Lords Sitting of 12 June 1997

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Lincoln.): The LORD CHANCELLOR on the Woolsack.
Lord Evans of Parkside
John Evans, Esquire, having been created Baron Evans of Parkside, of St. Helens in the County of Merseyside, for life—Was, in his robes, introduced between the Baroness Gould of Potternewton and the Lord Whitty, and made the solemn Affirmation.
Lord Lofthouse of Pontefract
Sir Geoffrey Lofthouse, Knight, having been created Baron Lofthouse of Pontefract, of Pontefract in the County of West Yorkshire, for life—Was, in his robes, introduced between the Lord Gregson and the Lord Mason of Barnsley.

The Lord Chancellor: Leave of Absence
The Lord Chancellor (Lord Irvine of Lairg): My Lords, before the commencement of business, I take the opportunity to inform the House that I am to attend the University of Glasgow to receive an honorary Doctorate of Laws on Wednesday, 18th June 1997. Accordingly, I trust that the House will grant me leave of absence.
Noble Lords: Hear, hear!

EU Anti-Fraud Proposals
3.21 p.m.
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
Whether they will support the European Union's proposed FISCALIS programme, which is due to start in 1998 and which is intended to reduce fraud in VAT and in excise duties by improving co-operation between member states.
Lord Haskel: My Lords, may I congratulate the noble Lord on his alertness at picking up so early the FISCALIS proposals because they have not yet been considered in detail at European Community level. So in a way the Question is a little premature. However, while endorsing the FISCALIS programme in principle, the Government's full support must be subject to further consideration of the costs and resources involved. The Government are determined to work with the European Commission in developing co-operation with EC authorities as a means of combating fraud within the Community.
Lord Campbell of Croy: My Lords, I thank the noble Lord for his Answer. I agree that this is an early stage, but it cannot be too soon to start considering the scheme which has been put forward. Does the noble Lord agree that while the European Commission can provide help and co-ordination, the curbing of fraud must mainly depend on the willingness of authorities in member countries to increase their vigilance and clamp down on transgressions? Can the British Government stimulate other governments in the Community to catch and prosecute their nationals who indulge in fraudulent practices? I confidently expect to receive support for what I say from the noble Lord, Lord Bruce of Donington, whom I am glad to see in his place. The noble Lord has made a study of this subject over several years.
Lord Haskel: My Lords, the proposed arrangements under the FISCALIS programme, particularly the improvement of IT systems, are based very much on work which has been done in the United Kingdom. So the noble Lord can be assured that work will be carried out within the United Kingdom on this very important project. The whole programme is designed with co-operation between European Community countries in mind. I am sure therefore that the benefit of experience in the UK will be made available to the other European countries.
Lord Bruce of Donington: My Lords, is the noble Lord aware that one of the difficulties that must be facing Her Majesty's Government in this regard is the failure of the Commission's proposals to make adequate distinction between fraud and irregularity and its failure generally to take account of irregularity which, according to British law, in many cases is already fraudulent? Will the Government give consideration to the view already widely held, not only in the United Kingdom, that the nature and form of Commission legislation in many spheres is in itself an open invitation to fraud?
Lord Haskel: My Lords, I am not sure that I can respond to the second part of the noble Lord's question. As to the first part, most of the tax at risk is excise duty. There is no evidence of significant fraud as a result of intra-EC VAT systems. VAT losses attributable to the single market are estimated at about £150 million. As regards excise goods, Customs and Excise estimates that revenue—that is, excise duty and VAT—evaded through abuse of personal importation rules for alcohol and tobacco is about £770 million a year. That is large-scale commercial fraud. There are possibly other significant but unquantifiable losses.
Lord Mackay of Ardbrecknish: My Lords, do the Government agree that not only is there fraud on VAT and excise duty across the Community, but, as the noble Lord, Lord Bruce of Donington, has told us on a number of occasions, there is fairly massive fraud in the European budget itself, especially in the common agricultural policy? Can the Minister assure the House

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that the Government will be every bit as determined as the last Government to pursue fraud in the Commission, at European level and also at member state level?
Lord Haskel: My Lords, I can certainly assure the noble Lord that this Government will be as diligent as the previous one, and far more diligent, I hope, in pursuing fraud.

EU Social Chapter
3.26 p.m.
Lord Pearson of Rannoch Lord Pearson of Rannoch asked Her Majesty's Government:
How they propose to sign the EU social chapter and then avoid EU legislation arising therefrom which they may consider damaging to British interests, given the chapter's provision for qualified majority voting.
The Minister of State, Department of Trade and Industry (Lord Clinton-Davis): My Lords, by accepting the social chapter we will ensure that the United Kingdom can take part in negotiations and influence the outcome. We will argue strongly for competitiveness. Under the last Government's so-called "opt-out", legislation such as the European Works Council Directive, which affects many British companies, could be adopted without any United Kingdom involvement.
Lord Pearson of Rannoch: My Lords, I am grateful to the noble Lord for that reply, which I find a little optimistic in view of the fact that the draft social chapter legislation at present includes provision to impose works councils on companies with as few as 50 employees, with legal rights within those companies, affecting perhaps 11.5 million people in this country, and also gives to part-time workers all the rights which are at present enjoyed by full-time workers. Does not the noble Lord agree that the new Government could pass into British legislation any Act it wished in this field without having possibly to assume legislation from Brussels which it does not like? In short, is not signing the social chapter rather like going for a walk in a tropical country in the rainy season and forgoing the offer of an umbrella?
Lord Clinton-Davis: My Lords, I find the analogy rather bizarre, but then I would expect that from the noble Lord. The fact of the matter is that, as regards the Works Council Directive, a large number of companies in this country have voluntarily undertaken the obligations which are enshrined in the social chapter in this regard. But we had no influence on that whatsoever because of the opt-out. Indeed, there can be no influence if one seeks to entertain the idea of an opt-out. For the sake of its business and its own interests, we believe that it is important that Britain should participate in the debates. We were precluded from doing that because of the strange notions of the party opposite.
Lord Stoddart of Swindon: My Lords, can my noble friend confirm that at present there is discussion between Mr. Flynn and the European Parliament about the possibility of a further 87 items being brought in under the social chapter? If so, can the Minister refer back to the Question and say whether it would be possible for Britain to choose not to implement items which will not do this country's economy any good and with which the Government disagree?
Lord Clinton-Davis: My Lords, my noble friend inadvertently draws attention to the need for us to be present at those discussions. I do not know precisely what discussions Commissioner Padraig Flynn is having with the European Parliament, but we need to have a voice in the discussions and the sooner we can achieve that the better. I do not accept all my noble friend's conclusions on this. The reality is that in the discussions we shall maximise flexibility and competitiveness while at the same time ensuring that the social justice which is enjoyed by others comes to people in this country also.
Lord Stoddart of Swindon: My Lords, can my noble friend say whether qualified majority voting will overrule British objections?
Lord Clinton-Davis: My Lords, qualified majority voting could theoretically—
Noble Lords: Ah!
Lord Clinton-Davis:—overcome objections from any member state, not only from Britain. Why does my noble friend consider that we are incapable of influencing a decision so that it is in favour of Britain? That was not possible under the government of the party opposite because of the extraordinary stance that they took. We have a much better chance of being able to ensure that the need to maintain the competitiveness of the Community economy, which is stated explicitly in the social chapter, is indeed maintained if we have a proper voice.
Lord Campbell of Alloway: My Lords, is the Minister aware that interventionist employment legislation, such as unduly onerous terms of hiring and firing and such as a minimum wage of over £5 per hour, can but inhibit employment? Is the Minister also aware that the European Court of Justice, as part of the process of advancing integration, would give effect to such subsidiary legislation?
Lord Clinton-Davis: My Lords, we had quite a lengthy exchange yesterday on the minimum wage—
Lord Campbell of Alloway: We did not get a reply.
Lord Clinton-Davis: My Lords, a reply which satisfies some will never satisfy the noble Lord, but I am quite used to that because I have heard the noble Lord, and have been much entertained by him, over many years now. A Low Pay Commission has now been established. It will look at the level of the minimum

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wage. I reiterate what I said yesterday to the noble Lord: this matter was placed clearly before the electorate in our manifesto—there was no equivocation about it—and it was endorsed by the electorate. That is something that the other side will have to get used to.
Lord Wallace of Saltaire: My Lords, will the Minister confirm that not all of the proposals that are put forward by the Commission emerge unchanged as Community legislation? The noble Lord may have experience of that himself. Will he also confirm that the British attitude to social policy is shared by a number of other governments, in particular by the Swedish, Finnish, Danish and Dutch Governments, and that we are therefore unlikely to be isolated or on our own?
Lord Clinton-Davis: My Lords, the answer to the noble Lord's second point is definitively yes. On his first point, as a former European Commissioner, perhaps I may say that not one of my proposals (or for that matter any proposal by a colleague) was ever passed without qualification by the Council of Ministers or even by the CoReper before that.
Lord Clark of Kempston: My Lords, in view of the fact that in answer to his noble friend the Minister said that majority voting could mean technically that we would have to put up with something which we voted against, will the Minister now confirm that it would be much better to do our negotiating now, to get something that is in Britain's interests and only then to sign the social chapter?
Lord Clinton-Davis: My Lords, the noble Lord has asked a rather strange question. I thought that the party opposite was against the social chapter, but the noble Lord is now urging us to legislate nationally for the items that are in the social chapter—
Lord Clark of Kempston: No!
Lord Clinton-Davis: My Lords, I find that an extraordinary proposition, coming as it does from that source. The fact of the matter is that it was the noble Lord's government who extended qualified majority voting in the Single European Act—and who did so extensively. Why does the noble Lord omit to recall that salient fact?
Lord Moynihan: My Lords, can the Minister give the House one example of how the signing of the social chapter will create jobs in the United Kingdom or enhance our international competitiveness?
Lord Clinton-Davis: My Lords, I believe that introducing greater fairness at work is an important element of ensuring greater job creation—
Noble Lords: Oh!
Lord Clinton-Davis: You see, my Lords, I think that the parental leave directive is important in encouraging people to be able to take up work, yet it is something
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which the noble Lord's government vigorously opposed. I thought that that was morally offensive. Indeed, I also thought that it ran contrary to the interests of British industry. If the works council directive is so offensive, why have 39 British plcs adopted it voluntarily?
Lord Harris of Greenwich: My Lords, does not the Minister agree that some of the exchanges this afternoon have been strange, given the fact that the British people declared their view of the matter at the last general election?
Lord Clinton-Davis: My Lords, but noble Lords opposite are not at home with that decision. They are not prepared to live with it—but they will have to do so.
Lord Annan: My Lords, does the Minister agree that the welfare of the workforce in this country and creating decent social conditions for them are matters of importance which have been totally neglected by those who have criticised him today?
Lord Clinton-Davis: My Lords, I am most grateful to the noble Lord for his support.
Earl Russell: My Lords, when the Minister listens to these exchanges, does he understand better why it has been said that the English have the attitude to sovereignty of a confirmed bachelor nation?
Lord Clinton-Davis: My Lords, I suppose so.

Plastic Baton Rounds: Use in Northern Ireland
3.37 p.m.
Lord Stallard Lord Stallard asked Her Majesty's Government:
Whether, in the interest of reinforcing the credibility of the "peace process", they will recommend the banning of the use of plastic bullets in Northern Ireland.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Dubs): No, my Lords. We shall act with the greatest energy and determination to advance the prospects of reaching a comprehensive and widely acceptable settlement in Northern Ireland, but we do not believe that that objective would be served by banning the use of plastic baton rounds. We recognise that the use of baton rounds has given rise to controversy and we look forward to a time when their use is no longer required. In current circumstances, however, where the security forces require the capability to defend lives and property, and to protect themselves in riot situations, baton rounds unfortunately remain necessary.
Lord Stallard: My Lords, I thank the Minister for that Answer and congratulate him on his appointment. However, I find the reply disappointing. I suppose that the Minister must know that since the introduction of these missiles 100,000 bullets have been fired and

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17 people have died as a result, among them eight children. That has had a devastating effect on whole communities, with thousands of people alienated from any talk of a peace process while they are under constant threat from plastic missiles. If we are serious and sincere about attempting to carry the population with us with regard to the peace process, I should have thought that it would be better to recommend a ban on the use of such missiles, particularly before the parade season starts, in order to give the peace process some credibility in the eyes of those affected. I should add that plastic bullets have been available to the police on the mainland for many years but none was used during the riots in Toxteth, Notting Hill, Bristol or Tottenham. The police did not use plastic bullets then, but suddenly their use outside public houses, at football matches, in private homes and at demonstrations is being justified. Will the Minister reconsider his Answer?
Lord Dubs: My Lords, plastic baton rounds have been used in Northern Ireland for many years. I remind my noble friend that they were used only a week or so ago at Harryville to prevent disorder when rioters tried to break into a Catholic church. We have had to use them to maintain the peace and to ensure that safeguards can be applied when lives or properties are at risk. For that reason we must stick with these weapons. I hope that when there is peace in Northern Ireland these weapons will no longer be necessary. In the meantime, unfortunately they are.
Lord Blease: My Lords, does the Minister agree—
Lord Hylton: My Lords, even if it is not possible—
The Lord Privy Seal (Lord Richard): My Lords, I believe that it is the turn of the Cross Benches.
Lord Hylton: My Lords, even if banning these weapons is not possible, can the Minister give an assurance that their use will be kept to a minimum and that the right size and quality of missile will be used?
Lord Dubs: My Lords, there are already strict rules governing the use of plastic baton rounds by the RUC. The use of these rounds is also governed by Section 3 of the Criminal Law Act 1967 in that the force used must be reasonable in the circumstances. The police also undergo thorough training before they are able to use these weapons. We are doing all we can to ensure that they are used in the safest possible way.
Lord Blease: My Lords, does the Minister agree that it is the considered aim of all peaceable organisations in Northern Ireland to be able to dispense with the use of plastic bullets? Does the Minister also agree that the credibility of the peace process could be more realistically and constructively reinforced if the perpetrators of crowd violence, organised rioting, the burning of churches, property and public transport, and
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the destruction of homes were to exercise responsibility and control over themselves and those who crowd around them?
Lord Dubs: My Lords, if there were no disorder on the streets plastic baton rounds would not have to be used.
Baroness Denton of Wakefield: My Lords, recently not only did the RUC battle for four hours to prevent a Catholic church from being burnt down but also a policeman was kicked to death for doing his duty and trying to separate participants on a march demonstration. Is this the climate in which we should contemplate the removal of support from the RUC? Is the Minister able to give the House an indication of the number of members of the RUC who have been injured in recent years compared with the number of those injured by plastic baton rounds?
Lord Dubs: My Lords, it is difficult to give absolutely precise figures but I shall do my best to inform the House. It is estimated that some 100 people may have been injured over the past three years by plastic baton rounds. Last year alone over 400 RUC officers were injured in dealing with disorders. In one week alone between 7th and 15th July 230 officers were injured, some seriously, in trying to maintain peace on the streets.
Lord Molloy: My Lords, will my noble friend consider seeking a worldwide ban on the use of this horrendous weapon? When one sees what has happened to human beings who have been hit by these bullets one wonders in what kind of world we live. In a way, it is even more terrible than the threat of any bomb. I should like my country to initiate a total world prohibition on the use of this particular bullet.
Lord Dubs: My Lords, I fear that if in the present situation in Northern Ireland the security services were not in certain circumstances able to use these weapons there might be more injuries both to members of the security services and to rioters. None of us likes this weapon, but in the circumstances it is less unpleasant than any alternative currently available. If there were a better alternative available the Government would very quickly adopt it.
Lord Elton: My Lords, does the noble Lord accept that, regrettable though the necessity of using these weapons may be, the intervention of the last noble Lord sounded more like a comment on landmines than plastic bullets? Does the noble Lord agree that this House should not accept that as a description of their effect?
Lord Dubs: My Lords, I said earlier that the training of the police was such that everything was done to minimise serious injury to those who might be hit by plastic baton rounds. That is the way in which they are intended to be used, and the police are well trained.
Lord Stallard: My Lords, will the Minister comment on the recent report from Northern Ireland about a batch

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of plastic bullets found to be flawed and allegedly ill made and far more damaging and dangerous than those normally used? What are the implications of that finding and the report from the police in Northern Ireland?
Lord Dubs: My Lords, only a few days ago there appeared in Hansard an Answer to a Parliamentary Written Question on this very subject. There have been some problems with plastic baton rounds which have not been up to the required standard. When the RUC spotted this in March of this year they immediately drew attention to the fact and the rounds were withdrawn in April—very quickly indeed. Although there were some defects in the plastic baton rounds which were used in the two years following 1994 there is no hard and fast evidence that they caused injury, or any injury greater than that which might have been caused by ordinary plastic baton rounds. Certainly, that point is still under investigation.

EMU: Stability Pact
3.46 p.m.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish asked Her Majesty's Government:
What is their policy towards the stability pact for the European single currency.
Lord Haskel: My Lords, I compliment the noble Lord on the topicality of his Question, which is on the front page of most of the newspapers this morning. My right honourable friend the Prime Minister has made it clear that it is unlikely that Britain will be in the first wave of membership of EMU. However, it is in everyone's interests, including ours, that EMU is built on a firm basis and that it succeeds. The stability pact is designed to promote sound public finances. The Government believe that sound public finances are necessary to provide a stable economic environment and the foundations for high and sustainable levels of growth and employment. The Government have set their economic policies on this course to achieve these objectives.
Lord Mackay of Ardbrecknish: My Lords, I thank the noble Lord for his reply and for his recognition of the topicality of the Question—which is what it is supposed to be. I am sorry that the Minister who is in charge of these matters at the Treasury, the noble Lord, Lord Simon of Highbury, has once again not come to the Dispatch Box to deal with these matters. Can I take it from the Answer given by the noble Lord that next week in Amsterdam his right honourable friend the Prime Minister will not support his fellow socialist M. Jospin, the Prime Minister of France, who wants consideration of the stability pact deferred so that the French Government can study it? Further, will his right honourable friend not be supporting M. Jospin in his desire to place less emphasis on an independent central bank and more on elected politicians?
Lord Haskel: My Lords, I am answering for the Government this afternoon. My noble friend Lord Simon will be here whenever he is required to be here. As to
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M. Jospin, it is not for me to comment on the position of other governments. The French have asked for time to allow their new government to consider these issues, which I believe to be a reasonable request. I am afraid that I am unable to speculate on what will happen next week. The Prime Minister will need to take a view on the proposals placed before him at the Amsterdam European Council and decide what is best in Britain's interests.
Lord Barnett: My Lords, recognising that the noble Lord, Lord Mackay of Ardbrecknish, does not yet know for whom he speaks, does my noble friend accept that there is need for stability within a monetary union? Therefore, is it not necessary for any country that seeks to join to have clear and sustainable convergence, even if it means that France and Germany are not able to join an economic and monetary union?
Lord Haskel: My Lords, I agree entirely with my noble friend. What is essential for the success of EMU is genuine convergence among the economies taking part. Any decision about Britain joining must be determined by a hard-headed assessment of Britain's economic interests. We have set out five economic tests: looking at the likely impact of EMU on investment, financial services, business cycles, keeping the flexibility to respond to any problems that might arise, and, what is vital, the effect of EMU on employment.
Lord Taverne: My Lords, will the Minister advise the Government, in approaching the criteria under the Maastricht Treaty and the rules under the stability pact, not to lose sight of their essential purpose, for which they are only an aid, which is to ensure that only those who can sustain a low rate of inflation can be feasible members of monetary union? I hope that the Government will not be hung up on the strict letter of the criteria and will not lose sight of the wood for the trees?
Lord Haskel: My Lords, I can assure the noble Lord that we shall not lose sight of the wood for the trees. The full title of the pact is the stability and growth pact. Stability is only part of EMU. We are equally concerned about its other aspects: employment, growth and investment. When we are satisfied with the entire package we shall make our decision.

Business
3.51 p.m.
Lord Carter: My Lords, following the debate on Community railway strategy, my noble friend Lord Donoughue will, with the leave of the House, repeat in the form of a Statement an Answer to a PNQ in another place on the rejection of proposals to relax the ban on UK beef exports. I should like to take this opportunity to remind the House that the Companion indicates that discussion on a Statement should not exceed 20 minutes from the end of the Minister's initial reply to the Opposition spokesmen and that contributions to the discussion should be confined to brief comments and questions for clarification.

Parliamentary Broadcasting Unit Limited
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 as proposed by the Committee of Selection the following Lords be named as members of the Parliamentary Broadcasting Unit Limited (PARBUL):
L. Boston of Faversham,
L. Chesham,
L. Thomson of Monifieth.—(The Chairman of Committees.)
On Question, Motion agreed to.

Parliamentary Office of Science and Technology (POST)
The Chairman of Committees: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That as proposed by the Committee of Selection the following Lords he appointed to serve as members of the Board of the Parliamentary Office of Science and Technology (POST):
L. Flowers,
L. Phillips of Ellesmere,
L. Renfrew of Kaimsthorn.—(The Chairman of Committees.)
On Question, Motion agreed to.

Science and Technology: Select Committee
The Chairman of Committees: My Lords, I beg to move the third Motion standing in my name on the Order Paper. In doing so perhaps I may say that your Lordships might be relieved and I hope comforted to know that this afternoon completes the series of sessional Motions which I find it my duty to impose upon your Lordships from time to time. I hope that noble Lords' smiles are not over-optimistically enthusiastic, because I cannot promise not to bring other Motions before your Lordships during the Session.
Perhaps I may take this opportunity to thank the usual channels and the Convenor of the Cross-Bench Peers for the considerable amount of effort they put into the preparation of the names and other matters placed before your Lordships. The usual channels and the Convenor are sometimes not thanked sufficiently. I should like to take the opportunity to do so.
Moved, on behalf of the Committee of Selection, That the Baroness Platt of Writtle be appointed a member of the Select Committee.—(The Chairman of Committees.)
On Question, Motion agreed to.

