that he made—though I do not accept what he said. He said that the tobacco experts in the Commission knew nothing about the quality of tobacco. I think that that is probably false, but it is a point that he made. They think that it is wrong.
He made another point which I believe is important, and it concerns the large number of smallholdings. The noble Lord, Lord Reay, mentioned, as we mentioned in our report, that the average size of holding on which tobacco is grown is no larger than 10 hectares (25 acres), of which two-and-a-half to three acres is all that is down to tobacco. The noble Baroness, Lady David, mentioned the question of rotation. The Spanish MEP said that this was a result of the Napoleonic Code on land inheritance. I believe that that raises a major problem, which the noble Lord, Lord Wade, raised but in a slightly different way. In this report and earlier reports we have suggested that it may be possible to buy out the farmer. The problem is that the farmer may be farming quite a lot of land within that 10 hectares which belongs to the extended family as a result of the Napoleonic Code. We are in the position of buying out one generation without there necessarily being the means to transfer the money.
I know from having lived and worked in France how family ownership of land causes family problems. Opposite to where I lived for about six years there was a field of some five acres. It was never sold for building—although it was perfectly viable to be built on and was sold 10 years later—because, of the family of about 25 members, none could agree on the price or how to sell it. I could see this problem arising if one were trying to buy with a bond or whatever.
I would draw the attention of the noble Lord, Lord Donoughue, to this matter. I wonder whether there might be a case at some stage for one of the committees of this House to look at the implications of the Napoleonic Code and land inheritance for the development of the common agricultural policy.
The Earl of Onslow: My Lords, perhaps I may briefly interrupt. What the noble Lord says is absolutely

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fascinating. He produced the number of 170,000 people; he went on to speak about children and relations; and he then went on to talk about the Napoleonic Code, about which I understand. How many people are involved? Is 170,000 the gross figure or the net figure?
Lord Brain: My Lords, the noble Lord has me in a slight quandary. When we were taking our evidence we had to use a judgment. That was a figure given to me by a Spanish MEP. I believe that the noble Lord, Lord Reay, in introducing this debate said that we knew there were about 130,000 farmers and 30,000 to 35,000 in the processing industry. We discovered that a farmer rarely employs any labour and that it is the extended family—the wife, the daughters and the sons—who gain from this. Yes, it may be 350,000 or it may be 500,000 people who obtain some employment, but perhaps for only four weeks a year. I was not going to go into the technical detail, but we received quite a lot of evidence that one of the problems is that tobacco cannot be mechanically harvested, partly because of the way it is grown. Therefore they go along the rows, rather like picking grapes in the old days, picking off certain ripe leaves which they then transport, possibly in a pannier on their backs.
I am afraid that I have digressed from the point I was trying to make, which is that we have never studied the Napoleonic Code with reference to land when we talk about bonds, insurance schemes and getting people off the land.
I have spoken long enough. I believe that this is a very good report and, like others who have spoken, I shall be most interested to hear the Government's reply.
5.15 p.m.
Lord Grantchester: My Lords, I am grateful that time has been allocated by the House for a debate on this report. On the face of it, a debate might seem unnecessary given what appears to be virtual unanimity of opinion on all sides of the House on the tobacco regime. Notwithstanding that, it is important for us to underline the degree of dissatisfaction over this regime and the half-hearted reforms being proposed by the Commission.
This dissatisfaction is evidenced by the fact that the committee declared unanimously in paragraph 37 the following view. I am happy to underline it by repeating the quotation:
"the subsidy of tobacco production in the European Community is a scandalous waste of taxpayers' money …The tobacco sector is a hole in the ground into which money is being poured with no thought for the long-term prospects of those involved in it".
Indeed, the tobacco regime would make an interesting chapter in Gulliver's Travels. The European Union pays large sums of money (£760 million this year) to grow a poor quality product of no usefulness, for which there is very little demand and whose effects on health cause us to spend even more money to counteract them. Tobacco attracts the highest subsidy of any commodity in the EU. Even the previous Government described the arrangements as:
"A crazy regime and a crazy way of spending taxpayers' money".
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It is encouraging that my noble friend Lord Donoughue responded to our report on behalf of the new Government, agreeing in principle that we should decouple support from production. We need to persuade our European partners to start the process of disengagement.
It is important to note that three-quarters of European tobacco production comes from just two member states, Greece and Italy. However, up till now the British Government have been able to gain the support only of Sweden and, to a lesser extent, Denmark. It is indicative of the previous Government's isolation in Europe that they could not attract more allies on this issue. Now, thankfully, with the Labour Government, who have immediately begun to improve relations with the EU, there is a prospect for reform. It is a not a practical proposition to end the tobacco regime completely and immediately, but we are now at least in a better position to encourage our partners to disengage gradually.
Negotiations on this issue will not be easy, as there are several other states, notably Ireland, which have an interest in maintaining common agricultural policy support for other crops on the social grounds which apply to tobacco. Not surprisingly, therefore, the status quo has its attractions for some.
We must resist calls for the status quo to be maintained. Tobacco is one of the few subsidised crops which is not eaten and which is uniquely recognised as injurious to health. Smoking is the greatest cause of avoidable death and in the UK alone kills 120,000 people each year. It is disappointing, therefore, to reflect on the possibilities of reform in other areas when so little seems possible so far as tobacco is concerned.
As regards practical proposals, I believe that the introduction of saleable bonds could be effective. They should be flexible in their payment scheduling to allow individual farmers to find their own solutions to restructuring their businesses. This need not require that farmers remain in agriculture. Of course, further resources would need to be put into regional development. Guidance would also need to be given on alternative enterprises within what are essentially objective 1 areas.
Solutions demand diverse responses and any scheme must, therefore, be able to accommodate alternative routes out of the problem. If premiums and quotas remain at existing levels, there will be little cash for bonds and local development plans. If reforms are to achieve long-term change, they must be coupled with gradual reductions in premiums. One cannot simply pull the plug.
The added advantage of bonds is that savings could be made by reducing the bureaucracy which comes with the administration of quotas. Perhaps the Minister could give the House an indication of the potential cost savings from quota administration and fraud control. If only more limited reforms are undertaken, quotas could be made saleable and a buy-up scheme implemented. Saleability would result in the less efficient producers moving out of tobacco, thus encouraging departure from the regime. New entrants to the sector would have to be

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barred from purchasing the bonds, which, make no bones about it, is difficult to achieve in an open society, where farmers like to pass on their "inheritance".
The committee's deliberations on this subject were unavoidably constrained by the fact that they took place toward the end of the previous Parliament. With more time, we could have conducted a more detailed investigation. That would not have undermined the case for reform; rather, it would have reinforced it.
The new Government have brought a new credibility to our relations with the European Union. Let us hope that one of its fruits will be the ending of this scheme, which wastes our money and our health. I commend the report to the House.
5.22 p.m.
The Earl of Balfour: My Lords, the 13th report of the European Economic Communities' Committee on the tobacco regime makes depressing reading. Although it has already been said by the noble Baroness, Lady David, I should like to quote one sentence from page 17 of the report:
"The figures speak for themselves—we currently spend £1.2 million on smoking prevention and £800 million on subsidising a crop which has little market value".
In this country we have decided to ban tobacco advertising in sports activities—yet I should have thought that sport was one activity that would have discouraged smoking. But be that as it may.
Perhaps I may speak as a smoker, a farmer and a forester. As a farmer, there is no earthly point in my growing a crop that I cannot sell. If I cannot sell a crop, I shall not grow it. Agricultural crops are zero-rated for VAT. Forestry, on the other hand, is rated for VAT. That is unfair because trees should be regarded as a crop. Tobacco is bad for us—I accept that, as a smoker—and so why not add on VAT in respect of its production? If a tobacco plant can be grown, so can a tree. I should like to put forward some constructive suggestions.
But, first, let me ask this country to think again. I have always been fascinated when we have tree planting days. With great respect, any fool can dig a hole in the ground and stick in a tree. But unless that tree is looked after carefully for the first 16 years of its life, its chances of survival are extremely slim. At the end of about 16 years one may start to obtain some return from thinnings. Today, however, one will obtain only about £1.50 per tonne and it goes to make chipboard. It is not until perhaps the tree is about 30 years old that one can achieve any kind of return. I am also fascinated by local authority tree preservation orders. Nothing lives for ever and trees die just as we do. If we allow the old trees to carry on living, we risk spreading a disease which will destroy many other trees. If the legislation had been worded so as to have a tree management order, it would have been very much more productive.
Where crops other than tobacco cannot be grown, I suggest that forestry should be established. It is labour-intensive. But it should not be done as the
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Forestry Commission has done it so often, with large areas which contain only one or two species of trees. There, there is a risk of disease and also all the trees mature at the same time. We should have a wide variety of trees of all types, if necessary even to the extent that the land is terraced, as might be necessary in parts of Italy and Greece. We should make woodlands zero-rated for VAT and forestry should be treated as an agricultural crop. Europe imports a great deal of timber. We should grow our own. Even coppicing for baskets or charcoal might be a possibility.
The noble Lord, Lord Harris, rightly pointed out that the Government should subsidise or support people, not industries. The noble Lord, Lord Brain, said that the Napoleonic land tenure arrangements may make forestry difficult. But if forestry can be regarded as a crop, there may be more possibilities.
5.27 p.m.
Lord Beaumont of Whitley: My Lords, we have had a good debate on a good report. I offer my thanks, along with those of other noble Lords, to members of the sub-committee and its chairman, the noble Lord, Lord Reay, who so ably mixes the blood of the aristocracy from at least three European countries, thus making him a very suitable chairman for this particular operation. I very much look forward to the reply of the Minister whom I welcome to his post. Let me say, however, that I shall greatly miss the noble Lord, Lord Carter, who has been banished to the slightly less rewarding office of the Whips.
The Commission has dismissed gradual disengagement. That is wrong and indefensible, as the committee points out. It was very ably said by the noble Lord, Lord Grantchester, that there could be few bodies which would continue to provide heavy subsidies for harmful substances of admittedly poor quality. I understand why the committee did not take particularly into consideration the health issue. Apart from anything else, by doing so it managed to earn the well deserved acknowledgement and praise of the noble Lord. Lord Harris. But I do not believe that the health issue should be dismissed. The argument that if we do not grow tobacco other people will do so is morally contemptible and on an intellectual par with similar arguments about, say, landmines. Before anyone misquotes me or takes me up, let me say that I am not comparing tobacco with landmines. I am merely comparing the intellectual arguments used in both cases.
The evidence of rural communities must be supported and I would willingly spend a considerable part of your Lordships' time saying how that should happen. However, this has been a full debate; we have covered a lot of ground. The noble Lord, Lord Wade, covered that issue well and the House will no doubt appreciate it if I keep my remarks short, which I intend to do.
Of course rural communities must be supported and there are interesting suggestions as to how that should be done in paragraph 4.4 of written evidence. However, it seems to me that we are quite clear that this is not the way in which rural communities should be supported. An interesting point was raised by the last speaker and

