Lords Sitting of 19 March 1997

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Ripon.

Pensions: Downrating during Hospitalisation
Baroness Fisher of Rednal Baroness Fisher of Rednal asked Her Majesty's Government:
What savings occur from the financial penalty imposed on persons on state retirement pensions who spend up to six weeks a year in hospital.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, data are not available to calculate savings from downrating of retirement pensions for stays in hospital of up to six weeks. The only cases where downrating applies during the first six weeks of a hospital stay are where the person goes into hospital from a council home. The estimated total saving from hospital downrating of state retirement pensions is some £60 million a year, almost all of which comes from downrating after six weeks.
Baroness Fisher of Rednal: My Lords, does the Minister agree that the people concerned have earned that pension, by their entitlement and through the insurance scheme? Does he further agree that when they go into hospital they are still faced with the same responsibilities to keep the home going, whether it be house, bungalow or flat? Is it right that they should then be deprived of that money if they spend more than six weeks in hospital undergoing treatment which is designed to make them better, when going there is not their personal choice?
Lord Mackay of Ardbrecknish: My Lords, the downrating of the state pension when someone is in hospital for over six weeks and the further downrating when they are in hospital for over 52 weeks is of long standing and has been the policy of governments of both parties since the inception of the pension system in 1948. Of course, the pension is not all lost. The downrating is merely a portion of the pension after six weeks and then a slightly larger portion after 52 weeks. The reason is that, if the state is looking after many of the person's needs in hospital, it would be double provision to continue to pay the pension should they be in hospital for some time. The state system is pay-as-you-go, unlike Basic Pension Plus, which we have just announced and which would be funded.
Lord Stoddart of Swindon: My Lords, does the Minister agree that whether it is something which has been operated by all kinds of governments does not matter? The fact is, as my noble friend said, that it is an
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insurance-based pension. Let us make no mistake about that. It has been contributed to by pensioners and it is their money. Will he accept that other people are not similarly disadvantaged when they go into hospital, and it is about time that the Government, of whatever colour, reviewed their policy and ceased to penalise older people when they go into hospital?
Lord Mackay of Ardbrecknish: My Lords, the fact of the matter is that pensions are paid out of the taxes and national insurance contributions collected in the same year as the pensions are paid out. As I mentioned, it is not a properly funded policy. The point is that the taxpayer and national insurance payer are paying to look after someone in hospital for more than six weeks initially and, if it goes on, for more than 52 weeks. It seems to me that it is double provision if they get the help there and at the same time receive their full retirement pension. I believe that they get sufficient of their retirement pension to continue with any responsibilities for their house and so on that they might have. But if the noble Lord wants the social security budget to rise by another £60 million, I suggest that he talks to his honourable friend Gordon Brown about his suggestion that the budget that we are providing for the next two years is perfectly adequate in social security.
Baroness Fisher of Rednal: My Lords, will the noble Lord clarify that £60 million? How many persons does it represent in one year who are benefiting from the state, as the noble Lord said? How many persons are involved?
Lord Mackay of Ardbrecknish: My Lords, the position on downrating is that approximately 35,000 people at any one time have their pension downrated. Approximately 20,000 of them are in the six to 52-week period and approximately 15,000 are in the over-52-week period.

Inward Investment and Employment Statistics
2.38 p.m.
The Viscount of Oxfuird The Viscount of Oxfuird asked Her Majesty's Government:
What is their forecast for inward investment for the remainder of this financial year and what effect that figure will have on the unemployment statistics.
The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie): My Lords, it is not possible to predict the number of new inward investment decisions and related employment figures that will be notified to my department's Invest in Britain Bureau in this period. However, the pattern over the past three years has shown an upward trend in both numbers of projects and jobs created.
The Viscount of Oxfuird: My Lords, is my noble and learned friend aware that today in Dunfermline, Scotland, the Hyundai Company of Korea is breaking

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the ground for a new factory, which will give 2,000 jobs to the constituency of the Shadow Chancellor? Does he agree that the declared objective of the party opposite is such that to sign up to the social chapter is surely a somewhat strange step, in view of that investment?
Lord Fraser of Carmyllie: My Lords, my noble friend is absolutely right. Noble Lords may laugh, but I do not believe that there is anything in the least bit humorous about it. Dunfermline is an area that many in the party opposite had written off as a place for employment, opportunity and reasons for optimism. Two thousand jobs will be created there. That is as a result of this Government's policy in attracting inward investment. I have no doubt whatever that, were we to sign up to the social chapter, that quite remarkable record in Europe, which is better than anyone else's, would seriously be put in peril.
Lord Bruce of Donington: My Lords, in order that the Question may be considered within its correct perspective, will the Minister confirm that, according to the Government's figures, for every £1 invested inwards in the United Kingdom, £2 is invested outside Britain?
Lord Fraser of Carmyllie: My Lords, I am not sure that those figures are correct. However, we have a remarkable economy in that we attract almost as much inward investment as we invest outwards. We wish to see that activity maintained. It is as desirable that we attract inward investment as it is that we invest elsewhere around the world. We are doing that extremely satisfactorily and efficiently.
Lord Clark of Kempston: My Lords, does my noble and learned friend agree that one of the reasons the UK has the bulk of inward investment into Europe, not only from Europe, but also from Korea and America, is the competitive position of our industries? They have a lower labour on-cost than our main competitors in Europe. Does he agree also that, if the social chapter was signed, inward investment would dry up?
Lord Fraser of Carmyllie: My Lords, yes. An interesting indication of that is not so much the Japanese and Korean investment that we now attract to the United Kingdom—we are the number one location for Asian investment—but that some of the most important investments undertaken by German companies are now in the United Kingdom. Most notable, in recent years, is the massive Siemens semi-conductor plant in the north-east of England.
Lord Mackie of Benshie: My Lords, can the noble and learned Lord tell us who those foolish investors are from this country who invest abroad when it is so much more attractive to invest at home?
Lord Fraser of Carmyllie: My Lords, all manner of companies. One group that certainly would not have been investing abroad, had it not been for this Government, are the privatised utilities which now have
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extensive investments overseas. It is highly desirable that they should undertake that activity and no other government would have given them that opportunity.
Lord Gisborough: My Lords, to what extent would a dissipation of the funds of the utilities through the proposed windfall tax—which will give six months employment to the unemployable—deny investment in restructuring which would create genuine long-term jobs?
Lord Fraser of Carmyllie: My Lords, I have just made the point that those utilities that have been privatised have been extremely successful and are now investing in every continent in the world. If they were to be subjected to a windfall tax, I would consider that their prospects of being able to continue that high level of investment, either in the United Kingdom or overseas, would be seriously diminished.
Lord Sewel: My Lords, does the Minister accept that the evidence he gave earlier indicates beyond doubt that inward investment into Scotland is not at all deterred by the prospect of a Scottish Parliament?
Lord Fraser of Carmyllie: My Lords, there is absolutely no indication of that. I am saying that we can look to those areas of Scotland which the noble Lord's friends wrote off. For instance, parts of Lanarkshire and Dunfermline, as we have already mentioned, through the efforts of this Government and the Scottish Office have been turned around. They now provide some of the finest hi-tech jobs in the country. We deserve the credit for that and not the noble Lord's party.
Lord Elton: My Lords, does the obvious confusion of noble Lords opposite in relation to the effects of legislation and policy on Scotland throw a little light on an intriguing headline in the Glasgow Herald a week ago, which read, "Labour amends wrong clause"?
Lord Fraser of Carmyllie: My Lords, I did not see that heading, but it does not surprise me.
Lord Peston: My Lords, is the noble and learned Lord aware that, certainly on my last question in this Parliament, I could not be in a better mood? Mention has been made of the social chapter, privatised utilities and the windfall tax. I cannot think of anything more that noble Lords opposite could have spoken about. But I retain an interest in the Question on the Order Paper which asked for a connection between investment and unemployment.
One interesting aspect about this Government is that they have presided over the largest and most sustained level of unemployment in modern history. At the same time we have had high inward investment. The resulting implication is that there is, at best, no connection between inward investment and the employment figures. If one was cynical, one might point out that inward investment perhaps leads to higher unemployment rather than lower. However, I would never say that on such a pleasant and final day for me. Does the noble and