Railway Strategy: ECC Report
3.54 p.m.
Lord Geddes Lord Geddes rose to move, That this House take note of the Report of the European Communities Committee on Community railway strategy (7th Report, Session 1996–97, HL Paper 46).
The noble Lord said: My Lords, before outlining the basis of our report and the conclusions that the committee reached, perhaps I may congratulate the Minister most sincerely on her appointment. The noble Baroness brings with her a wealth of knowledge and experience of transport matters. It is an area in which too, take a great interest, and doubtless we shall be looking at each other across the Floor of the House on many occasions. I congratulate her.
I thank also most sincerely—it is traditional to do so on these occasions, but I do it with great sincerity—the technical adviser who assisted Sub-Committee B, Professor Andrew Evans of the University of London Centre for Transport Studies, our Clerk. Doctor Andrew Mylne, and his secretary, Jane Sanders, for the tremendous amount of work they put in during our discussions and in compiling the report. Finally, I thank my colleagues on Sub-Committee B. This was the first occasion upon which I had had the honour of chairing the committee, although I had been a member of it for some years. Without their support, I could not have got through this report. I thank them.
The report is based upon the Commission's White Paper published in July 1996 with the principal aim to introduce market forces to the rail sector and to allow rail to compete more effectively with other transport modes. The measures within the White Paper included greater financial transparency and relief of what is described as historic debt; the separation of infrastructure management from operations; the greater integration of national systems; the promotion of—I confess I hate this word—inter-operability; and the establishment of rail freight freeways to encourage the movement of freight from road to rail.
The rail sector within the EU remains largely state-controlled and organised on a national basis. Railways are widely regarded as national assets and as providing a public service as well as a commercial one. The White Paper upon which our report was based attempts to balance the benefits of a more commercial approach with protection for the public service element. Thus it proposes open access for freight and international passenger services only, but not for all domestic passenger services, which are dependent upon subsidy.
Although the key areas in the White Paper are not new—indeed the committee reported on similar proposals in 1990—they have been taken up enthusiastically by Commissioner Kinnock. In evidence to the committee, for which the committee was extremely grateful, Mr. Kinnock spoke passionately about the need for change if rail is to survive as a major transport mode.
As will be seen from our report, the committee took evidence from, among others, Mr. Kinnock and Commission officials; John Watts MP, then Minister for railways and roads; Mr. John Swift QC, the Rail Regulator; Railtrack; SNCF and the Community of European Railways; Mr. Jimmy Knapp of the RMT; and from—I apologise for the mouthful that is coming up—English, Welsh and Scottish Railway on the freight side and the Great North Eastern Railway on the passenger side.
The committee recognised that the UK rail sector is considerably ahead of the railways of most other member states in terms of liberalisation. Only Sweden has also separated infrastructure and operations, although in its case with one national operator. So the Commission's proposals will have a much greater impact, if implemented, outside the UK than inside it. However, UK witnesses were interested, particularly the freight operators, who were looking for better access to other networks.
The report does not consider the merits of rail privatisation. The Commission does not, and indeed cannot, advocate privatisation in any case. But it is notable that the previous Government linked their support for much of the White Paper proposals to their advocacy of privatisation. When the Minister replies, will she explain Her Majesty's Government's attitude in that context, and to what extent she expects it to differ from that of the previous Government?
The committee agreed with the case for change and supported much in the White Paper, although, as we said, we realised that it would require a concerted political will to achieve such change. Indeed, it might take as much as a generation to do so. We supported the introduction of market forces, but emphasised that rail will continue to rely on public subsidy for passenger services. Therefore, we considered it essential to introduce transparency to ensure that the area where rail operates more commercially is clearly distinguished from the area which is funded by the taxpayers. Where services are uneconomic, the state should offer exclusive concessions to particular operators. However, those concessions should be open initially to competitive tender, including from companies in other member states.
The committee disagreed with the Commission on the Commission's advocacy of separation of infrastructure and operations. Indeed, financial separation is already required under an earlier Community directive. We were of the opinion—and I emphasise that word—that such separation of infrastructure and operations was not necessary per se. It might be desirable; it might not be desirable. But it did not have to take place provided that there was financial transparency and everyone could see exactly what was happening.
Our conclusion was contested perhaps by my noble friend in person, but certainly by the previous Government. I should be interested to know from the Minister the view of the present Government in this context. Our report very strongly advocates a Community regulatory authority. The White Paper proposed an agency, but we went further than that and
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stated that if there was to be any hope of achieving inter-operability—of achieving a proper exchange within the European Community on railways—there had to be a regulatory authority which had the ability and strength to knock heads together. Without that—I was going to use slightly stronger language, which within the Chamber I shall moderate—we did not see how such integration and inter-operability could conceivably take place.
Again, I suggest that the previous Government were lukewarm on our advocacy of a regulatory authority. They suggested that a European-wide regulator should be established only if existing powers were shown to he inadequate. Will the Minister comment on that and say to what extent this Government's views vary from those of their predecessors?
The second area where we disagreed with the previous Government was with regard to the uniform cut-off date for defining "historic debt". The White Paper advocated a specific date of 1st January 1993. The committee was highly sceptical about that, given that some member states have run up huge debts by buying expensive new rolling stock, while Britain, for instance, had very little debt because of lower investment. A uniform cut-off would give an unfair advantage in a single market to those who had bought high, bought recently and had more modern stock. The previous Government disagreed, saying that a case-by-case approach would be too slow and would benefit those member states whose cases were considered first. Will the Minister comment on that?
Much of the White Paper dealt with freight issues. I strongly suspect that the noble Lord, Lord Berkeley, will concentrate on that issue. The Commission was keen to see early progress on getting more international freight onto rail. Our committee was impressed by this approach and the imaginative proposal for rail freight freeways. It is ridiculous that long distance freight takes so long. Within the European Union, rail freight travels at an average speed of 10 m.p.h. Of course, when it is moving it is faster than that, but statistically that is the speed at which it travels from point A to point B. We particularly welcomed the pragmatic approach of encouraging railway companies to set up freeways on a voluntary basis rather than proceeding by legislation. Can the Minister say what progress is being made and to what extent, and how, the present Government are supporting the initiative?
As regards integration and inter-operability, there are formidable practical obstacles in moving towards an integrated European rail network. The most obvious are the physical factors, such as differences in the gauge of the track or the electric voltage. There are also operational obstacles such as the recognition of train crew qualifications and border formalities. Because rolling stock specification varies from country to country, train operators cannot benefit from a single market when buying new stock. UK freight operators found the restricted British loading gauge a disadvantage. But they are also disadvantaged vis-à-vis road by being held up for hours at a time at frontiers. The report calls for a pragmatic, case-by-case approach. concentrating on ways to make different

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systems work together rather than imposing a single uniform system at a high cost. Will the Minister advise us of the progress that has been made or that she expects to be made in that context?
Our report also calls for harmonisation in the area of safety appraisal, with oversight by an independent, Community-wide body. Obviously safety is a very important issue, but there is a danger that rail is disadvantaged in the competition with road by safety standards much higher than those applicable in the road sector. We did not want to diminish the importance of safety, but we were of the opinion that sometimes the requirements went more than a little over the top. The challenge is to make rail more competitive without lowering safety standards.
As regards employment, we recognise that restructuring European railways will inevitably involve significant job losses. But we also recognise the greater danger of a continuing decline of the sector if the nettle is not grasped. Mr. Kinnock, in evidence to the Transport Committee of another place, made a most interesting remark. He stated:
"The choice now is between the lingering demise of rail, which will be cataclysmic for the number of jobs involved, and the possibility of progress through change".
We endorse that comment most strongly. We agreed that jobs were best protected by restructuring and we supported the use of the Community Social Fund to mitigate the impact on workers. Again, I am sorry to say that the previous Government were not at all keen on that, stating that it could let off the hook the member states which had not provided for their own rail employees. Will the Minister comment on that?
The Deputy Prime Minister recently announced the development of an integrated transport policy for the UK. Does the Minister see Labour's plans for rail in Britain as consistent with the Commission's thinking, as developed by a former Labour leader?
In summary, the report was on the Commission's White Paper. It was only that; and we described it as a fairly "green" White Paper. The next stage must be towards specific proposals. The committee hopes that Her Majesty's Government are committed to making this a priority for the UK presidency in the first half of 1998. I beg to move.
Moved, That this House take note of the Report of the European Communities Committee on Community Railway Strategy (7th Report, Session 1996–97, HL Paper 46).—(Lord Geddes.)
4.8 p.m.
Lord Berkeley: My Lords, as a comparatively new member of the committee, I wish to be the first to congratulate the noble Lord, Lord Geddes, on his wise and business-like chairing of the committee, interspersed with much good humour, and on his excellent summary of the sub-committee's report. Perhaps I may first declare an interest as chairman of the Rail Freight Group. As the noble Lord suggested, today I shall concentrate mainly on freight.
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It is interesting to reflect that the committee began hearing evidence nine months ago. Since then, we have had a change of government. However, it will also be interesting to see how much change there has been in the intervening period in the attitude to the report of the railways of other member states and how they intend to implement it. I shall return to that matter later. I certainly welcome not only the White Paper but also the committee's report as major contributions to creating competitiveness on the railways and to helping to solve the congestion problem of congestion on the roads in an environmentally friendly manner.
I should like to look at the history of some of the railways, to some extent in this country but mainly on the Continent. It is true that they were probably built as a symbol of the state carrying out its duty to transport freight and passengers and to generate economic movement around the country. As the noble Lord, Lord Geddes, said, there has been enormous investment—the TGV in France and the ICE in Germany. But that has been done on extremely nationalistic lines with very poor or under-used cross-frontier arrangements for both passengers and freight. The UK has invested less and probably closed more lines. The whole of Europe has spent the past 20 years building roads. The railways have ended up with enormous debts while there is virtually no debt in respect of roads. The road network throughout Europe is becoming clogged up. There is an inflexible rail system with appalling links between many member states. That is what has driven the Commission to issue the White Paper.
Where are we now in terms of freight? Continental railways carry a much higher proportion of freight, measured in tonnes per kilometre, than we do in this country. It is something like 15 per cent. in France, 21 per cent. in Germany and 6 per cent. in this country. We are in a situation now where money has run out, for whatever reason, for the building of roads and money has run out also for the building of railways. Therefore, it is good that the White Paper sets out a framework within which the railways should be restructured; and it is not a prescriptive framework. The challenge must be to create an environment in which the railways can achieve the growth which we all want in the market place on a basis of a level playing field with other modes of transport.
I wish to discuss two points in particular in the committee's report: one is rail freight freeways; and the other is to add something to what the noble Lord, Lord Geddes, said about technical inter-operability and safety.
In a personal capacity with the Rail Freight Group, I am involved in the development of a rail freight freeway from London to Hungary—a place called Sopron. Perhaps I may share some of the challenges we face and the progress we are making in that regard. What has emerged is that there is very little connection between the passenger service and the freight service. They have different needs and customers. They meet on the track usually only when they are getting in the way

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of each other. Therefore, there will always be a debate as to who wins and who has priority. That is one of the challenges that we must address.
Of course, in the UK, the railways are privatised. There are four operators of rail freight in this country. EWS is the largest but there are also Freightliner, which concentrates on containers, and two others. They provide a transport service to the end user which includes rail. In the industry there are also terminal providers, providers of road freight to the terminals, wagon and equipment providers, road haulage connections and so on. It is a long logistical chain. It is not just a question of rail versus road. It is very important to remember that.
On the Continent, there are privately owned and state owned trains but the state railways usually provide the traction and the drivers. As the noble Lord, Lord Geddes, said, the average speed is quite abysmal. Freight is given a fairly low priority on many routes. That may be because of lack of drivers, timetabling or frontier controls. It is interesting that the timetabling between member states is often non-existent. Sometimes it takes about six months to get a new train running between member states. The first rail freight freeway from Rotterdam to Milan has easily found a path for half a dozen more trains per day in each direction simply because people have started to talk to each other. There have been no new lines. There has been merely an exchange of ideas and the working out of priorities.
TERFF—which is a terrible acronym for Trans Europe Rail Freight Freeways—is not seeking new lines but more efficient use of existing ones and the removal of bureaucracy which is holding up growth. That is terribly important. It seeks to create new rail freight flows which can compete with roads in terms of time, price, reliability and customer service. It seeks to do that by creating a new flow or by increasing an existing one. For example, 40 per cent. of the traffic from UK to Italy goes by rail while none of the traffic from UK to Germany goes by rail. I shall return to that point.
For me, the ultimate objective is a train that goes from London to Hungary non-stop, with two drivers, a bunk and cooking and toilet facilities. The train may be diesel or it may be electric. That is how we shall compete, and that could be achieved.
The sub-committee welcomed the freight freeways. SNCF expressed concern but since it gave evidence I believe that its attitude has modified. It cannot call it a freeway but it calls it a freightway. It is quite happy to participate so long as it provides the locomotives and drivers, perhaps on a subcontractual basis. That is a beginning.
There is also progress from the Community of European Railways, which is a grouping of all the European railways. It has produced a report, which it sent to Mr. Neil Kinnock last month. That is very positive and all the railways to which I have referred signed up. That is a good basis for moving forward.
How are we to achieve those freeways? What are the pitfalls? First, if an operator wishes to send a train, he should be able to get an answer to the question of whether there is a train path, how much it will cost and
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how long it will take within 24 hours. As I have said, it sometimes takes several months. In fact, this morning I heard that one such request to Germany took six months. That must change. Timetables must exist for the train to follow, with connections. Frontier controls must change. We must remove the delay involved in collecting the tail lights from the back of trains. There are a great many frontier controls and immigration controls in relation to the drivers. There are custom controls, especially in this country. There is a change of locomotive at every change of voltage. We must be able to make improvements in that regard. This country is one of the worst offenders.
Costs are the biggest problem. If we add up the infrastructure costs all the way from London to Hungary we shall probably find, as we may do in the autumn, that the costs, to which must be added traction and rolling stock costs, make rail totally uncompetitive with road. That is because each member state has a different means of charging. In Holland, there will be no charge for freight trains for another few years. In Germany, there is a price list and if you ask the Germans to negotiate they say, "No, that is the price and we are sticking to it. We shall not discuss it". As I have said previously, charges for using the Channel Tunnel are higher for rail freight than for road freight. There is an historic reason for that and I do not blame anyone, but in the next few months perhaps the Minister will find time to address that issue. It is a very complicated problem. But the fact remains that for the end customer it is three times more expensive to take a rail container through the tunnel than it is a road container. I suggest that that is hardly in line with the present Government's policies.
The operators are also putting together a market study to see how much traffic there will be. There are other freight freeways between Rotterdam and Milan and between Germany and Barcelona. The railways are very enthusiastic about it but it needs governments and the European institutions to provide support and pressure on member states to accept the freeways, market pricing and some priorities. That is a beginning but we have a long way to go.
I turn briefly to the interoperability and safety issues. The sub-committee noted the very different systems to which the noble Lord, Lord Geddes, referred. Paragraph 97 of the report mentions the problem of frontier procedures and the need to harmonise standards. I was particularly struck by the previous Government's response to that where they say that,
"technical and administrative provision must be subject to cost/benefit and only laid down to the extent necessary".
In a recent conference speech, Richard Hope, who is a well-known railway journalist and former adviser to the Select Committee on Transport in another place. quoted Roger Freeman, the former Minister for Public Transport, in 1990 saying that,
"on the roads you actually measure the safety benefits in cash terms: on railways, if technology is available to improve safety, it should be done".
I hope that my noble friend the Minister can reassure us that some of this will change. If the railways are really to compete on a level playing field with road, we

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need safety; but we also need affordable safety, otherwise they will close down. For example, with South West Trains, half the problem was that the drivers were learning the routes and took several weeks to do so. However, there are 32 million car drivers who do not even have to learn any road routes before they go anywhere.
I should like to conclude on the complexity of the matter. I believe that it is illustrated most effectively by the European night sleeper services which have not yet started through the Channel Tunnel and are owned by four railway companies. Each railway specified its wish list. It is now so expensive to operate that, even with the several hundred million pounds' worth of government money that went into the project, it is unlikely to enter service at all. That is a scandalous waste of public money. I hope that my noble friend the Minister will be able to inform your Lordships as to what might be the future of that project. Even if it is written off, I should like to see those trains run rather than sitting in a siding as they are at present.
I believe that the report has been a most useful exercise. I strongly welcome the policy of the new Government towards public transport and towards Europe and its partner member states. I also welcome the constructive attitude to European matters, offering advice, leadership and, occasionally, a little humility. That also applies to railways. I look forward to hearing my noble friend's reply.
4.21 p.m.
Lord Methuen: My Lords, I feel somewhat daunted following the noble Lord, Lord Berkeley, with his extensive practical experience. I am only an amateur in the business. I should also like to thank the noble Lord, Lord Geddes, for introducing the debate on the report on European Community railway strategy. I congratulate him on his very able chairmanship of our committee. I have just a few points to make.
The evidence presented to the committee showed European railways to be in a very critical state with a steadily declining share of the market, especially in freight. Drastic steps such as those proposed in the strategy will be required to revitalise the railways before they suffer a fatal decline. I am in complete agreement with the policy of support for rail transport. I am appalled at the destruction of our environment by heavy goods vehicles while railway lines, which could be used for much of the bulk mineral traffic carried in these vehicles, lie idle. I suspect that the situation elsewhere in Europe is similar to that which pertains in Derbyshire with which I am particularly familiar. I know of at least three railway lines in Derbyshire lying idle and rusting. All the traffic is on the road.
The short distance of some 60 kilometres travelled by the average load in the United Kingdom probably limits the scope of what can be done, except in the case of trainload freight. Hence we must support the programme of rail freight freeways which are beginning to become a reality in the UK and elsewhere in Europe. I understand that the longest of
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these is from the North Sea ports to Moscow—a distance of some 1,400 miles—with a break of gauge at the Russian border.
Both the strategy and our report comment on the harmonisation of Community railway systems. A number of major problems make this impractical and unlikely to be cost effective, as already mentioned. One problem with all European through rail routes is the diverse nature of the traction supply on electrified tracks. The capacity to accept four or five systems of electrical power may be required on international routes; this leads to great complexity. It is not cost effective to convert a complete railway system to the standard of 25,000 volts at 50 hertz, which is the preferred methodology nowadays. We have done it in the UK. The London, Tilbury and Southend line was converted from a DC (direct current) system to an alternating current. But that is a very small item compared, for example, with converting the whole of Austria with its unusual frequency and voltage.
International traffic to and from the UK is limited by our loading gauge being substantially smaller than that in Europe. We do not even have a common European track gauge. Spain uses a broad gauge track which requires the axles of rolling stock to be changed at border stations. All that is compounded by the delays of Customs and driver checks which result in rail freight taking twice as long as that carried in a lorry to travel from the UK to Italy. Rail freight freeways should go some way towards restoring the balance, providing that the cost can be met as described by the noble Lord, Lord Berkeley.
The noble Lord, Lord Geddes, outlined the separation of infrastructure from operations. I am not convinced of the necessity for this. Prior to the formation of British Rail in 1948, the railway companies used each other's lines with legally enforced running powers and were able to invest in infrastructure to meet their traffic needs. Examples were the extensive quadrupling of mainlines to accommodate both freight and passenger traffic without interference of one with the other, and the avoiding lines built by the Great Western Railway to speed up passenger traffic by avoiding certain stations. That took place both on West Country lines and in South Wales. It is a type of investment we do not see at present. It is, however, what is needed on the West Coast mainline and in the strategy for Europe. It is essential that pinch points which interfere with the interaction of passenger and freight traffic are examined and adequate investment provided to overcome the problem.
I am not impressed by aspects of competition between UK train operating companies. The matter is perhaps a little wide of our report. As one of our witnesses said, the real competition is not between rail companies but between road and rail. Yet the Community rail strategy is to be modelled largely upon what we have done in this country. We are apparently ahead of the field. I do not believe that we have enough experience to be clear about the advantages and disadvantages of our approach. To date, we have seen Railtrack's under investment in infrastructure and the appalling performance of South West Trains this spring. The

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general reduction in manpower, already evident since privatisation in the UK, will be repeated all over Europe, and especially in France.
One paramount essential is safety. The safety record of British railways has been built up over the past 150 years and is second to none. I believe that the road traffic record in no way approaches the same standards, and that it cannot do so due to the inherent differences between the two modes of transport. Those standards must be maintained in the proposed strategy while remaining cost justifiable. I hope that I do not sound too pessimistic. I am a keen supporter of railways from environmental and social points of view. I trust that we can still revitalise the European Community railways and I look forward to hearing the Minister's comments.
4.27 p.m.
The Lord Bishop of Hereford: My Lords, I too congratulate the noble Baroness on her appointment to this post. I recall, appropriately, that I first met the noble Baroness on a railway station when she was a very young worker for Shelter and I had inveigled her to address the massed divisions of senior boys at Eton—a far more intimidating task, I believe, than any she will ever face in this Chamber. I also congratulate the noble Lord, Lord Geddes, on the work of the Select Committee.
I should like to give a warm welcome to the Commission's White Paper and to the careful and thorough work undertaken by the Select Committee. The question of developing a European railway strategy needs urgent attention. Indeed, there is a reference on page 9 of the House of Lords paper to the statement of Commissioner Kinnock that,
"the survival of rail is at stake",
that it may face a "lingering demise" unless vigorous and co-ordinated action is taken. That may sound somewhat alarmist, even apocalyptic—and, indeed, not altogether convincing—in the light of the enormous sums being invested by most European railway administrations, but there is certainly no room for complacency.
Members of your Lordships' House may wonder why someone from these Benches is taking part in today's debate. It is a highly technical debate and one about which most bishops might not be expected to know very much. I do, indeed, speak with the greatest diffidence. I do so because I have a particular personal interest in the subject—an entirely amateur interest; but, more importantly, because I believe that transport strategy should be driven by a clear ethical imperative; namely, the protection of the environment, in the widest possible sense of the word, from the ever-increasing impact of road traffic. I believe it to be the case that both the Commission's White Paper and the Select Committee's report underestimate the potential for transfer of traffic from road to rail.
I hope that I may for a moment be parochial and anecdotal. Last Saturday I was invited to launch in Hereford the local Agenda 21 action programme agreed by five existing local authorities and one shadow unitary authority under the sharp and arresting title of
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WHAM?—What Happens After Me? It was a serious attempt to pick up the Agenda 21 issues which emerged from the Rio Conference five years ago and to put in place practical policies for environmental protection at every level, encouraging vigorous action by everyone from the largest commercial and industrial firms to the individual citizen.
The relevance of that local initiative to today's debate lies in the answers given by participants to the question about what they most disliked at present about living in Herefordshire. There were lots of things they liked but the thing they overwhelmingly disliked the most was the relentless increase in road traffic, both lorries and cars. Those answers reveal one aspect of what I believe is a rapidly rising sense of frustration, impatience and even anger at the dominance of the road culture.
I am saddened to see the relatively scant attention paid in the Select Committee report to environmental issues, summed up in two rather discouraging paragraphs on page 12. I believe we need to do much better than that. There are specific ways in which government action could make a decisive difference to the relative volumes of freight traffic conveyed by road and by rail.
In particular, I welcome the point well made by the Rail Freight Group about the need to impose the full costs of road use on road hauliers so that there is a more nearly level playing field in which rail can compete with road. That is dealt with at question 8 on page 2 of the Minutes of Evidence which points out that not only do Vehicle Excise Duty and road tax not cover such costs as policing and dealing with accidents, but they wholly ignore the costs of environmental damage caused by heavy road traffic. That seems to me to be the first priority for government action.
The second is seemingly a much more minor matter but I believe it is also important. It requires a brief resume of the recent history of rail freight operations in this country. Twenty years ago British Rail had a monolithic freight operation, not notable for dynamic or imaginative management. It was the dinosaur, if you like, of the transport industry. In the 1980s there came about a change which was described by the unlovely word "sectorisation" in which the haulage of different commodities was placed under separate management: coal, steel, roadstone, petrochemicals and so on. The emphasis was strongly on block trains of the same commodity. Some Members of your Lordships' House may remember freight locomotives carrying quaint pictograms indicating the traffic they were supposed to be hauling, for example black diamonds indicated coal.
Alongside the block trains, the rail freight operators' pride and joy were two other forms of rail freight: Speedlink for wagonload traffic, small consignments, and Freightliner—which has already been mentioned—for inter-modal traffic. Containers which arrived by sea or by lorry at a Freightliner terminal were transhipped onto a Freightliner block train and then transhipped again at the other end. It was fine for some long runs and for traffic in containers but it was not widely usable by most manufacturers and distributors for most of their journeys. Those people needed Speedlink, but Speedlink came to a sticky end after losing much money.

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In the run-up to privatisation came further reorganisation. There was Loadhaul, Mainline, Transrail, Rail Express Services, Rail Freight Distribution and so on. The process was not exactly calculated to encourage good management or vigorous marketing. In the end, in February last year, ownership of most of these operations passed, as we have heard, to the American company, Wisconsin Central, now renamed English, Welsh and Scottish Railway (EWS) whose evidence was central to the Select Committee's work. This year EWS also acquired Rail Freight Distribution, the international arm of rail freight, operating conventional and inter-modal traffic through the Channel Tunnel, our vital link into the European rail system.
I think that many people held their breath and wondered what this American company would do. It claimed that it would triple rail's share of freight in Britain from the pitiful 6 per cent. we have already heard mentioned this afternoon. Many people were incredulous. However, the signs so far are extremely encouraging. I hope I may identify four things which seem to me to be grounds for hope and encouragement. The first is the revolution in managerial attitudes displayed by EWS—its focus on the customer, and the energetic and imaginative marketing of rail freight. I hold no brief for the company but I admire what has already been achieved and what the company's chairman. Mr. Ed Burkhardt, aims to do. A propos the EWS acquisition of Rail Freight Distribution—which happened after the Select Committee took evidence—which took place despite the fact that RFD was losing £1 million a week, Mr. Burkhardt said:
"It is a can of worms, and EWS is either daft or incredibly brave in attempting its rescue. But we believe that properly operated international freight services can tap into a huge market where today's rail share is minuscule. I would like to see the railways treating their customers in a kinder. gentler manner".
Those are the words of a hard-nosed American entrepreneur! He continued:
"This is not rocket science. We just have to provide dependable services with fast schedules. and be convenient to use".
In the same speech at the Euromodal conference in Paris in March of this year he said:
"We have met our European partners. They recognise that the railway culture must change towards a higher level of customer orientation. I think it is our role to hasten reform on a collaborative basis".
That statement picks up a great deal that was said to the Select Committee—some of it said rather anxiously—about co-operation with European partners. Therefore the first positive point is that we need much better management and an attitude of total commitment to expanding rail freight in the UK and in mainland Europe.
The second point is that we need confident investment in the rail freight business. EWS has just ordered 250 new locomotives—which are sadly to be built in Canada. although in London, Ontario—and it plans to set up a wagon manufacturing business in Britain turning out 500 new wagons a year. That does not sound to me like an industry in terminal decline.
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The third point brings me back, after this historical digression, to the second area where I believe government action is needed. It relates to wagonload traffic. Despite the earlier collapse of Speedlink, there were still railway managers who believed in wagonload traffic. It was greatly to the credit of the short-lived Transrail company that it reintroduced a wagonload system called Enterprise. This now has 250 terminals served daily. They are not massive installations like Freightliner terminals but for the most part modest sidings. EWS is admirably fitted to build on that business. Some 80 per cent. of Wisconsin Central's freight business in the USA consists of wagonload traffic. That is an incredible figure in European terms, but it explains, at least in part, why EWS is so confident of vastly increasing the share taken by this Cinderella of rail freight. I beg to differ with the noble Lord, Lord Methuen, about that. I believe that there is a future in wagonload traffic, not just in block trains.
The importance of all this is that the rail freight business will really make an impact on road traffic at the wagonload level as regards supermarket deliveries and small factories' output which at present travel exclusively by road—the traffic that so irritates the people of Herefordshire. However, the terminals must be in place. The connections with rail must be in place. There was, and still is, a provision called Section 8 grants, which help greatly with the cost of connecting business premises to the rail network. That system functioned well when Speedlink was operating but of course it was no use when the wagonload facility was withdrawn. It is referred to at question 2 in the Minutes of Evidence where Julia Clarke states:
"we have a system of support for freight through freight facilities grants and track access grants, and we certainly do not want to see that ruled out because of European legislation".
Indeed we do not. In fact we want much more positive encouragement of such grants so that the potential for transfer from road to rail is enormously increased. The environmental argument in favour of this policy is, I believe, overwhelmingly convincing.
Fourthly, and finally, another most welcome development since the Select Committee took its evidence, and another key to a major expansion of rail freight traffic, has been the negotiation of a track access agreement between EWS and Railtrack, giving a fixed annual charge for track access over the next five years. No longer will the complicated and discouraging process explained at question 61 be a deterrent for rail freight operation.
The environmental imperative is of great importance. I hope and believe that the Minister will be able to respond encouragingly on the two matters I have identified as requiring government action: first, the accurate measurement and charging of the environmental and other at present unquantified costs to road transport and the creation of a more equitable basis for competition between road and rail; and, secondly, the active encouragement of wagonload, or less-than-block train, traffic by offering further help in making rail accessible to manufacturers and distributors.