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by my noble friend Lady Robson in the questioning in written evidence in relation to the World Trade Organisation.
I do not often defend the World Trade Organisation. However, it is useful that that body is visualised as bringing an end to this particularly ridiculous and corrupt regime at some time in the near future. If that is so—it appears to be so—it is short-sighted for the Community not to start thinking now about the way forward. As one noble Lord said, the British farming community is very good at thinking of alternative uses when it is told that certain crops are no longer needed. I have no reason to believe that European farmers will be any less efficient. The sooner all the regimes, including the Italian and Greek governments, turn their attention to that and stop merely blocking it, the better.
This is a thoroughly good report on a thoroughly bad European document. I hope that the noble Lord, Lord Donoughue, will be able to give us some hope that the Government will be able to see their way forward to doing something about it.
5.33 p.m.
Lord Lucas: My Lords, I too congratulate my noble friend Lord Reay on this excellent report, which I am sure would have gained just the plaudits from us had we continued in government as it will no doubt receive from the noble Lord, Lord Donoughue, and justly deserves. Also, I congratulate the noble Lord, Lord Donoughue, on finding himself in the position which I was happy to occupy so recently. I am sure he will fill it with great ability, to which I certainly cannot lay claim.
This is also perhaps an opportunity to congratulate the noble Lord, Lord Beaumont of Whitley, who I find on this occasion so converted to the cause that he is wearing the Swedish flag in his lapel, on representing the only other member of the Community who supports us in our endeavour.
Lord Beaumont of Whitley: My Lords, the noble Lord is mistaken. It is National Carers' Week and these are the colours of carers.
Lord Lucas: My Lords, nonetheless, it is always a pleasure to discover a member of the Liberal Democrat Party at one with us and at one with reality. It is not often that we encounter those two happy conditions.
Most noble Lords who have spoken today pointed out that this debate concerns a social subsidy. We could be subsidising anything. It has nothing to do with tobacco, and I shall not therefore stray into the areas of anti-smoking and tobacco quality which others covered. Nor—I hope not too much to their disappointment—shall I follow the noble Lord, Lord Brain, down the route of the "Code Napoléon" or my noble friend Lord Balfour into forestry.
I was fascinated by the little vignettes that today's debate provided; its ability to hold a magnifying glass over this particular vignette at work and its characteristics and foibles. It is fascinating to see what a bureaucracy is like when it has no proper political
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control. It is comforting for a politician to see that we do have a function in this world. The Commission possesses all that supreme intelligence and so little common sense. It has so little ability to indulge in radical self-criticism and radical change. It seems to believe that if one changes something radically, everything is lost and all is chaos. Politicians live by change. We live for what we can change in the world, and the combination of the two is the way the system should work. An organisation that is so biased towards a bureaucracy has some fundamental faults which are hard to eradicate and which appear throughout its work.
The Commission has an attachment to stability at all costs, even when it comes to keeping people in poverty because that is the way things are and that is the direction in which they are set, even to the extent of running a system to a point where, in the end, change has been ignored for so long that when it comes it is catastrophic and calamitous.
What really astonished me about the report was the sheer mendacity of the Commission. I find it difficult not to characterise what it says as anything other than outright and deliberate lies. When there are politicians around, the bureaucrats have other people to do that for them and I am sure that they are grateful for that.
The report also gives a little vignette of European politics and the way in which countries fight over what is "our" share of the cake. To the Greeks and the Italians the tobacco subsidy is their share of it, and they fight not out of any rationale but because other countries have other subsidies which is "their" share. The trade-off works because the rationality and the possibility of reform become crippled by the inability to deal with individual subjects on their own. One can only deal with the tobacco subsidy when one is dealing with all other sets of regimes at the same time. Therefore, if the Greeks and Italians are to suffer from these changes, then in some way they can make the Brits suffer.
One can see the clash of the old and the new socialist cultures; the belief that is still common in Europe in relation to subsidy—that is, subsidy at its most extreme. In some cases 99 per cent. is represented by subsidy. We are almost inventing jobs for people to do. Indeed, we see in France some more of that to come—350,000 jobs to be created in the public sector. To do what? To add what to the economy? That is the sort of feature of socialism which I am sure the noble Lord, Lord Bruce of Donington, recognises from his youth in the Labour movement. It is a characteristic of the cause which he once so ably espoused, and perhaps still does, in which case he may enjoy seeing it come to fruition in the European Community.
The noble Lord, Lord Harris of High Cross, made a valid point when he said that we should not look at the net expenditure on the European Commission; it is gross expenditure. The money that comes back to us is not spent as efficiently and wisely as we would spend it or indeed, if we were to leave it to the individual members of our nation to spend wisely. We cannot equate money with money; outgoings with incomings. It is a large amount of worth and value which we invest in the European Community.