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learned Lord's department have any evidence whatever, at a serious level of analysis, relating to the level of inward investment and the level of unemployment? Is there any data to which he can guide me?
Lord Fraser of Carmyllie: My Lords, I am extremely grateful to the noble Lord for his question; I was wondering how I was going to get in today's unemployment figures. They are now down by 68,200, following on 68,000 in January and 46,000 in December. I am more than happy to answer as many questions as the noble Lord wishes on unemployment and the improvements that we have secured. I cannot accept that there is no relationship between our massive improvement in the way in which we have attracted inward investment and jobs. Since 1986 around 250,000 jobs have come to the United Kingdom from European investment alone.
Lord Peston: My Lords, the serious point is that in 1993, for example, unemployment was virtually 3 million and inward investment was massive in that year. There simply cannot be a connection; that is the point.
Lord Fraser of Carmyllie: My Lords, with respect, it is not. There are 2,000 people in Dunfermline today who give the lie to that assertion.
Lord Beloff: My Lords, does my noble and learned friend agree that the noble Lord, Lord Peston, has obviously lost touch with the economics he once used to teach? It is a commonplace of business that before employment is created the factories have to be built and the markets discovered. If the noble Lord does not know that, I only hope that he will not be going back to teaching economics when his party is disappointed in the election, as undoubtedly it will be.
Lord Fraser of Carmyllie: My Lords, it is only the last point of my noble friend's question with which I disagree. I hope the noble Lord will go back to teaching economics.
Lord Stallard: My Lords, what proportion of the number of unemployed is directly related to the jobseeker's allowance?
Lord Fraser of Carmyllie: My Lords, I have given the figure of the number of people unemployed. It has been going down steadily. I do not understand what else the noble Lord wants. Some 68,000 people have come off the register. That is extremely important. I should have thought that the whole House would be delighted that the trend is in the right direction. One sometimes feels that the noble Lord and his friends have a vested interest in keeping those unemployment levels up.
Earl Russell: My Lords, I congratulate the Minister on today's unemployment figures. In the light of those figures, how does he explain the MORI poll reported in
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today's papers showing that unemployment is causing more anxiety to voters than any other single subject? Are the voters just stupid?
Lord Fraser of Carmyllie: No, my Lords. They must be worried when they contemplate that, unlike the United Kingdom, countries like Germany probably have the highest unemployment levels since the 1930s. One of the causes has undoubtedly been the very high social costs that are attracted to employment in Germany. The prospect that such social costs might be attached to employment in the United Kingdom would seem to be very good cause for the electorate to be worried.
Baroness Farrington of Ribbleton: My Lords, can the noble and learned Lord say how much of the £2 outward investment referred to by my noble friend in the ratio of £1 inward investment is invested in countries in Europe which have signed the social chapter and have a national minimum wage?
Lord Fraser of Carmyllie: My Lords, I cannot give the noble Baroness that figure. What I can say is that there is investment throughout the world. Indeed I am delighted to say that much of the investment that is currently underway from the United Kingdom is in the developing world. I am sure that she will be as pleased as I am that there is still that investment from the United Kingdom. We all benefit from it in the long run.

NAAFI: Food Supply Contract
2.52 p.m.
Baroness Turner of Camden Baroness Turner of Camden asked Her Majesty's Government:
Why the NAAFI food supply contract has been awarded to a private company, Booker Foodservice, and what saving to the taxpayer will result from this decision.
The Parliamentary Under-Secretary of State, Ministry of Defence (Earl Howe): My Lords, the award of the food supply contract to the Booker Foodservice Group followed a year-long competition phase. The tenders submitted were subjected to thorough commercial and technical evaluation and the Booker bid was assessed as clearly offering the better overall value for money for the department. Savings as a result of the tendering process over the life of the contract are currently estimated to be of the order of £15 million.
Baroness Turner of Camden: My Lords. I thank the Minister for that response. Is he aware that the awarding of the contract to this company could result in the possible loss of 2,000 jobs of people formerly employed by NAAFI? Is this social cost taken into account by the Government when considering what the costs are to the taxpayer?
Earl Howe: My Lords, the job losses announced by NAAFI are clearly a matter for regret. But I would stress

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that the majority of them are the result not of the loss of the food supply contract but of the restructuring programme that was recently announced by NAAFI's chief executive. That programme should be regarded as a vote of confidence in NAAFI's future and is aimed at ensuring the long-term health of the corporation and had already been planned before the decision on the food supply contract was announced. However, there is good news for some because Booker expects to create some 300 new jobs by virtue of winning the contract.
Earl Attlee: My Lords, is the noble Earl aware that NAAFI is not a perfect supplier? My own TA unit frequently receives supplies of beer that has very little shelf life remaining. Is the Minister aware of the great difficulties of drinking such large quantities of beer in a relatively short space of time?
Earl Howe: My Lords, I do not think my noble friend should have to put up with a glass of beer that is not to his satisfaction. He makes an important point. NAAFI knows that there is scope for improvement in the services it offers. It underlines the point that NAAFI will now focus on its traditional core activities; namely, its shops and clubs. It will do that in partnership with high street stores and leading breweries so as to maximise efficiency. The priority for NAAFI is to maintain the momentum of that programme, which has already got off to a very good start, and to make sure that it can provide high quality retail and leisure facilities for service personnel.
Lord Williams of Elvel: My Lords, as this may be the last point at which the noble Earl and I have exchanges from our respective Dispatch Boxes, perhaps I may, with the leave of the House, thank him very sincerely for the way he has conducted the defence portfolio in this House. He has been a model of courtesy and I am most grateful from my point of view. I also congratulate the Minister on not introducing the minimum wage. Previous Ministers have brought everything in; this one has been left out. Can he expand a little on the future of NAAFI? Having lost what I understand is a very important contract—an important element in NAAFI—does the Minister consider that NAAFI, even in spite of what he said about the retail activities, has a real future?
Earl Howe: My Lords, I am extremely grateful to the noble Lord for his generous remarks. I too have enjoyed our exchanges across the Dispatch Boxes over the past 18 months or so. The future importance of NAAFI to the services cannot be overstated. NAAFI now has a chief executive who is determined to drive the organisation forward, to modernise and to make sure that its services are consistent with what our Armed Forces wish to receive. I have every confidence in NAAFI's ability to do that and every confidence that the restructuring exercise that I mentioned will enable it to
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invest to the degree necessary to ensure that the clubs in particular but also the retail outlets are upgraded to a satisfactory standard.
Lord Dean of Beswick: My Lords, while the business deal that has been explained today sounds very good, is the Minister aware that some of the people involved have a reputation for asset stripping in other companies? Can we have an undertaking that this exercise will not have that kind of ending? Is the Minister aware that some of the same people are now targeting the Co-op movement? Those of us who have been involved with the Co-op all our lives do not want anything to do with them. Can he give an undertaking that the Bank of England and the Ministries concerned will keep a close watch on the activities of these people as one of their companies has had to cease trading on the instructions of the Bank of England because it had acquired an artificial increase in its share prices?
Earl Howe: My Lords, the contract will be closely monitored as it proceeds. Booker is the market leader in food distribution. It has a well proven track record. It is setting up dedicated facilities to support the MoD contract which, as the noble Lord will be well aware, will be backed up by the considerable strength of the Booker plc organisation. My department considered all aspects of the food supply requirement both in this country and overseas during its evaluation of the tenders. We were absolutely satisfied that Booker's proposals were sound, realistic and achievable. I repeat that I am confident that we shall see a successful transition of the food supply contract when NAAFI's service comes to an end later this year.
Lord Palmer: My Lords, will the noble Earl tell the House how many other tenders they had other than Booker's for this particular contract?
Earl Howe: My Lords, tenders were initially invited from six companies, but in the end bids were received from only two; namely, NAAFI and the Booker Foodservice Group.
Baroness Turner of Camden: My Lords, in view of the fact that NAAFI is itself restructuring and no doubt endeavouring to modernise its activities, would it not have been better in the circumstances at least to have given the contract to NAAFI and to have retained the jobs rather than to put out the contract to an outside operation?
Earl Howe: My Lords, we made it clear when NAAFI gained the food supply contract initially in 1994 that that contract would be subject to a tendering exercise last year. We adhered to that. Having decided on that route, we had to make sure that the competition was fair and open. I, and no doubt many others, were disappointed that NAAFI did not manage to secure the contract. But clearly we have a good prospect, as I have said, in the shape of Booker to ensure that the contract is delivered successfully. As regards job losses, I stress again that jobs will be created by Booker. It is not

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entirely a one-way story. But for those people who are losing their jobs steps are being taken to minimise the pain to ensure that resettlement services are available, advice and so on. I believe that the decision we have taken is in the long-term interests of our Armed Services.
The Countess of Mar: My Lords—
The Lord Privy Seal (Viscount Cranborne): My Lords, with the greatest respect to the noble Countess, I think we should give perhaps five minutes to the next Question.