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There is much else I could say. Yes, we need a European regulatory agency. We should certainly not have a uniform cut-off point for debt. Yes, we want rail freight freeways, and so on. But I have already trespassed far too long on your Lordships' time—far longer than any amateur has a right to do.
4.41 p.m.
Lord Cadman: My Lords, I feel that we should congratulate my noble friend Lord Geddes and his committee on producing this most interesting report. It is most encouraging also that the European Commission under the direction of its transport Commissioner Mr. Neil Kinnock seems to have realised that rail has a part to play in the transport needs of the Community. Indeed, one may even suspect that a degree of urgency has crept into its deliberations over the need to take some action to alleviate problems associated with the burgeoning road vehicle population and its effect on the well-being of Community transport.
Many of us, indeed the vast majority, value the independence that motoring gives us. We seem to be quite prepared to put up with the inconvenience caused by the presence of so-called juggernauts. A trip around the M.25 is a good demonstration. One would do well to remember that this independence transcends equally to the commercial world. Many, if not all, those trucks are owned by firms engaged in providing a service to their customers by transporting goods, largely using their own staff, on roads provided and maintained using public money at little cost to themselves.
The railway also acts as a transport contractor. However, it has to provide its own infrastructure and this imposes on it a considerable financial burden. Since most EU railway administrations are government owned, governments find themselves not only having to provide very expensive roads but railways as well. Noble Lords can well imagine that there are problems with treasuries.
The real role of governments, aided by the European Commission, is to provide a framework to enable goods and passengers to move about the area as efficiently as possible having regard to environmental consequences. Some form of integration is obviously necessary. That is why I believe we should look at least positively at the new Government's proposed efforts in that direction.
The report's conclusions and the European Commission White Paper point in the direction of a considerable increase in the use of rail in the long term. That, given the environmental advantages of rail, is most encouraging. The problem seems to be in achieving the policy. I suggest that the privatisation models, as proposed and introduced in this country and in Sweden, could go a long way towards success, although it is too early to say which method is best.
There has been much new investment recently in infrastructure, including the Channel Tunnel, the Storaebelt, the soon to be completed Oresund crossings between Denmark and Sweden, French and German high speed lines, and eventually our own Channel Tunnel rail link. Much of that improvement is directed
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at passenger traffic but one can draw attention to the two great water crossings as being of particular benefit to freight flows.
The recommendation to establish freight freeways is a most welcome step. It will be interesting to see how the various railway administrations measure up to the task. It is encouraging to note that in this country Railtrack is actively pursuing the establishment of just such a freight route linking Scotland with the Channel Tunnel. That should do much to encourage the transfer of long distance freight to rail to the benefit of users of the motorway system. The response of the SNCF to that initiative is disappointing to say the least. I suppose it is hardly surprising given the present political situation in France. but let us hope that French railway affairs progress in the future as well as they have in the past.
Governments seem prepared to look after their agriculture lobby to an extraordinary extent. We have the common agricultural policy. I like to think that one of the main reasons is to have the land and countryside adequately farmed and managed. Can noble Lords imagine what it would be like if large areas were left unfarmed? Can noble Lords also imagine what it would be like on the motorway network if the railway systems were to become unavailable? Their continued availability and development is, I suggest. almost a social necessity given the fact that everyone wants to be able to have total mobility in their cars.
I give a rather bizarre example. Many noble Lords are familiar with the Austrian Alps and the fact that the agriculture of that region is heavily livestock based. Indeed, it is the activities of the Alpine farmers which allow many of us to indulge in winter sports. Many of the farmers use straw which has to be delivered from other parts of Austria. Much is still delivered by rail in vans for collection from the local station by farmers in their tractors. As noble Lords can imagine, one cannot get much straw into a railway van even if it is the rather more generously proportioned European model. Coupled with the fact that some of the traffic has to be delivered along narrow gauge tracks, the operation must be extremely expensive. The benefit of not having that agriculture traffic on the somewhat restricted Alpine road network is obviously worth the considerable subsidy involved.
To revert to the freight freeway issue, so ably spoken about by the noble Lord, Lord Berkeley, from the Benches opposite, much freight traffic is at this moment sent along routes that avoid areas congested by passenger traffic. Unfortunately, there has always been a conflict of interest here regarding higher weights and lower speeds. It is interesting that in Poland there exists just such a dedicated freight route. However, a little closer to home, the use by the Germans of separate lines on each side of the Rhine for freight and passenger traffic is a good example. In effect, they have a four track railway which is a somewhat unusual luxury in Europe. Together with all the river traffic, it makes an interesting spectacle.
A recent visit to north Italy showed that the Italians, who are well into intermodal traffic, are sending an appreciable number of trains along an exceedingly

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secondary-looking railway on the eastern side of Lake Maggiore. By doing so, trains from the Milan area passing north through Switzerland are able to avoid the congestion at Chiasso, the traditional border crossing point.
From a socio-economic aspect, the prospective loss of railway jobs as administrations become more business oriented and adopt improved technology could easily be offset by the increased use of rail throughout the Community. Outside the Community, it is interesting to note that many old cross-border routes that were closed due to the presence of the Iron Curtain or other international impediments are being reinstated. Let us remember that building motorways is much more expensive than reinstating old railway lines. In eastern Europe, where governments are perhaps less able to afford such luxuries, the availability of new rail routes is becoming increasingly interesting.
There is no doubt that rail has an important part to play in the transport area. Let us hope that this report is helpful in encouraging the various EU railway administrations better to co-operate with each other. It seems to be a bureaucratic and technological nightmare at times, as the problems with our own European nightstock sleeping cars will testify. Perhaps it will not be too long before the next report by this excellent committee will be able to tell us that many of the recommendations in the report have been achieved.
4.50 p.m.
Lord Elis-Thomas: My Lords, as a member of sister Sub-Committee C, perhaps I may congratulate the noble Lord, Lord Geddes, on the report. With our brief as regards environmental issues, we were closely interested in reading the conclusions. I remember the excitement with which I read the final draft of the report in our Select Committee meeting. Events since then, so ably set out by the right reverend Prelate, have only confirmed the importance of the report and our debate today.
Perhaps I may congratulate the right reverend Prelate on his expertise on railway matters. As a regular rail passenger through his diocese on the South Wales and West service, this helps to explain the quality of the service as it speeds through Hereford. Long may it continue.
It also falls to me to correct something which I said during our debate on the Queen's Speech, where I was a little critical about the lack of debate on environmental policy during the last general election. I may have anticipated that perhaps there would not be any environmental initiatives emerging from the Government. However, I was wrong, or at least I have been wrong so far. Therefore, tonight I want to encourage the Government, and Mr. Prescott in particular, with the noble Baroness, Lady Hayman, this evening to continue to pursue their agenda for an integrated transport policy. I want to thank them for pursuing this not only in the United Kingdom, its countries and regions, but also at the European level. The reason is that, as we come to the end of the
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Netherlands presidency and on to the United Kingdom presidency, there will be a marvellous opportunity for co-operation between Neil Kinnock, as the transport Commissioner, and his former colleagues in the new government in the United Kingdom to pursue this earnestly. I am sure that the Minister will tell us this evening that this is what they intend to do.
The report was valuable not only because of its analysis and conclusion but also, as always with these documents, because of the quality of the evidence. I was also very impressed by the EWS evidence and the commitment this international company has already shown to the development of a new freight market. The promise to try to increase the freight market threefold over the next 10 years, with a commercial dynamic to do that, could have substantial environmental effects. I fail to understand the argument put forward in some of our discussions on the impact of rail change that because road use is increasing exponentially the amount of environmental benefit from transfer is only minimal and therefore should not be seen as a major contribution to environmental policy.
In the longer term, clearly the transfer from road to rail of the existing additional freight will of course benefit the environment, and the sooner that is realised and the sooner it is properly priced the more effective such transfers will be. Clearly, in the area of passenger transport there are more immediate benefits in terms of the reduction of overcrowding of roads by individuals in motor cars, and particularly in travel-to-work patterns. That again is something which the report highlights, and we need to pursue it further.
The development of the United Kingdom separation between operational and infrastructural aspects of rail policy is one which many of us were concerned about before privatisation but if Mr. Neil Kinnock can be converted about privatisation so can the rest of us. However, it is not so much a sudden conversion, in my case or on the part of Mr. Kinnock, to privatisation as a conversion to transparency of funding and to ensuring that the operational infrastructural aspects are clearly identified. The operation of rail represented perhaps the worst aspects of traditional forms of state ownership and traditional forms of nationalisation. That was exemplified in the funding mechanisms, in the impact on the overall indebtedness of states throughout Europe that the rail network brought about and also in the lack of investment in terms of rail renewal, because again that had public expenditure implications.
The opening up of the rail network to a separation of the infrastructure and the operational aspects has enabled all these issues to be more clearly identified and hopefully tackled. Clearly, the existing subsidy arrangements for suburban and regional services need to be argued for and they can be argued for more clearly now on the basis of transparency. It is not the case that state aid can be poured in at the end of a year or of a five-year period in order to subsidise losses on specific services. All these are clearly identifiable and have to be identified. Therefore, the opportunity of providing state aid for so-called loss-making services—that is loss making in terms of revenue but often environmentally beneficial—can be pursued more clearly.

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The United Kingdom has taken the lead in this area of separation between infrastructure and operation, with the other model which we have in Sweden operating differently in terms of the way in which funding is transferred as between the infrastructure provider and the operator. There is a different mode of transfer of resources there but whichever mode we adopt, the fact that there is this model surely will enable us to argue more clearly for identifiable environmental objectives and targets to be introduced into the provision of services.
Again in this area it is important to identify the way in which environmental benefits can be properly quantified. I would ask the Government, when they look at their integrated policy for transport, not just to look at it in terms of public transport facilities but to look at the real environmental, social and therefore economic pricing of different modes of transport. There needs to be an analysis of transport across all modes and all types of transport ownership. Only then can we clearly identify the environmental benefits that in my view certainly arise out of railway transport.
The transport network, as traditionally developed throughout Europe, is, as we have heard, related to the creation of the nation-state system. Indeed, one can look at the issue of the integration of rail transport in much the same way as we may look at the currency integration, single market integration or indeed the integration of environmental standards more generally. The rail network itself, being a nation-state creation, exhibits all the benefits of the traditional centralisation of the nation state. We need only look at the rail networks to see how they are traditionally centred on capitals. One of the interesting developments in recent years has been the growth of trans-European networks and also an emphasis on regional links, which are no longer operating in the "hub and spokes" traditional nation-state structure.
Therefore, I would make a final plea that, as we go towards 1999 and the revision of the TM guidelines, we should look at essential trans-regional connections such as the one across North Wales to Ireland. It seems to me that the exponential growth in the Irish economy at 5 per cent. or 6 per cent. a year which is predicted over the next five years should result in a much more substantial—I see the noble Lord, Lord Berkeley, agrees with me—demand for freight development along the North Wales rail link. After all, we have already an overdeveloped expressway network across most of North Wales which is pushed to capacity occasionally. To have an effective rail alternative there for freight as well as for passenger traffic would, in my view, be an essential part of regional policy, not just for North Wales but obviously in terms of a link to Ireland.
The other issue which is covered very clearly in the Sub-Committee's report and also in the original document is that of the reduction in employment in the rail industry. I would not want to sit down without mentioning that. There has been a loss of over half a million employees in the rail industry in the past 10 years. Therefore, I hope we shall see a proposal that the social fund should be utilised to cushion the reduction. I hope that will be pursued, because clearly
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any effective development of the network depends on the quality of the staffing. That after all is a great tradition in the history of Wales, as in all other regions of the United Kingdom and the rest of Europe. There is a great tradition of service in the rail industry and I am pleased to say, as I experienced again this morning travelling to Bangor, that that tradition of service is still maintained.
5 p.m.
Lord Elibank: My Lords, I should first like to join with other speakers in congratulating the sub-committee on an interesting report on an important subject. I also congratulate my noble friend Lord Geddes on a clear exposition of the report which clarified the main points and was an extremely helpful introduction to the debate.
When we consider rail, it is important to see it in the context of transport issues in general. This country and most of Europe face a considerable problem in dealing with the congestion, expense and environmental pollution of road transport. It is a challenge to any government to try to ameliorate that problem. It is perhaps the gravest environmental problem that we face as a nation and as a continent.
Seen against that situation, rail's possible contribution is modest. Rail is often held up by the enthusiasts as something close to our salvation in the environmental world. It is said that if we invested more, spent more time on it and gave it greater priority, the congestion and the pollution which we experience on our roads could be greatly lessened.
I am more of a pessimist. Rail, like a number of other programmes and policies, can ameliorate the situation; it can make a helpful change. But it is at the margin and should be treated as such. There are some areas in which rail is tremendously important and takes the bulk of the traffic—for instance, commuter traffic into London and our other conurbations. But throughout the country as a whole it is much less important. I have heard it said that if we made a tremendous investment in rail, both freight and passenger, it would do nothing more than absorb one year's incremental growth in road transport. Even if that is not an accurate statistic, it gives us an idea of the scale of the problem.
I should like to say a few words about freight transport. I must speak with caution because I too am a total amateur. Freight transport depends on two things: first, efficient inter-modal terminals and, secondly, a regular supply and programme of freight trains moving at a reasonable speed between the terminals. Most road hauliers would rather have their lorries spend hours in gridlock on the M.25 or other motorways than put their goods on a freight train and perhaps lose days in a siding. The pain and grief of road transport does not exceed at the moment the delays that can be caused by freight moving, as we heard today, at an average speed of 10 miles an hour. Until that can be improved, I see no realistic hope that a great mass of freight can be moved from the roads to rail.
I remember at an earlier inquiry grave reservations being aired by witnesses over the interest and enthusiasm of what was then British Rail for investing

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in terminals. It was felt that British Rail was not competitively interested in moving freight onto the railways. We have heard much more encouraging reports of EWS: I can only hope that it and the other franchisees can produce a much greater transfer of loads from road to rail. I wait with modest pessimism to see what can be done.
It is most interesting to have seen the network of "rail trams" that have sprung up in some of our major conurbations recently. I am not sure whether the topic falls strictly within the scope of the debate, but to me it is the most interesting development in passenger rail transport in recent years. I have experience only of Manchester, which has a good network of rail trams. They are efficient, clean, regular and reasonably priced. They have been so successful that there are ambitious plans to extend the system and to have a branch out to the airport. That seems to me to be a guaranteed way of taking motor cars off the roads. If we can produce rail trams at a reasonable price and make them reasonably efficient, investment in that sort of railway network would produce more immediate and perhaps more lasting results than the long distance, more conventional type of passenger train.
The committee dealt with gauges, which I take to mean not the distance between the two rails but the superstructure of wagons and carriages. It came to the conclusion that investment in standardising our railways with the continental gauges was not a sensible investment of money and that better use could be made of funds by improving the bureaucracy, the administration and the passenger trains between countries. I do not entirely rule out a modification of the gauge system in the UK for one network—the West Coast main line to Glasgow. When one considers gauge changes, one is generally confronted with a tremendous global figure which is horrifying in its size. But if one breaks down that global figure into annual increments over 10 or 15 years, it may become much more manageable, particularly as each section is completed to the standardised continental gauge. The towns and cities within that section could benefit immediately from the modifications.
We must never lose sight of the fact that we are on the periphery of Europe. We do not have the advantage of countries such as France and Germany which are more or less in the centre. We must always be prepared to spend more than those countries on communications of all sorts if we are to maintain our position as a major trading partner with our competitors.
5.7 p.m.
Lord Mountevans: My Lords, this report, and, indeed, this afternoon's debate, have given me more inspiration than almost any other previous European Community or railway debate. First, the Commission's proposals recognise Britain's contribution. It was Sir Peter Parker who invented the expression "public service obligation" way back in the mid-1970s. The Commission's proposals were also radical in stressing that if we do not move, and move quickly, the on-going
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decline in the railways will become terminal. Furthermore, it recognises that there are mountains to climb.
First, we have the debt mountain, as several noble Lords mentioned. Secondly, there is the cultural mountain, especially the one between what one might call the cost-led railway—which, sadly, still applies to much of Europe—and what I hope will become a market-led railway in this country. Those mountains have a special implication for job creation and job preservation. Thirdly, there is the mountain posed by the conflict of flexibility of road versus rail and the problems of levelling the playing field, which is distorted by environmental and social costs, in particular the great difficulty in quantifying those latter inputs.
The membership of Sub-Committee B, whose report we are debating, was uniquely qualified to tackle the issues. I cannot recall another membership which included experts such as the former Secretary of State for Transport, doubling as a former chairman of British Rail, and a former Minister of State in the same department. Both have an important role to play in emphasising that major acts of political will are necessary if we are to achieve the Commission's aims. On the technical side we have the noble Lord, Lord Berkeley—a senior member of the Eurotunnel staff, who, not I feel because of a mid-life crisis, has metamorphosed into an expert in multi-modal freight. We also had a leading civil engineer and a highly successful trade union administrator. If I single them out it is only to show how well balanced they were by other members who, while lacking the specialist skills, were less likely to take evidence at its face value and thus were more prone to ask penetrating questions. Our Committee of Selection served the House well in this context.
The choice of witnesses left almost nothing to be desired in putting the issues before the committee. If I could be allowed a dream ticket, while recognising Mr. Nigel Jones's competence in articulating the EWS view, I would note how he emphasised the learning curve which he was climbing. I would have loved, as would the right reverend Prelate the Bishop of Hereford, to hear or read evidence from Ed Burkhardt, his ultimate boss, on the US experience, where freight is king and passenger railway is much closer to death than it is anywhere in Europe.
It was also a pity that Sweden's experience was available only in the form of written evidence, because sometimes such material tells only half the story. The domestic passenger graph on page 101 confirms the argument of my noble friend Lord Elibank that one cannot treat transport modes in isolation. The written evidence does not explain Sweden's airport policy, which for several decades has been to move away from down-town airports to remote greenfield sites. There is also the introduction of the Swedish high speed train in the early 1990s, with the consequent 50 per cent. plus increase in line speed and average speed. Both those factors played a significant part in the passenger growth figures demonstrated in the graph.

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Similarly, there is the fact that Swedish rail runs a "groupage" service for less than wagonload or less than container load consignments, as well as a collection and delivery service. That is not highlighted in the freight elements of the Swedish evidence. I believe such provision attracts a great deal of traffic and, although it is modest or small traffic, it is that traffic which underpins any growth in traffic in general.
The Swedes have also simplified their administration and improved reliability. These are but foothills in the mountain range which I have touched on loosely, but they must be climbed if suitable freight is to be attracted hack to rail.
Section 101 of the Committee's conclusions notes that rail's ability to reduce the volume of road traffic is limited. But I believe there is scope to some extent by following Ed Burkhardt's dicta. First, you have to cut costs, go for automation and cut staff, sad though that may be. He notes, in a magazine article which I read recently, that Wisconsin Central's major marshalling yard at Greenbay handles roughly the same volume of traffic as the EWS one at Willesden, but it manages to do so with one-eighth of the staff. Trains are now being shunted with one man and a radio.
Secondly, you have to keep up service levels and go for wagonload. The right reverend Prelate mentioned that Wisconsin Central's traffic is 80 per cent. wagonload. I was intending to say that that is a figure which is anathema to most European operators, but as the right reverend Prelate used that word first I decided not to cross swords with him but to use the word "nightmare". But all the European operators need subsidies, whereas Wisconsin Central's wagonload-dominated operation raised its income by 139 per cent. in 1993–94—that is its net income, not its gross revenue—and by a further 16 per cent. in 1994–95, a sum getting on towards £30 million.
Another sentiment of Mr. Burkhardt is that if your customer is giving you wagonload business, see if you can persuade him to give you the extra wagon or even more of the same commodity, or, by tailoring your product, see if you can move another product which your customer is already moving.
The committee, at Section 104, queries the need for a uniform cut-off date for historic debt. But if we are to see serious growth in international freight, market-led operators must replace cost-led operators; otherwise we shall have the Avesta to Sheffield situation which is mentioned in the report, where market-led Scandinavian railways, in particular the Swedish one, came face to face with German cost-led tariffs. Swedish steel is still fabricated in Sheffield and then returned to Sweden for consumption, but because of the German attitude to tariffs, which I am certain was cost-led, and was also non-negotiable, as was said earlier, material, alas, no longer goes by rail.
If the will is there you can do it the opposite way. Swedish and Norwegian rail some years ago set up an Oslo-to-Narvik service over a distance of 1,240 miles, which is roughly the same distance as Oslo to central Italy. a service which takes 27 hours and averages just under 46 miles per hour from origin to destination. This
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has required reducing frontier times and using trans-border locomotive working, which has been the practice between Sweden and Norway for almost as long as I can remember. It has involved trans-border crew working—alas, achieved only in the last few years, but now a fixture and fitting of their joint railway operation. It involves reduced bureaucracy and has simplified paperwork. These are all best practices which other European railways should study if international rail freight is to grow.
Those are all elements of the rail freight freeway (recommendation 106), which I would strongly welcome. I believe that these detailed elements, small in scale but big in outcome, are far more desirable than total system harmonisation. If we are talking of £1 billion to make the west coast main line (some 500 miles) fit for the 21st century, I shudder to think what a European network would cost either in finance or in terms of bickering between administrations.
Smaller sums are being spent on equipping the high speed link to the Channel Tunnel with freight loops—his was at the insistence of another place—and a freight link into Ripple Lane, north of the Thames. Here too we have hit the buffers, because if Eurotunnel, as my noble Lord, Lord Berkeley, pointed out, prices rail freight out of the tunnel, the investment is wasted. We hit the buffers again if the new French Government follow the old in opposing the Brussels proposals we are discussing this evening. How long could that go on, I ask myself. How does harmonisation square with different gauges—another subject touched upon—as in Ireland, the Iberian peninsula, Finland and perhaps eventually the former USSR? How long would it take to negotiate two round-trip tickets by Eurostar—and here I delve into the passenger business, only to discover that I have to go elsewhere to buy tickets for the onward journey into Holland?
I have talked about mountains. Let us set out to climb them but let us first tackle molehills closer to home.
5.8 p.m.
Baroness Thomas of Walliswood: My Lords, during today's debate a number of people have claimed they are amateurs as far as rail transport is concerned. I really am an amateur, notwithstanding the fact that my first employment was in the purchasing authority of Sudan railways, right opposite St. James's Palace. It took up about seven eighths or nine tenths of the space given to the embassy as a whole. Its main purpose was to buy rolling stock and other equipment for the Sudan railway. That, as your Lordships will understand, was many years ago. Sudan railways are still going, but only just. So, I am an amateur.
I should like to join other noble Lords in congratulating the noble Lord, Lord Geddes, and his committee on the work that they have done on this Community White Paper, and the conclusions which they have presented for our consideration. The noble Lord, Lord Geddes, has given a very comprehensive introduction to the White Paper and to the work of his committee. He asked the Minister a number of questions. I would like to add my support to those