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Several solutions were proposed to the problems that the tobacco regime represents—and a number of good ones. It was said that the subsidy should be directed at the real problem for which it is supposed to exist. If there are social problems, let them be dealt with directly. Trying to deal with them through a different method is fundamentally unsatisfactory and leads to all kinds of distortions.
The World Trade Organisation will clearly have some effect on the future of the subsidy. If the European Community wishes to keep it the way it is, perhaps it should redirect it into something which is economically neutral. Perhaps we should pay the Greeks to grow wild flowers in their fields and to sit outside their front doors playing the bouzouki. It would scarcely cost more and would produce many benefits for the rest of us, even perhaps for the Greeks themselves.
On the question of subsidiarity, as my noble friend Lord Reay said, why should the European Commission tell these individual countries how they should live? Why should it be the Commission's business to keep Greek peasants doing what they have always done—living in poverty, growing tobacco? Why should this not be a matter for the Greek Government to choose? Yes, we agree that we as a Community will give money to Greece and will give money to the poorer areas of the Community to help them prosper. But why should we be limited to the imagination of the Commission to deal with this matter? Why should we not, as my noble friend Lord Wade of Chorlton so ably said, draw on the kind of experience we have in this country of how to revive and revitalise rural communities? These things are much better done by individual countries than done in a regimented way by
the Commission. We are much better placed to respond to the individual problems that we have and to deal with the particular problems which come from the Code Napoleon. If money is needed to solve that kind of problem, why should it not be applied to solving that kind of problem? That is fundamental to the difficulties these rural areas find themselves in. Why should it be restricted to subsidising the growth of tobacco? If we are to supply subsidy, subsidising new businesses, infrastructure, the ability to market and transport produce and communications of all kinds are what rural areas need and not money to spend on a totally useless activity.
I look forward with great interest to hearing what the noble Lord, Lord Donoughue, will say in reply to the report. I shall put one particular emphasis on it. I shall listen carefully to the answers that he proposes Europe should adopt and I shall imagine him trying to apply those same answers to our own little tobacco regime in miniature—the hill livestock compensatory allowance. There we are, facing the same problem of looking after rural communities which are no longer viable. There is no way in which those rural communities, as farming communities, can pay their way without subsidy. How are we to deal with that problem within our own shores? Will we adopt the recipes which we suggest for others?
5.42 p.m.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Lord Donoughue): My Lords, I thank the noble Lord, Lord Reay, for initiating the debate. I agree with virtually all he said and I do not propose this evening to defend the indefensible. I thank him for the kind words he said about me personally and assure him that I am very committed to the reform of the CAP. However, I should warn him that I do not expect to achieve all of that before Ascot—not before the first day of Ascot anyway!
I thank my noble friend Lady David for her characteristically kind words. I thank the noble Lord, Lord Beaumont of Whitley. I can tell him that during the first few weeks of this job I totally shared his regret at the banishment of my noble friend Lord Carter away from agriculture. But it is beginning to feel better. I thank the noble Lord, Lord Lucas. He was modest. I say that with the hindsight of my present experience I look back on his performance in this job with growing retrospective admiration and sympathy. I shall look carefully at what he said about hill livestock.
As a government, we welcome the committee's excellent report. It is a well organised analysis of the position and is commendably frank in some of its justified criticisms. As stated in the Government's response to the report, we agree with most of the points made by the committee. I certainly agree with a good many of the comments made in today's debate, in particular with the comments of my noble friend Lady David on the Brussels contradictions and with the belief of the noble Lord, Lord Harris of High Cross, that such nonsense cannot survive enlargement and what is to happen in the World Trade Organisation.
The House will be aware that the European tobacco regime has attracted criticism wider than here. It has attracted this criticism for a number of years not least because of the great expenditure involved and the health implications. There has also been widely reported criticism—it has occurred this afternoon and even within the Commission—of the illogicality of supporting production at the same time as encouraging anti-smoking measures. The House of Lords report, commendable in almost every way, is, if anything, a little gentle on that aspect. My noble friend Lord Rea spoke with great medical expertise, especially with regard to his concern for health in the less developed world. I noted, too, the comment of the noble Lord, Lord Beaumont of Whitley, in that regard.
The ban on advertising is fairly oblique with regard to this debate but perhaps I may say that the Government believe that the ban will be most effective if introduced as part of a package. Next month the Minister of State for Public Health is holding a summit of experts on ways to reduce smoking. We are also looking carefully at how best to remove tobacco sports sponsorship without putting at risk particular events in the UK. It involves a number of sports, particularly horse racing. National heritage Ministers will be consulting the sports concerned and legislation will include a transitional period.

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Coming back to the central concern of the debate, we must ask what are the chances of reform. We have to concede to the Commission—even critics must concede—that the 1992 reform was a significant step in the right direction. It reduced the scope for fraud and it cut overall expenditure. Costs on the regime are now down 23 per cent. from the 1991 peak. Fraud has been reduced. There are now no intervention and export refunds, which were the areas most prone to fraud. The aided categories have been simplified—cut from 34 to eight—and monitoring strengthened. We note that the Greek and Italian tobacco agencies have not been set up and that the Commission at least is reasonably satisfied that other crop control agencies now being used for tobacco control have good effect. We believe that the Community now needs to take the opportunity to build on those reforms.
Looking at what is proposed, we are pleased that the Commission accepts that maintenance of the status quo is not an option. The fact is, as often mentioned in the debate, that the regime supports production of tobacco—nearly 5 per cent. of world production—of a very low quality and that the product would barely be grown in the European Union without subsidy. The Commission report says that the quality could improve. There is a long way to go. That is reflected in the fact that Europe imports most of the tobacco it consumes and exports 80 per cent. of its own production to those less privileged—mainly north Africa and eastern Europe—as my noble friend pointed out.
The Commission examined and rejected the option to disengage, which is attractive in many ways. We, like the noble Lord, Lord Harris of High Cross, whose anti-political correctness status I always find engaging, were very disappointed by that conclusion. We pressed hard for decoupling from production, but it was the Council of Ministers who insisted that that should not happen. It preferred the proposal to reform the existing system, the key elements of which are modifications to encourage quality and measures to enable growers to move out of tobacco with a voluntary buy-out scheme and flexibility to transfer into varieties in demand.
Broadly, we welcome the Commission's proposals in so far as they go because they are a modest improvement, but one of our main concerns is that the Commission's ideas fall far short of what is required. It is our view that further reform will soon be needed.
The Commission's preferred options for improving the regime raise questions of effectiveness and control as well as of health. One can argue that the more quality is improved then there are more tobacco and health questions. Those issues will need to be fully explored when the detailed proposals are made available. We shall be probing those issues.
The Commission's report focuses on making more effective use of funds to secure better quality production while maintaining broadly the current level of support. This approach seems certain to be reflected in any formal proposals eventually put forward. The Commission is waiting for the European Parliament's opinion on its report before issuing its detailed proposals. We regret this, but it is expected to take until the autumn.
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The cost of the regime is over one billion ecu paid on a maximum quota of 350,600 tonnes. That makes tobacco the eighth most costly CAP regime and accounts for about 2.5 per cent. of CAP expenditure. It is the most costly CAP regime in terms of support per hectare. We agree with many noble Lords, including my noble friend Lady David and my noble friend Lord Grantchester, in that we do not consider that financial support for tobacco production is an effective way of spending Community money. We have strongly argued that the cost of the regime should be reduced. At this point I say to my noble friend Lord Bruce that many of his views on EU expenditure are not entirely unfamiliar to me, but on his general point I agree that CAP imposes a big burden on both taxpayers and consumers. We point out that the percentage of the EU budget has been reduced from two-thirds in 1988 to under one-half now, but it is still too high. The Government are pressing the Commission to come forward with further proposals.
A point made by a number of noble Lords, which is central, is that the problem is really a social one; it is not a commodity issue. Tobacco tends to be grown in remote rural areas on very small plots with an average size, as mentioned, of about three acres. It also involves Napoleonic or Continental land ownership issues. There are great difficulties in changing land use, which the noble Lord, Lord Brain, mentioned. It is an intensive crop and the social problem is that in some areas it is a, or the, major employer and important local source of income. The question of the numbers of people involved was raised. It involves 170,000 full-time jobs including 135,000 growers and in addition 30,000 processing jobs. I say to the House that we do not dismiss that as a social problem. It is a significant number of people. We sympathise with the attempt to help to deal with that problem, but our position is that what is proposed is not the best way to do it. It is a difficult problem. The farms often have no irrigation and there are no real alternative crops which would make such small farms economically viable. Switching to other crops runs the risk of upsetting the balance in those sectors and the European Union has placed quantitative restrictions on support for some of them.
We are disappointed that the Commission did not look closer at non-agricultural alternatives. There is also the wider question of rural policy raised by the noble Lords, Lord Wade and Lord Lucas, and the argument that we need a positive rural policy in Europe as here. I wholly agree. My right honourable friend the Minister is looking at ways to alter the balance in our own ministry towards a wider rural policy, away from the concept of just supporting agricultural production. We propose to advocate that change in Europe, but one would be foolish to pretend that it can happen overnight.
Our central, particular approach is that any measures introduced in this area should be aimed at reorientating growers towards other activities. Our view of the ideal solution would be a Europe-wide commitment to an eventual phasing out of the regime. I note that the committee suggests 10 years and I wholly agree. I agree with the noble Lord, Lord Reay, that the large amounts of money involved would be much better spent phasing out the industry and not perpetuating it.