Digital Television Services
3.2 p.m.
Lord McNally Lord McNally asked Her Majesty's Government:
When they expect a decision from the ITC on the bids by the Digital Television Network and British Digital Broadcasting to operate digital terrestrial television in the United Kingdom.
The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood): My Lords, the award of licences to operate commercial digital terrestrial television multiplexes is for the Independent Television Commission. It is for the commission to determine the time needed to consider the applications which have been submitted.
Lord McNally: My Lords, is the Minister aware of the assessment in last Sunday's Sunday Telegraph that British television is on the verge of a decision which could see the multi-billion pound future of pay television handed to Rupert Murdoch? In those circumstances, does the Minister agree that it would be wrong for this decision to be made while Parliament is not sitting? Further, does he not think it right that Parliament should take a broader look at decisions being made in the broadcasting industry, such as over-the-set top boxes, paying the levy and various strategic alliances, all of which involve a steady accretion of power by Mr. Murdoch? Is it not time that Parliament took a broad view of the power that Mr. Murdoch is acquiring in our media to see whether that is in the public interest?
Lord Inglewood: My Lords, these matters were considered at very considerable length during the debates on the Broadcasting Bill last year. Very strong measures have been put in place to control media concentration. No company can control more than three digital terrestrial multiplexes; no company can provide more than 25 per cent. of new digital terrestrial programming; no company can have more than 15 per cent of the total television audience. These matters have been set down. The procedures for dealing with digital terrestrial multiplexes were given by Parliament to the ITC. It is always the case that Parliament can debate these matters whenever it wishes.
Lord Donoughue: My Lords, I am sure that the Minister is aware that the inside story is that this
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decision is scheduled to be announced on 1st May when perhaps the attention of the whole nation will not be entirely on it. The Minister mentioned Section 8 of the Broadcasting Act which covers these issues very specifically. Great emphasis is given to criteria of competition and the provision of a variety of programmes to meet a diversity of opinion. Will the Minister confirm that the Government still agree with that? Will he further confirm that the overarching principle stated in Section 8 is that the promotion of digital television should be, "otherwise than by satellite"? Will he tell us what the Government mean by that phrasing and whether they still support it?
Lord Inglewood: My Lords, I can confirm the first part of the remarks made by the noble Lord. The second part of his remarks are self-explanatory. We believe that award of the digital terrestrial television licences should be in order to promote the uptake of digital terrestrial television.
Lord Renton: My Lords, without disagreeing with the answers which my noble friend has given so far, is he aware that when I tried recently to buy a new television so that I could see how well we were doing in the general election, I found that the only kind of set available was Japanese, possibly made in this country? Can my noble friend say whether British Digital Broadcasting will be seen and heard in future on British made sets?
Lord Inglewood: My Lords, my noble friend is jumping the gun a little. British Digital Broadcasting has not been granted a licence for anything. One of the purposes of our proposals for digital terrestrial broadcasting in this country is to promote the industry and technology in order to provide jobs for here and for profits to be generated abroad.
Lord Thomson of Monifieth: My Lords, is the Minister aware, as the noble Lord, Lord Donoughue, said, that in the Bill which he steered through this House great emphasis was laid on the importance of maintaining competition? Is the Minister further aware that this decision will shape the future of British digital broadcasting in general in a way which is of great concern to future viewers and consumers? Although we are all told that the British general election has been virtually decided by Mr. Rupert Murdoch, as he already controls 90 per cent. of satellite broadcasting, that he intends to launch 200 digital satellite channels, and that he will be a major element in this new proposition, does the Minister agree that it might be a good thing if the ITC were to delay its decision until the general election was over and we were all a little cooler and able to take a more rational view of where the public interest lies in this matter?
Lord Inglewood: My Lords, the proposals in Section 8 of the Broadcasting Act specifically state that one of the considerations of the ITC must be whether the applicant has acted in a manner to ensure effective and fair competition. The noble Lord is absolutely right

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about the long-term significance of the decisions that the ITC will take. Those matters have been set down by Parliament for decisions to be taken by the ITC independently. However, the noble Lord is not right in saying that the result of the general election is to be determined by Mr. Rupert Murdoch. There has been a lot of debate about his possible endorsement of one party or another. I notice that the newspaper which endorsed the video of the alleged frolics of Princess Di may have endorsed the party opposite.

Police (Property) Bill
3.8 p.m.
The Minister of State, Home Office (Baroness Blatch): My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Police (Property) Bill, has consented to place her prerogative and interest so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Read a third time, and passed.

Finance Bill
3.9 p.m.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that this Bill be now read a second time.
As many of your Lordships will have noticed, the Bill before us this year is considerably shorter than last year's—something that I am sure will be welcome to everyone. Last year's Finance Act, and a number of others before it, were, I trust, the exception, dealing as they did with a number of large one-offs, such as new rules for self-assessment and the extensive new rules on corporate loan relationships to mention just two. So I hope we are back to something more like a typical length of Finance Bill.
As last year, this Bill opens with a piece of good news Clause 1 cuts the rate of duty on spirits. The Scotch whisky industry in particular is an important export earner, and it is pleasing that for the second year running we have been able to cut the duty on whisky by 4 per cent. This will reduce the incentive to smuggle, and reinforce the message we have been sending to overseas tax authorities that they should not discriminate against our goods. Also for the second year running, the Government have not raised the duties on wine and beer. This measure will help to allay the drinks industry's concerns over cross-border shopping and smuggling, which was the subject of a short debate in your Lordships' House recently.
Clause 6 of the Bill puts into effect the Government's commitment to increase the duty on road fuel by an average of at least 5 per cent. in real terms each year. This not only plays a significant role in reducing borrowing, but it is an important part of the air quality package in the Budget. We believe it is right to reduce
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people's incentive to pollute, and we can do that through tax concessions as well as tax increases. That is why Clause 6 also reduces the duty on road fuel gas; it is why Clause 7 provides for the reduction in the duty on ultra-low sulphur diesel; and it is why we are proposing a cut in the rate of vehicle excise duty of up to £500 for lorries producing very low particulate emissions.
The Bill also raises the duty on tobacco, in line with our commitment. Again, we are determined to press home the message that smoking damages people's health.
The Bill contains a number of measures to protect the tax base against erosion from people's attempts to avoid paying the tax they were intended to pay. I have to say that tax avoidance is not an economically useful activity. It is a zero sum game, because those people who have subverted a tax relief, or found some other way of ingeniously reducing their tax liabilities, simply cause everyone else to have to pay more tax; and people and resources are diverted from activities that genuinely benefit the rest of the economy.
Perhaps I may mention a few of the measures we are proposing. We are tackling a leakage of VAT where insurance is sold alongside goods and services. In some cases, part of the price of the package is shifted onto the insurance product, which is taxed at the lower rate of insurance premium tax. We are therefore increasing the rate of insurance premium tax on products of this sort to 17½ per cent. We are also taking steps in Clause 37 to prevent VAT-exempt companies, not normally entitled to recover VAT on their costs, from doing so on commercial property—though here, as in a number of areas, changes have been made to the Bill in another place to reflect the concerns of those affected. As always, we seek to target the avoidance, without damaging people's legitimate commercial relationships. The full package of VAT measures will yield over £700 million in the first year and protect a further £1.6 billion from attack by avoidance schemes.
The Bill also contains measures to protect the income tax and corporation tax base; for example, Schedule 12 alters the tax treatment of certain finance leasing arrangements. The Bill also brings in the new rules that apply where companies buy back their own shares or pay certain special dividends in an attempt to exploit the payment of tax credits to tax exempt institutions. In new clauses added at Report stage in another place, we have protected the corporation tax yield by blocking two types of highly artificial schemes using derivatives and annuities to turn, respectively, interest received into capital, and capital paid into interest.
I shall not weary your Lordships with a description of all the measures, but we have moved against avoidance schemes wherever we have found them, so that the tax base holds up.
The Bill also removes or reduces certain tax reliefs. Perhaps I may mention the two most important. Clause 61 provides for the phasing out of the tax relief for profit related pay. This relief was introduced by my noble friend Lord Lawson in 1987, explicitly as a temporary measure to encourage firms to set up PRP