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questions and I await their answers with great interest. I must apologise as I have a question or two of my own to ask. I am sorry I have not given advance notice of them, but no doubt if they cannot be answered today then perhaps a letter could be sent instead. I congratulate the right reverend Prelate the Bishop of Hereford on asking some pertinent questions. He is another person who claims not to know anything about the subject but he knows a great deal.
No doubt the matters we are discussing today will play a part in the debate before and after the transport White Paper which is to be published by the Government next year. I very much welcome that announcement and withdraw perhaps a little of the scepticism I expressed during the debate on the Queen's Speech. Among other things I hope that the White Paper will result in targets for the modal shift from road to rail for inter-urban and commuter passenger journeys and for freight journeys. We shall not get these policy changes unless we set ourselves some objectives. The Community, in urging us to do various things, is another helpful influence, but, as individual states, we still have to set ourselves the policy targets in order to play our part within a wider Community endeavour. Like the noble Lord, Lord Elis-Thomas, I believe that the context in which a sustainable and integrated approach to meeting peoples' travel needs is gradually emerging. I have hopes that the Government will achieve more than the previous government's transport debate managed to do. I wish them well in the production of the White Paper.
I wish to make a few general comments about the conclusions of the European Communities Committee report. We welcome the continued emphasis by the Commission and other European Union authorities on achieving a shift from road to rail and the committee's broad support for that. I am neutral on the value of privatization. It is too early to say whether privatisation has really worked. However, I am definitely sceptical about the need to separate operations from infrastructure. That argument is still not decided. There are real problems when that separation is made.
I generally support the scepticism expressed by those giving evidence and by the committee with regard to large bureaucratic organisations on a European-wide basis trying to organise the railways. The committee has committed itself to a European-level regulatory body. As I understood from the introductory comments of the noble Lord, Lord Geddes—I did not quite understand from the report—that is because the committee thinks that such a regulatory body would be an essential part of assisting inter-operability. I remain to be totally convinced bearing in mind the evidence given by the industry. Noble Lords may say that the industry would say that it did not want to be regulated and did not want large bureaucratic organisations. I was struck by the industry's interest in trying to get on with this in a practical day-to-day way rather than having to do it as part of a huge scheme. On the whole, when we are dealing with difficult situations, that is probably a sensible way of progressing.
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It is impossible to cover all the topics raised in the original strategy paper and in the European Communities Committee report on it and so, like others, I shall concentrate largely on freight issues and on the proposed rail freight freeways, of whose difficulties and potential advantages the noble Lord, Lord Berkeley, spoke in great detail and with great authority. In this context I wish to ask the Government a few questions.
Generally, we support the contention that it is desirable to shift traffic from road to rail. I believe it is possible. Within that I share the enthusiasm of the Commission for trying to shift greater amounts of freight onto rail. That enthusiasm and determination is justified on safety grounds, which various noble Lords have mentioned; on the grounds which no one has directly mentioned of the greater damage caused to the roads by freight vehicles, which will become worse as vehicles become heavier and heavier; and on the grounds of damage to the local environment and pollution, particularly that caused by inner city congestion. Those are all good reasons for trying to achieve that objective.
I do not share the view of the previous government that the proportion of rail freight has fallen so low that the effect of increasing the total, even by quite a large amount, would not be significant in terms of traffic. That view was expressed today by the noble Lord, Lord Elibank. The industry in this country does not seem to share that doubt and diffidence in the matter of the shift and the potential for the shift. I was interested that the right reverend Prelate the Bishop of Hereford also questioned these doubts as to whether we can transfer from road to rail. The noble Lord, Lord Mountevans, drew our attention to other means of attracting freight back to rail and referred to the experience of other countries. It is not merely a desirable objective but an attainable objective, particularly when EWS and other companies in the UK rail industry are as bullish as they are.
We may have to do other things on the government/local government side to redress the balance between road and rail freight. I was interested by the suggestion to ban larger lorries from entering city centres. In that way road transport would have the same need to make transfers as rail transport now has. Rail transport normally has to transfer onto road transport for the last leg of a journey. One of the advantages currently seen in road transport is that goods do not have to be moved from one truck to another. As lorries become bigger, as they will do, the disturbance they cause in town centres will become worse and worse. I hope that in the course of the preparation of the White Paper the Government will pay attention to that aspect.
Another difficulty in achieving the objective of transfer which cannot necessarily be achieved simply by opening up European railways to competitive operations is the inbuilt price/convenience advantage that road transport has over rail for both passengers and freight. My noble friend has outlined his fears in that respect. As those giving evidence from the industry pointed out, railways, whether they like it or not and irrespective of whether they are competitive within the industry, are subject to competition from road transport. While there

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may be some discussion as to whether road users bear the full burden of the costs which they impose—my view is that they do not—users are faced with higher journey costs at the point of use on rail as compared with road. That is one of the main deterrents to freight shippers and private individuals approaching their transport needs. What action are the Government contemplating to try to shift that balance a little in favour of rail as compared with road? I believe that this perceived cost has to be tackled at a national level and needs real government input. Perhaps not today, but during the preparation of the White Paper, I shall be interested to see what the Government have in mind.
I believe that it was the right reverend Prelate who discussed the acquisition by EWS of Rail Freight Distribution. My understanding is that that is still being held up by Commission attention being paid to the competition aspect and whether too much subsidy is involved. If I am correct, I very much hope that the Government will be able to make the appropriate intervention at Community level to ensure that this merger can go ahead because, as the right reverend Prelate said, it is very much in the interests of getting more freight onto rail that the determination and management skills of EWS should be applied also to the Rail Freight Distribution company.
There is another problem in which the Government might take an interest, and I hope that they will; namely, the subject of access to an international rail freeway from the United Kingdom. The noble Lord, Lord Berkeley, dealt with that. My impression is that the Germans, Dutch and Italians are beginning to talk very constructively about the construction of such a freeway, but we are hampered because we have to go through France in order to get to any of those countries and the French alliance of the rail company, the government and the unions is opposing the initiative. Are the Government able to make representations, either through Community organisations or directly to the French Government, to see that that is no longer a disadvantage to us?
The noble Lord, Lord Berkeley, drew attention to the high cost of taking rail freight through the tunnel. Again, I understand that one of the problems is that competition between Eurotunnel and the ferry services has resulted in the heavy discounting of the price for lorries going both through the tunnel and on the ferries. It has been suggested that the prices now being charged are below cost. Are Ministers concerned that Eurotunnel has not passed on that price benefit to rail freight operators, that is to say, for loads going by rail? If so, is there any action that they can contemplate taking?
Finally, I draw attention to the fact that while there seems to be some confidence that there is capacity on some of the continental railways to accommodate the freight freeway and that on those railways it is bureaucratic rigidity which is the main obstacle to progress, on this side of the Channel the situation may be different. The noble Lord, Lord Elibank, considered the possible need to modify our infrastructure to adapt to wagons of a different gauge.
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There has been a great deal of talk over recent months and years on a subject which the noble Lord, Lord Berkeley, holds close to his heart; namely the piggy-back. I do not know whether the Government will be interested in supporting that initiative, particularly on the West Coast mainline where it appears that the recently signed contract with Virgin may mean that we do not have the right capacity to accommodate the desired through route from the Channel Tunnel to the North and North-West.
My last point deals with the different regions. Are the Government interested in the East-West Rail Consortium proposal for a route from the haven ports in East Anglia into central England and from there to the North and North-East? Obviously, it would be of great benefit if we could have another route for rail travel, as we used to have, from those ports directly into northern Europe. For that to succeed we need the right capacity to take rail traffic to and from those ports.
I welcome the report and the Commission's interest. I look forward with great interest to watching a government which, I hope, are committed to the same objectives, carrying out their policies.
5.35 p.m.
Viscount Goschen: My Lords, we have certainly had a fascinating debate this afternoon, as ever, on railway matters. I congratulate the Committee on the production of its report. It is a very thoroughly researched document. An enormous amount of high quality evidence was taken and a great deal of analysis went into it. As the noble Baroness, Lady Thomas, remarked, we have heard a number of speeches from people who claimed not to know very much about railways, but who then went on to give highly informed speeches on the subject. I only hope that the reverse is not thought of the noble Baroness opposite and myself as we ought to be expected to know something of the subject. But, of course, that will not be the case.
We heard a very good speech from the right reverend Prelate the Bishop of Hereford, who was one of the notable claimants of innocence in the matter of railways. But the House may not know that he knows a great deal about motorcycles as well, so the depth of his knowledge about transport has few bounds.
It has been said this afternoon that there is no doubt that the railways are of key economic, social and environmental importance to this nation's transport requirements and also to our European partners. It is very clear that changes are required in Europe if the decline in investment and in rail's share of the passenger and freight markets is to be reversed. Here I find myself totally in agreement with the Transport Commissioner.
Of course, we know that the Conservative Government recognised the strength of this issue and these arguments, which led to the structural reform introduced by the Railways Act. We know that this measure met very bitter political opposition right up to the general election campaign. I certainly welcome the conversions that we saw on this issue and the U-turns on the commitment of the Labour Party to a publicly-owned railway, particularly after my colleagues

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and I had tried to persuade them over the course of more than 200 parliamentary Questions in this House alone and of lengthy debates. At that stage we did not seem to have convinced the party opposite. I am very glad that at the 11th hour we managed to do so. I very much look forward to a detailed statement from the noble Baroness opposite putting some flesh on the bones of the public statements that we saw during the election campaign. We saw the then Leader of the Opposition in a photocall with a privatised train operator, which raised more than one eyebrow. That certainly added weight to the conversion.
We know that the policy of privatisation was controversial and as such it certainly made a change, particularly in an area where a public sector body had so long held a cosy monopoly. That is inevitably so. The prospect of change provoked some to don rose-tinted spectacles and to reminisce about the good old days of British Rail in the 1970s. But I believe that most commentators, when looking at the issue seriously, realised that, in the past 25 years and beyond, the rail network in this country had had very real problems indeed. British Rail had become desperately inefficient and distanced from the needs of the consumer. That is one of the things about which we are now all agreed. British Rail lacked an incentive to improve. The public sector was unable to provide the level of investment required.
The reality now is that privatisation, despite very real political opposition at the time, has been a clear success. We have seen some notable conversions to the cause. I was delighted to see the noble Lord, Lord Elis-Thomas, in his place, and to hear how he had followed the arguments concerning rail privatisation and the separation of the vertically integrated units. I was extremely interested in his opinions and in those of the Transport Commissioner, Mr. Kinnock, to whom the noble Lord referred.
We have seen companies competing fiercely for franchises, new levels of service and a new quality of service—higher than was provided by British Rail—new safeguards for passengers, with guaranteed levels of service, and key fares being capped. There has also been new investment, with over £10 billion-worth of investment planned by Railtrack.
Lord Howie of Troon: My Lords, the noble Viscount is making a most interesting speech, but has he noticed that the report is not about rail privatisation in the United Kingdom?
Viscount Goschen: My Lords, the report is about Community rail strategy. If the noble Lord looks again at the report, he will find that it refers extensively to what has happened in the UK. I very much regret the fact that the noble Lord has not been able to make a detailed contribution this afternoon. Nonetheless, we look forward to hearing from him in later railway debates when he has more time available.
As I was saying, we have also seen new investment by the privatised train operators in new rolling stock. I refer, for example, to Virgin Rail's commitment to
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invest in high-speed tilting trains. Passenger TOCs are committed to investing considerable sums in rolling stock. All of that has been achieved with a saving to the taxpayer over the next 15 years of some £6 billion. In seven years' time, the grant requirement will be about 40 per cent. of what BR claimed for running the services last year. I should be grateful if the Minister could confirm the accuracy of those figures.
I now direct my remarks particularly to the noble Lord, Lord Howie of Troon. It is inevitable that any debate on Community rail strategy examines the clearest possible example of where such major structural changes have taken place—and that is in the UK. I think that it is of considerable significance—indeed, almost every speaker this afternoon has referred to it—that we examine what has happened in this country (albeit over a very short period of time) from the extremely pessimistic predictions that were made at the time of the passage of the Railways Act to the realities of today.
It is against that background that we now see a widespread acceptance internationally that there have to be major structural changes in rail networks. In Japan, Germany, Sweden and the Netherlands there have been steady moves in this direction. We now have before us the Commission's White Paper, which is a further endorsement of this approach. There is a great deal in the White Paper with which we could agree. The central message is that railways have largely been insulated from market forces, and that they will not deliver anywhere near their full potential unless drastic action is taken to revitalise them. There is a greater emphasis on commercial operations, and on redefining the relationship between government and operator. That is precisely what has occurred in the United Kingdom and it is of direct relevance to what is happening in Europe.
When we were in government, we welcomed the White Paper. Indeed, in the explanatory memorandum which was submitted by Mr. John Watts, who was then the Minister responsible for railways, he said that the White Paper successfully identified many of the issues that rail must address if it is to develop and, indeed, increase its market share. Certainly, the recognition that rail must,
"be more efficient, customer orientated and attractive to users, whilst at the same time reducing the burden on the state for subsidy",
was music to our ears, as it reflects our own determination, which led to the privatisation of the UK's railways. We support the emphasis on greater commercialisation of rail networks and the proposed extension of separation of infrastructure from operations, measures which have, of course, already been implemented in the UK. We welcome the recognition that more freight traffic needs to be encouraged to use rail.
In his explanatory memorandum, John Watts indicated that the then government supported the Commission's objective of increased interoperability of conventional rail where this will improve competitiveness. Measures must be firmly linked to cost/benefit principles. We did not agree that successful financial restructuring required that all past debt be relieved, and we would expect normal state aids criteria to apply. There were, however, a number of areas where

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we did not necessarily support the Commission: for example, we believe that the level of access charges should be set by national infrastructure managers, not by a European body. I should be interested to hear the Minister's comments on the analysis that was put forward by the then government to find out where, if at all, the policies of her government differ from ours.
As was mentioned by my noble friend Lord Geddes, the White Paper is really more of a Green Paper, as it does not contain specific legislative proposals, but is couched in more general terms. Although there is detail in some areas, in others specific detail is lacking.
With regard to the committee's examination of the report, evidence was given from a wide variety of sources. I was certainly very interested to read the evidence of the independent rail regulator, Mr. John Swift QC. He was struck by how far behind the rest of the Community was in rail restructuring. He was quite right to draw attention to the necessity of introducing market forces or increasing efficiency, as the continuing burden on the state for subsidy would not be sustainable. If railways are to have a long-term sustainable future in Europe, these truths will have to be faced and tough decisions will have to he taken.
When considering how the measures proposed in the White Paper would affect the rail networks of Community countries, it is best to start by looking at the UK example. In giving evidence to the Committee, John Watts was clear that the changes made in the UK were in line with the policy objectives set out in the White Paper. That must put the UK in a very special position when it comes to negotiations in the Transport Council, because the UK has the expertise in, and experience of, such a transfer and of structural changes. Indeed, the objectives that are set out in the White Paper coincide to a great extent with the experience of the UK.
This afternoon's debate is therefore of considerable importance. It is probably the first major opportunity the new Government have had to outline in some detail their policy towards the railways and how they intend to apply that approach to their negotiating policy in Europe as regards the Commission's proposals. There are therefore some key questions for the Government to answer, and I am sure that the whole House looks forward with considerable interest to the speech of the noble Baroness, Lady Hayman. The House was probably looking forward rather less to my speech, because I have rehearsed the policy of my party on railway privatisation and railway restructuring on possibly more than one occasion. As we now have wholly new policies to come from the party opposite, we can all look forward with great excitement to hearing from the new advocates of privatisation.
As we know, the Labour Party opposed this policy tooth and nail at the highest level, vowed to stop the privatisation process and, when that looked set to fail, committed themselves to taking back the railways into public ownership. Their subsequent U-turn was most wise, and most welcome, but how far does it go, particularly in view of the general acceptance of the success of the policy, and the consistent moves towards
1018
following our example from our European partners about which we have heard this afternoon? The Commission's White Paper is the clearest possible example that this is the case. In the light of this, will the Government now be the international advocates of rail restructuring and privatisation? Will they impress their views on their European colleagues? But before we find the answers to those questions, their credibility in Europe on this matter will depend upon how they handle the issue at home. I invite the noble Baroness to tell the House whether the Government intend to accept the current structure of the privatised railway industry and, if not, what changes they propose to make to the regulatory and franchising system, to track access arrangements and to freight facility grants.
Perhaps I may ask as an aside, although I believe that it is a relevant one, whether Railtrack fulfils the eligibility criteria for the windfall tax. I do not want the noble Baroness to be coy and invite me to wait for the Budget. I should like to ask specifically whether it fulfils the eligibility criteria. That is deeply relevant. Does the noble Baroness believe that if such a tax were imposed on the infrastructure operator it would, for example, speed the improvements to the West Coast main line or hinder them?
So far as labour relations are concerned, it is clear that, where there are good incentives for staff to perform well out of the monolithic structure of state railway corporations, real progress can be made. The White Paper notes that railway workers can expect overall employment in the industry to decline but should recognise that their job security depends upon making rail more competitive and that that will require a more productive and flexible workforce. That must be true. I was very interested that, in his evidence, the Transport Commissioner, Mr. Kinnock, said that rail unions faced a harsh choice between losing virtually all the jobs in rail because change had not taken place or making changes which would probably bring about workforce reductions but in a controlled and controllable way.
If the noble Baroness allows her eyes to dwell on the section of her speech that deals with employment issues and how interventionist the Government seek to be, I shall be interested in hearing any comments that she may want to make on the threatened ASLEF industrial action that is to take place fairly shortly. The noble Baroness may not be keen to volunteer an opinion, but I shall respect her very much if she does so.
I see that I have trespassed considerably on the time of the House. However, the issues of vertical integration were ones on which a number of my noble friends and other noble Lords talked a great deal. Suffice it to say that the model that we have seen with the separation of the infrastructure from the operations has brought very considerable benefits.
As to freight, I believe that we have had a very positive discussion this afternoon. In particular, I refer to the speeches of the right reverend Prelate and the noble Lord, Lord Elis-Thomas. They have been impressed by the determination of the new private sector operators to increase market share and receive the full benefit of that improved market share, using all the

1019
incentives and new investment possible to ensure success. Possibly the most important change has been the orientation towards the customer. I believe that that remark by the right reverend Prelate is very valid.
If this debate had taken place five years ago I am sure that the White Paper would have contained very different conclusions and that the Committee's remarks in its consideration of that White Paper would have been very different. The fact that in the intervening period we have witnessed the biggest structural readjustment in the railways for a very long time—from proposals for legislation through to enactment and into successful operation—has completely changed the game plan. I am very pleased that there is now wide acceptance that this policy has worked. I look forward to hearing the proposals of the new Government.
5.54 p.m.
The Parliamentary Under-Secretary of State, Department for the Environment and Transport (Baroness Hayman): My Lords, I start by thanking all noble Lords who have been so generous in their welcome to me in this debate tonight. The right reverend Prelate the Bishop of Hereford referred to the time we first met when I made a speech to a group of senior boys at Eton. He said that after that nothing could get worse. Sometimes I look at the Front Bench opposite and believe that nothing has changed at all!
A debate in your Lordships' House is a sure way of focusing a new Minister's mind on a subject with which he or she may not have been previously familiar. It is a daunting as well as a salutary experience to reply to a debate in this place where, however specialised the subject, one is always dealing with specialists. Sometimes they come from unexpected places, like the Bishops' Bench today.
I am most grateful to the committee and to noble Lords who have spoken for ensuring that I have at least started to get to grips with this important area early in my time as a transport Minister. I record the Government's thanks to the committee and in particular to the noble Lord, Lord Geddes, both for his work as chairman and for the lucid and authoritative way in which he introduced the debate today.
A large number of specific questions have been raised in the course of the debate by the noble Lord, Lord Geddes, and other noble Lords. I shall attempt to reply to the vast majority of them in the course of my speech. However, I must tell the noble Viscount, Lord Goschen, that at the risk of sacrificing his respect I shall not be drawn into answering questions on putative ASLEF action. Even more so, I believe that it is prudent rather than coy in a debate on European railway strategy not to be tempted into discussing the plans of the Chancellor of the Exchequer for a windfall tax.
The White Paper on revitalising the Community's railways has come at a crucial time. Railway use across Europe, both passenger and freight, has been in decline for many years. This is a trend that must be reversed not only for the sake of the railways but also for wider environmental and transport considerations, as many
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noble Lords have pointed out. The committee recognised clearly the importance of the railway system in Europe in its report and that given the right support railways could become a cheaper, faster and thus more efficient transport option. The Government agree. Like the noble Lord, Lord Methuen, the right reverend Prelate the Bishop of Hereford and the noble Lord, Lord Cadman, we believe that a more efficient and attractive rail system able to compete with other transport modes will also bring significant benefits to the environment by reducing pollution and congestion.
As several noble Lords have said, next year we shall publish a White Paper on an integrated transport policy for this country. I am glad that we have been able to reassure some of the more sceptical Members of your Lordships' House in the first debate on transport issues as to the fulfilment of that commitment. The White Paper will set out a long term strategy and a sustainable framework for decision-making on transport issues which takes into account our responsibility to safeguard the environment. I am grateful for the support of the noble Lords, Lord Cadman and Lord Elis-Thomas, in this respect. We believe that this meshes very well with the European approach set out in the White Paper.
The Government therefore share and welcome the committee's support for the White Paper and agree with many of the initiatives proposed by the Commission. There is a great deal of work to be done. We shall need to consider carefully the best way of proceeding in the interests of the United Kingdom. I hope noble Lords will understand that the Government are still developing their detailed policy in a number of areas, but I should like to take the opportunity today to respond in general to the White Paper and the conclusions that the committee drew from it and to answer points that have been raised in the course of the debate.
At the outset, I believe that it is important to flag up the clear shift in approach in the new Government's attitude to Europe and the European Union. We want the United Kingdom to be a leading player in Europe—a contributor to and a shaper of policies. In this spirit we shall take a more positive attitude in a number of areas. We see Europe as an opportunity for the United Kingdom—for jobs, working conditions and trade. The United Kingdom presidency next year gives us a real chance to make an impact. We want to make progress towards completion of the single market, tackle unemployment and promote flexible labour markets. Positive action in the rail sector will contribute to all those aims.
It is clear that we are dealing today with a fundamental transport issue for Europe. Mr. Neil Kinnock, the European Union Transport Commissioner, whose evidence to the Select Committee has been referred to by several contributors to today's debate, was asked whether the main motive behind the White Paper was commercial, environmental or to do with the dreaded word "interoperability". He replied that all of these issues were significant but that at root it was a question of survival for the railways. He saw the rapid demise of the rail sector not only in terms of its railway consequences but as a serious additional threat to an already overburdened road system. That point was also made by the noble Baroness,

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Lady Thomas of Walliswood. He described the potential effects of further decline in terms of the economy, employment, the environment and the efficiency of transport movement within and across the single market as devastating. The Government agree with the analysis of Commissioner Kinnock and the committee that change is urgently required; moreover, the Government have the political will to bring about such change.
It may be helpful if I say a word or two about privatisation. It is tempting to follow the invitation of the noble Viscount, Lord Goschen, and reopen the debate about privatisation within this country. But it would not be appropriate to go into that matter in detail—tempted though I might be—in a debate on European transport matters. I should point out that privatisation is neither a prerequisite nor a requirement of the proposals in the White Paper. The main changes which the Commission has proposed, and with which both the committee and the Government agree, can be achieved within the framework of a well-run state rail sector.
The timing of the White Paper is significant because, as noble Lords are aware, many countries have already restructured or are in the process of restructuring their railways to give effect to EC Directive 91/440. That directive, which came into force in 1993, requires member states to separate the management of railway infrastructure from the operation of train services so that in terms of management, administration and accounting, the railways are afforded independent status—an issue referred to today. It also allows international groupings—that is, associations of companies in different member states—access to the networks of those countries where the railway operators are based, as well as transit rights in between. The White Paper rightly says that further restructuring is necessary if the process of regenerating the European rail sector is to continue. On the question of debt, for example, financial restructuring is essential if a transparent system for the allocation of, and charges for, train paths is to be realised.
Perhaps I may reply to the noble Lord, Lord Geddes, with regard to the Government's attitude towards the cut-off date for the relief of debt. The Government are not wedded to the one date of 1993. But whatever date is chosen it must provide the right basis for sound financial management.
In pursuing the extension of open access, a principle with which the committee agrees, questions such as whether international services should take priority over domestic services will need to be addressed.
The committee commented on the Commission's suggestion of the creation of a European railway agency as a possible means of resolving the problems of infrastructure allocation and the general integration of national railway systems. Its view was that if such a body were to be set up, it should be more of a regulatory authority than an agency. That is obviously an area at which the UK and its European partners will have to look more closely as proposals are developed. It will be necessary to identify those tasks which could usefully be undertaken, or those areas which need to be
1022
regulated, and then ensure that the existing mechanisms could not be improved before the case for such an agency or authority could be demonstrated. That is an issue at which we need to look in some detail. I hope that that helps noble Lords who raised the issue.
The committee also welcomed the concept of rail freight freeways. My noble friend Lord Berkeley and other noble Lords referred to that important issue in some detail. The aim is to develop international freight services with freer access and better co-operation and co-ordination between rail freight operators and infrastructure managers. I hope that will be welcomed by the noble Lord, Lord Elibank, despite his pessimism about the scope for change. This would include "one-stop-shop" facilities to deliver fast-response, coherent path allocations across borders and an approach which encouraged the players to market an end-to-end product, beyond a purely national perspective.
As your Lordships will know, a high level group of member states' representatives has been meeting under Commission chairmanship to take the rail freight freeways initiative forward. The Commission sees the freeways idea as an interim solution pending multilateral agreement to further liberalisation of freight access rights, an objective which we share in helping to complete the single market in the transport sector.
It may be helpful if I say a word or two about the latest position on freeways. The Commission has submitted within the last few days its review of the work of the high level group to the Council of Ministers. The review summarises the action to be taken by the member states and their railways and identifies a number of key issues for resolution over the longer term, notably track access charges, train path allocation and the establishment of a performance regime for freeways. The Commission concludes by suggesting a wider remit for the high level group, broadening the debate on longer term issues to encompass passenger services as well as freight. On a more practical level, there are active proposals for the early implementation of the freeway concept on a number of routes: one is a north-south freeway linking the Netherlands and Italy. Another is UK-Hungary, which is also the subject of an application for funding under the pilot actions for combined transport scheme from the European Freight and Logistics Leaders Club in which a number of UK-based rail interests are prominent.
The Government very much welcome the fact that the UK will be among the first in taking active steps towards making the freeway concept a reality and we shall be supporting the application for PACT funding. We hope that freeways can be developed quickly in other member states and the benefits of flexibility and more open access exploited to the full.
The noble Baroness, Lady Thomas of Walliswood, asked about the French Government's attitude in that respect. The French had previously opposed the White Paper, and, in particular, the proposals for extending open access. However, the restructuring of SNCF has recently been completed, and we hope that that will preface a more pragmatic approach by the French. The