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As regards the tobacco regime, we are critical. We agree with all the criticism so pungently expressed by my noble friend Lady David. We encourage voluntary departure from the regime so long as it leads to permanent reductions in quota. We do not believe that the quota obtained through a voluntary buy-up scheme should be redistributed nor do we wish to see new entrants encouraged. The Government support the Commission's ideas for premia modulated according to quality, in so far as they go, but we much prefer to see lower premia to expose producers more to the market.
Looking at the political practicalities of achieving what we believe in, we have to state the unfortunate fact, as the noble Lord, Lord Reay so excellently said, that few other member states support our views on reform. No fewer than eight countries have producer interests which they are not prepared to set to one side. So far—and I stress this—most other non-producers have had little to say. Given that and the system of qualified majority voting in the Council, the chances of our being able to bring about a radical change are limited unless and until external forces such as the World Trade Organisation talks and enlargement pressures force it. In the context of enlargement, we note that current production in Poland and Hungary alone would increase the European Union quota by 17 per cent.
In conclusion, it would be foolish to promise the rapid reforms in which we strongly believe, but I assure the House and members of the Select Committee that when the Commission's proposals come forward this Government will press for the greatest possible degree of reform, and, bearing in mind what my noble friend Lord Grantchester said, we shall also try, unlike our predecessors, to build a coalition of support for our rational position among our European partners.
6 p.m.
Lord Reay: My Lords, I am extremely pleased that so many noble Lords have participated in the debate, and particularly that so many have done so who are not members of Sub-Committee D. All too often, members of sub-committees tend to end up talking to themselves on occasions such as this, but that has very much not been the case today.
I should like to refer briefly to the remarks of the noble Lord, Lord Harris of High Cross. I value highly the support that he gave to the report. The noble Lord had a criticism of the last sentence of paragraph 39 in which we say how public health arguments, even if ill founded, could nevertheless help to create the will to change the regime. I can see why a campaigning smoker like the noble Lord could be offended by the apparent lack of scruple in that observation. However, I take the sentence to which he objects more in the nature of an objective and passive observation than as an incitement to indulge in anti-smoking propaganda. I hope that others will do the same. However, that was the noble Lord's only small criticism among all his other highly complimentary remarks about the report, for which I am truly grateful.
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I have detected hardly any other criticisms of the report during this debate and I am grateful for the degree of support which it has received. Indeed, familiar antagonisms in your Lordships' House disappeared in the cloud of unanimous agreement which the report received. The noble Lord, Lord Beaumont of Whitley, found nothing with which to disagree in what the noble Lord, Lord Bruce of Donington, had to say. My all but namesake, the noble Lord, Lord Rea, found nothing with which to disagree in anything said by my noble friend Lord Boyd-Carpenter. What else is there to live for?
I am also grateful to all members of the sub-committee who have spoken, including my noble friend Lord Wade, the noble Lords, Lord Brain and Lord Grantchester, and the noble Baroness, Lady David. I thank them particularly for the kind things that they said about me. I also thank the noble Lord. Lord Beaumont of Whitley, for the same reason.
I listened at the time to the early morning interview of the noble Lord, Lord Brain, on Radio 4—and very good it was too. The noble Lord told us about the Portuguese MEP who asked, "What about set-aside?". As my noble friend Lord Lucas correctly pointed out, we must not forget that there are regimes under the common agricultural policy which benefit producers in this country. My noble friend mentioned one which is of particular interest to us. I refer to the hill farmers' scheme. We cannot say, hand on heart, that none of those would or should have happened if the CAP did not exist or if it were to be in some way repatriated. We must always bear that point in mind.
I am grateful to the Minister for the way in which he has received the report. I am sure that what he has said will bear close study. But it gives me confidence to believe that the Government will continue to strive for reform in the Council, which is what we all wish to see. I commend the report to the House.
On Question, Motion agreed to.

Prison and Probation Services
6.4 p.m.
The Earl of Longford: rose to ask Her Majesty's Government whether they are yet in a position to reconsider plans for cutting the prison and probation services in view of the prospective large increase in the number of prisoners.
The noble Earl said: My Lords, like other speakers, I am confined to 11 minutes, but tomorrow is another day, as is the day after that and the day after that, so the House will no doubt wish to consider these matters much more closely on a future occasion.
I am happy that the noble Lord, Lord Williams of Mostyn, is to reply to the debate. I am told by an expert friend of his that the noble Lord's heart is in the right place, whatever that may mean. I only hope that the Minister will allow his tongue to wag freely in the interests of his heart. I am also pleased that the noble Lord, Lord Graham of Edmonton, is to speak. Apart from myself—I am not exactly sure of the

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competition—no one has visited more prisons than the noble Lord, Lord Graham, who thus speaks with much authority on these matters.
In the short time available I shall speak very crudely and almost in shorthand. The choice is simple now: are we to return to the procedures that led to a steady improvement in the lot of prisoners and to a more humane treatment of them (which progress was presided over in later years by six Conservative Home Secretaries), or are we to continue with what I am afraid I have had to call "Howardism"? I never kick a man when he is down—
Noble Lords: Go on!
The Earl of Longford: My Lords, no. I am too timid and I may get kicked back. I do not want to risk anything. I never kick a man when he is down—although I have called the previous Home Secretary "The Prince of Darkness" and I offer him the consolation that Satan is generally regarded as the real hero of Paradise Lost. I hope that that will be some consolation to him in these difficult times.
As I have said, the choice is simple: are we to return to that more humane, kinder and more constructive treatment, which led to improvements in the living standards of prisoners, or are we to continue with the practices of the past four years and with the philosophy of "prison works" and that it works all the better if prisons are made nastier for prisoners?
What are the facts today? We understand from official figures that the prison population has increased from about 40,000 to about 60,000 in the past few years. If present policies were pursued—I hope, of course, that they will not be—the prison population would reach 74,500 according to official estimates. Other estimates put the figure much higher. At any rate, that is an enormous increase in the number of prisoners. What are the Government doing about it? They are cutting the provision per prisoner. There is to be a total reduction of 25 per cent. in the Probation Service's budget in the next few years. I know that we shall be told that the total amount that is spent on prisons will increase. Well, one would expect that given that vast increase in the number of prisoners, but in terms of the provision for the effective treatment of prisoners, there are to be cuts. Those cuts are bitterly resented in every prison that I have visited—and I visit two a week. That is the situation today.
In the time available I cannot quote all the various organisations that have expressed their horror to me. However, the Prisons Affairs Consortium has expressed its concern about the "cuts", as it calls them. Likewise, the Probation Service and the Prison Officers' Association have expressed similar concerns. The noble Lord, Lord Graham, may well speak for those bodies and will do so with great authority. An unprecedented burden is being placed on prison officers.
As I have said, there is a simple choice. I am not asking the Government to come up with a dramatic announcement today after only a few weeks in office. The most that I can hope for is that the Government will
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show some sign that they are aware of the problems created by "Howardism" and that they are leaning in the direction of better things.
I hope that I have never suggested in this place that prison reform is a party question. The roll of honour contains names like Sir Winston Churchill, who became the greatest Conservative Prime Minister, but was a Liberal before the First World War, Lord Templewood and the former Home Secretary, Lord Butler, on the Conservative side. On the Labour side one had Baroness Wootton, Lord Gardner and the noble Lord, Lord Jenkins, who was a Labour Home Secretary. Since then he has been the leader of at least two other parties. Therefore, credit for so-called prison reform has been widely spread.
Today we face with equanimity—perhaps others face it with alarm—quite a few years of Labour rule. I address myself particularly to the Labour Government that is to preside over us for a few years yet. During the debate on the Address I said that I drew encouragement from the fact that eight—I believe I said six—members of the present Cabinet were members of the Christian Socialist Organisation. That must mean something; it cannot mean nothing. They gain nothing in their own lives from that except spiritual advantage. Therefore, there are eight Cabinet Ministers who are Christian socialists. They include the Prime Minister and, most relevantly, Mr. Jack Straw, the Home Secretary. What are we to expect of him?
A recent article in the Howard League magazine contained the heading "From Longford to Straw". The only relevance of that was that in 1964 I chaired a committee set up by the then Leader of the Opposition, Mr. Harold Wilson, to draw up plans for penal reform, most of which were carried out later. They included the introduction of parole and the abolition of capital punishment. That was the so-called Longford Committee of 1964. I do not believe that the Howard League magazine was trying to be complimentary to Mr. Straw by the use of the words "From Longford to Straw", but I draw a different conclusion. I think of St. John the Baptist who said,
"I must decrease and He must increase".
I must decrease almost to the point of invisibility, and I hope that Mr. Straw will go on from strength to strength, always remembering that he comes before us as a Christian. I hope that he will never forget one of the key passages in the Gospels that the Son of Man has come to seek and to save those who are lost.
6.12 p.m.
Lord Ackner: My Lords, some 10 years ago when I was a shy, retiring, self-effacing and recently appointed Lord of Appeal in Ordinary I was seduced by my noble and learned friend Lord Brightman to take part in debates on sentencing. He did so because he told me that judges were constantly being attacked and there was no one to defend them. He was quite right. That was the tone of that particular era. It was exacerbated by misleading reports in the newspapers from time to time as to exactly what judges had done.