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schemes. It has been an outstanding success. It has now done its job, and it is no longer appropriate to offer such a generous tax relief.
Schedule 14 to the Bill reduces the rate of writing down allowances on long life assets from 25 per cent. to 6 per cent. a year. Twenty-five per cent. a year is too generous for assets with lives of over 25 years. By setting a more realistic rate, and one that is closer to that adopted by companies themselves, investment decisions will he less dependent on their tax treatment.
The Government believe that low tax rates on a broad base are best for the economy and we have taken the further step towards our goal of a 20 pence basic rate of income tax in Clause 54, which cuts the standard rate of income tax to 23 pence.
I finish by mentioning a number of measures we are taking to help small businesses. The cut in income tax in Clause 54 will benefit unincorporated businesses, leaving business men and women more of their own money to spend or invest as they choose. The small companies' rate of corporation tax will also fall to 23 per cent. from next month, benefiting the majority of companies in the country. Small businesses are crucial to the success of the economy. We have listened to their concerns, and responded in this Bill by introducing relaxations to the venture capital trust and the enterprise investment schemes. We are also freezing business rates for small properties this year.
This will be the last Finance Bill of this Parliament. It is fitting that it should be, because it crowns five years of achievement on the economy. Since this Government were re-elected in 1992, we have seen five years of uninterrupted growth, with unprecedentedly low rates of inflation. This year, a family on average earnings should be £370 better off after earnings growth, tax and inflation, and over £1,100 better off than before the last election.
We are the party that has the courage to take tough decisions on spending and borrowing to produce the climate for the economic growth and prosperity that we are enjoying today. We are the party that has put in place the conditions for a fall in unemployment to its lowest level in six years, and to one of the lowest levels in the European Union, as my noble and learned friend Lord Fraser of Carmyllie clearly demonstrated at Question Time only a few moments ago. We are the party that believes in letting people keep more of what they earn and save. This Finance Bill proves it. I commend it to your Lordships.
Moved, That the Bill be now read a second time.— (Lord Mackay of Ardbrecknish.)
3.16 p.m.
Lord Eatwell: My Lords, I am sure that the whole House is grateful to the noble Lord, Lord Mackay of Ardbrecknish, for once again so ably summarising a complex Finance Bill. I am sure that he has broken all records in the short amount of time that he took to give that summary. However, in his brief summary, the noble Lord failed to mention one of the most significant aspects of the Bill: the fact that it is a tax-increasing Bill. In Clauses 21 to 24 it introduces, as the Minister
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conceded, one brand new tax: the extension of VAT to previously exempt forms of insurance. To that new tax are added a raft of tax increases from air passenger tax to higher fuel duties. The total tax raised by this Bill from tax increases amounts to £350 million.
This is the fifth tax-increasing Finance Bill in succession since the general election of 1992. To paraphrase Stephen Dorrell, we have had tax increases year on year on year on year on year—and that is after Mr. John Major famously promised the British people on 7th April 1992:
"Year by year"—
he seemed to anticipate Mr. Dorrell—
"more tax cuts for all".
That was not the only promise. There was the promise that the level of national insurance contributions would not be raised. That promise was broken. There was the promise that mortgage interest tax relief would be maintained. That promise was broken. There was the promise, made over and over again, that there would be no increase in VAT. That promise was broken over and over again.
The truly intriguing question is: why? Why did John Major break every promise that he made to cut taxes? Why have the Conservatives increased taxation by such an extent that between the last election and the election on 1st May the average family will have suffered total tax increases of £2,120. Why? Did the Tories simply tell "fibs" in order to get elected? That may be part of the story; I would not know.
However, there is another far more important lesson to learn from this Finance Bill and from all the tax-increasing Finance Acts of this Parliament. The Tories have been forced to raise taxes because of the underlying weakness of the economy. If growth had been stronger, unemployment would have been lower, saving billions of pounds in social security benefits and sharply increasing tax revenues. If investment had been higher, the British economy would have been more competitive, capturing markets at home and abroad and yielding more taxes to the revenue. If consumers had been able to spend with confidence with their expenditure underwritten by a strong and competitive economy, revenues would have been even higher and would have been secure. Instead, five years after the recovery from the depths of the recession the Government are still running a substantial deficit. Even today when consumption spending is growing at rates reminiscent of 1988 and 1989 the consequent increases in tax revenues leave the Government with a huge deficit, with the prospect of fiscal balance retreating ever further into that pie in the sky.
The Minister claimed that the economy was in great shape. It is simply not true. If it were true, there would not be a yawning deficit in the Government's accounts after five years of tax increases year after year. It has been claimed today that in the past month unemployment has fallen by 68,000. That is not true. What is true is that the number of people eligible for job seeker's allowance has fallen by that number, not the number of people unemployed. When the noble Lord sums up perhaps he will explain why in the past year

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the number of people eligible for benefit has fallen by 475,000 but the number of people in employment has increased by only 222,000. What has happened to the other 253,000 people who are apparently no longer unemployed but are not employed either?
There is one other aspect of the Finance Bill relevant to the assessment of the platform that the Conservative Party put before the people at the coming general election. Last weekend the Prime Minister said that his goal was to help the people whom he referred to as the "have-nots". If that is so, can the Minister explain why the tax changes in this Finance Bill give a bonus of £5.50 per week to the richest 10 per cent. of the population while taking 50 pence per week away from the poorest 10 per cent.? What a contemptible exercise! This is not an abberation. Year after year the Government's tax changes have hit the poor and benefited the rich. As the Institute for Fiscal Studies has recently shown, the top 1 per cent. of earners with an average income of £120,000 per year have received 30 per cent. of all the tax cuts since 1979 but now pay only 4 per cent. of the tax rises that have been imposed since 1992. Is that a policy for the "have-nots"? No, my Lords. This Government are committed to a policy of inequality. They revel in the misery of the poor. The Prime Minister's new concern for the have-nots is sheer hypocrisy.
I am sure noble Lords are aware that the underlying weakness of our economy derives from a failure to invest. Often it seems that this Government care about investment only when it is carried out by foreigners. If only British investors were given the same assistance that foreign investors are given. It is only by greater domestic investment in machines, in the skills and ideas of our people and in innovation for the future that the foundations of the economy can be restored.
Of course, it has been necessary for the Labour Party to accept the overall expenditure plans proposed by the Government for this year. The economy that we will inherit has such fundamental weaknesses that it can do no other. But at the coming election the Labour Party proposes a new framework for economic policy that is not merely investment-friendly but sees increased investment in Britain's future as the fundamental goal of economic policy, from a commitment to monetary stability to the new welfare to work programme financed by the windfall tax on the utilities, from a commitment to the golden rule of public spending which ensures that the Government borrow only for investment to the new tax proposals to encourage long-term investment, from the new university for industry to make the latest skills available to all to the provision of long term finance for small businesses. Every new initiative will be geared to the goal of increasing investment. That is the new economic policy which will build the underlying strength that our economy so sadly lacks today. From that underlying strength will come the greater fiscal revenues to ensure that Labour keeps its promise not to increase tax rates. It is that underlying strength that Tory economic policy has singularly failed to deliver. For that
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reason, on 1st May the British people will vote for new policies and a new government that they can trust. That is why they will vote for new Labour.
3.24 p.m.
Lord Taverne: My Lords, at this stage of the Parliament I doubt whether the nation is waiting breathless for the speeches to be made on the Second Reading of the Finance Bill in this place. Nevertheless, I should like to make two points on the Finance Bill which I believe are of importance.
I regret to say that it seems that we shall start the election campaign in an atmosphere of unreality and hypocrisy. Let us look for a moment at the major promises relating to tax and spending that have been made by the two main parties. Both the Conservative Party and the Labour Party are committed to improving schools and the National Health Service. Both are committed to maintaining the present expenditure plans of the Government as announced in the Budget. The Labour Party says that there will be no rise in income tax rates. Both promise cuts. The Conservatives promise further cuts in income tax, and Mr. Brown has announced that it is Labour's aim to reduce the lower rate band to 10 per cent. The Finance Bill already sets off along that path—a path that the Government have followed fairly consistently—by lowering income tax rates to 23 per cent.
Unfortunately, these aims are incompatible. I take the example of the National Health Service. Since 1979 expenditure on the NHS has increased in real terms by approximately 72 per cent. For that the Government deserve some credit. The paradox is that, despite that very substantial increase in expenditure on the health service, there is a mass of anecdotal evidence of shortages, rationing, people being unable to get the treatment they need, people being unable to get beds and cases where kidney patients who are over 65 are not allowed to have dialysis. In some respects in this field we have the worst record in Europe. In Britain only some 6 per cent. of kidney patients over 65 receive dialysis treatment, whereas the European average is well over 25 per cent.
Why is this so? There are two main reasons. First, the population has aged, and the older population makes a much greater demand on the health service. Secondly, better and more expensive drugs and treatment are available and the costs rise much faster than the resources that have been devoted to the health service. Despite an average increase in real terms in expenditure on the health service over the past 20 years of some 3 per cent. per annum, the National Health Service has not kept up with rising costs and there is considerable evidence of decay.
What are the Government's plans, endorsed by the main Opposition party; for the National Health Service under the public expenditure programme? The plan is that it should grow in real terms by 0.3 per cent. over the next three years. Inevitably, that means that the quality of treatment will suffer and the health service will fall further into decay.