1023
noble Baroness asked also about the opportunity for piggyback services on the West Coast main line. We understand that Railtrack is currently examining the opportunity for a freight upgrade. We expect to know more when those investigations have been completed.
There is much else to be commended in the White Paper. As the committee noted, many member state railways are burdened with substantial debt; that prevents competition on equal terms, as the noble Lord, Lord Mountevans, said. Investment has not always met business needs and the decline in the attractiveness of rail has led to reduced revenue. Relieving debt and allowing independent financial management will allow the railways to keep track of their costs and revenues and enable subsidy to be focused where it is needed; for example on the provision of a guaranteed level of socially necessary rail services.
In addition, the Commission has put forward proposals to separate the management of infrastructure and the provision of train services into distinct business units, with separate management and balance sheets. The committee, I know, was not convinced of the merits of that proposal but, after a slow start, many member states, including France, which until recently was strongly opposed to the idea, are now taking this route. The Government believe that it makes sense. I shall reply to the concerns of the noble Lord. Lord Geddes, by reiterating the point made by Commissioner Kinnock, that the fundamental reason for seeking the change was to help new entrants gain entry to the market and to enable a competitive, commercial relationship between the providers and users of the infrastructure.
In terms of trans-European train operation, the Government agree with the committee that it would be more cost effective to pursue the benefits of greater interoperability by developing compatibility in systems and equipment rather than by aiming for total harmonisation. The noble Lords, Lord Methuen and Lord Geddes, referred to those issues. We support the aims of the existing interoperability directive which applies to the European high speed train network. But for this directive and any future proposals for conventional rail lines, we believe that technical and administrative measures to effect interoperability should be kept to the minimum necessary to ensure the safe and efficient running of through trains on the network. At the same time the potentially high costs of interoperability should not be allowed to outweigh the benefits. The UK is playing an active role in the preparation of technical specifications for interoperability with a view to producing practical solutions within a realistic timescale.
My noble friend Lord Berkeley asked about sleeper services through the Channel Tunnel. I understand that those services are under review by Eurostar and its European partners. Under the railway regime that we presently have in this country it is for the railway companies alone to decide what services to introduce and when.
Noble Lords drew attention to the fact that restructuring Europe's railways and the resulting improvements in efficiency have led to a reduction
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in the railways' workforce. The noble Lord, Lord Elis-Thomas, spoke about that. Perhaps I may make clear the change in this Government's attitude as compared with the previous Administration's negative response to the committee's recommendation that the European Social Fund might be used to mitigate the impact of job losses. We believe that every avenue should be explored to make it easier for redundant employees to find new jobs and share the committee's view on the issue. However, with only limited funds likely to be available, they should be aimed at those areas where redundancies exacerbate existing regional unemployment problems. We will need to ensure that there is a sound legal base for use of funds in this way and that they are properly targeted—not simply used to bail out those members states which have made no provision for redundancies at the expense of those which have.
The White Paper contains many positive ideas for ensuring that rail becomes an attractive, viable alternative in comparison with other transport modes, most of which were endorsed by the committee. The UK, which has already implemented many of the Commission's proposals, will take an equally positive approach in assisting the Community to achieve its goal. We have experience in this field which we can share with our European colleagues. Our presidency of the EU in 1998 provides a valuable opportunity which we are determined to take.
In conclusion, I would like to reiterate the Government's gratitude to the committee for its important contribution to the wider debate on the future of Europe's railways and for recognising that major change is needed, not just at national but at European level. This Government are determined to contribute positively to this change and intend playing a full part in the concerted effort that is necessary to achieve a new era for Europe's railway system.
6.12 p.m.
Lord Geddes: My Lords, it is customary on these occasions to say what an interesting and valuable debate we have had and for the proposer of the Motion to thank all those who have spoken. But we have had an extremely interesting and constructive debate and I thank all those who have spoken.
I thank in particular the noble Baroness the Minister for a very comprehensive and constructive reply. If I heard her correctly, relative to the committee's report—and that is the only reason why I am standing and not sitting—she disagreed with its conclusions in only one respect. That was concerned with the separation between infrastructure and operation. I reiterate that the conclusion of the committee was neutral in that respect. We said that we did not regard it as a necessity. We did not express an opinion as to whether we thought it was good or bad. Our conclusion was that different countries should or would approach the matter in different ways given their national characteristics and—dare I say it?—problems. Therefore, we have reached the situation in which the Government concur with all the committee's recommendations, which is a very satisfactory situation.

1025
It is not my job to go through every speech that has been made and it would be invidious to do so. However, perhaps I may make a couple of points. First, I greatly welcomed the contribution of the right reverend Prelate the Bishop of Hereford. I hope that he can encourage his fellow Lords Spiritual to join in such debates more often. It genuinely adds to the debates, and we are very grateful to him.
The right reverend Prelate believed that there was an underestimate of the scope for transfer from road to rail. My noble friend Lord Elibank took the opposite view and poured slight scepticism on that belief. The committee was extremely disappointed that on the evidence there did not appear to be great scope. I draw the right reverend Prelate's attention to paragraph 85 in particular, which states:
"While supporting rail for these reasons"—
economic, environmental and all the other reasons—
"we recognise that the revitalisation of rail, even on the most optimistic forecast, is likely to have in itself only a minor impact on the overall balance of transport modes".
We found that conclusion intensely disappointing, but on the evidence we received we could reach no other conclusion. As your Lordships know, a report can be made only on the evidence received.
The noble Baroness, Lady Thomas of Walliswood, spoke of the regulatory authority. We put forward that suggestion, if I may use lay terms, because we thought that it would be necessary to have a really strong referee or umpire who could knock heads together and perhaps ultimately say, "Look, you will do it this way and not that way because the two sides cannot agree". That was the point of our emphasis on a regulatory body. I note the Minister's remark in that context and I concur. Let us wait to see whether existing agencies and authorities can do the job. The committee, in conclusion, doubted it, but I take the point that we should wait and see.
The noble Baroness, Lady Thomas of Walliswood, gave me a good opportunity to refer to a previous report of the committee under the inestimable chairmanship of my noble friend Lord Elibank; namely, that on the weights and dimensions of road vehicles. If the noble Baroness cares to look at the report dated 26th July 1994 she will see conclusion 49, which states:
"We are persuaded that 44 tonnes spread over six axles causes significantly less damage than 38 tonnes over five".
Therefore, we do not concur with her that more weight is necessarily more harmful.
It has been a good debate and I thank all those who have taken part. I commend the Motion to the House.
On Question, Motion agreed to.

UK Beef Exports
6.17 p.m.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Lord Donoughue): My Lords, with the leave of the House, I shall now repeat a Statement on the opinion of the European Union Scientific Veterinary Committee on the
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United Kingdom's proposals for a certified herd scheme which is being made in another place by my right honourable friend the Minister of Agriculture, Fisheries and Food. The Statement is as follows:
"The terms of the Florence Agreement for lifting the export ban on British beef provided for a number of steps, including meat from animals in certified herds. It envisaged that these proposals would first be considered by the Commission's Scientific Advisory Committee before the Commission made changes to the European Union legislation.
"On 25th February, the previous UK Government submitted their proposals for a certified herds scheme to the Commission, which passed them to the Scientific Veterinary Committee for an opinion. The committee delivered its opinion yesterday and expressed concern on five points relating to the identification of animals, the tracing of the animals on farms and of their meat through the slaughterhouse and the degree of veterinary supervision. The committee suggested that changes needed to be made to the UK proposals before they would be acceptable.
"It is disappointing that the Scientific Veterinary Committee has asked for further clarification when it did not take up our offer to send an expert to explain our proposals at an earlier stage. We are not surprised that it has some criticisms. We are already considering carefully the points made and will give a detailed technical response very quickly. Officials are in Brussels today and discussions will continue over the next few days. We recognise that all consumers will be anxious to have full assurances in line with sound scientific assessments of risk. At the same time we will press for the removal of the ban where those assurances can be given. I will keep the House fully informed on developments."
My Lords, that concludes the Statement.
6.19 p.m.
Baroness Denton of Wakefield: My Lords, I thank the noble Lord for repeating the Statement made by his colleague in another place. Consumers, producers and processors must be very disappointed. We had been told that soft words would turn away anger and would probably lift the ban as opposed to the tremendous support which the previous Government gave to the industry. But today's news leaves us in a very unsatisfactory position.
Why is it said that insufficient information was taken forward? If there is a desire for an identification system, what is wrong with the system in operation in Northern Ireland? The Commissioner has said already that he is happy with that. The EU vets have crawled over that system. If that is an issue, why did the Minister not press for those animals to be allowed back into the market place?
Will the Minister tell the House when it is proposed to establish a computerised system in England? When will the tracing take the form not of planned visits but planned inspections? What is the timetable that he foresees for those inspections?

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The Statement does not help us as regards any new ideas or new approaches which are to be brought to this matter. In the past, we have given information to that committee. It was assumed that all the necessary information had been given. What is now different from the requirements that were imposed before Christmas?
As regards the identification of cohorts to meet the selective slaughter, will MAFF make arrangements to ensure that the selective slaughter in Northern Ireland, which is well under way, can be completed? Will it have priority?
What are the noble Lord's views on a ban not only in Europe but in the rest of the world? The South Africans are prepared and happy to take beef from Northern Ireland. What right does the European Union have to stop that? Is it based on the assumption that re-imports into the Union cannot be controlled? If so, that is not a problem for farmers in the United Kingdom.
The Minister may need to reply to my next question in writing. What are the Government doing about the fact that the French continue to refuse imports of meat that is processed in the United Kingdom but which comes from other countries which may have BSE? That meat can go back into Europe but has been stopped by the French. If the Minister looks at that issue, he will find a thick folder on it. I hope that that is a matter which the Government have taken on board.
One anxiety which is not touched on in the Statement relates to compensation for farmers in the future. I understand that there is to be no additional compensation. But if, as it appears, we are working towards settling the issue by allowing into the market place only those animals born after August 1996, that would involve heavy costs. The previous Government never walked away from supporting the producers and processors.
The main issue about which I wish to ask the Minister is whether he believes that there is now no safer beef anywhere in the world than that from Northern Ireland. That is well identified and well measured. It is hoped that Scotland and England will come up to that standard. Can the Minister give me some indication of the timetable that we can look forward to?
Lord Beaumont of Whitley: My Lords, I thank the Minister for answering the Question and making the Statement. Because it is a PNQ rather than a Statement as such, we did not have copies of it in advance. I draw that to the attention of the noble Lord the Chief Whip, who is here. I am sure that he is here in two capacities, as he will be interested in the subject as well as our procedures. This is not like an ordinary Question at Question Time when the questioner should not be told what is the Answer before he produces his supplementary questions. The procedure which we are following is very much the same as that for a Statement when, because the subject is complex, the details are provided in advance. But that is by the way.
The Statement is very disappointing. I am sure that everyone will find that that is so. Do the Government accept that the most important and urgent issue, rather
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than the opening of the export market as such, is the need for the harmonisation of import and export controls throughout Europe so that all beef that is consumed is of the same standard? Of course it is important that we look after the health of the public. It is very important also for the future of Europe that we see that there is fair dealing. That should be one of the Government's objectives.
Lord Donoughue: My Lords, I thank the noble Baroness and the noble Lord for their questions.
The noble Baroness asked why the committee felt that there was insufficient information. It set that out in its document. We do not necessarily accept that but it has put forward its reasons. We shall examine them and do our best to provide further information.
As regards Northern Ireland, which was the subject of about six of the noble Baroness's questions, our view is that we must achieve a lifting of the ban for the whole of the United Kingdom. We accept that in many ways the situation is better in Northern Ireland. When we achieve acceptance of certain solutions that we are trying to put forward, then it is quite clear that Northern Ireland will be a beneficiary because, in many ways, its herds are in a better state. The traceability is certainly better. Northern Ireland will benefit and we very much want that to happen and we bear very much in mind the situation in Northern Ireland because of its greater dependence on agriculture.
The noble Baroness asked when the computerised system would be set up. The previous Government were responsible for the handling of that. My understanding is that that is now under way in Great Britain and by the beginning of next year we are looking to have a reasonable, although not a full, establishment.
The noble Baroness asked about France. That really is a matter for the Commission. We shall submit our views on that.
On compensation, we are subject to strict budgetary restraints. We shall look at the matter and try to protect the British farming and meat industry as far as we possibly can. But I am bound to say that we act in a budgetary situation in which the previous Administration bequeathed us insufficient provision even to meet the present needs.
On the need for harmonisation, I should tell the noble Lord, Lord Beaumont, that we wholly agree with it; indeed, we have put that view fully to the Commission, and that is also its view. However, the Commission has its problems in the Council, as we do. As regards any further questions to which I have not responded, I shall write to the noble Baroness.
6.30 p.m.
Lord Stoddart of Swindon: My Lords, does my noble friend the Minister accept that I think his description of the decision of the veterinary committee is disappointing? Indeed, that is probably a grave understatement; I believe that it is catastrophic. Can he confirm a report which appeared in the Sunday Telegraph on 8th June that Professor John Pattison has now conceded that the

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CJD epidemic running into hundreds of thousands of cases which he predicted, and which gave rise to the BSE catastrophe, will not now occur? Faced with the dramatic decline in the number of CJD cases, the professor has now apparently admitted that the final number of such cases may end up not in hundreds of thousands but in only 200.
If that is so, is it not a fact that the professor and other scientists got it grievously wrong and that the then government were grievously at fault in too easily accepting the doomwatch scenario painted by the scientists which resulted in the futile killing of a million animals over 30 months of age and cost the taxpayer £3.5 billion in compensation—that is, £134 for every single household? If that is the case, does my noble friend the Minister agree that we have in fact been faced with enormous expense and enormous damage to our farming industry for no reason at all? Further, will he now take a far more robust attitude with our European partners than was taken by the previous government?
Lord Donoughue: My Lords, I thank my noble friend for his intervention. The handling of this issue, and others, by the previous government did, I believe one can say quite gently, contain many defects. So far, we are pleased that there is no epidemic. However, there have been eight cases since last March and there are now 18. That is not an epidemic, but it is serious. In government one always finds oneself in the dilemma, especially when one is dependent on scientific advice, to which my noble friend referred, whereby one has always to preserve the balance between caution over the national health—and one probably always has to be over-cautious—and over huge costs. History will judge whether the previous government got that right. But we, with them, would not want to take major risks with the health of the nation.
Lord Marlesford: My Lords, I should like, first, to congratulate the noble Lord on his new post. I should also like to say how lucky in my opinion the farming industry is—and I declare an interest as a farmer—to have someone of such ability in the position that the noble Lord now occupies. Secondly, I must say that I find myself very much in agreement with the noble Lord, Lord Stoddart. Of course, I am delighted that the present Government are following some 90 per cent. plus of the previous government's policies. However, this is one area where, frankly, they should scrap them totally. They should cease to attempt to appease the unappeasable in the case of Europe and recognise that, however much anyone may be trying to get a balance between budgetary constraints and risks to human health, there is no way in which we can justify spending £3.5 billion on 18 cases of a disease which may be linked to BSE in cows. Indeed, there is no way in which the budgetary decisions so made could be justified.
With the massive majority that the Government have, perhaps I may urge the Minister to take a totally fresh look at the matter and say, "We shall not export our beef until BSE is ended". It will end in due course because the numbers are falling rapidly at present. Indeed, there is probably a great deal less BSE in Britain than there is
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in France, and the time has now come to stop spending taxpayers' money, to stop the slaughter—certainly of cohorts—and to wait until the situation comes to a natural end.
Lord Donoughue: My Lords, I thank the noble Lord for his kind remarks. I have taken note of his alliance with my noble friend who is sitting behind me. I am not sure whether that has always been the case and, therefore, I shall view what the noble Lord says with even greater care. I shall certainly report his views to my right honourable friend. Nevertheless, I have to tell the noble Lord that we are not totally—or even 90 per cent. in general—continuing the policies of the previous government, but we are locked into a particular process and we have certain obligations which we shall pursue while taking a radical look at them. We would not wish taxpayers to pay more than is necessary. We are most concerned about the consumer interest, but the health of the country is our top priority.
Lord Hylton: My Lords, I have perhaps an easier question for the Minister. Can he say what progress is being made to secure the removal of heads, spinal cords and some other offal from beef carcasses imported into this country from continental Europe?
Lord Donoughue: My Lords, I thank the noble Lord. However, I can assure him that it is my observation that there are no easy questions in this department. We announced last week our proposals to ensure that specified risk materials are removed, and, indeed, are removed from imports. We have given the European Union until 22nd July to come forward with proposals to ensure that it has similar controls. Therefore, we have taken quite new and radical steps in that respect. I hope that that will satisfy the noble Lord.
Lord Lucas: My Lords, does the Minister agree that the case we have to put before the Scientific Veterinary Committee is an unanswerable one? We have all the evidence and we have done all the things that we need to do in order to be able to get the committee to agree with us. If we find the committee continuing with the obfuscation and obstruction which it has demonstrated on this occasion and which may be a hangover from previous days, or if at the end of the process it reaches the conclusion that we should not be allowed to go ahead with a certified herd scheme, would that not be a great disappointment to the Minister and cause him to question whether the approach being taken by his Government towards Europe is going to pay the dividends which he hopes? Further, can the Minister tell the House what conceivable disadvantage would occur to any other part of the United Kingdom—except perhaps to the amour propre of the Scots—if Northern Ireland were allowed to go ahead of the rest of us in getting permission to market its beef?
Lord Donoughue: My Lords, I thank the noble Lord for his intervention. I believe that our case is very strong. It is not in all specifics the case that we might have submitted; indeed, it was submitted by the previous

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government. However, we believe that the thrust of the case is absolutely right. But if the committee has questions about particular details and phrasings, we shall look into them in order to try to be constructive. As the noble Lord knows, it is an independent scientific committee; it is not a group of European politicians. Therefore, we must treat the committee with respect and we shall try our very best to do so.
I should also tell the noble Lord that my right honourable friend has been in contact today, by telephone, with both the relevant commissioners—namely, Commissioner Fischler and Commissioner Bonino—to discuss how we should take the matter forward positively. It is clear that their view is that this step is not a slap in the face or a rejection; it seeks to establish the basis on which we can go forward and secure a lifting of the ban. It should be viewed more positively than it has been in the British press.
As regards Northern Ireland, I can only repeat what I said to the noble Baroness. We sympathise with and are concerned about the beef industry in Northern Ireland. We shall do everything we can to help it. However, our basic aim is to seek a lifting of the ban for the whole of the United Kingdom. If we obtain specific concessions—for example, on certified herds or on animals born after certain dates—there is no doubt that those in Northern Ireland will he the main beneficiaries. As regards damage, I do not believe that the industry in Northern Ireland could inflict any damage on the rest of the United Kingdom. However, the Scots are often sensitive about these matters.
Lord Monson: My Lords, I wish to pick up a point made by the noble Baroness, Lady Denton of Wakefield, which I do not think was answered. Does the noble Lord accept that what infuriates the British people more than anything else with regard to the beef ban is the power, or purported power, of the European Commission to ban exports of our beef and beef derivatives to countries outside the European Union which may wish to buy our beef, notwithstanding the BSE scare? I suspect that 18 months ago 99.99 per cent. of the people in this country would have found it quite inconceivable that the European Commission possessed such draconian powers at the expense of national parliaments. Will the Minister say under what clauses or paragraphs of the Treaty of Rome, the Single European Act or the Treaty of Maastricht the European Commission is given such powers? If he does not have the facts at his fingertips, will he be so kind as to write to me? At the same time can he say whether the power to ban such exports is confined solely to agricultural produce, or could it be extended to manufactured goods which the Commission deems to be in some way unsafe?
Lord Donoughue: My Lords, I point out to the noble Lord that we are challenging that action as being excessive and beyond the Commission's powers. We
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must await the judgment of the European Court on that matter. We do not accept that the Commission has those powers.
Lord Willoughby de Broke: My Lords, when do we expect the European Court of Justice to deliver its verdict on this matter?
Lord Donoughue: My Lords, I am sorry, we have no idea, but we hope it will be by the end of the year.

Social Security (Social Fund and Claims and Payments) (Miscellaneous Amendments) Regulations 1997
6.42 p.m.
Lord Beaumont of Whitley Lord Beaumont of Whitley rose to move, That an humble Address be presented to Her Majesty praying that the Regulations (S.I. 1997/792), laid before the House on 17th March, be annulled.
The noble Lord said: My Lords, the purpose of this Motion is to persuade the Government to think again, or rather to persuade a new Government for the first time to think through the present proposals further to tighten eligibility for funeral expenses payments. In my speech to this Motion I depend for my facts on a number of briefs, but most particularly on the respected and impartial brief of the citizens advice bureaux. I also rely on my noble friend Lord Falkland to raise some matters which I shall not be able to touch on.
However, I depend for my motivation, as opposed to my facts, on my experience as a parish priest, where I suppose I have more experience with the bereaved than most Members of your Lordships' House. That moves me to know that this is one area where it is important that any government fall over backwards to be as humane and as compassionate as possible. Unlike other social security areas, in this case the damage done by fraud cannot be of major and overwhelming importance. Death comes to all of us but at least it comes only once.
The citizens advice bureaux consider that the present proposals further to tighten eligibility for funeral expenses payments and to limit the amount allowed will lead to people being deprived of assistance by harsh rules which fail to take account of the significance of funerals for those who are bereaved. The rules governing access to funeral payments are now so complex that not only does this cause problems for Benefits Agency staff administering the scheme, but it is virtually impossible for anyone apart from a partner of the deceased—and not always then—to know if they will qualify for a payment, let alone how much they will receive. The proposed amendments are another example of how short-term demands to cut costs take precedence over the creation of a system which is comprehensible to claimants and easy to administer.
At present, help is available to a person in receipt of income related benefits who is the partner of the deceased or either a close relative or close friend of

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the deceased. Since June 1995 there has been a ceiling on the amount allowed for funeral expenses: £500 plus a range of specified expenses. In practice, judging from CAB evidence, this has meant total payments are made in the range of between £650 and £800, which have fallen well short of the actual cost of a simple funeral in many cases. The fact that there are simple "green" funerals—which would appeal to me and about which I know a certain amount—does not affect the issue, as the poor do not usually have the know-how or necessarily the will to benefit from that.
There are two main aspects to the new proposals. First, an "immediate family member" test will be introduced. That will mean that, where there is no surviving partner, a funeral payment will be refused if there is a parent (including an absent parent) or a son or daughter of the deceased who is not in receipt of an income related benefit. In this situation relatives or close friends who would otherwise qualify for financial help in arranging a funeral will be refused. Secondly, the £500 limit will rise to £600, but with a reduction in assistance with specific expenses. The effect is likely to he a reduction in the overall payments made to individuals.
The CAB service believes that the new immediate family member test will lead to cruel and arbitrary decisions where the person judged to be an immediate family member may well have no interest or intention in paying for the funeral of the deceased and may not even be available to do so. Already CAB evidence shows that Benefits Agency officials are rejecting claims from close friends or relatives on the basis that it is not reasonable that they should take responsibility—usually where the deceased has other relatives who are not in receipt of qualifying benefits.
For example, a CAB in Wales reported the refusal of a funeral payment to a single parent on income support. Her mother had died in suspicious circumstances and the father had been arrested for her murder, then sent to a mental hospital, from which he had disappeared without trace. The Benefits Agency argued,
"There is a close relative who could reasonably he expected to pay"—
that is, the father. By selling all her possessions of value, the client had managed to accumulate £450, but that was not enough. There are other examples of such judgments.
Where immediate family members are exempted from responsibility for funeral costs if at school, a student, in prison, in hospital or in the Armed Forces, these exceptions are too rigid to cope with the variety of other situations where it might be unreasonable to expect an immediate family member to pay. For instance, they do not deal with the situation where the immediate relative is mentally ill but living in the community on contributory benefits. I am afraid that such cases are only too common these days. They do not cover the situation where the immediate family member is not traceable. There will be particular problems for immigrants to the UK who may have immediate family overseas. An elderly parent living in Pakistan or Nigeria for example will not be in receipt of qualifying benefits
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but may still be living in straitened circumstances. There may also be difficulties in contacting the person and arranging for the transfer of funds.
The proposed rules are likely to cause further grief to the parent of a deceased child. The Child Support Act has emphasised the financial obligation of each biological parent regardless of any estrangement between them. The new rules exempt from the "immediate family" test a parent, son or daughter who is estranged from the deceased. This exemption will not necessarily assist parents who are estranged from each other rather than the child, in particular if the absent parent had contact with the child or had been pressing for contact.
The further proposed restrictions on the amount awarded for funeral expenses merely throw into relief how inadequate the payment has become in enabling poor people to bury their dead without falling into debt. The truth is that even modest funerals cost more than £600. Many examples are reported to the citizens advice bureaux where it has been impossible for the person involved to pay the expenses. The proposed new limit on funeral expenses bears no relation to reality. As a result, the DSS appears indifferent to the consequences for poor people.
I know that the measure is a result of bureaucracy rather than necessarily hard-heartedness. However. I would expect the present new Government to be able to give us a new start in this matter. We consider that poor people should be allowed to bury their loved ones with all proper respect. Assistance with funeral costs is one of the oldest and most valued forms of help which the social security system in this country gives. The proposed new rules are a further erosion of claimants' rights to be treated with dignity, not least at moments of greatest distress. If we are committed, as I hope we all are, to helping those who are most in need of help, this is a situation where I sincerely hope that the Government will be able to think again. I beg to move.
Moved, That an humble Address be presented to Her Majesty praying that the Regulations (S.I. 1997/792), laid before the House on 17th March, be annulled.— (Lord Beaumont of Whitley.)
6.52 p.m.
The Viscount of Falkland: My Lords, my noble friend has outlined admirably the view from these Benches. I should not have been dealing with this subject, but my noble friend Lord Russell is not available today.
Like most noble Lords I have had a funeral in my family. During the past two years my mother died. She did not have an elaborate funeral, but I know full well the costs of that funeral. It was not in the London area; it was in the far west, in Devon. The cost was considerably in excess of the £600 allowed under the scheme. I agree with my noble friend and support him in saying that the limit of £600 is too rigid. In general terms the amount is inadequate.
However, my specific concern relates to homosexuals who find themselves bereaved. A partner may have died, often regrettably as a result of AIDS. In this country in