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I recall a case some years ago that gave rise to extensive headlines which condemned a High Court judge for sentencing to 20 years' "imprisonment" a boy of 16 for "mugging" a middle aged man in Birmingham. Such was the violence of the criticism in the press that there were demands in the Commons for the judge's resignation or dismissal. The boy had not been sentenced to 20 years' imprisonment, or any period of imprisonment; he had been sentenced by reason of his age to detention. The period of 20 years was fixed pursuant to Section 53(2) of the Children and Young Persons Act 1933 and provided merely for the maximum period of his detention. The place in which and the period for which the sentence had to be served were matters at the discretion of the Home Secretary.
The boy had not been sentenced for mugging but for attempted murder. Indeed, he had pleaded guilty to that crime. He and two or three other youths had at night knocked down a man in a dark passageway, robbed him and left him lying on the ground. The boy thus sentenced had gone back not once but twice and had sought to finish off the man with a brick. He had very nearly succeeded. The victim was unconscious for 10 days and spent seven weeks in hospital. He was discharged with permanent damage to his brain, hearing and one eye. The Court of Appeal upheld and commended the sentence. The boy was a dangerous psychopath who might need years of treatment before he could be safely discharged from detention. Needless to say, the publicity that the Court of Appeal's decision received was in comparison minuscule.
Following on these criticisms, eventually the Government in 1990 issued the White Paper Crime, Justice and Protecting the Public. The Government were anxious to promote punishment in the community. It was said in the White Paper:
"It was once believed that prison, properly used, could encourage a high proportion of offenders to start an honest life on their release. Nobody now regards imprisonment, in itself, as an effective means of reform for most prisoners …For most offenders, imprisonment has to be justified in terms of public protection, denunciation and retribution. Otherwise, it can be an expensive way of making bad people worse. The prospects of reforming offenders are usually much better if they are in the community provided the public are properly protected".
It was on the basis of that White Paper that the Criminal Justice Act 1991 came into being.
It is clear from the terms of that Act, in particular Section 1, that imprisonment was to be the punishment of last resort. The seeds for turning in a contrary direction were sown by the then Home Secretary in a speech to the party faithful in 1993. He said then:
"More convictions and longer sentences, more people will go to prison. I do not flinch from that. No longer shall we judge our system of justice by a fall in the prison population. Let's be clear: prison works".
Those words produced a much harsher climate. As a result, the prison population has increased by 50 per cent., from 40,000 to 60,000. There was an earlier forecast that by the year 2005 the prison population would reach 59,900. We have surpassed that with seven years to spare.
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I listened to the secretary-general of the Prison Governors Association address a committee in this House last week. He said that the weekly prison population was increasing by 250 to 300. Your Lordships will recall the publicity that surrounded the prison ship imported from America at vast expense. To my recollection, that was able to house 500 prisoners. Based on the present weekly increase in prisoners, we shall require two prison ships a month. Very soon no doubt a flotilla of prison ships will ring the south coast.
The population has caused the prisons to reach saturation point. According to the secretary-general, obviously it has impacted upon the system's ability to provide the necessary facilities for rehabilitation.
How are we to get back to a saner, more sober and balanced view of our penal policy, which for the moment is in a mess? In the short term we must persuade the public that their protection is far better achieved by a more efficient use of limited resources: first, more effective policing—the risks of detection are accepted to be the best deterrence; and, secondly, more effective rehabilitation means being provided in prison—better education and training so that the prisoner returns with a good prospect of successfully entering the labour market.
The most important input the Government should seek at the moment is the views of the prison governors. They have an intimate knowledge of those who in their view would be better off being treated in the community and those who for reasons of persistency or danger should be locked up. They will have views upon whether the present system has any real deterrent value, which is considerably doubted, and whether the rehabilitative prospects are being cut down by the overcrowding and the reduction in money spent on prisons. They will be able to give the Government a clear view of the ways in which the rehabilitative process can be improved.
In the long term provision must be made for a comprehensive reassessment of a rational penal policy. Some two years ago a letter was sent to The Times with the impressive signatures of Professor Seán McConville. Sir Louis Blom-Cooper, Lord Allen of Abbeydale, Professor Anthony Bottoms, Lord Callaghan, Sir Ralph Gibson, John Harding, Lord Hunt, Professor Terence Morris, Brendan O'Friel and Lord Runcie. The letter was sent on the 100th anniversary of the report of the Gladstone Committee on Prisons. It stated:
"Tomorrow (10 April) [1995] marks the centenary of the submission to the Home Secretary Herbert Asquith of the Gladstone Committee's Report on Prisons. This Committee propagated the twin philosophies of deterrence and rehabilitation, which greatly influenced penal affairs for much of the twentieth century. In recent years, however, both the question of rehabilitation and the issue of deterrence have become highly problematic, as has their relationship. The use of punishment by society needs careful consideration, as does the value of imprisonment".
It went on to say:
"We think the time is ripe for an overview, on the scale of the Gladstone inquiry, to propound a sound and authoritative penal philosophy for the twenty-first century".
The letter's authors went on to suggest that that could be done by a royal commission. That might be looked upon as having a number of advantages. I suggest that

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the Advisory Council on the Penal System which was set up in 1966 be set up again. For over 10 years it made a significant contribution to the formulation of policy and was a valuable instrument for identifying and suggesting changes in penal policy and practice. I have already said that penal policy is at the moment in a mess. Urgent action should be taken to rectify it.
6.25 p.m.
The Lord Bishop of Lincoln: My Lords, I thank the noble Earl, Lord Longford, for initiating this short debate. There is no need to rehearse the facts about the pressure in the prison system from a numbers point of view. Alongside the increase in numbers of those being detained, equally devastating is the need for constant efficiency savings, as required by the Treasury—some 5 to 6 per cent. is looked for over the next three years.
As the noble and learned Lord, Lord Ackner, said, prison governors find themselves under enormous pressure merely in managing the system as it is. My experience as Bishop to Prisons visiting chaplains in various establishments up and down the country indicates that the soft targets for much of that efficiency saving are education and probation—actually working with inmates.
Despite the difficulties, over recent years the Prison Service has worked hard to put money back into the system to reopen and develop workshops, to cover incentive payments for prisoners demonstrating good behaviour and to finance drug and sex offender programmes. The Prison Service in recent years has made its first systematic attempt to introduce programmes concerned with the real reduction of offending.
Most people acknowledge that prisons work best where prisoners get up and know that they are going to work. The work ethic is important in the prison world. If all that comes under threat with the pressures of overcrowding, when prisoners are continually moved between different establishments, it of course demoralises prison staff working with inmates.
The Prison Service desperately needs a period of calm and stability. The issue that comes across to me is whether the Prison Service is to be allowed to work with prisoners. We must not let that go in the name of overcrowding or efficiency savings and concentrate merely upon the business of warehousing inmates. What I hope will come out of the debate is a commitment by the Government to look again at the pressures on the system, which the noble and learned Lord, Lord Ackner and the noble Earl, Lord Longford, have mentioned, and at the difficulty of the efficiency cuts.
If we turn out from prisons those who are still embittered, those who have not come to terms with their offences and often with themselves, we serve our society badly. The real hope in the Prison Service is to build upon the dedication and commitment of prison staff, particularly those in education and probation who are working effectively with prisoners to address their problems, so that they go out much better than they went in. I hope that the Government will look again at their own targets and allow the Prison Service to manage its own service and commitment.
6.30 p.m.
Lord Graham of Edmonton: My Lords, I rise to speak in the debate having been in Parliament for 23 years. Twenty years were served in Whips' offices in both Houses. I feel somewhat like a prisoner on release; I feel liberated. The freedom of the Back Benches gives me an opportunity, without deep commitment, to express views that I have held for a long time. The first that I wish to put on record is the indebtedness of this House to the noble Earl, Lord Longford. He has a reputation for and a lifetime of service in not only trying to improve the penal estate to make it more humane and sincere but in seeking to rehabilitate prisoners and to improve their lives, those of their families and society. We owe a great debt to him.
Those who work in the prison service do society's dirty work. They face potentially dangerous men and women every minute of every working day. Even in Northern Ireland and beyond, they deserve far more support and understanding. I have high hopes that we shall receive that from this Government and from my noble friend. I speak from a former close contact with the Prison Officers' Association. That body of men and women is often much maligned, yet it has a proud record of public service which I have often witnessed. For the life of me, I fail to understand how prison officers can do their job when the tools with which to do it—workshops, education, sports facilities and social life—are reduced while prison numbers rise.
I believe that regimes in prisons are being damaged due to the highest prisoner population on record. It is a combination of more prisoners, budget cuts and fewer staff which will exacerbate the fragile nature of the service. In my view, a delicate balance is involved in the exercise of sympathetic control which can easily go out of kilter. No one should underestimate the potential for disruption. More urgently, there is a need for a strategy to reduce the prisoner population. That is an essential requirement. The noble and learned Lord, Lord Ackner, referred to that, saying that in his view there is a need not only to rethink but to reassess exactly what we are doing.
This House has debated alternative strategies on a number of occasions. I believe that there are at least four ways in which we can help to make prison life easier not only for prison officers but for prisoners. There is an urgent requirement to examine the remand prisoner population. That would be a useful first step. The Government should consider introducing the 110-day rule, as exists in Scotland. The removal of fine defaulters is a crying urgency, as is an examination of the mentally ill and their transfer out of the penal system and examining the mentally disturbed with a view to their transfer into community care. Briefly, within those four areas alone there is tremendous potential to reduce the prison population significantly. Such an enduring reduction would provide permanent relief to the prison service and its beleaguered staff.
The financial savings would be enormous and would enable the service and the Government to focus more critically on the needs of the prison service. I see sitting on the Front Bench beside my noble friend the Minister