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There is an argument between the Government and the Labour Party about cutting red tape and the number of managers. That will make hardly any difference to the future of the National Health Service. It is a matter of unreality and hypocrisy. It may be that one can squeeze extra resources for the health service from extra charges as recommended by the organisation Health 2000. However, my view—which I believe corresponds to reality—is that the only way in which the NHS can maintain, let alone improve, treatment is for us to spend substantially more on it. It seems to me that the only way that can be done is by adopting the suggestion in this week's Economist—which is surprisingly radical given its general views—that there should be an hypothecated income tax, separated from the rest of income tax, which goes solely to the National Health Service. It would make the issues much clearer. I believe that if people knew where the money was going they would be more willing to pay. The alternative that must be faced by both the Government and the Labour Party is that there will be a two-tier health service: an upper tier with more specialised and better treatment, financed by insurance; and a lower, poorish emergency service financed out of taxation. That is my first point.
My second point is concerned solely with taxation. A good deal has been said about helping the poor—the have-nots—but it is now unfortunately clear that both major parties reject any redistributive role for taxation. I joined the Labour Party in my teens because I supported its stand on social justice. I left the Labour Party in the early 1970s because its sense of social justice—if I may over-simplify things—was not combined with any sense of realism. Today, I salute the Labour Party for its conversion to realism, but I regret that it seems virtually to have abandoned any concern for social justice. That is evident from its approach to taxation and to the Finance Bill.
I wish to look for a moment at Mr. Brown's alternative strategy. I recognise that the main priority must be to get people out of the poverty trap and into work, but there will inevitably be a sizeable group—deserted wives, single mothers, disabled people, sick people, old people who depend solely upon the basic state pension, the unskilled, the dregs, as it were of the school system—which will be dependent upon the state and upon very low earnings. What do cuts in income tax do for them? Practically nothing, because most of them do not pay tax. What will the extension of the lower rate band of 20 per cent. do for them? Virtually nothing. As the IFS has shown in the 1997 green budget it benefits the seventh and eighth deciles of the income groups many times more than the bottom three deciles.
What about Mr. Brown's proposals for a 10 per cent. lower rate? That, too, benefits the top five deciles or, if one likes, the top half of earners, much more than it benefits the bottom half. It is claimed that it will help with the poverty trap. The IFS has done some research on that. Let me quote from its 1997 green budget:
"A family receiving family credit and housing benefit currently faces a marginal tax rate of 96.85 per cent. due to very high benefit withdrawal rates. If the lower rate of tax were cut to 10 per cent. its marginal tax rate would only fall to 96.4 per cent.".
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Big deal! It is down from 96.85 per cent. to 96.4 per cent.
The best way to help the lower paid, or the poor, through income tax is by extending allowances, preferably by turning them into tax credits which are worth the same to high and low rate taxpayers, but that, too, does not much help the poverty trap.
But what stands out a mile is that the way to make tax cuts help the poor is to cut the taxes they actually pay; that is, VAT. A cut in VAT helps the poor most and the richest least.
The tragedy about Mr. Brown's pledge that there will be no change in income tax rates—I have great respect for Mr. Brown—is that the time will come when he will have to raise taxes. If the Government were by any chance re-elected, they, too, would have to raise taxes. There can be very little doubt that this will have to be done. Whoever the Government are, they will either have to raise taxes or let schools and health become worse. If there is to be no change in income tax rates, then we might be able to get something out of changing the way allowances are charged, but the only real weapon for getting extra tax will be VAT which hurts the poorest most.
It is not fashionable to be concerned with poverty. Both main parties now reject taxation as a way of redistribution. I should like to voice a note of dissent. The primary role of taxes is to raise revenue, and to do so fairly according to ability to pay, but there is still room for a redistributive element, provided that there is not a disincentive to wealth creation.
The Finance Bill reduces taxes. It also raises some taxes. But in so far as it reduces taxes that, to my mind, is a grave error for which the next government will have to pay. If there had been room for tax cuts, then the Bill should have had more regard for social justice. Concern for social justice seems to have been abandoned by Conservatives, and, I regret, the Labour Party alike.
3.35 p.m.
Lord Boyd-Carpenter: My Lords, I am delighted that we have had some little debate this time on the Finance Bill. Noble Lords will recall that the previous Finance Bill was not debated as a result of a government and opposition decision. Today we have had a short debate, inadequate to cover enormously complex and difficult issues that arise on the Finance Bill, but still we have, as a matter of principle, had some discussion of it.
I do not wish to obtrude unduly upon that restraint and, in the circumstances of this Session, inevitable state of affairs. But I want to stress, as the noble Lord opposite stressed, the desirability of cutting VAT. VAT is a very bad tax indeed. It falls, as the noble Lord said, particularly upon those least able to afford it. It is an inflationary tax. It is, indeed, a damaging piece of taxation.
The point that I should like to make on this Second Reading of the Finance Bill is that the government of the day, whoever they may be, should undoubtedly, when we return, cut VAT heavily and restore the ordinary system of taxation. I could of course dilate at

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some length on the various highly complicated issues with which my noble friend the Minister dealt so clearly and effectively, but that, I think, would be contrary to the wishes of the House. But what is important is that the House has established the right to debate the Finance Bill and to make such points as the one I have ventured to make about VAT. If the expression of opinion in this House against VAT is effective, as I believe that it will be, we shall be beginning to address in the right direction the handling of the Finance Bill—that is, in debating it and amending it.
3.38 p.m.
Lord Ezra: My Lords, the time has come in this short debate to wind up and to summarise the position as it has been deployed by previous speakers, and to make a few points in conclusion. In trying to be objective, I should like to start by describing what I believe are the good points of the Bill. First, it has been limited in its scope. It has been a fairly cautious Bill, which I think is appropriate bearing in mind the present delicate balance of the economy.
Secondly, I very much welcome what has been done to help small firms. That is highly desirable. Thirdly, as the noble Lord reminded us, it has been a shorter Bill. It is still pretty long. It is over 200 pages long, but it is easier to manage than the two volumes that we have been used to in recent times.
That said, however, and looking at it in the longer perspective, I believe that it is an opportunity missed. When one looks back on the development of the British economy over the years—certainly over the years since the last world war—what emerges strongly is that we have tended to consume at an increasing rate, but at the same time our investment has not developed in line with that. So we have been strong on consumption, but relatively weak on investment.
I should like to see in successive Finance Bills an attempt to correct that imbalance. Unless we can do so, we shall soon run out of the ability to consume more. Of course, increased consumption is highly desirable, but it has to be supported by corresponding increases in investment. Our performance in investment, even with the benefit of the inward investment of which noble Lords opposite continue to remind us, compares poorly with our main competitors.
The Bill, if subjected to that test, does not show up too well. First, it further stimulates consumption by the admittedly modest reductions in income tax. Many people believe that probably this is not the time to reduce direct taxation because of all the other calls on the economy. Furthermore, later this year there will be a windfall payment by the building societies which will be converting to PLCs. That has been variously estimated at anything from £10 billion to £18 billion, which is the equivalent to several pence off income tax. No one knows how much of that very large windfall will go into increased consumption or increased savings, so there could be a big boost to consumption.
As regards investment, the only measure taken in the Bill is that to which the Minister referred in opening; namely, in Schedule 14, which reduces the rate of
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write-down for taxation purposes of major investment. That means that in long-term, basic investment there will be less of an incentive. That will be a blow for the heavy engineering industry and will mean that those who are involved in this type of development must think again in the light of the new legislation. I should like to see more fiscal incentive for investment rather than less.
Furthermore, we have the unfortunate situation in the public sector where investment in certain vital areas is diminishing, despite what the Government may say to the contrary. We have been talking a great deal about the Government's plans for London Underground. Although the amount of funding which the Government provide to the Underground has risen over the years, it is, on the basis of statements by the management of the Underground, inadequate to meet normal maintenance. Therefore, users of the Underground can expect more delays as a result of signalling failures and other deficiencies. The Government's solution is to privatise, but on their own estimate, if they were returned to power, it would take three years before a privatisation Bill could be introduced and five years of privatisation before investment in the Underground could reach a proper level. That is eight years from now, but what will happen during that period? It is a gloomy prospect, indeed.
We are led to believe that the Government in their manifesto will be putting forward proposals on the Post Office. It happens to be a successfully run public-sector company, but it is now being pushed into great difficulty by the Government taking virtually the whole of its post-tax profits in enforced dividends. That is totally unheard of in the private sector. No quoted company would be distributing more than about one-third of its post-tax earnings, but Government have been taking up to 90 per cent. from the Post Office.
In my opinion, there are insufficient stimuli to investment in the private sector, and in vital investment in the public sector there is a deficiency. It should be the task of successive Finance Bills to try to put the balance right between stimulating consumption on the one hand and increasing investment on the other.
3.44 p.m.
Lord Mackay of Ardbrecknish: My Lords, this has been a short but interesting debate. Perhaps I may say to my noble friend Lord Boyd-Carpenter that my recollection of my time as Minister answerable for Treasury matters at this Dispatch Box is that we have debated the Finance Bill every year. We may not be allowed to amend it, but that is by long tradition and convention. Perhaps my noble friend is confusing the Finance Bill with the Consolidated Fund Bill, which I managed to get through your Lordships' House quickly yesterday afternoon, perhaps without my noble friend noticing.
We have had a number of debates on the economy in recent times. One took place a fortnight ago and there were a number in the autumn and early winter. We have not been short of debates. The noble Lords, Lord Ezra and Lord Eatwell, and myself have discussed these matters on a number of occasions to such an extent—