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recent years there have been some 9,500 deaths as a result of AIDS of which about 75 per cent. have occurred among gay men. Although some people may not have accepted the fact, having lived with the difficulties of being homosexual and having suffered in many ways some homosexuals now choose to live with partners in stable relationships and can suffer this kind of bereavement.
The £600 limit affects everyone. However, homosexuals are particularly vulnerable as regards the immediate family test. Distress is caused to the surviving member of the partnership if he is denied the responsibility of taking care of the funeral expenses. Under the regulations, if it is necessary to probe and investigate whether there is a close member of the family who is not receiving benefit that adds additional complications in the case of homosexuals. Many are living with a partner of which the family is ignorant, and of whom they would wish the family to remain ignorant. In some cases the family has taken a disapproving view of the relationship and there has been an estrangement.
I have no reason to suppose that the tidying up measures imply any discrimination against homosexuals. I have read all the papers concerned with these measures. It is a bureaucratic tidying up and an attempt to ensure that there is no abuse of benefit claims. I have no doubt that there are examples of fraudulent benefit claims in this area. However, it is a sensitive subject. It is on record that in the old days, as many of your Lordships will know, people who were very poor saved all their lives for a funeral. It was commonplace until perhaps 20 or 30 years ago for people to spend several years worrying and enduring hardship, saving for a funeral so that they would not load their families with the distressing responsibility of having to scrape around to give them a decent burial. I think that that situation is preferable even if there were some hardship, rather than having to undergo what is clearly a distressing, painful and probing investigation in order to qualify for the benefits under the regulations.
I have read in the papers of general cases which if they were not so tragic would be ludicrous. The cases do not involve homosexuals about whom I am specifically concerned. The Benefits Agency has felt it incumbent to make inquiries and investigations, with statements in letters to people who suffer the distress of grief. We are enjoying again the programme "Yes, Prime Minister". Those statements make some of the jokes in that programme not so far fetched. I should like to see the removal of that distress. It is surely not beyond the means of the Government to devise a scheme where the most simple criteria are exercised, giving the least possible distress to the bereaved even if that increases slightly the risk of the occasional claim being made which is not strictly correct.
I conclude on this note. The Terrence Higgins Trust which has done good work in the area of AIDS and in caring for those who have suffered distress and bereavement through AIDS has reiterated that if the situation is allowed to continue it will cause distress not only to people who are bereaved but also to a great
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number of family members of surviving homosexuals who had been in partnerships. It is an important point. I know that some people have fairly hard views about those who live in homosexual relationships. I believe that we are now more able to accept that many are extremely respectable and caring relationships.
I utterly reject that in a more permissive society we are seeing evidence of more homosexuals taking on this kind of lifestyle. It is just that there are now fewer people suffering in silence under the appalling burden of not being able to reveal to their families and to the world at large that they are homosexual, and that more of them are out and living in these kinds of relationships. Unfortunately, in these kinds of relationships, and because of the dreadful disease of AIDS, there are a great number of fatalities. It is just as painful for a homosexual who has lost his partner, and sometimes more painful in terms of grief and upheaval in their lives, as it is for people living in heterosexual relationships. The additional difficulties imposed by these regulations, which I hope I have articulated clearly enough, make the matter well worth our attention. I hope that the noble Baroness will be able to give me some help and encouragement to believe that the situation will alter in due course.
7.2 p.m.
Lord Mackay of Ardbrecknish: My Lords, I should like to congratulate the noble Lord, Lord Beaumont, on putting down this Prayer, although in fact I suspect I should be congratulating his noble friend Lord Russell, who had intended to put down this Prayer on the last day of the last Parliament. However, it suddenly dawned on the noble Earl that he could actually put it down in this Parliament if, as I suspect he then thought, a new government decided to continue the policy of their predecessors. Certainly the noble Lord. Lord Beaumont, should be congratulated for today, but he really does not deserve the full congratulations because these should rather be directed to his noble friend. Actually I think he should be doubly congratulated because in the few weeks of this Parliament we have had from the Liberal Democrat Benches for the first time some tentative—and I must say they have been pretty tentative—criticisms of the new Government. To date it has been a fairly lap dog performance from the Liberal Benches. Its members have jumped up one after the other to ingratiate themselves with the Government Benches, to such an extent that we all wonder on these Benches how long it will take for one of them to be given a job. It will not surprise anybody who has read—
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): Sour!
Lord Mackay of Ardbrecknish: My Lords, no, it is not sour at all: my goodness! It is just a statement, an observation of what has been happening no later than today. In fact the Liberal Democrats have been almost more supportive of the Government than the government Back-Benchers have been. The noble Baroness the Minister will not be in the least surprised

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when I say that I am not going to be in any way critical of these regulations, because they were signed by my honourable friend in another place, Mr. Roger Evans, before the unfortunate event of the general election.
The regulations are the result of some very heart-searching discussions we had in the Department of Social Security on several occasions and more recently, when we decided on these changes to the Social Fund payments and claims for funerals. When we first looked at this issue we decided that we had to take some steps to deal with what was becoming an increasingly difficult problem. What was happening—I know that it never bothered the Liberal Democrats Benches when we were in government and I do not suppose it will bother them now that we have a Labour government—was that the cost of funerals to the Social Fund—that is, to the taxpayer—which was £18 million in 1988–89, had risen to £61 million by 1994–95. At that point we decided, as part of our general review of every part of the system, that we really had to look rather carefully at this.
The noble Viscount who has just spoken, was complaining about the Benefits Agency looking around to see if there was a close member of the family who was not receiving benefit and who should in fact be taking on responsibility. For myself, I see nothing wrong with that. It seems to me preferable to what was happening, which was that the family were looking round to see who was on benefit who could become the responsible member and therefore become eligible for the benefit. That was one of the problems and one of the reasons for the increase.
The other reason for the increase was the cost of the funerals themselves. Although I no longer have the facts in front of me I can certainly remember enough of them to remember the enormous variations from one part of the country to another, which we felt were really quite wrong. If the taxpayer was picking up the bill, it seemed to be quite unreasonable that he should be picking up very large bills in one part of the country for funerals which were exactly the same as those in another part of the country where the bills were very much smaller. We worried considerably about this and one of the reasons why the first lot of regulations was complex was indeed as a result of our concern to make sure that every eventuality was covered.
It is not true to say £600 is the end, because we were careful about that. We were very well aware that the difference in costs between cremation and burial is very considerable, and indeed the costs of burials differ between one part of the country and another, for very well understood reasons. The difference can be very considerable indeed. We therefore made the cost of cremation and the cost of burial quite separate from the item of £600, so that somebody who could not afford to bury a relative would not be forced into cremation, for example, simply because they could not afford it. The result of that, if my memory is correct, is that for burials the average was not £600 but in excess of £1,000 because of the additional cost of burials. However, I am sure the noble Baroness will correct me if I am wrong.
These issues of social security are always difficult. I have a great deal of sympathy for the difficulties that I know will face the noble Baroness, because there are
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always hard cases and the citizens advice bureaux seem to make a great habit of finding the hardest imaginable cases that exist. However, the simple fact of the matter is that the social security system has to deal with the generality. It has to be fair to everybody, and I think the system that we devised was a perfectly fair one.
As the noble Viscount pointed out, there are many people who make sure that they pay for insurance to deal with their funeral provisions. They will still have to be careful with the costs of the funeral when they come along, if in fact their insurance is modest. It seemed to us, and it certainly seems to me. that it would be quite wrong if the relatives of somebody who is not very well off but who has taken sensible insurance precautions during his or her lifetime find that the funeral they can afford is far less expensive than somebody else can obtain via the social security system and the taxpayer. Frankly, that is the position we were in. So I have a great deal of sympathy with the Government on this one.
I absolutely agree with the instrument before us. I hope the noble Baroness will not accede to any of the requests that have come from the Liberal Democrat Benches and that she will stick to the plans put forward by the last government in this regard, in order to be fair to all people in the country, both taxpayers and those poor people who need help, and also in order to prevent the abuse and escalation in this particular service that we were seeing. I think I am right in saying that as a result of the actions that we took in 1994 the costs to the Social Fund of this particular programme were reduced from the £61 million I mentioned earlier to £49 million in 1995–96. However, I may be wrong and I have no doubt that the noble Baroness knows exactly what the cost is. I can certainly assure her that if the Liberal Benches put this Prayer to a Division tonight she will not find me reversing the views which I took when I was in government.
7.9 p.m.
Baroness Hollis of Heigham: My Lords, I have listened with interest to the points made during the debate and I believe the entire House is grateful to the noble Lord, Lord Beaumont, for giving us the opportunity to explain the Government's position regarding the provision of help to meet funeral expenses and in particular to explain the changes contained in the amending legislation, the subject of today's debate, the Social Security (Social Fund and Claims and Payments)(Miscellaneous Amendments) Regulations 1997. I suppose I should be even more grateful for the speech of the noble Lord, Lord Mackay, setting out the previous Government's views on an item that we have inherited and which he defended with considerable enthusiasm—an enthusiasm which I would find difficulty in matching, and I shall not seek to do so.
Your Lordships will be aware that the Government inherited policy changes in a number of areas. I do not necessarily defend those changes. However, your Lordships will also know that savings from those policy changes, including the measures within the amending regulations which are the subject of today's debate, were

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built in to the previous Government's expenditure plan. We need to take that into account in considering the issues before us today.
Before I talk about the changes. I should like to refer back to the purpose of Social Fund funeral payments. They are to provide help with funeral expenses where someone has been awarded a qualifying benefit and has good cause for taking responsibility for the costs but has insufficient funds to meet such an expense. Help goes to people on income-related benefits namely, income support, income-based jobseeker's allowance, family credit, housing benefit, council tax benefit or disability working allowance.
As the noble Lord, Lord Mackay, said, the scheme covers the necessary cost of specified items, including burial and cremation charges, which can amount to over £2,000. In addition, the scheme provides £600 to meet the funeral director's charges, a minister's fee or donation and possibly an organist's fee or a floral tribute. The total cost met by the DSS could exceed £3,000 under the regulations.
A number of changes have been made in recent years to the way the scheme works. Taking into account all the changes introduced, planned expenditure for 1997–98 is £40 million, helping an estimated 50,000 people.
The changes to the provisions we are discussing today were first announced on 1st November 1996. The proposed amendments were referred to the Social Security Advisory Committee. The committee conducted a consultation exercise, to which 51 responses were received: its report and recommendations were given to the previous Government, who decided to proceed with the changes as originally planned. The amending regulations came into force on 7th April 1997.
The package of measures within the amending regulations being debated today include the introduction of an additional test to help determine whether someone has good reason for taking responsibility for the funeral expenses. Where there is a surviving partner, they will automatically be regarded as being responsible for the expenses, and help will be available provided the other qualifying conditions—for example, being in receipt of income-related benefit—are met. The same will apply in respect of a child's death, where the parents will be deemed responsible. In all other cases, details of any parent (including absent parents), son or daughter of the deceased will be considered. Where at least one member of the immediate family exists and neither they nor their partner, if they have one, have not been awarded a qualifying benefit, no help will be given.
Where a parent, son or daughter of the deceased is able to meet the costs, it is right that they should do so, rather than the taxpayer. The balance needs to be struck between providing help to anyone in genuine need and the taxpayer being asked to meet the cost when someone else should do so.
The advisory committee was concerned about the degree of questioning at a difficult time for families, but the regulations introduce some provisions to disregard certain categories of immediate family members not
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awarded a qualifying income-related benefit. They include children, full-time students, fully maintained members of a religious order, prisoners or hospital in-patients who had been awarded a qualifying benefit immediately before entering prison or hospital, and where the person was estranged from the deceased prior to death. The point in relation to estrangement is that it was meant to be helpful rather than the reverse. The Government will keep the position under close review and consider changes if it becomes clear that help is not reaching those in genuine need.
The noble Lord, Lord Beaumont, pressed me on what would happen where a family member not on an income-related benefit lives overseas. They would not be eligible. The noble Viscount, Lord Falkland, asked what the situation was for same-sex couples. The survivor of a same-sex partnership may well be eligible for help under the regulations, provided he or she has good reason for taking responsibility. But so would any parent, son or daughter and it would have to be determined who might be regarded as the responsible person in that situation. I accept that it is a sensitive issue and respect the problems that may arise. We will obviously keep the matter under review.
The noble Lord, Lord Beaumont, asked what would happen if no one was available to take responsibility. The local authority takes responsibility if there is no person in the immediate family who is liable to do so.
The other major change within the amending regulations relates not to who in the family may be responsible, but to the removal of the specified provision for funeral director's fees, which was capped at £500. That capped amount included a list of what was allowable for the funeral director's fees, and a number of additional items, including minister's and organist's fees, have also been removed as specified items. However, both have been subsumed within the higher figure of £600 for "other funeral expenses". That gives more flexibility to the family in disposing of the money.
Before April this year, up to £75 was available as a separate provision for additional requirements arising out of the religious faith of the deceased. Monitoring of funeral payment awards showed that that provision was very rarely used. In addition, the Social Security Advisory Committee reported that it had received no comments in the responses to its consultation exercise on the proposal to no longer specify that provision.
In addition to the amount allowed for "other funeral expenses", the necessary cost of specified items and services, including burial or cremation charges, will be met. The person arranging the funeral will still be able to choose between a burial or cremation. In the case of a burial, in some parts of the country—particularly where the local authority charges for a non-resident—that cost alone can be up to £2,300 before the department meets the cost of the funeral director's fees. Where the deceased lived in a remote area of the country, or died away from home, extra help may also be available for the additional transportation costs.
A number of other change measures are included within the amending regulations. Those include allowing people who marry while living in a residential

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care home or a nursing home to be treated as partners and where one dies the other is regarded as being responsible for the funeral expenses—thereby removing the need to consider other family members.
I understand that the detailed, pre-April 1997 provision was thought to be complex, difficult to understand, and led to inconsistent decision-making. Under the current arrangements, the person making the funeral arrangements is free to decide the detail, knowing the level of help available. Of course, it will be important for funeral directors to be aware that the person making the arrangements will be making a claim to the Social Fund for help. Encouragement should be given to consider the level of help available and the services which can be obtained within that amount.
I accept that it is a worrying and upsetting time for people who do not always feel able to "shop around" and obtain a decent price. I asked an official today to check the response of the three organisations of funeral directors to see whether services could be provided within the £600 cap available. Though those organisations accepted that not all funeral directors would be able to meet their costs, most of them should be able to do so. Clearly the department cannot be in the position of underwriting whatever a funeral director sees fit to charge. That would not be reasonable.
The amended provision allows someone to spend some of the available funds on fees or services not directly provided by the funeral director—something that was not possible before due to the specific and tightly-drawn references in the previous regulations.
Finally, we should note that the Social Security Advisory Committee's main recommendation was that there should be
"a new approach to provision for funerals".
That reflected the view that the scheme had become too complex. In doing so, it put forward the suggestion of an insurance-based scheme. The noble Lord, Lord Mackay, referred to the number of people who take that on voluntarily. It is an interesting idea. One of our aims in reviewing social security is to consider how we can foster arrangements that encourage people to make provision for themselves, and which reward, rather than penalise, saving.
To conclude, your Lordships will be aware of your Government's commitment to the electorate to live within the previous administration's expenditure plan and these savings conform to it. Room for manoeuvre is limited, but, as I stated earlier, the provision will be kept under close review and if changes are thought necessary then, of course, I shall come back to the House to do so. I therefore ask the House to accept these regulations.
7.20 p.m.
Lord Beaumont of Whitley: My Lords, I would like to pick up a couple of remarks made from the Conservative Front Bench. It is a little unfair on the citizens' advice bureaux to suggest that they make a practice of finding the hardest cases. The citizens' advice bureaux make a survey of what their branches bring into them and then, of course, they choose the ones which make the best cases, rather like the noble Lord does when
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he is making speeches from the Front Bench. It is what we all do and it is perfectly acceptable. The fact that those extreme cases do exist is evidence.
It is certainly not true of my colleagues, looking around here, and certainly not of myself that we are lap dogs to the present Government Front Bench. I spent the whole of the general election in Liverpool fighting a Labour incumbent in a constituency where I could not fight any Tories because there were not any. In fact, it was difficult enough to find a Tory voter and certainly no Tory workers of any kind were available, so I was fighting a Labour incumbent with Liberal policies, which I may say come from the left-wing of the Labour Party.
I had hoped that I would receive some response from the Minister, and I have. I had hoped that wearing carers' ribbons this week might be equivalent to a Masonic handshake across the Chamber, and although it was not quite that, at least it shows that we both think along the same lines and care in the same kind of way.
One of the reasons why I am not a lap dog of the Government is that I do not like the defence that the Government have to stick to the previous Government's expenditure plans and have to accept their rejection of necessary tax rises. We thought that was wrong at the time, and incidentally, quite unnecessary to get them elected, and we thought it was wrong in principle as well, and we still do.
I welcome the Minister's commitment that they will keep the matter under close review and will make changes if necessary. I conclude by paying tribute, largely to the small independent and really good funeral directors found throughout these islands. I regret that the whole industry appears to have been taken over by large American conglomerates which, from personal experience, I do not regard as giving anything like the same kind of service. But the good funeral director does need support. I am delighted to know from the Minister that most funeral directors think that in most cases they can meet funeral arrangements under—
Baroness Hollis of Heigham: My Lords, perhaps I can clarify what I said. I talked to three trade organisations, if I can use that word. They could not give a guarantee in the case of every funeral director, but they were confident, or reasonably so, that there were some funeral directors in the organisations they represented who could provide such a funeral.
Lord Beaumont of Whitley: I am delighted to hear that. It will involve a certain amount of shopping around, although I know, as the Minister has already accepted, that this is not on the whole an occasion when you want to shop around. I will take what the noble Minister said and examine it in detail. It certainly confirms what the noble Earl, Lord Russell, has been suggesting and also the noble Viscount, who has contributed a very important point to the debate. In those circumstances I beg leave to withdraw the Motion.
Motion, by leave, withdrawn.

Hong Kong
7.24 p.m.
Lord Thomas of Gresford Lord Thomas of Gresford rose to ask Her Majesty's Government what steps they are taking to support the rights and freedoms of the people of Hong Kong and to maintain the common law system in the administration of justice in Hong Kong courts, in accordance with the autonomy accorded to Hong Kong in the Joint Declaration.
The noble Lord said: My Lords, it is indeed a privilege to raise the question of the unique territory of Hong Kong in the final days of the British administration and in the presence of many of those who have shown such a long and dedicated commitment to its people.
The bequest of the British administration of Hong Kong to the People's Republic of China is a thriving economy, the eighth largest trading entity in goods in the world, producing the equivalent of 25 per cent. of China's gross domestic product. The GDP per head of population is up to 207,000 Hong Kong dollars, or £16,640, for the current year. Growth rates have been at an annual average of 5.9 per cent. and are estimated for this year at 5.5 per cent. The reserves stand in excess of the equivalent of £13 billion. We have provided the framework of administration and law, within which the natural genius of the Chinese people for business and for hard work has thrived. Commercial obligations have been entered into and enforced. Law and order have been maintained. Corruption has been checked. Human rights have been respected. These are the conditions within which prosperity and freedom can flourish and be enjoyed. Historically, we have also in Hong Kong offered a haven to those escaping repression and injustice, and many of them and their descendants we leave behind.
With this record, 30th June is a moment for farewell but not for regret. July 1st is a moment for pride. We are proud of our contribution. The British traditions of fairness and justice have not repressed or exploited the Chinese people or in some way distorted their philosophy, as is sometimes claimed. By contrast, representing as they do universal truths and freedoms, British values, liberal values, have been a liberating force.
Our responsibilities for Hong Kong are not over. We have to maintain the Sino-British Joint Declaration of 1984. A clear breach of that declaration was the creation of a "provisional legislature" in the territory. The previous Foreign Secretary, Mr. Rifkind, described it as reprehensible and unjustifiable. Representations were made by the previous government to the United Nations Human Rights Committee, and in December last Mr. Rifkind announced that he had sought Chinese co-operation for an independent settlement of the question by the International Court of Justice. But nothing has happened. The first act promised by China after midnight on 30th June, no doubt in the red glare of the rockets, will be to swear in that unconstitutional provisional legislature.
The noble Lord, Lord Dubs, speaking for the then Labour Opposition a year ago, said that it was beyond doubt that China was breaking the Joint Declaration by setting up the provisional council. His view has been confirmed by the International Commission of Jurists, the United Nations Human Rights Commission, the US Senate and, recently, the Australian Parliament's Committee on Foreign Affairs. The noble Lord, Lord Dubs, referred to a commitment by Mr. Major, the Prime Minister at that time:
"If there were to be any suggestion of a breach of the Joint Declaration we would have a duty to pursue every legal and other avenue available to us".
Now that duty falls upon a Labour Government.
The current Legislative Council, as constituted by the 1995 democratic elections in Hong Kong, is in accordance with the Joint Declaration and the Basic Law. On the other hand, the Provisional Legislative Council, set up on 21st December last year by the selection of some 60 members by 400 persons appointed, in effect, by the Government of China, has no basis in law. Constitutionally it does not exist. Any ordinances it purports to pass will be illegal. If you look at its make-up you will see that the pro-democracy parties in Hong Kong, who represent 52 per cent. of the current LegCo, would now hold only 8.3 per cent. of the membership of this appointed body.
Why is it illegal? It is illegal because the Joint Declaration provided in its first annex that the legislature of the Hong Kong Special Administrative Region shall be constituted by elections. It is illegal because the Basic Law itself, the constitution passed and approved by China, provides in Article 68 that the Legislative Council of the Hong Kong Special Administrative Region shall be constituted by election, and Annex II of the Basic Law sets out how in its first term the council shall be formed in accordance with the decision of the National People's Congress.
That congress did make a decision, in 1990. It provided that the first council, which would last for two years, should be composed of 60 members, with 20 members returned by geographical constituencies through direct election, 10 members by an election committee and 30 members by functional constituencies. That has not been followed through. We owe it to the people of Hong Kong, the people whom Mr. Major declared would never walk alone, to demand free and fair elections, in accordance with the Basic Law and in fulfilment of the obligations of the Joint Declaration. And let no party in Hong Kong be proscribed from standing in those elections.
As the Harvard sinologist, Mr. Roderick McFarquhar, has pointed out, the notion that whispering to China regarding breaches of the Joint Declaration will have more effect than talking tough in public is a total chimera. He rightly points out that the present Chinese leadership is afraid of international humiliation before its own people. He urges that, to be effective, pressure on China must be firm, public and continual.
I urge upon this new Government that they fulfil the promises they made in opposition. If China refuses to respond to the invitation to take the matter to the