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the noble Lord, Lord Hoyle, who I know worked tirelessly in another place on behalf of the Prison Officers' Association. Therefore, those in the prison service—whether governors, officers, probation officers or educationists—are not alone, without friends in either House. I very much hope that tonight the Minister can give the House some hope.
6.34 p.m.
Baroness Masham of Ilion: My Lords, I thank the noble Earl for bringing to your Lordships' House today this very important and complex question. I have at the moment the privilege of chairing for the Howard League an inquiry about young girls aged 15 to 17 years in prison. The members of the committee have visited the establishments where these girls are. I have recently been to several prisons. The inquiry will report later this year. I hope that the Minister will be able to give some good news this evening. I am sure that what I found in most of the prisons visited can be echoed throughout the country in both male and female establishments.
The prison population is around 65,380, rising all the time. The courts go on sending people to prison without knowing that the prisons are full. The system runs from crisis to crisis, with governors and staff getting bogged down with paper work and not being able to be around and about the prisons keeping a close eye on everything that goes on. Many prisons lock up the prisoners from 5 p.m. to 8 a.m. With prison work, one has to have hope; hope that the prisoners will be treated with humanity and become useful, law-abiding citizens. This cannot happen if services are continually being cut.
In prisons there are many violent offenders—about 63 per cent.—and persistent offenders. But about 37 per cent. are not violent. Should not these prisoners perhaps be doing community service? Drugs and drug-related crime have become a scourge and a problem of society. About 65 per cent. of prisoners have some form of drug involvement. There are and have been some very helpful and worthwhile drug rehabilitation projects in some prisons. One prisoner who has been through treatment and is now a counsellor frequently writes to me from prison with progress reports. He is now an expert, having studied and worked hard, and is helping others to help themselves in avoiding addiction.
Those services are very important and should continue and develop. Detoxification services are patchy throughout the country. Last week at the All-party Penal Affairs Group a prison governor told us that when prisoners with a drug problem ask, "Please help me", and all he can say is, "I have no resources", he feels impotent. What hope is there in that kind of situation? Drugs also seem to have increased the bullying in prisons. In busy prisons, with prisoners coming in and going out and with staff morale low, the naïve first-offender prisoner who is not street wise is very much at risk.
The kind of services most likely to be cut are those which are contracted out, such as education and probation. Many of the young offenders are drop-outs
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from school. They need extra classes, such as good parenting, catering and life skills, as well as the three Rs. Many of these young people have not had such skills given to them by their parents. Many come from problem backgrounds. Many come from care and, sadly, were abused before and while in so-called care. The tragedy is that if there had been more welfare provision in schools picking up vulnerable children before they dropped out and turned to crime there might not be such a problem now.
When visiting prisons, I felt concerned that probation officers were working with reduced person power. In some prisons, relationships with prison officers and probation officers were good but in others there seemed to be little co-operation and communication. There was not a good team approach. Perhaps that is due to the different way in which prisoners are regarded.
The Probation Service is so important with the through-care which it provides. That is vital if prisoners are to be resettled in the community and stay out of trouble. In December 1995, there were 639 probation officers working in prisons. In December 1996, the number had been cut to 543. That seems very unwise in view of the increase in the number of prisoners. I am sure that your Lordships will listen with particular interest when the Minister tells us what are the plans for the Probation Service.
I have two specific questions for the Minister. If he cannot answer them this evening, perhaps he will write to me. At New Hall Prison, near Wakefield, there is a farm attached to the prison where prisoners work. Farm and horticultural work can be extremely therapeutic. Because of their work on that farm, several prisoners have been able to obtain work. It was rumoured that the farm may have to close. That would be a pity because it would do away with a healthy occupation which can help to rehabilitate prisoners and help them to find work.
The other concern I have is in relation to the prison health service. Will the Government look into that? There are many prisoners with serious health conditions; increasing numbers have mental health problems. They are being dumped in prison as no one else wants them. Would the prison health service not be better as part of the National Health Service? This year, I spent my birthday visiting Holloway Prison. It was an interesting day. I found that there are not adequate facilities to cope with prisoners who have personality disorders.
I have been amazed by the number of young children involved in prison life: either babies within the prisons or older children who are visiting their parents. Some prisons are doing the best they can but visiting facilities are extremely crowded. It could be said that some prisons are bursting at the seams. There are very positive and dedicated people giving their time and energy to the prisons, both in statutory and voluntary work. But it would be a very serious and retrograde step if no attempt made to improve services and an insufficient number of probation officers were employed to cope with the ever-increasing through care. Also, we must be able to develop more initiatives in the community.

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I hope that the Minister will give your Lordships hope this evening so that morale is raised. That would help with the escalating problems to be found in our prisons. I hope also that he will put crime prevention high on the agenda.
6.44 p.m.
Lord Acton: My Lords, as there are some minutes to spare, I should like, with the leave of the House, to say a few words in the gap. Perhaps I may ask the Minister whether the Government have any plans to give one person responsibility for women prisoners. That was the case in the 1950s and early 1960s, when an assistant prison commissioner had responsibility for women prisoners and Borstal girls. I suggest that it would be a very good plan to restore such a position.
6.45 p.m.
Lord Rodgers of Quarry Bank: My Lords, perhaps I may associate myself in particular with the tribute paid by the noble Lord, Lord Graham, to the noble Earl, Lord Longford. I tried to think of the word which best described him and I came up with the word "irrepressible". He is irrepressible both in terms of his energy at his age and more particularly in the persistence and commitment which he brings to the issues that we are discussing this evening. He has the added quality that he is right at least nine times out of 10. That is a far better average than most of us can ever hope to achieve. Therefore, I am very grateful, as are other noble Lords, to the noble Earl, Lord Longford, for enabling us to debate these matters this evening.
I am pleased also that it has given the opportunity to the noble Lord, Lord Graham, to break his silence. I have heard him (or not heard him) for many of the 23 distinguished years that he has spent in one House or another. I hope that now he is released from some of the obligations of the past, we shall hear from him more frequently.
This is very early in the life of the new Home Secretary and, as the noble Earl, Lord Longford, said, we cannot expect any dramatic announcement by the noble Lord, Lord Williams of Mostyn, on the Home Secretary's behalf. It is too soon to hear from the Home Secretary a considered view of all his duties. But I hope that he will soon be able to put on record—and put on record first in Parliament—at least a statement of the principles which will inform many of the decisions which he will be required to make during his period in office.
This evening, we approach this debate in a spirit of gentle probing and a friendly airing of anxieties. But a period of grace for any Home Secretary does not last long. Towards the end of this year we may return rather more critically to some of the issues which we are discussing this evening.
Many noble Lords have referred already to the extent to which the catchphrase "Prison Works" is proved not to be the case at all. The noble Earl, Lord Longford, was right to add the corollary as regards the previous Home Secretary, who seemed to think that prison worked especially if you made it nastier. All the evidence is that,
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if prison is made even nastier, it will work even less well. That has been the spirit of much that has been said on all sides of the House, including by the right reverend Prelate the Bishop of Lincoln.
I was struck recently by the remarks of the Penal Affairs Consortium, when it said:
"Reducing reoffending by the effective rehabilitation of offenders should be seen as a central part of a comprehensive strategy to reduce crime".
We return again to that old word "rehabilitation", which was referred to by the noble and learned Lord, Lord Ackner. I believe that that word itself deserves to be rehabilitated. It has been out of fashion but nothing better expresses what our penal system should be about. I hope that when in due course the Home Secretary makes a speech to reflect the spirit of his period in office, he will incorporate the idea of rehabilitation in what he says.
I was delighted that the noble Baroness, Lady Masham, made some passing remarks about the Probation Service because I thought it might be neglected in this debate. But as your Lordships will remember, we had a most important debate on 5th April 1995, introduced by the noble Viscount, Lord Tenby, about the Government's proposals on education and training of probation officers, and we returned to the matter on 5th December 1995 on a Motion in the name of the noble Lord, Lord Allen of Abbeydale. I remind the Minister that that Motion was carried by 108 votes to 85 and it would have been 107 votes if the noble Lord, Lord Williams of Mostyn, had not voted for the Motion.
I have no need to remind him of what the Motion said but it made a very important point about the form that the training and education of probation officers should take, despite the Probation (Amendment) Rules 1995, which had not found general favour with the House.
I shall not ask the noble Lord, Lord Williams of Mostyn, to say "Yes" to the following points that I make this evening but I hope that he will bear them in mind and pass on the message. First, I believe that the Home Secretary should call a halt to the changes which have been introduced following the unsatisfactory Dews report. Secondly, I hope that he will implement the spirit of our debate on 5th December on that Motion, which was nevertheless compatible with the order which was passed by your Lordships' House. Thirdly, will he urgently review the whole question of education and training? I hope he will conclude that it is time for a new and different approach than was embodied in decisions of the Government of that time, or that at least he will institute a review to discover whether that is the case.
On the question of prisons, a number of your Lordships have referred to the acute crisis—that is what it is—that is being caused by the growth in the prison population. In the debate on the Address, I gave the figure for the prison population on the previous Friday as 60,431. We are debating the Prison Service three weeks precisely after that debate on the Address and the figure for last Friday is 60,855; in other words, there has been an increase of 424 in three weeks. The prison