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I hope that he will not mind me saying so—that on our way to the debate the noble Lord, Lord Ezra, expressed the hope that I would not give my usual speech extolling the virtues of the British economy and how well we are doing. I promised him that I would try to contain my enthusiasm in the interest of getting the business through.
However, I must make one or two comments in summing up. My noble friend Lord Boyd-Carpenter and the noble Lord, Lord Taverne, showed hostility to value added tax. Perhaps my noble friend and I can argue that on another day. However, I am surprised that the noble Lord, Lord Taverne, is not aware of the limitations imposed on any government in reducing value added tax. It is called the Sixth VAT Directive and it has something to do with the European Union. I understand from some of the noble Lord's previous interventions that he is an enthusiastic supporter and would tie us in even further to the European Union—
Lord Taverne: My Lords, when VAT was at a lower level, at 15 per cent., there was not to my knowledge any infringement of any European Union directive. I am sure that the noble Lord will agree.
Lord Mackay of Ardbrecknish: My Lords, indeed, one is allowed to have a standard rate and two reduced rates, but one is not allowed to reduce the rates of value added tax. That was the argument that the noble Lord, Lord Taverne, was making. Some people—I do not subscribe to their view—suggest that the closer we go to Europe the more likely we are to have to extend our rates of VAT because our European friends will insist on that in the course of harmonisation. If that happens, I presume that the noble Lord, Lord Taverne, and his party will, as always, welcome those suggestions from the European Union. However, I must not be tempted into a European debate because we have plenty of them, and the noble Lord, Lord Bruce of Donington, is beginning to look at me with a smile on his face!
When we previously debated these issues I indicated some of the huge improvements that have been made to our economy. Unemployment has fallen again, as I mentioned in my speech and as my noble and learned friend Lord Fraser of Carmyllie mentioned at Question Time. The noble Lord, Lord Eatwell, posed a question about jobs being created and the fall in unemployment. As I am sure he is aware, it is most unusual for a fall in unemployment to be mirrored exactly by rises in employment. Nevertheless, in the past few years we have seen an excellent record of rising employment alongside falling unemployment. According to respective figures from the Labour Force Survey, employment has risen substantially during this recovery. Approximately 900,000 new jobs have been created since the end of 1992. Of course, all of us want to create more jobs, but I believe that the Government's economic policy does that.
As always, the noble Lord, Lord Ezra, raised the question of investment. I know that he is always concerned about investment. He said that there were not many measures in the Finance Bill to encourage investment. Whether it is inward investment or
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investment by British firms in Britain, they are encouraged to invest not only by what is contained in the Finance Bill; they are encouraged by the economic climate created by the Government. It is a climate of low inflation, low interest rates, flexible labour markets, no social chapter and no minimum wage. Those are part of the background which creates a climate which helps investment. We have certainly achieved that position and we are determined to maintain it. Perhaps I may underline the last two points that I made: no signing up to the social chapter and no minimum wage.
The noble Lord, Lord Taverne, indicated that the Liberal Democrats are now the great tax-raising party. I thought that he objected hugely the last time that I suggested that, as a taxpayer in Scotland. I might be looking at a standard rate of 30p or 31p in the pound. Of course, the Liberal Democrats are enthusiasts for the so-called "tartan tax" which would add 3p. They want more money spent on education and have resisted the two 1 p drops in the standard rate of tax that we have had-25p to 24p and 24p to 23p—and it does not take a calculator to work out that one quite quickly reaches 30p in the pound. From what I heard today, the noble Lord would like to tax even more. He may wish to tax in other ways but certainly, if one was to get that from the standard rate of tax, one would need to do that.
But one cannot divorce taxation from the money that we raise from spending. The noble Lord made much of the health service. I was grateful to him for conceding that since 1979 the real terms increase in expenditure on health has been 72 per cent. and, indeed, if one looks forward to next year, it will be 75 per cent. That has come through not in the kind of demoralised health service which the noble Lord tried to portray and which is normally painted by the spokesman on health from the party opposite. That comes through in waiting times, which are at an all-time low, and in more patients being treated than 18 years ago. As the noble Lord pointed out quite rightly, there are now some remarkable treatments both in relation to surgery and drugs which were simply inconceivable 18 years ago. We have 10 per cent. more nurses and 25 per cent. more doctors than we had at the beginning of the 1980s.
The noble Lord suggested also that we should spend a lot more money on education. One must look at our record on education. I take only one statistic, which I believe is the most impressive one. Every time that I see it, I feel that we should say it again and again, not just as a party political point but as a point to make to the world outside the United Kingdom to show the dramatic improvement in our education system. In 1979, one young person in eight went on to university. Now it is one in three. The United Kingdom has the second highest graduation rate for bachelors degrees in the European Union after Denmark. As a member of this Government for at least some of that time, with a small responsibility for Scottish education at one time, I am mightily proud of our record on education, especially with regard to higher education.
Therefore, we have made huge progress over the years and that has been achieved through sensible balancing of the budget.

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The noble Lord, Lord Eatwell, told your Lordships about higher taxes and listed them. He seemed to say that he was against higher fuel duties. I shall wager that that is not what the party opposite will say when they try to cultivate the green vote over the next five or six weeks. He knows why we have decided to have higher fuel duties. We have done that as a means to encourage people to look carefully at the consumption of fossil fuels and the pollution which they create. I was not sure whether he was in favour of leaving the loopholes which we are seeking to close in the Bill by describing them as tax-raising measures.
But he made no mention of the cuts in taxation to 23p in the pound and the increase in allowances which, as the noble Lord, Lord Taverne, pointed out, help lower paid people in particular. Therefore, we have taken those steps to cut taxation. But as I said to your Lordships on a number of occasions, taxation must be balanced against expenditure. If one wishes to reduce and control taxation, one must reduce and control expenditure. Speaking also as the person who comes to this House representing the largest spending department in Whitehall, I have never noticed any support from the Benches opposite for any measure which I bring to your Lordships' House to control that social security budget.
On the general question of the PSBR, mentioned by the noble Lord, Lord Eatwell, it is on a clear downward path. The 1996 Budget ensures that that continues. The PSBR halved as a share of GDP between 199–4 and 199–7 and it is projected to be close to balance by the end of the century.
Your Lordships may be interested to know what that figure was during the course of the last Labour Government. The PSBR this year is less than half the average that it was under the last Labour Government. Therefore, I do not believe that we can take any lessons on the PSBR from the party opposite.
Therefore, in our economy we have strong growth, low inflation, falling unemployment, strong export performance, low mortgage rates and falling public borrowing. We have sound public finances and tax down from 33p in the pound as the standard rate in 1979 to 23p in the pound, its lowest level for 60 years. And, as I say, we have more than bettered the statutory indexation on allowances. That helps everyone in the country and, compared with the year before the last election, a family on average earnings should be more than £1,000 per year better off.
In the last debate on the economy a fortnight ago, the noble Lord, Lord Eatwell, quoted from a Lloyd's Bank economic bulletin. He did not read it all and I do not blame him for that. But I should like to give another quote from that bulletin which states:
"There is evidence that the UK economy has become more stable recently both in absolute terms and relative to other countries. Sustaining this improvement would remove an important barrier to faster long-term growth in living standards".
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This Government are determined to sustain that improvement, and this budget helps. I commend the Finance Bill to your Lordships.
Lord Eatwell: My Lords, before the noble Lord sits down, perhaps I may be permitted to make a brief comment about the manner in which he has presented the Government's economic policies in the many debates in which I have been across the Dispatch Box from him during the past three years.
I believe that everyone in the House will agree that the noble Lord, Lord Mackay, has presented his arguments, answered questions and often evaded questions with considerable wit and charm. Of course, he has defended the indefensible, but he has done that with spirited good humour and cheerfulness and has been assisted on a number of occasions by extremely well-trained speech writers—trained by me.
Before we conclude consideration of this Finance Bill, I should like to thank him for his many courtesies in our frequent debates and to wish him well in the forthcoming long years on the Opposition Benches.
Lord Mackay of Ardbrecknish: My Lords, I thank the noble Lord, Lord Eatwell. I hope that the House has enjoyed our exchanges, which have often included the noble Lord, Lord Ezra, as much as, I suspect, the three of us have enjoyed participating in them.
On Question, Bill read a second time; Committee negatived. Then, Standing Order 44 having been dispensed with (pursuant to Resolution of 18th March), Bill read a third time, and passed.