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International Court of Justice, then let the issue of the provisional legislature be referred immediately to that court for an "advisory opinion". That is what happened in 1971 with the South African occupation of Namibia. The consent of the Chinese Government would not be required. All that is needed is that the United Nations votes to refer the issue to that court. China, as a party to the dispute, though a permanent member of the Security Council, could not exercise a veto. An advisory opinion, although not a binding judgment, defines international law. It would marshall international censure. It is wholly unsatisfactory that we should stand by while the Democratic Party in Hong Kong is forced, as it did this week, to issue proceedings for an injunction in the courts of Hong Kong to challenge the legitimacy of the provisional legislature. Not only are the individual members of that party exposed, but the independence of the new Final Court of Appeal will be under enormous and immediate pressure.
I turn to human rights. A year ago, Mr. Hanley, then a Minister in the Foreign and Commonwealth Office, said that the Government were continuing to press China to ratify a range of international human rights instruments. The President of the International Commission of Jurists, the honourable Justice Michael Kirby, has since called for Britain to join the 92 other countries which signed the first optional protocol of the International Covenant of Civil and Political Rights so that individual citizens can appeal directly to the United Nations Human Rights Committee which monitors compliance with the guarantees of freedom of expression and of association. As Dr. Robin Fitzsimmons pointed out in an article in the Asian Wall Street Journal on Tuesday last:
"Dissidents who demonstrate 'illegally' or who are charged with the new crime of 'subversion' against the PRC, could appeal to the committee in Geneva and gain an international audience".
In the Hong Kong courts, the common law system preserved by the Joint Declaration for the next 50 years and underpinning the commercial success of the territory is under an unexpected threat. It is the use of the English language and its place in those courts. If international confidence is to be retained, it is essential that Hong Kong's legal system functions in accordance with well tried and tested procedures. The essence of the common law around the world is that precedent will prevail. The precedents of the common law are in the English language. It is unrealistic to suppose that they can ever be translated into the Chinese language. It is obvious that difficulties may arise in the interpretation of precedents in a language which is not the mother tongue for the majority of the population.
In the criminal courts, where the liberty of the subject is at stake, there are compelling reasons why the language used should be Chinese. It is the language of nearly all the defendants and most jurors. But in the civil and commercial courts it is essential that a policy of bilingualism be introduced. That is well recognised by the elected Legislative Council, the Bar and the Law Society of Hong Kong. The outgoing British administration has been hesitant, afraid perhaps to
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challenge what is perceived to be possible opposition by China and ready in an unthinking way to promote the use of Chinese in all the courts.
The final LegCo meeting on this special subject has resolved to request the Chief Secretary to set up a high level body to monitor and co-ordinate the implementation of a policy of true biligualism at a speed compatible with Hong Kong's paramount interests. The proposal is that the body should be under the leadership of the Chief Secretary, with representatives of the Bar, the Law Society, the judiciary, the universities, the Attorney-General's chambers and consumers of legal services. I urge the Government to give their full support to this proposal in the few days left when executive action can be taken.
I have no doubt that the people of Hong Kong will welcome reassurances from the new Labour Administration that they are determined to uphold their interests and their freedoms. I look forward to hearing the Minister's response in that regard. The best way in which the interests of the new Government can be signalled is by the attendance of the Prime Minister, Mr. Blair, at the handover ceremonies on 30th June next. But he must not be there to preside over the swearing in of an unconstitutional legislative council. He is entitled to expect, before he signals his intention of going, that the People's Republic of China will announce a timetable for the implementation of the requirements of the Basic Law for democratic elections and for the creation of a constitutional legislative council.
I am grateful to your Lordships for the time and attention you have given to this Question.
7.37 p.m.
Lord Ponsonby of Shulbrede: My Lords, I thank the noble Lord, Lord Thomas of Gresford, for providing this opportunity for debate. It is an important debate and I look forward to hearing other noble Lords' contributions.
There are only 18 days until the transfer of sovereignty and this Government took office only some 40 days ago. Clearly, the most immediate responsibility of the Government is to ensure that there is a successful transition. But I am sure that in this debate we can and will look further than this immediate responsibility.
For myself, there are two groups of issues which are in a tension with each other. The first is that Britain should work to use Hong Kong as a bridge into China to further its business interests in trade, manufacturing and mineral exploitation. The second group of issues is that we should continue to draw to the world's attention human rights abuses within China and how those rights are to be protected in Hong Kong once the transition is complete. I shall first say a few words about the business opportunities in China.
I have some little experience of that as I worked on oil exploration rigs in northern China in the early 1980s. The lesson I learnt was that when one is investing in China there is infinite flexibility in helping one make the investment. Unfortunately, the exploration programme with which I was associated was

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unsuccessful, so we never found out whether that Chinese flexibility extended to recovering the fruits of our investment. Nevertheless, that initial encouragement was certainly there.
I should like to give two very minor examples of the flexibility which I encountered. First, we had a couple of small strikes on the rig on which I worked. By "strikes", I mean labour strikes and not oil strikes. The Chinese crews refused to work. We found that we resolved those strikes very amicably with the help of the Chinese authorities. They were speedily and practically resolved and, as far as I am aware, there were no repercussions on the crews concerned.
The second example of flexibility is that on my days off I travelled fairly extensively within China. At the time that was quite illegal and I was told not to do it. Nevertheless, I thought that I knew better and off I went. As I travelled I found that I was accompanied by a series of English-speaking students who attached themselves to me and ensured that I came to no harm. No doubt these students informed others that I had come to no harm and the whole experience was completely unthreatening.
These two small examples showed me that when one is associated with a project which is benefiting China, flexibility is the order of the day. There can be no doubt that there are huge opportunities available for Britain to work through Hong Kong.
The second group of issues, as I have said, relates to the question of human rights abuses within China. Last night I spent an idle couple of hours searching the Internet for information about Hong Kong and China. I have to report to your Lordships that, apart from the immaculately presented website of the Foreign Office, there is a huge amount of information about human rights abuses in China and particularly concern emanating from Hong Kong about how that issue will affect them.
I shall raise just one of these small issues, which has also been brought to my attention by Amnesty International—that is the issue of Vietnamese migrants who, I believe, have been refused refugee status. Many of them are petty criminals and stateless. My understanding is that China does not want to inherit that problem. It is also my understanding that the Hong Kong authorities have promised that the refugee camps, or the camps in which the migrants are kept, will be cleared by 1st July. However, that is unlikely to be the case, or so I am informed. I shall be grateful if my noble friend the Minister can tell me what the fate of those people will be.
In general, I am sure that my noble friend the Minister will say that the rule of law is the ultimate protection for the people of Hong Kong and that China has agreed in the Joint Declaration that its version of a socialist system shall not be imposed on Hong Kong. However, I believe that it is incumbent on the Government to do all they can to ensure that all the provisions of the Joint Declaration are met in full and that proper and verifiable reports are submitted to the UN treaty monitoring body.
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But I go further than that. Quite rightly, Britain will be fully represented in Hong Kong after the transition of sovereignty. The FCO mission statement, about which we have heard so much, must become a tangible working document daily guiding us in developing our relationship with China. We should never shy away from raising our concerns about human rights, while at the same time trying to capitalise on the business opportunities that are available to us.
The unique experiment of managing two systems within one country will be an extraordinary challenge to China. The way in which China handles that challenge will be critical for the future prosperity of Hong Kong and an important test of China's own commitment to human rights. I wish them well.
7.44 p.m.
Lord Marlesford: My Lords, this debate represents the continuing interest in Hong Kong which Parliament has taken and will, I believe, continue to take. To begin with, I declare that for a number of years I have been an adviser to John Swire and Sons, who have considerable interests in Hong Kong.
For at least the next 50 years the future of the people of Hong Kong will, by treaty enforceable if necessary, as the noble Lord pointed out, in the international courts, be in the hands of the Government and Legislative Council of Hong Kong. Their individual freedoms and rights will be interpreted and adjudicated by the Hong Kong courts. There is in place, I believe, the means to ensure the continuing prosperity and stability of Hong Kong.
The only concerns are therefore on how it will work out in practice. I will confine myself to two aspects of this: first, the coming handover at the end of the month; secondly, the style of government which will follow.
First, the handover. I believe that we should all be delighted that China's top leadership—that is, both Jiang Zemin and Li Peng—will be attending and that our Prime Minister, together with the Foreign Secretary, will he representing Britain, along with the Prince of Wales, who will represent the British Crown. It is also appropriate that among the representatives of other foreign governments will be the American Secretary of State, Mrs. Madeleine Albright.
There will also be in Hong Kong no fewer than 8,400 journalists, all of whom will be as ready as anyone fully to enjoy the festivities (and of course I know a thing or two about how journalists can enjoy themselves) but all of whose editors will be wanting, indeed demanding, a story. Thus in the remaining two weeks before, and for an unquantifiable period after the handover, there will be in Hong Kong a large number of highly intelligent people seeking symbols, signals or tokens to interpret—and, if necessary for dramatic effect, to misinterpret—events. It may not be easy for the Chinese leadership, who have what they at least would still regard as the benefit of a compliant and supportive media, to understand this.
I believe that the position of Hong Kong is fundamentally very strong but temporarily and superficially it could prove fragile. There is one point,

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increasingly referred to in the press, which does worry me. That is the arrangements for the arrival of the Chinese military forces. Under the Basic Law they are there for the defence of Hong Kong. There is provision in Article 14 of the Basic Law for the Chinese military to be used in aid to the civil power to restore order, but only at the request of the Chief Executive, as has always been the case with the Governor under British administration.
In my view it is inconceivable that such intervention would be necessary under any circumstances which can be foreseen at present. Hong Kong, which is one of the best ordered cities in the world, has an extremely well trained 30,000 strong police force. The necessary advance party of Chinese military has already arrived. I regret, therefore, that it appears to be thought necessary that there should be a large scale "march in" of the People's Liberation Army at midnight on 30th June, complete with a press stand to cover their arrival. It would be still worse if these forces were to be accompanied by armoured vehicles. Frankly, that cannot be the TV image which China, Britain or Hong Kong would wish to see flashed around the world.
I now turn to the style of government. It is clear that the new Chief Executive, Mr. C. H. Tung, has the complete confidence of the leadership in Peking and that he has unfettered access to them. This is a particularly important means of guaranteeing the independence of Hong Kong under the one country-two systems formula.
China will also have two senior representatives based in Hong Kong. One will be Ambassador Ma Yuzhen, formerly Ambassador in London, who will be the Commissioner of the Ministry of Foreign Affairs Liaison Office with a staff of some 200. The other will be the Director of the New China News Agency, whose present staff of over 1,000 is expected to be considerably reduced. The present head of NCNA, Mr. Chou Nan, is not expected to remain and he may be succeeded by Ambassador Jian Enzhou, who also, until earlier this year, was China's Ambassador in London. Britain will have a special locus for the next three years through the Joint Liaison Group.
Although there will have to be links at working bureaucratic level between Chinese authorities and the Hong Kong Government, there should be no need whatsoever for there to be any Chinese cadre pressure to be applied to the Chief Executive or members of his office. But we would be naive indeed not to assume that private, commercial and political interests, perhaps even some with allegiance to the Chinese Ministry of State Security, will not try very hard to worm their way into the heart of the new Hong Kong Government. I am confident that Mr. Tung will successfully resist this, provided he is aware of the danger.
One of Hong Kong's great assets is the calibre and integrity of its Civil Service. That integrity owes much to the noble Lord, Lord MacLehose, who in the 1970s took resolute and effective action to root out corruption in the Hong Kong police and some parts of the administration. He also set up the Independent Commission against Corruption, which is a formidable
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enemy of wrongdoers. Conflicts between personal interest and public duty are most rigorously excluded from the Hong Kong Civil Service.
One of the few risks which I would see to the future of Hong Kong, especially as the world's third most important financial centre (and what a prize it is for China, as a third-world country, to be acquiring this) would be the introduction of the corrupt practices which have so plagued China in recent years. It is crucial that Hong Kong, and especially the Hong Kong government, is defended against this. From this it follows that there must be the closest links and mutual confidence between the Chief Executive and the Hong Kong Civil Service.
Hong Kong is extremely lucky to have as Chief Secretary and head of its Civil Service someone of the talent and dedication of Anson Chan. And although, during these twilight weeks when she has been working for the Hong Kong government while it has been under British administration, it may have been difficult to forge the close partnership between Mr. Tung and Mrs. Chan which will be crucial, I hope it can be established from the beginning of next month.
Then there is the role of the Legislative Council. I agree that it is a pity that the "through train" did not apply to all members of the elected council. However, we should at least be glad that 33 of them are members of the new, nominated LegCo.
The final safeguard for Hong Kong's people is the judiciary. Everyone is delighted at the appointment of Mr. Andrew Li as the new Chief Justice. A member of one of Hong Kong's most distinguished families and a former member of the Governor's Executive Council, his reputation for impartiality is equalled only by his proved ability.
The perpetuation of the independence of the judiciary, based on the constitutional position in the United Kingdom, was one of the great achievements of the 1983–84 negotiations for the future of Hong Kong. That the resulting agreement was so good is a great tribute to my noble friends Lady Thatcher and Lord Howe, with their insistence that to be recommended to the British House of Commons any agreement negotiated in Peking must first be acceptable to the people of Hong Kong.
Finally, I would like to say a word of tribute to the last Governor of Hong Kong. I believe history will judge that Mr. Patten has served the people of Hong Kong, and thus the interests of China, well. He has ensured that after Westminster loses its 150 year-old role as the ultimate guardian of Hong Kong's rights and freedoms, the people of Hong Kong are in a much stronger position to speak for themselves.
I returned from Hong Kong yesterday. On Tuesday, an ordinary lower middle class Chinese man said to me, "It will all be OK. The eyes of the world will be on Hong Kong. China will do nothing bad to us." To me that is the real epitaph on Mr. Patten.
7.53 p.m.
Baroness Dunn: My Lords, I am grateful to the noble Lord, Lord Thomas of Gresford, for the opportunity to contribute in this House my brief thoughts on Hong Kong for the last time before it ceases to be a

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British territory. As the noble Lord, Lord Marlesford, said, the means and the safeguards are in place to ensure that Hong Kong's rights and freedoms, and the rule of law, will continue. However, the question that goes on nagging so many commentators, particularly in the western world, is: will it all fall apart once the British have gone?
Normal pressure group activities in Hong Kong, an everyday occurrence in any civilised society, are reported as widespread discontent. Innocent comments by Hong Kong's political leaders are scrutinised for nuances to support the thesis that they are China's mouthpieces. The media play up proposals to modify the public security ordinances, but they play down the changes to those proposals resulting from public consultations. They tell us of friction between senior civil servants and the new Chief Executive, but they rarely report civil servants' repeated public pledges of loyalty and support. Far-fetched and irresponsible conclusions are drawn with little or no basis.
Those pessimistic pronouncements remind me of the character in Anthony Trollope who had predicted evil consequences and who then did his best to bring about verification of his own prophecies. Your Lordships will understand how deeply unsettling it is for Hong Kong's people to read such downbeat predictions about their future in the overseas media.
The reality is very different. Hong Kong's stock and property markets are at an all-time high. Hong Kong people who have emigrated to Canada and elsewhere are returning in droves. Hong Kong's economy continues to be the envy of the western world, growing at over 5 per cent. per annum in real terms. The auspicious list goes on and on.
Of course, it would be naéve to suggest that everything will be smooth sailing; nor is it realistic to think that the Hong Kong of tomorrow will be exactly like the Hong Kong of today. The new Chief Executive and his team of advisers will have a crucial role to play in providing leadership to Hong Kong and advice to China. They will have to establish their credibility with the public by clearly demonstrating that they will exercise a high degree of autonomy within the framework of the Basic Law fearlessly and in the best interests of Hong Kong. They will need to establish a close working relationship with Hong Kong's well respected Civil Service, the morale of which has understandably taken a knock in recent months. The Civil Service has a proud record of professionalism and honesty. It is a pillar of Hong Kong's success. It has greatly contributed to Hong Kong's stability. Its members need to be assured by the incoming administration that their service under British administration will not be held against them, that they are trusted, that their professional judgment will be considered seriously and that their integrity will be protected. Those tasks are difficult enough without constant sniping by the media and fireside critics who have no responsibility for the fate of the 6 million people of Hong Kong.
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My essential point is this: for the very first time in the history of this remarkable community, Hong Kong people have the opportunity to assume the role of governing Hong Kong's internal affairs. This is a turning point. Hong Kong's people will need time to develop their own style. They will need time for the new systems to bed down. They will need time to develop a relationship of mutual trust and respect with their new sovereign.
Britain has done much to put in place arrangements to enable Hong Kong's way of life to continue. The goodwill and support of this House is always a source of comfort and assurance. But the time has come for Hong Kong people to assume responsibility for their own affairs, and they should be encouraged to do so. They should be encouraged to resolve differences where they exist in their own way, to seek consensus wherever they can, and to seek unity in purpose and vision.
What has been built in Hong Kong from the magic mix of British administration and Chinese entrepreneurial energy and flair is a unique society. When the British flag comes down at midnight on 30th June Britain can feel justly proud that it leaves Hong Kong in good shape with a self-confident community that assumes responsibility for its internal self-government. There is no doubt in my mind that Hong Kong people will rise to this challenge with courage. Let us wish them well and give them our blessing, and let us root for their success.
8.1 p.m.
Lord Monkswell: My Lords, this debate gives me the opportunity to thank the Government and people of Hong Kong for inviting me and my wife to visit that jewel of the Far East. I do so most warmly. My wife and I spent five days in Hong Kong just after Easter of this year. Both of us found it enjoyable, interesting and very rewarding. We learned a lot. I was particularly impressed by the Hong Kong civil servants with whom we had meetings. Apart from their warmth and friendliness, I was impressed by their obvious ability and professionalism. I also had meetings with business leaders and was impressed by their entrepreneurial zeal and investment plans for the future—not only investment in Hong Kong but also in mainland China. I also met British diplomats and the General Officer commanding the Hong Kong garrison. I was impressed by their professionalism and frankness in answering my questions.
This debate is about human rights. The opening speaker dealt mainly with classical human rights, that is, the right of freedom under the law, free expression, democracy and so on. I am surprised to learn that the English common law can operate only in English. I would have thought that the principles of English common law would be susceptible to translation into every language in the world. I should like to strike a slightly different note and emphasise the basic rights of human existence: the right to decent housing and the right to the means of sustaining life.
During my visit I was fascinated to learn that during the late 1940s and early 1950s the population of Hong Kong rose from about 600,000 to 3 million in the space

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of 18 months to two years, and that as a result of a serious fire in a refugee or resettlement camp a major programme of public housing was introduced. It is of interest to reflect that the proportion of the population of Hong Kong then living in public housing was probably higher than in our major conurbations of Glasgow, Manchester, Birmingham and London.
Two particular aspects struck me about the Hong Kong situation. One was the apparent direction of Hong Kong Government policy to withdraw from public housing. The other was the apparent lack of adequate pension provision for the vast majority of the Hong Kong population. In this country over the past 20 years we have had experience in both areas. The Government in this country have reduced investment in public housing and encouraged the selling off of public housing assets under the right to buy policy. The same Government have also allowed the value of old age pensions to be eroded over the period. One knows that the result of those policies has been an increase in homelessness, due mainly to repossessions because of unforeseen repair bills, massive reductions in income because of loss of jobs and matters of that kind, and poverty in old age. Of course, it is not right for us even in this august Chamber, to lecture the people of Hong Kong on how to run their affairs. However, I hope that they will learn from our experiences in those two areas of public policy and thus try to escape some of the pitfalls into which we have fallen.
I hope that the new Government will build a constructive and positive relationship with the Government and people of China which in the long run will enable us to have influence with them and assist the people of Hong Kong to maintain close links with the rest of the world and also integrate with mainland China.
It is apposite in this House to discuss two elements of the historical perspective. First, I refer to the remarks of a late uncle of mine who took a great interest in Chinese affairs. When I asked his view on what had happened in Tiananmen Square his response was that the Chinese leadership had grown up in the 1920s, 1930s and 1940s when the whole of China was a seething maelstrom of disorder. They were terrified of that disorder and the disintegration of the Chinese nation, and the whole of their political life had been shaped by it. That was a salutary message to me. It was not an excuse for what had happened but an explanation of it. Secondly, I believe that recently a film has been made based on what is generically known as the Chinese opium wars. I may not be a very good student of history, but I was amazed to discover that campaigns were mounted by British armed forces to protect capitalist entrepreneurs who were selling opium to the Chinese people. If one thinks of that in the modern context one is absolutely horrified. Therefore, in a historical context, compared with that portrayed over the past 20 to 50 years, Britain's involvement in Hong Kong is not a completely rosy picture.
I hope that as the new Government ascend through their learning curve they will also recognise the lessons of history and relate to the Government of China on the basis of mutual understanding not only of the historical perceptions of our two nations but the possibility of
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peaceful progress and development with Hong Kong, not just as a jewel sitting in isolation in the Far East but as a gateway for the rest of the world into China and a gateway for the whole of China to the rest of world.
8.10 p.m.
Lord Howe of Aberavon: My Lords, it is a great pleasure to be able to take part in what has been rightly described as the last debate of this kind on Hong Kong under British jurisdiction to take place in this House. I hope that the House, and, in particular, the Minister will forgive me if I have to depart before the conclusion of the debate to catch up with a long deferred engagement. I am privileged also to follow the noble Lord, Lord Monkswell, who drew our attention to the lessons of history with regard to Hong Kong and China. I recollect one particularly vivid fact. It is that my opposite number Wu Xuequian, the Foreign Minister with whom I negotiated the Joint Declaration, was separated from his wife and sent into the countryside to work on the land for several years during the Cultural Revolution. That, too, is part of the background to which the noble Lord referred.
I join the noble Lord, Lord Thomas of Gresford, to whom we are grateful, in describing Hong Kong's achievements as those of an historically unique society, and as a magic mix, as the noble Baroness, Lady Dunn, said, between two distinct and ancient cultures, with tremendous achievements. It was a great privilege for me to play any part in helping to negotiate, with a marvellous team of governors and ambassadors, starting with the noble Lord, Lord MacLehose, and going through governors Youde and Wilson and ambassadors Cradock, Evans and McLaren, the production of the Joint Declaration which the noble Baroness, Lady Thatcher, signed in December 1984 on behalf of us all.
If I were required to identify one guiding principle in that negotiation I hope I shall not be counted egocentric when I identify a metaphor of my own when I said that it was as though China and Britain were engaged in running a relay race together in which we had to hand over at the critical point not a baton, but something of enormous value—a relay race run with a Ming vase. Within five years the agreement that we had hammered out had proved astonishingly successful as a means of withstanding the buffeting of the tragic events in Tiananmen Square, proving itself to be an agreement for bad times as well as for good, and remaining the foundation for subsequent agreements.
There was the most remarkable agreement to be laid upon that within 12 months of Tiananmen Square. It was arrived at between my noble friend Lord Hurd and his then opposite number Qian Guichen, and embodied in the Basic Law for the progressive extension of democracy in the Legislative Council of Hong Kong, as the noble Lord said, of 60: 20 in 1995 to be elected; 24 in 1999 and 50 per cent. in 2003.
It is remarkable that the relationship proved so strong that that could be agreed between the two governments within less than a year of Tiananmen Square. So was constructed the through train (a continuously evolving