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population is growing by 140 a week. That is fewer than the figure referred to by the noble and learned Lord, Lord Ackner, as the figure given by the director general of the Prison Service. However, I am happy to rest on the figure as we have found it to be in the past three weeks. I know that the noble Earl has in mind the suggestion that the prison population will rise to 74,500 by the year 2005. That is the official estimate. However, on the growth in the prison population in the past three weeks, we shall reach that figure in precisely two years' time. That adds strength to the vivid expression of the noble and learned Lord, Lord Ackner, that we shall need a flotilla of prison ships to deal with such growth in the prison population.
That is one of the issues with which the Home Secretary must deal urgently. However, I ask him also to look urgently at the whole question of the relationship of the Home Secretary with the Prison Service. The right reverend Prelate the Bishop of Lincoln referred to the service requiring a period of calm and stability. I do not disagree with that but a period of calm and stability depends on the view the Home Secretary takes of his relationship with the Prison Service. In an interview he gave to the Independent newspaper 10 days after his appointment, the Home Secretary is reported as saying—he has not denied this—that,
"he would take full responsibility for the prisons—no more Howard-like ducking and weaving about what is policy and what is operational".
What does that mean? Does it mean the Home Secretary is now responsible for all operational decisions? Is he prepared to answer to the House of Commons on everything at Question Time? If that is the case, I think it is madness. We shall find ourselves calling for his resignation at least half a dozen times a year. That will be no reflection on the present Home Secretary but on the nature of his relationship with the Prison Service and on the sort of problems that every Home Secretary has to deal with. There is no point in having an executive agency if the Home Secretary is to take full responsibility for the Prison Service—as, apparently, he claims to do—and if there is to be no more confusion about what is policy and what is operational.
I do not deny that this is a difficult question. However, we need a full and early statement from the Home Secretary about the precise relationship he envisages with the Prison Service. I suggest that he makes that statement to Parliament so that Parliament can give its implicit approval to the new relationship and there will be less argument in the future about what that relationship is.
If the noble Lord, Lord Williams of Mostyn, has not yet looked at the annual report of the Home Office for 1997 that was published in March—I would not blame him if he has not—I suggest that he looks at it and the figures that it contains. I believe that in this and many other matters the Chancellor of the Exchequer was foolish to endorse the previous Government's expenditure plans. How do the Government intend to fund the growth in the prison population when the report that was published only in March indicates that £80 million more will be needed in the current financial
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year to meet the growth in the prison population now envisaged on present trends? I also ask the Minister to reflect on the fact that, given the growth in the prison population, we shall need 5,000 more places in certified accommodation to meet the growth in the population which is now anticipated. The figures do not add up. Therefore, either we shall have to spend more despite what the Chancellor of the Exchequer has said, or there will have to be shifts in the spending under the Home Office heading.
A catastrophe is in the making. The growth in the prison population will have grave consequences for security in prisons. We shall see an explosion of Strangeways proportions. It will have a severe effect on prison staff, as the right reverend Prelate the Bishop of Lincoln and the noble Lord, Lord Graham, have said. We shall see a minimum of education and training. We shall have a more dangerous and crime ridden country, not one that is less so. I hope that the Home Secretary will look immediately at these issues, because the noble Earl, Lord Longford, is right; we are facing the most critical situation in penal history. Something must be done.
6.56 p.m.
Baroness Blatch: My Lords, the noble Lord, Lord Rodgers of Quarry Bank, referred to the noble Earl, Lord Longford, as irrepressible. I certainly go along with that description. However, I say affectionately to the noble Earl that I would use the word "incorrigible". I have been at the receiving end of such Questions as these for some years now. The noble Earl is greatly committed to this cause. I warn the Minister that the noble Earl, Lord Longford, will not go away on this matter.
This is, of course, a Question for the Government and not for me. It is an interesting Question in view of the reference I made to the present Home Secretary when responding to the Queen's Speech. I referred to him as someone who throughout the election campaign—which was successful for him—was running for the prize of "out-toughing" the Tories. That is all very well, as are warm words about what needs to be done, and putting some meat on the bones as regards the criticism of the previous Government. However, the Chancellor has said there is no more money over and above the expenditure plans of the previous Government. Already we have heard promises of more money for education, social services, regional government, devolution, added bureaucracies, the environment, and, only today at Question Time, housing. Something will have to give. The Minister will no doubt talk about things that need to be done but how will they be paid for?
I must refer briefly to the Probation Service. I was proud to hold the portfolio for that service as a member of the previous Government. I note the question that was raised in that regard by the noble Lord, Lord Rodgers of Quarry Bank. I had a personal commitment to the training of probation officers. Much progress has been made. I know that the noble Lord, Lord Allen of Abbeydale, shared that concern and he has told me that he was pleased with the progress that was being made. Is that work to be undone, stopped, curtailed in some

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way or not proceeded with? I hope that it will be proceeded with. I was also proud to belong to a government who put in place national standards for the Probation Service which were welcomed. Progress is being made on meeting those standards.
No doubt in the course of the winding-up speech by the Minister we shall be told that crime doubled under the previous Government. Therefore perhaps noble Lords will allow me to give the history of recorded crime since the 1950s. I use Home Office figures. For the purposes of the statistics, I exclude crime damage below £20. Recorded crime in the 1950s rose by 57 per cent., an average in each year of the 1950s of 4.62 per cent. In the 1960s it rose by 107 per cent., an average in each year of that decade of 7.57 per cent. In the 1970s, it rose by 59 per cent., an average in each year of that decade of 4.72 per cent. In the 1980s it rose by 56 per cent., an average in that decade of 4.54 per cent.; and in the 1990s, there was the lowest increase of all, 31 per cent., an average in each of the years in that decade of 3.97 per cent. The previous Government presided over a reduction in crime in the past four years of 10 per cent.; and that was due to the effective work of the police, community partnerships, and the introduction of technology.
No doubt we shall also be told that what really matters is detection. It is argued that the criminal is deterred by the fear of being caught. I wish that that were true. Too many people who walk into court and are found guilty walk out not terribly afeared by what has happened to them in court. I am afraid that too many people regard the punishment as not really worth worrying about when committing the next crime. The reconviction rates are testament to that.
There is another aspect to the story. If getting caught acts as a deterrent, it is true, and again thanks to the police, that the detection rates for violent crime—although such crime is on the increase even in that overall reduction—are very high. The detection rates for violent crime are some of the best. They are in the seventies and eighties, and in some forces even higher. But that crime is on the increase. Therefore it does not follow that somehow detection is the only answer. What is needed is to catch, convict and punish criminals.
Baroness Masham of Ilton: My Lords, what about rehabilitating them?
Baroness Blatch: My Lords, if I may, I shall come to rehabilitation.
There are many ways of ensuring that we do not have so many people going to prison or on to community sentences. I pose the question to the Minister. The Narey Report—it is an important report which was welcomed—said a great deal about ways of reducing delays and the number of people who end up on remand in the system. The Narey Report made 33 recommendations to speed up the criminal justice system and reduce delay. By reducing delay in the criminal justice system, time spent on remand would also be reduced. The recommendations in the report would mean that almost all defendants appeared in court the next working day after they were charged; and that
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about 50 per cent. of those defendants, possibly more, would be convicted the day after they were charged, compared with 3 per cent. at present. That kind of recommendation can only be a good thing.
At one time the previous Government had a trial issues group, again doing important work. The trial issues group sought to identify reasons why cases do not meet time guidelines, particular attention being paid to the impact of the time guidelines on custody cases; to look at opportunities for further categorisation of cases for fast-tracking and/or special treatment some of which would include custody cases; to spearhead a drive to enable prosecution files to be prepared more swiftly by simplifying the requirements for their preparation; and to improve the efficiency of the prosecution process by improving the co-operation between the police and the Crown Prosecution Service. The Criminal Procedure and Investigations Act 1996 also contained provisions which would assist in that regard.
The noble Baroness, Lady Masham, referred to rehabilitation. It is an important point. I refer to unemployment courses, job clubs, and recreational classes. In 1995–96 17,309 NVQs were gained by prisoners, which was a 25 per cent. increase over the previous year. I refer to rehabilitation courses on drugs, alcohol, household management, child care, debt counselling and basic education and skills. As the Minister visits prisons and prison establishments, I hope that he will be as impressed as I am with much of the very good work that is being done in our prisons. Perhaps I may say this to the right reverend Prelate the Bishop of Lincoln. I saw some of that impressive work. Young people are working. About 8,000 prisoners are working in prison industries producing goods and services worth about £345 million. Lincoln Prison is one such prison.
Perhaps I may refer again to the achievements of the previous Government which will help towards detection and keeping people out of prison. They are better technology, fingerprint schemes, the Phoenix computerised database of criminal records, rapid search facilities, the QUEST system, and the DNA database which will be enormously important. I refer to closed-circuit television, and faster justice. I referred to the Narey Report and delays in the system, and proposals to cut the time in bringing young people to court. There is closer liaison between police and the CPS. As regards Action on Juveniles, local child crime teams identify vulnerable young people. There are parental control orders and secure training centres to deal with persistent young offenders. What does the Minister intend to do about that? Questions have been posed about curfew orders for 10 to 15 year-olds; minimum sentences and new prison places.
Crime prevention schemes include Neighbourhood Watch; special constables; civilian posts, many in order to release operational policemen; victim support schemes; the National Crime Squad; the National Criminal Intelligence Service, and so on. There are many ways of improving the system.
Just how tough and how effective will the new Home Secretary be? As regards repeat violent or sexual offenders, we had a celebrated case this weekend. The