Education Bill
3.57 p.m.
The Minister of State, Department for Education and Employment (Lord Henley): My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Lord Henley.)
On Question, Motion agreed to.
[Amendments Nos. 42 and 43 had been withdrawn from the Marshalled List.]
Clause 32 [Home-school partnership documents]:
[Amendment No. 44 not moved.]
[Amendment No. 45 had been withdrawn from the Marshalled List.]
Lord Northbourne Lord Northbourne moved Amendment No. 46:
Page 28, line 29, at end insert ("the need for the terms of the partnership document and parental declaration to be so worded that they cannot be used by schools to exclude pupils solely because of the economic or social circumstances of their parents, and to").
The noble Lord said: My Lords, in the context in which this Bill is now being dealt with, I hope that it is reasonable for me to ask the Minister to give the

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House an assurance that the important issue which is raised by this amendment will not be entirely lost and will be raised with the new Secretary of State, whoever that may be, in the next government so that it can be taken into account during the preparation of guidelines on the implementation of the Bill. I beg to move.
Lord Henley: My Lords, I understand the concerns expressed by the noble Lord. I can certainly give an assurance that we shall reflect on those concerns when drawing up the guidance on home-school partnership documents and their use in school admission arrangements.
Lord Northbourne: My Lords, I am grateful for that assurance from the Minister. Accordingly, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 47 to 51 had been withdrawn from the Marshalled List.]
[Amendment No. 52 not moved.]
[Amendments Nos. 53 to 61 had been withdrawn from the Marshalled List.]
Lord Henley moved Lord Henley moved Amendment No. 62:
After Clause 38, insert the following new clause—
PROVISION OF INFORMATION ABOUT INDIVIDUAL PUPILS' PERFORMANCE
(" . After section 537 of the Education Act 1996 there shall be inserted
"Provision of information about individual pupils' performance.
537A.—(1) The Secretary of State may by regulations make provision requiring—

(a) the governing body of every school which is—

(i) maintained by a local education authority, or

(ii) a grant-maintained school, or

(iii) a special school which is not maintained by a local education authority, and

(b) the proprietor of each independent school,

to provide to the Secretary of State such individual performance information relating to pupils or former pupils at the school as may be prescribed.
(2) In this section "individual performance information" means information about the performance of individual pupils (identified in the prescribed manner)—

(a) in any assessment made for the purposes of the National Curriculum or in accordance with a baseline assessment scheme (within the meaning of Chapter I of Part VI of the Education Act 1997);

(b) in any prescribed public examination;

(c) in connection with the attainment of any vocational qualification; or

(d) in any such other assessment or examination, or in connection with the attainment of any such other qualification, as may be prescribed.

(3) The Secretary of State may provide any information received by him by virtue of subsection (1)—

(a) to any prescribed body or person, or

(b) to any body or person falling within a prescribed category.

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(4) Any body or person holding any individual performance information may provide that information to any body to which this subsection applies; and any body to which this subsection applies—

(a) may provide any information received by it under this subsection—

(i) to the Secretary of State, or

(ii) to the governing body or proprietor of the school attended by the pupil or pupils to whom the information relates; and

(b) may, at such times as the Secretary of State may determine, provide to any prescribed body such information received by it under this subsection as may be prescribed.

(5) Subsection (4) applies to any body which, for the purposes of or in connection with the functions of the Secretary of State relating to education, is responsible for collating or checking information relating to the performance of pupils—

(a) in any assessment or examination falling within subsection (2)(a), (b) or (d), or

(b) in connection with the attainment of any qualification falling within subsection (2)(c) or (d).

(6) No individual performance information received under or by virtue of this section shall be published in any form which includes the name of the pupil or pupils to whom it relates.
(7) References in this section to the attainment of a qualification of any description include references to the completion of any module or part of a course leading to any such qualification."").
The noble Lord said: My Lords, in moving the above amendment, I shall speak also to Amendment No. 115. These amendments meet the purpose of those tabled by the noble Lord, Lord Morris, and the noble Baroness, Lady Thomas, in Committee. They enable the Secretary of State to collect the performance data of individual pupils and to provide it to LEAs and others. The data will help schools, LEAs and the Government to analyse performance and will underpin school improvement policies—including target-setting and benchmarking. The exact requirements will be set out in regulations on which there will be full consultation. I can offer assurance that the amendments provide appropriate safeguards to protect the confidentiality of individual pupil data, and that they will not force independent schools to participate in national curriculum assessment. I beg to move.
Lord Morris of Castle Morris: My Lords, the issue was debated thoroughly in Committee. In our view, the Government's amendments meet the objectives that were set out in the speech made by the noble Baroness, Lady Thomas; namely, that the Secretary of State should be able to give pupil level information electronically to LEAs to assist with local work on value added and the setting of performance targets. The operation of this new power by the Secretary of State will, we hope, be subject to much discussion after the Bill has been enacted. However, the clause will enable all those with a legitimate interest to obtain the data that they need.
Lord Tope: My Lords, unfortunately my noble friend Lady Thomas cannot be with us this afternoon. However, I know that she would wish me to express our support for the amendments on her behalf. I should also like to thank the Minister for the helpful way in which he approached the matter; and I do so with pleasure.
On Question, amendment agreed to.
[Amendments Nos. 63 to 65 had been withdrawn from the Marshalled List.]
Schedule 6 [The Qualifications and Curriculum Authority]:
Lord Henley Lord Henley moved Amendments Nos. 66 to 70:
Page 70, leave out lines 27 and 28.
Page 70, line 38, leave out first ("Treasury") and insert ("Minister for the Civil Service").
Page 70, line 38, leave out second ("the Treasury") and insert ("he").
Page 70, line 39, leave out ("the Treasury") and insert ("he").
Page 70, line 44, leave out ("Treasury") and insert ("Secretary of State").
The noble Lord said: My Lords, I should like to move Amendments Nos. 66 to 70 en bloc and to speak also to Amendments Nos. 80 to 84 and 117.
These are technical amendments tabled on the advice of the Treasury. Their purpose is: to remove the requirement for the Treasury's consent to decisions by the Secretary of State about payments to members of the QCA and ACCAC; to transfer decisions concerning the terms on which people who are both members and officers of QCA and ACCAC should qualify for pensions from the Treasury to the Secretary of State; and to take account of the transfer of responsibility for the Vote from which Civil Service pensions are paid from the Treasury to the Cabinet Office. I understand that the Treasury is looking to introduce legislation to change the many previous pieces of legislation where these procedures apply to ensure that all non-departmental public bodies work to the same practices. I beg to move.
Lord Morris of Castle Morris: My Lords, we welcome the amendments.
On Question, amendments agreed to.
[Amendments Nos. 71 to 75 had been withdrawn from the Marshalled List.]
Clause 44 [Supplementary provisions relating to discharge by Authority of their functions]:
Lord Henley Lord Henley moved Amendment No. 76:
Page 37, line 3, leave out ("and").
The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 77, 79 and 86 to 88. I promised during the debate in Committee that I would consider further the amendment moved by the noble Baroness, Lady David, and return at Report stage with appropriate amendments to take account of all learners with special needs, learning difficulties and disabilities in schools, colleges and publicly-funded education.
The amendments place a duty on the new authority and ACCAC to take into account the requirements of persons with special learning needs when carrying out their functions. In amending Clauses 44 and 50, rather than Clauses 41 and 47, as proposed by the noble Baroness in Committee, the duty will apply to all the functions of the authority rather than just those relating to pupils of compulsory school age. I beg to move.
Baroness David: My Lords, I should like to thank the Minister very much for producing the amendments
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in response to amendments that I moved in Committee. I am very pleased with this reference to children with special educational needs—indeed, all the special educational needs—and that the authority will have to pay more attention to them than it would have done if the Bill been left in its original form.
Lord Campbell of Alloway: My Lords, I, too, should like to thank the Government as I have an interest in the matter.
On Question, amendment agreed to.
Lord Henley Lord Henley moved Amendment No. 77:
Page 37, line 6, at end insert (", and
() the requirements of persons with special learning needs.").
On Question, amendment agreed to.
[Amendment No. 78 had been withdrawn from the Marshalled List.]
Lord Henley Lord Henley moved Amendment No. 79:
Page 37, line 27, at end insert—
("() In this section "persons with special learning needs" means—
(a) children with special educational needs (as defined in section 312 of the Education Act 1996); or
(b) persons (other than children as so defined) who—

(i) have a significantly greater difficulty in learning than the majority of persons of their age, or

(ii) have a disability which either prevents or hinders them from making use of educational facilities of a kind generally provided for persons of their age.").