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LegCo, designed to carry the Ming vase over the historic frontier of 1997). I am not now proposing to review the events since then, still less to apportion responsibility for any mishaps along the way, but to come straight to the present position: it must be acknowledged that the position as it is today is not as it was foreseen by Wu Xuequian and myself in 1984.
We did not visualise the competing existence of two Legislative Councils, both in due course due to disappear. We did not visualise a situation in which the last British appointed governor should have little, if any, contact with Chinese officialdom for probably four years—a situation in which the chief executive designate and the outgoing governor are barely in communication with each other. The latest miracle of that unique society is that it has been so little disturbed by those features that it remains optimistic about its own future, as the noble Baroness, Lady Dunn, described.
How has that been achieved? I think it is because most, if not all, alas, of the key institutions and features that we needed are firmly in place: the economy, the separate currency, the budgetary system, and the financial institutions are prosperous and confident. The laws of course require work still to be done to them, but the laws, the administration (local and central) the legal system, the judges, including the newly appointed Chief Justice, Mr. Andrew Li, to whose appointment we all pay tribute as an outstanding one, are there. Alongside all those institutions there are the people who matter: a Chief Secretary of distinction and integrity, Anson Chan, and all her senior colleagues. Again, I endorse the tribute paid by the noble Baroness, Lady Dunn, to the quality and dedication of the civil service.
Last but not least, Hong Kong has enjoyed the benefit of two successive chiefs of high ability, intelligence, sense of duty and integrity, one of them being my most talented and experienced colleague in British politics. I spoke at the last meeting of his, alas, unsuccessful election campaign in 1992. He has been there since his appointment in that year. He is to be followed by one of Hong Kong's most distinguished world-respected citizens with, as my noble friend Lord Marlesford pointed out. real authority and influence in Beijing—Mr. Tung Chee Hwa.
Hong Kong must count itself fortunate. Any democratic society would surely be grateful to have had available the service of two such distinguished people. My only sadness is that their service has not been concurrent—literally running alongside each other: running the relay race together and in step—but very largely consecutive; and, alas, not as fellow drivers of the through train with the Ming vase safely aboard.
Yet I retain my optimism about the future of Hong Kong. What are the features that justify that that will secure her continuing success? The first is the response of the People's Republic of China to the extraordinary challenge identified by the noble Lord, Lord Ponsonby: the manifest determination of Chinese and Hong Kong leaders to achieve, in self interest and for the sake of self-esteem, the success that they want to achieve. The second is the appointments that have been made of the Chief Executive, the Chief Justice, and the rest. The
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third is the sustained determination of the Hong Kong people themselves, not deterred by the past 40 years of political uncertainty. Nor will they be deterred in the days and months of possible uncertainty ahead.
I endorse strongly what the noble Baroness, Lady Dunn, said about the part that can be played by the world's media in commenting upon these matters. Of course they are entitled to comment and report freely, but responsibly and not in such a way as to create prophecies which will be self-fulfilling.
What more is needed beyond that for success? Most important of all, Chinese understanding, to the fullest extent, that Hong Kong's success depends as much on the continuity of political and social institutions, rights and obligations, as on the economic factors of Hong Kong. Indeed, they are probably more important than the economic factors in the last resort.
In that context—here I join hands with the noble Lord, Lord Thomas of Gresford—what is needed is the speedy implementation of the Chinese pledge that the provisional Legislative Council will soon abolish itself, and proceed, as swiftly as possible, to the re-election of a Legislation Council, broadly on the basis agreed with my noble friend Lord Hurd, and that, in accordance with Article 26 of the Basic Law, the rights of all Hong Kong residents to seek election will be safely guarded. That is the key question. Will all those who were formerly travelling as elected members on the earlier edition of the through train be free to resume that role in the elections that I hope will soon take place?
What role, finally, for Her Majesty's Government? In that context I congratulate Mr. Robin Cook, on his arrival at the Foreign and Commonwealth Office—not an easy perch but a perch with huge challenges. I congratulate the noble Baroness, Lady Symons, on her appearance at the Dispatch Box, in this role on his behalf. I wish them both very well in a fascinating task.
I recognise that some features of the ceremonies that will take place at the end of the month will be less well integrated than some of us would have hoped. Ex-President de Klerk and President Mandela will probably go down in history as having managed the transition a little better at that ceremonial moment. It is important to keep the ceremonial differences to the minimum. It is good news, as the noble Lord pointed out, that both countries will be represented by their senior leaders, alongside each other at the ceremonies. It is important for the sake of Sino-British relations, for the sake of Hong Kong itself and, above all, for the people of Hong Kong, that Her Majesty's Government should now re-establish the continuity and confidence in relations between the two governments. There are many reasons to regret the change of government which took place in this country on 1st May, but here at least may be one area where the change of the political cast can provide an opportunity of help in the future towards restoration as quickly as possible of that confidence, which is so important.
I wish the noble Baroness and her colleagues well in this task. As one who cares passionately about the future of Hong Kong, and about Sino-British relations only second to that, I also wish the people of Hong Kong everything they wish for themselves in the years ahead.
8.20 p.m.
Lord MacLehose of Beoch: My Lords, there is little for me to say. Two of the people I respect most in the creation of the modern Hong Kong are the noble Baroness, Lady Dunn, and the noble and learned Lord, Lord Howe of Aberavon. He negotiated the Declaration, which was a fantastic diplomatic achievement. He was helped by the late Sir Edward Youde and the noble Lord, Lord Wilson of Tillyorn. I am sorry that the noble Lord is not here tonight; he is looking after the electricity supply in the Orkneys. The noble Baroness, Lady Dunn, was a senior member of the Executive Council and took a leading part in the negotiations, not directly with the Chinese but in advice to the government.
I feel humble in following those two contributors to the debate and I am greatly relieved to hear their optimism. That optimism is clearly based on the same features, which encourages me about the future. Much as I love Hong Kong, I realise the anxiety of many people and wonder what we can do about it. I have a horrible feeling that, unless we are very careful, what we shall do is to start this great new experiment with a major row about the Provisional Legislative Council. The noble Lord, Lord Thomas, seemed to speak with a strong brief on the subject.
The last time that the noble Lord, Lord Wilson of Tillyorn, spoke in this House he begged the Government to face realities in Hong Kong. One of the realities to which he referred was the fact that the provisional legislature would come about. There was no way it could be stopped. I was very pleased that the noble and learned Lord, Lord Howe, explained that the provisional legislature was not something to be frightened of. It consists of some extremely good people who were members of the previous legislature. Its role is to extinguish itself by passing legislation for an elected successor. That is not something to have an enormous row about. I cannot follow the legalities, but it does not seem to me to be anything like as bad as the media and some people in Hong Kong make out.
Anyone who has much to do with Hong Kong is inevitably asked what will happen and will it all fall to pieces. The noble Baroness, Lady Dunn, answered that question in her own way. My way is to say to anyone who asks, "Go to Hong Kong and look around you. Do you really believe that people who can achieve a city of that kind are incapable of managing their affairs and achieving a working relationship with China?". After all, the odds are very much in their favour. Their links with China—commercial, financial and of blood—are close and extensive. Yes, the residue of emigration from China and memories of what has happened in China worry people; they are bound to. However, the population of Hong Kong will find it easier to adjust to a new relationship with China than appears to us here.
It is a unique place in the world and I very much hope that we will not lecture it about what happens there. Our way of doing things is so very different from that of the East Asians, although of course we have a continuing responsibility to ensure that the terms of the Joint Declaration are implemented. We will have to do that
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firmly if necessary, but, it is to be hoped, discreetly with no return to the mega-diplomacy which occasionally broke the surface in recent years.
Subject to that, prospects in Hong Kong are very good. The economy is right, the relationship of the SAR with China—sadly, not of the British Government with China—can be good and is good. The same applies to relationships with individual members of the community in Hong Kong. So long as the economy—an important aspect of Hong Kong's future—holds up and is linked to the level of world trade, the prospects for these delightful people are very bright. I am extremely glad to think that people such as the noble Baroness, Lady Dunn, will continue to play a major part there in one way or another.
Finally, I wish to emphasise the extreme importance of the quality of the public services in Hong Kong. I have served in six different countries and, as far as I am concerned, their quality has not been equalled anywhere. There has been a great deal of anxiety about a through-train of the legislature. I believe that what matters most is a through-train of the public services and, happily, I understand that there have been few defections. Most people are staying on with a degree of excitement to work for the SAR in the same way as they worked for the colony of Hong Kong. They are apolitical and highly professional, as was said by the noble Lord, Lord Monkswell. Happily, they are clean in their dealings with the public. So long as they and their confidence are maintained, the future of Hong Kong will continue to be bright.
8.30 p.m.
Lord Willoughby de Broke: My Lords, like other noble Lords this evening, I am grateful to the noble Lord, Lord Thomas of Gresford, for introducing this debate at this timely moment. Like the noble Lord, Lord MacLehose, who has just spoken, I find that there is very little for me to say. I believe that my speech will be reduced to a number of questions to the Minister.
First, is the Minister able to confirm that the right honourable gentleman the Prime Minister will attend the handover ceremony but that he will follow the lead given by the American Secretary of State, and not attend the swearing-in ceremony and thus legitimise the provisional legislative council?
On that subject, I wonder whether the Government have had any contact with our European Union partners to see what is their attitude to that swearing-in ceremony. Will they follow our lead on that? I should be particularly interested to know what is the attitude of the French Government to that because the President of France, M. Chirac, has only just returned to the upright position following a visit to Peking in the pursuit of Airbus orders.
The question of the provisional legislative council has been covered very well already by the noble Lord, Lord Thomas. I support him on that. I ask the Minister whether the Government believe that the Joint Declaration has been breached in any way. If so, will they state that very clearly, both in public and in private, to China?

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I hope also that the Minister will take the opportunity this evening to confirm that the Government will press for early elections to a properly-elected legislative council, earlier rather than later, in the one-year period which is presently envisaged.
The Question this evening relates to how we can best protect Hong Kong after the hand-over. I should like to touch on that very briefly. When Hong Kong is talked about in certain quarters, there is a tendency to simply shrug our shoulders and say, "Well, we cannot do anything about it. China will do as it wishes". I do not think that that is right. If we accept that, it becomes a self-fulfilling prophecy. There is action that we can take, if necessary, to ensure that Hong Kong receives the deal to which we put our name on its behalf.
If China does not wish the Hong Kong question to be internationalised, that is a very good reason for internationalising it if the case arises. We should not be frightened of doing that. In March of this year, the US Congress passed a resolution authorising the President to impose trade restrictions if China does not honour its promise. That is a fall-back position which I hope will not arise. Nevertheless, it gives some kind of weapon to the international community with which to support Hong Kong. Again, I stress that that is what we are asked to consider this evening in the Question before us.
Lord MacLehose of Beoch: My Lords, what good does the noble Lord think that sanctions on China by America would do for the people in Hong Kong? Surely it would ruin them.
Lord Willoughby de Broke: My Lords, I agree that sanctions should be very much an instrument of last resort and would be very difficult for Hong Kong. But the real point is that there is action that the international community should be able to take if the need arises. I very much believe that it will not. Nevertheless, I do not believe that saying that we cannot do anything is a valid way in which to tell Hong Kong that we shall be looking after its interests after the hand-over.
After all, China wishes and needs to become a full member of the World Trade Organisation. It wishes to host the Olympic Games at some stage in the future; and I hope it does. All those are perfectly legitimate aspirations. But I believe that they come with a price tag. China must understand and accept the constraints of interdependence with the outside world. It must recognise that it must play by the rules of the international game and abide by the guarantees that it has given to Hong Kong, jointly with us.
I conclude with two questions, one of which has been touched on already by the noble Lord, Lord Thomas of Gresford. Will the Minister tell the House what is the state of play in relation to the reporting on human rights to the United Nations under the Human Rights Convention and the Civil and Political Rights Convention? I do not know how that obligation to report will be fulfilled.
Finally, is it the Government's intention to implement the promise made by the previous Administration to report to Parliament at six-monthly intervals on
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Hong Kong covering the Joint Declaration with special reference to human rights; and that those reports will continue until at least 1st January, 2000?
8.35 p.m.
Lord Moynihan: My Lords, I am in agreement with the noble Lord, Lord MacLehose, this evening that it is difficult to add to the expertise that we have heard this evening. If the noble Lord can add little with all his expertise, knowledge and experience, I can surely add nothing more than a relatively young man's view of Hong Kong's future.
I agree that this debate has rightly struck a note of optimism. There has always been much firmness, strength of purpose and unity in your Lordships' House and another place on the subject of Hong Kong's transfer to China. As we have seen, many of your Lordships have a keen and often personal interest in all matters relating to Hong Kong and certainly your Lordships' House has played its part in writing one of the last chapters about the British presence in the region.
There is consensus to set a smooth and successful transfer of sovereignty. That consensus is underlined by the Government's continuity of policy. Hong Kong remains one of its highest foreign policy priorities, and that is reflected in the expressions of confidence in the work of the Governor, a sentiment which I fully endorse. His outstanding stewardship, his vision and courage in resolutely standing up for Hong Kong and its interests have been second to none. I hope that we shall hear from the Front Bench opposite that that means that there will be no lessening of Britain's commitment to Hong Kong in its new guise as the Hong Kong Special Administrative Region of the People's Republic of China. I hope that Britain will continue to be committed to its stability, prosperity, the support of its representative government, its rules of law and, of course, its rights and freedoms.
The paramount importance of the interdependence between China and Hong Kong was recognised in the Sino-British Joint Declaration of 1984, of which we have heard much this evening. In that international treaty, registered with the UN, there is a remarkable series of detailed and binding arrangements which were laid down to guarantee key issues—the rule of law and the rights and freedoms of the Hong Kong people—in exchange for Chinese sovereignty.
As a result, Hong Kong will and must continue as an international business centre with complete financial autonomy. It needs to continue to have its own government and legislature composed of Hong Kong people. Its capitalist economy, freedoms, currency, customs, legal systems and its financial markets must, and I hope will, remain intact.
As we know, it will continue to be a member of many international organisations from the WTO to the IMF and will be able to develop its own economic and cultural relations. Its cosmopolitan way of life will remain unchanged for 50 years beyond 1997. That was the debt of honour owed to Hong Kong by Britain and the Joint Declaration pays it. It underpins the important Chinese principle of one country, two systems and of

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Hong Kong people ruling Hong Kong. It is a framework within which the people of Hong Kong can continue to build on their achievements and can work for a secure and prosperous future.
The Joint Declaration was welcomed in 1984 both in Hong Kong and internationally as the best achievable basis for a secure future for Hong Kong. Its success in that regard has been demonstrated by the fact that the predictions of media prophets of doom, who have been referred to this evening and who foresaw the imminent economic death of Hong Kong have been proved to be utterly without foundation.
Together with the Joint Liaison Group, it has been the cornerstone of British policy since its origin 17 years ago and I am glad to say that it will continue to be so under the new Government. The Joint Declaration is a staggering achievement and it is an honour for me to pay tribute to all those who shaped that document, not least noble Lords present this evening and, notably, my noble and learned friend Lord Howe of Aberavon.
Central to the topic of today's debate, the Joint Declaration is unambiguous in its vision of the upholding of the rule of law and the protection of the rights and freedoms of the Hong Kong people. There is strong recognition that the only vehicle for a successful and prosperous future is freedom under the rule of law. The nexus of agreements of laws and treaties, rules and regulations covers almost every sphere of human activity and reflects Britain's greatest and most enduring legacy to Hong Kong and its future success; that is, the rule of law.
The Joint Liaison Group has worked hard to ensure that there will be judicial continuity—the independent exercise of judicial power, the fair appointment of judges—and that the work of the courts will remain free from political interference. The JLG has worked hard to ensure domestic autonomy and jurisdiction of the final Court of Appeal which will replace the Privy Council. This creates legal history in Hong Kong, by allowing it to have its final appellate court within its territory for the first time.
I echo the sentiments expressed by my noble and learned friend Lord Howe, who referred to the appointment of Andrew Li last month as first Chief Justice of the Court of Final Appeal. It was greeted enthusiastically by all sections of the Hong Kong community. I am sure that your Lordships' House will join me in wishing him well as he undertakes the pivotal role that he will play in navigating the Hong Kong judiciary into the next millennium and, above all, in ensuring that existing rights and freedoms are safeguarded by the fair, efficient and independent administration of justice. The JLG has also worked hard to ensure that Hong Kong's laws will be consistent with the Basic Law, and some 150 United Kingdom Acts have been localised in full consultation with the Chinese. Therefore, by 1st July. the Hong Kong people will possess a comprehensive body of laws which owes its authority to its own legislature.
In the last two minutes available to me, I should like to concentrate on what the Government need to do. The Government face diplomatic minefields ahead.
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Politically, ethically and economically the British Government, as co-signatory to the Joint Declaration, with 3.5 million British passport holders resident in Hong Kong, our 12th largest export market, must keep the emphatic promise made by the government of,
"never allowing Hong Kong to walk alone,"
after the handover. Britain's Consulate-General in Hong Kong is its largest in the world. It is a physical symbol in bricks and mortar of our continuing commitment to Hong Kong, which cannot and does not end with the transfer of sovereignty at the end of this month.
Having tasted democracy, Hong Kong expects nothing less than open, transparent and accountable government. Public demand for the democratic process to stay on course and develop after 1997 will be irresistible. I should, therefore, like to know the Government's policy towards the provisional legislature after the handover. I should particularly like to hear answers to the admirable questions posed by the noble Lord, Lord Thomas of Gresford.
In his opening address to the Legislative Council last year, the Governor laid out a series of eminently sensible benchmarks by which to judge events in Hong Kong after the handover. These benchmarks provide a standard by which the human rights performance as well as the legal and judicial autonomy can be measured. I urge the Government to adopt and apply them and to make a firm guarantee that action will be taken if China fails to meet them.
The Government admirably put human rights at the heart of their foreign policy. They correctly point out that China's modern dynamic economy is paralleled by a very unmodern, static attitude to human rights which is sometimes inappropriate for a member of the United Nations. They have indicated that policy towards China will not be one of economic exclusion or cultural isolation, as these options will not be the best way to influence China politically, as the noble Lord, Lord MacLehose, stated in his intervention. However, there is an inherent tension in that policy. With Hong Kong in mind, I must ask how the Government will seek to walk the fine line between non-isolation of China and appropriate action taken in protest at human rights violations.
In conclusion, I should like to take this opportunity to wish the Foreign Secretary and the Prime Minister, who will be in Hong Kong for the handover, a very successful trip. This debate has turned on Hong Kong's future. For 17 years, the Joint Declaration has ensured that no gamble has been taken with the lives of millions of Hong Kong men, women and children. The Government must ensure that that continues to be the case through the implementation of the treaty. June 30th 1997 is one of the key dates of this century, a date imbued with both past and future significance. It represents a leap of faith for Britain, for China and for Hong Kong. I look forward to hearing from the Minister what part the Government will play in ensuring that that leap of faith is vindicated.
8.44 p.m.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, I, too, should like to thank the noble Lord, Lord Thomas of Gresford, for providing this opportunity for debate. This House has always paid close and particular attention to developments in Hong Kong. The affection for, and understanding of, Hong Kong shown by all sides of the House this evening is testament, if one were needed, that Hong Kong will not be forgotten after 30th June.
I should like especially to welcome the contributions made by the former distinguished Governor of Hong Kong, the noble Lord, Lord MacLehose, and by the noble Baroness, Lady Dunn. If I may say so, the noble Baroness's elegant, persuasive and very wise advocacy is a reflection of her deep knowledge of Hong Kong and her continuing engagement in developments there.
There are 18 days until the transfer of sovereignty, which the Prime Minister announced yesterday he intends to witness personally. It is only a little over 40 days since this Government took office. One of our first actions was to confirm Chris Patten in his post as Governor until 30th June. He has done, and is doing, a tremendous job and he enjoys our full confidence.
As many noble Lords have noticed, events are moving at a tremendous pace. When I first spoke on Hong Kong in this House, I said that achieving a successful transition was among the heaviest and most immediate overseas responsibilities placed upon the Government. Since then, we have seen the 40th plenary meeting of the Sino-British Joint Liaison Group, the last before the handover, and numerous other contacts with China at all levels to ensure, as far as we can, that the transition agenda is completed.
That agenda is almost completed. I wish to pay tribute here, as many have done, to the officials of both sides and from the Hong Kong Government who, over the 13 years since the Joint Declaration was signed, have worked tenaciously and tirelessly to turn the high principles enshrined in the Joint Declaration into practical administrative measures; to convert the catch-phrases "one country, two systems" and "a high degree of autonomy" into real life.
The noble Lord, Lord Moynihan, was right. The rule of law has been central to Hong Kong's economic and social success. Not just rules; not just law; but the rule of law. As the noble and learned Lord, Lord Denning, once said:
"Be you ever so high, the law is above you".
The rule of law means that the government and each individual is equal before the law. It protects individuals against arbitrary interference by the government; against improper influence by the rich and powerful; against corruption; and against abuses of power. It means impartial judges and an independent prosecution service.
The phrase, "One country, two systems" means that Hong Kong will continue to have its own legal system, entirely separate from that of mainland China. One, of course, cannot legislate for integrity. But Hong Kong has one of the finest legal systems in the world, served
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by some of the best judges and lawyers in the world, as many noble Lords have acknowledged. What we can do—and have done with the agreement of China at every stage—is to ensure that that system and those people can continue to provide the people of the Hong Kong special administrative region with the protection of the rule of law within the common law system. With China's agreement, Hong Kong will have its own Court of Final Appeal—in Hong Kong, not Beijing—replacing the Judicial Committee of the Privy Council.
The rule of law is the ultimate protection of the fundamental rights and freedoms of the individual. China agreed in the Joint Declaration that the mainland's "socialist system", would not be imposed on the people of Hong Kong. To make sure that there is no room for doubt, China listed in the Joint Declaration exactly what it meant by that general undertaking. It promised freedom of the person, of speech, of the press, of assembly, of association, to join trade unions, of correspondence, of travel, of movement, of strike, of demonstration, of choice of occupation, of academic research, of belief, of the inviolability of the home, the freedom to marry and the right to raise a family freely. These are basic human rights to which many noble Lords have drawn our attention this evening.
China is itself party to neither the Covenant on Civil and Political Rights nor that on Economic Social and Cultural Rights, though it has indicated—and we would welcome this—that it may sign the second covenant this year. But it agreed in the Joint Declaration that the provisions of the two covenants as applied to Hong Kong will remain in force. We firmly believe that that includes reporting to the United Nations treaty monitoring bodies. We will continue to press the Chinese Government to explain how reports on the implementation of the covenants in the Hong Kong special administrative region will be made. We have made clear that, for our part, we would not object to the Hong Kong special administrative region submitting reports itself, and the UN treaty monitoring bodies have indicated that they are also willing to be flexible on this matter.
Many of those who have spoken this evening, including the noble Lord, Lord Monkswell, have placed our policy on Hong Kong in the wider context of our relations with China. China is a country of great and growing importance. We will speak up when we should in areas such as human rights, but that should be seen in the context of a much more wide-ranging and constructive relationship than has so far been achieved. We hope Hong Kong will be a bridge between Britain and China, not a barrier. But if it is to be a bridge of friendship and not a bridge of sorrows, the incoming sovereign power must fully honour the undertakings it has made in the Joint Declaration.
Several noble Lords have referred this evening to the plans to swear in the provisional legislature in the early hours of 1st July during the inaugural ceremony of the special administrative region. I do not wish this evening to rake over the past. Our views on this invention of China's are clear. Nothing China does can alter the fact that up to 30th June there can be only one constitutional legislature in Hong Kong—that elected by the people of

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Hong Kong in September 1995. We are committed to co-operating with it and we will do nothing to undermine it. There has never been any question of British Ministers attending the swearing-in of the provisional legislature. What is essential now is for China to ensure that the Hong Kong Special Administrative Region Government hold free and fair elections as soon as possible after the handover.
I now turn to some of the specific issues raised by noble Lords this evening. The noble Lord, Lord Thomas of Gresford, referred to the International Court of Justice as regards the legality of the provisional legislature and its actions. The previous Government made clear that Britain would be willing to join China in seeking adjudication on the question of the future of the legislature from the International Court of Justice, but it needs the consent of both parties for it to go before the ICJ. China has not accepted our offer but I confirm that it remains on the table. However, a nation state cannot itself ask the ICJ for an advisory opinion.
The noble Lord also asked about bilingualism. Both the Joint Declaration and the Basic Law provide for English and Chinese to be used in Hong Kong. The government legislature and the courts use both languages and laws are published in both languages.
I thank my noble friend Lord Ponsonby for his kind remarks about the Foreign Office web site. He raised some important questions about Vietnamese refugees, as opposed to the other problems with economic migrants. The Government continue to support the efforts of the UN High Commissioner for Refugees to find resettlement opportunities for the remaining refugees in Hong Kong.
The noble Lord, Lord Marlesford, asked about the transfer of defence responsibilities. We agreed some time ago through the Joint Liaison Group that the People's Liberation Army might station unarmed advance parties in Hong Kong to prepare for the orderly deployment of the main garrison on 1st July. There is no question of Britain agreeing to the deployment of the main PLA garrison in Hong Kong before 1st July. As sovereign, Britain is responsible for the defence of Hong Kong up to the last stroke of midnight on 30th June. At that point China will resume responsibility for the defence of Hong Kong.
The noble Lord, Lord Marlesford, asked about the style of government after the handover. The Government believe that the people will judge Mr. Tung and his government by what happens from 1st July on rather than what is said before he takes up office. If the concept of Hong Kong people running Hong Kong is to work, it will be important for all of Hong Kong's people to stand up for the territory's interests. I believe we would be sensible to listen to the wise words of the noble Baroness, Lady Dunn, on that point.
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The noble Lord, Lord Willoughby de Broke, asked what was happening as regards some of our colleagues in Europe. It is for our colleagues in Europe to decide what they intend to do about the Chinese swearing in. We have made our views clear to them.
I, like the noble Baroness, Lady Dunn, and the noble Lord, Lord Monkswell, wish to thank the Hong Kong Civil Service. 1 pay tribute to those who have fought tirelessly in the cause of more representative government in Hong Kong, many of whom for no good reason will find themselves on the sidelines on 1st July. Hong Kong needs them. I hope their dedication will carry them through to the next round of elections so that they can give the people of Hong Kong the opportunity to vote for openness and for progress.
Britain's relationship with Hong Kong will change in 18 days' time, but it will not end. The promises China made to Britain and to the people of Hong Kong in the Joint Declaration will last for 50 years. The Joint Liaison Group will continue to meet to discuss the fulfilment of those promises until the year 2000. The Government will monitor developments closely. We will publish for Parliament every six months a report on the implementation of the Joint Declaration, with special reference to the protection of human rights in Hong Kong. We will continue to remind all countries with a stake in Hong Kong's future of the importance of their maintaining an active interest in Hong Kong.
As the noble Lord, Lord Thomas of Gresford, told the House, Hong Kong is in great shape. We can be proud of what Hong Kong has achieved under British sovereignty. As many of us know, few, if any, places in the world are more vibrant, more energetic, more open and more prosperous than Hong Kong in 1997.
There can be no doubt about Britain's commitment to Hong Kong after the handover. Britain's commercial and consular interests speak for themselves: there are some 3½ million British passport-holders in the territory, 1,000 British firms operating there and tens of billions of pounds of investment in what is our second largest export market in Asia. We are proud that we shall have—as the noble Lord, Lord Moynihan, said—one of our largest consulates-general at the heart of all this.
We have done our best to secure the best possible future for the people of Hong Kong. Very soon, Hong Kong people themselves will take on the responsibility for guiding their own future development, within the framework of the Joint Declaration, under the late Deng Xiaoping's concept of,
"Hong Kong people running Hong Kong".
I am sure I speak for noble Lords in all parts of the House when I say that we wish them well.

Lloyds TSB Bill [H.L.]
Committed to a Select Committee.
House adjourned at three minutes before nine o'clock.