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police pleaded for something to do with prisoners who have to be released from prison when everyone in the system—prison officers, the Probation Service and the police—know that the person is dangerous. But the Minister will know that the Government have turned their face against our proposals to deal with repeat violent offenders. If our policy was not good enough, what will the Government do about persistent burglars? What will happen about persistent traffickers in hard drugs?
Much has been said about overcrowding. A great deal was achieved by the previous Government. I hope that that will be recognised. Three prisoners to a cell has been eliminated; slopping-out is a thing of the past; two to a cell built for one has been very substantially reduced. There is an almost infinitesimal number of fine defaulters in prison now. A huge reduction in fine defaulters in prison was achieved by the previous Government. But alternatives to prison were not supported by noble Lords opposite. I refer to electronic tagging, curfew orders, tougher community sentences, more effective and tougher community sentences and parental control orders. Do the present Government support the previous Government's prison building programme, the refurbishment programme and the programme of extension to provide extra places? What is the future of the ship that is moored off Portland?
Much has been said about the care and resettlement of criminals. That is important. However, I pay tribute to the previous Government for putting the concerns of the victims of crime and their shattered families at the centre of policy-making. Not a word has been said in the debate so far about victims of crime.
The Earl of Longford: My Lords, perhaps I may interrupt.
Baroness Blatch: My Lords, perhaps I may finish. My time is very tight. This is my last sentence. Letting criminals off and letting them out is not a policy that I and my noble friends on this side will support.
7.10 p.m.
Lord Williams of Mostyn: My Lords, the noble Earl began this debate, for which we are all indebted to him, with a critique of "Howardism". He did not define it. Perhaps he thought it had certain aspects of being unthinking, uncooperative, mulish, uninquiring, willing to parrot formulae rather than to listen to informed argument and—almost the worst in this new brutalism—totally ignoring of other people's views, such as those of the judges, prison governors, prison staff and probation officers. If that is what the noble Earl had in mind by "Howardism", I join him in rejecting and condemning it. It was not just Howardism I heard on one occasion, but perhaps Bourbonism—"I have learned nothing and I have forgotten nothing". The history of the Bourbons after Waterloo was not entirely impressive.
What I can say in the presence of the noble and learned Lord, Lord Ackner, and in the regretted absence of the former Lord Chief Justice, is that this is a
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Government and a Home Secretary who will restore and publicly underline and reaffirm a decent regard for the judiciary. That alone would be worth a long journey.
The noble and learned Lord, Lord Ackner, invited us to pay careful attention to the views of those who administer the system, whether it be the criminal justice system and service or the prison system and service. We shall do that. We now have a Home Secretary who believes in listening to other people's views. He wishes to see the informed, organic development and improvement of the Prison Service and the criminal justice system. It will not be done over night. We have inherited what we have inherited.
I entirely endorse the thrust of the remarks of the right reverend Prelate, added to one or two remarks—to move ahead in time—of the noble Baroness when she spoke of "chronicles of lost youth and wasted life". My noble friend Lord Graham of Edmonton, who has had to be silent now for a very long time, made some extremely important and valuable points. Not least, he raised the question of remand delays, many of which come about as a result of abuse of the system. They clog up prison accommodation, distort the proper operation of the courts and, not least, wound additionally those who are victims. I do not need any lessons about proper regard for victims; nor do I believe that previous speakers need them either.
The noble Baroness asked me specific questions. With her invariable courtesy, she invited me to write to her, which is prudent since I wish to be as precise and helpful as I can. Perhaps I may adopt the same course with the noble Lord, Lord Acton. At least two of the issues mentioned by the noble Baroness and the noble Lord are very much in our minds. I discussed them, as one is expected, and rightly ought, to do with Mr. Tilt only this morning. However, I need to write definitively to the noble Baroness and the noble Lord.
I very much welcome on behalf of the Government the constructive approach taken by the noble Lord, Lord Rodgers of Quarry Bank. As he and I are agreed—although in the past we have had shades of difference as to nuance—this is not a matter to be kicked about the gutters of party political warfare. The noble Lord has never adopted that approach, as I hope I have not in my dealings with him. Many of his questions are of extreme importance: education and training; a halt to changes with the weathercock wind for short-term advantage; and questions about the quality of the educational system in prison. Quite a number of us in this Chamber have experience of the prison system in one way or another. A large component of people in prison have to be there for reasons of public security. A significant component are being let out worse than they went in. They are unskilled, untrained and uneducated, and therefore can be properly described as a danger to the public and a menace to themselves.
The situation is not good in terms of projected figures. Since December 1992 the prison population has risen by 19,974—that is, 49 per cent. The projections are extremely gloomy. My information is that the long-term projections suggested are: a rise in 1999 of 2,000 to an annual prison population of 65,800. If present trends

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continue, that is likely to be a substantial underestimate. The population could rise to 62,000 in October this year; 63,700 in March next year; and 68,400 in March 1999. I believe that that simply confirms the pattern to which the noble Lord, Lord Rodgers, referred.
Funding is not being cut. That is a misapprehension. Current expenditure is set to increase this year and the following two years by an average of 7 per cent. a year compared to the forecast out-turn for last year. There will not be any more money available. We must therefore look for increasing efficiency. We have to look to the proper, scrupulous, considered allocation of resources. Even if there were unlimited resources available—and there are not—we could not reverse overnight the historic trends to which I referred.
The noble Lord, Lord Rodgers of Quarry Bank, said that he will return to this matter at the end of the year. I dare say that he will chide me (generously, I hope) that I still do not have perfect answers to all the questions that he will put. However, I repeat that I recognise the fact that the noble Lord has recognised publicly that the present Home Secretary has substantial mountains to climb and that it will take a long time. We believe in co-operation. We believe in the full involvement of staff and hope to demonstrate that that will be a characteristic of the new Home Office under the present Home Secretary.
I do not seek to enter into any bandying about of figures. As was pointed out in a debate on the Queen's Speech, the election is over and we need to administer the Home Office, its duties and priorities in a constructive way. It is true, as the noble Baroness
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said, that "slopping-out" has gone, as has "trebling"—the holding of three prisoners in a cell designed for one. How are we to deal with those problems? Partly by an attack on delay; partly by an attack on remand; partly by a necessary use of the new prison ship, which will come into commission on a partial basis on Wednesday this week; and partly as a result of the present provision made, so that over the next 12 months or so 5,000 additional places will become available for use—1,600 new places at existing prisons; 1,900 places at the new prisons, Bridgend, Fazerkley and Lowdham Grange. Refurbished wings will come back into use at Leeds, Brixton and Pentonville, which will provide a further 1,500 places. I have already mentioned the prison vessel, HM Prison-Weare.
It may well be said by the noble Earl that simply providing more accommodation is not a conclusive answer to the problem. I agree. There are serious questions that should be seriously addressed as to what we want prison to do, what we expect the Prison Service to provide and how it is to liaise appropriately with the criminal justice system. When people leave prison, what do we hope to have achieved for them? In other words, what do we hope they will do better and differently? Those are the philosophical and moral questions that the new Home Secretary must address. He has made a good start. However, he knows perfectly well—at least, on reading Hansard tomorrow he will—that he is on probation and that this House will carry out its proper duties of scrutiny, which I welcome.
House adjourned at twenty minutes past seven o'clock.