On Question, amendment agreed to.
Schedule 7 [The Qualifications, Curriculum and Assessment Authority for Wales]:
Lord Henley Lord Henley moved Amendments Nos. 80 to 84:
Page 74, leave out lines 13 and 14.
Page 74, line 24, leave out first ("Treasury") and insert ("Minister for the Civil Service").
Page 74, line 24, leave out second ("the Treasury") and insert ("he").
Page 74, line 25, leave out ("the Treasury") and insert ("he").
Page 74, line 30, leave out ("Treasury") and insert ("Secretary of State").
On Question, amendments agreed to.
[Amendment No. 85 had been withdrawn from the Marshalled List.]
Clause 50 [Supplementary provisions relating to discharge by Authority of their functions]:
Lord Henley Lord Henley moved Amendments Nos. 86 to 88:
Page 40, line 10, leave out ("and").
Page 40, line 13, at end insert (", and
() the requirements of persons with special learning needs.").
Page 40, line 34, at end insert—
("() In this section "persons with special learning needs" has the same meaning as in section 44.").
On Question, amendments agreed to.
Clause 56 [Inspection of LEAs]:
Lord Henley Lord Henley moved Amendment No. 89:
Page 44, line 15, leave out ("each") and insert ("a").
The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendment No. 90. These amendments seek to improve the wording of Clause 56(6), with regard to the collection of information from LEAs by the chief inspector. In particular, they remove the pre-set condition that regulations must require each LEA to supply information on an annual basis. They substitute a more flexible arrangement to allow the timing of the supply of information to be adjusted through the regulations. This recognises, among other things, that it may not always be necessary to collect information annually from all LEAs. The Secretary of State would consult LEAs, and others, before making the regulations. I therefore commend the amendments to the House. I beg to move.
Lord Morris of Castle Morris: My Lords, lest we should seem to be rattling through the proceedings at an unseemly speed, I have just one question to ask the Minister. The noble Lord said that the amendment relates to the frequency of reports from LEAs to HMCI. Certainly the LEAs will be grateful for what appears to be the purport of the amendment. They may well say with King Richard II:
"I give this heavy weight from off my head".
While recognising that relief from the onerous task of providing HMCI with annual reports is welcome, the amendment seems to suggest that reports might be made very much more frequently. Can the Minister say whether there is anything to stop that happening, because that could be a very considerable burden on the LEAs?
Lord Henley: My Lords, I agree that it would be a very considerable burden on the LEAs if they were asked to do this more often than on an annual basis. That is certainly not our intention. As I made quite clear, the important point here is that we want to remove burdens on the LEAs because we do not think that it is always necessary for them to produce such a report every year. That is why my right honourable friend will consult the LEAs precisely on the appropriate regulations before making such regulations.
Lord Morris of Castle Morris: My Lords, I am grateful to the Minister for that assurance. I am quite sure that LEAs will in years to come quote that particular passage from Hansard to their immense relief.
On Question, amendment agreed to.
Lord Henley Lord Henley moved Amendment No. 90:
Page 44, line 17, leave out ("on such annual basis as may he prescribed.") and insert ("in such form and—

(a) within such period following a request made by the Chief Inspector in any prescribed circumstances, or

(b) at such other times, as regulations may provide.").

On Question, amendment agreed to.
[Amendments Nos. 91 to 97 had been withdrawn from the Marshalled List.]
Lord Henley Lord Henley moved Amendment No. 98:
Before Clause 65, insert the following new clause—
("Exceptional educational provision
EXCEPTIONAL EDUCATIONAL PROVISION
.—(1) Section 19 of the Education Act 1996 (exceptional provision of education in pupil referral units or elsewhere) shall be amended as follows.
(2) In subsection (1) (duty of local education authority to make arrangements for provision of suitable full-time or part-time education, at school or otherwise, for excluded children etc.), the words "full-time or part-time" shall be omitted.
(3) In subsection (4) (power of local education authority to make arrangements for provision of suitable full-time or part-time education, otherwise than at school, for excluded young persons etc.), the words "full-time or part-time" shall he omitted.
(4) After that subsection there shall be inserted—
"(4A) In determining what arrangements to make under subsection (1) or (4) in the case of any child or young person a local education authority shall have regard to any guidance given from time to time by the Secretary of State.").
The noble Lord said: My Lords, in moving the above amendment, I shall speak also to Amendments Nos. 114 and 118. The noble Baroness, Lady Ramsay, moved an amendment in Committee to remove the words "or part-time" from Section 19 of the 1996 Act and thereby to require that LEAs always arrange full-time education for pupils who are out of school for whatever reason. As the noble Baroness will be aware, I had some sympathy for her aims and promised to consider further whether we could find a way of taking some useful steps in the direction that she proposed without giving rise to the legal, financial and practical difficulties which would have arisen from the amendment that she tabled.
The noble Baroness will also be aware that she and I and, indeed, the noble Baroness, Lady David, discussed such matters privately. I believe that these amendments meet the commitments that I made. By deleting the words "full-time or part-time" from Section 19, more emphasis is put on the requirement that LEAs arrange suitable education for pupils who are out of school. I believe that the amendments offer a practical way of meeting the concerns which were raised, and trust that they are generally acceptable. I beg to move.
Lord Morris of Castle Morris: My Lords, we welcome the amendments and no doubt my noble friend behind me may wish to express her more detailed form of gratitude.
Baroness Ramsay of Cartvale: Yes, my Lords; I was going to do that in any event. I am most grateful to the Minister for seeing both myself and my noble friend Lady David and, indeed, for the fruitful discussions that we had. We welcome the amendments. As the Minister knows, they do not cover everything that we wanted but, so far as we are concerned, they represent an improvement on the 1993 Act. By taking out "full-time" and "part-time" but leaving in the positive word "suitable", we hope—I think there is general agreement with the Minister on this—"suitable education" will be interpreted to mean, except

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in circumstances where it is quite impossible, that there should be full-time education, which certainly should be effective education, for those children out of school. I am grateful to the Minister for having listened to us and for having moved towards our objectives.
Baroness David: My Lords, the Minister was kind enough to discuss the matter with me as well as the noble Baroness, Lady Ramsay. I thank the Minister for going a long way towards meeting what we wanted. It was not quite everything we wanted, but he went a long way. I hope that the new clause will be interpreted in the way we want, so that children will not receive only one or two hours' education a week and will not be left roaming the streets. I do not know whether guidance will be issued on this matter. I wonder whether the Minister can tell us that and when the guidance might be available. It would be interesting to see it.
Lord Henley: My Lords, if there is not guidance, I should be very much surprised. Guidance more or less comes out of our ears, if I can put it that way. As to when guidance would be ready, I am not in a position to be able to advise the noble Baroness but I shall let her know in due course.
On Question, amendment agreed to.
[Amendments Nos. 99 to 102 not moved.]
[Amendments Nos. 103 to 105 had been withdrawn from the Marshalled List.]
[Amendments Nos. 106 to 110 not moved.]
Clause 65 [Management committees for pupil referral units]:
[Amendments Nos. 111 to 113 not moved.]
Schedule 9 [Minor and consequential amendments]:
Lord Henley Lord Henley moved Amendment No. 114:
Page 80, line 35, at end insert—
(" . In section 4(2) of that Act (schools: general)
(a) for "For" substitute "Nothing in subsection (1) shall be taken to preclude the making of arrangements under section 19(1) (exceptional educational provision) under which part-time education is to be provided at a school; and for"; and
(b) omit "(pupil referral units)".").
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 98. I beg to move.
On Question, amendment agreed to.
4.15 p.m.
Lord Henley Lord Henley moved Amendment No. 115:
Page 83, line 46, at end insert—
(" . In section 537(4) of that Act (power of Secretary of State to require information from governing bodies etc.), at the end add "; and regulations under this section may provide that, in such circumstances as may be prescribed, the provision of information to a person other than the Secretary of State is to be treated, for the purposes of any provision of such regulations or this section, as compliance with any requirement of such regulations relating to the provision of information to the Secretary of State.'"').
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 62. I beg to move.
On Question, amendment agreed to.
[Amendment No. 116 not moved.]
Lord Henley Lord Henley moved Amendment No. 117:
Page 84, line 45, at end insert—
(". In Schedule 2 to that Act (the funding authorities), paragraph 9(2) (superannuation of employees) shall have effect (and be deemed always to have had effect) with the following amendments, namely—

(a) for "the Treasury", in the first place where it occurs, substitute "the Minister for the Civil Service"; and

(b) for "the Treasury". in the other places where it occurs. substitute "he".").

The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 66. I beg to move.
On Question, amendment agreed to.
Schedule 10 [Repeals]:
Lord Henley Lord Henley moved Amendment No. 118:
Page 86, line 19, column 3, at beginning insert—
("In section 4(2), the words "(pupil referral units)".
In section 19(1) and (4), the words "full-time or part-time".")
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 98. I beg to move.
On Question, amendment agreed to.
Then, Standing Order 44 having been suspended, (pursuant to Resolution of 18th March):
Lord Henley: My Lords, I beg to move that the Bill be now read a third time.
Moved, That the Bill be now read a third time.— (Lord Henley.)
Clause 1 [Relaxation of controls on changes relating to selective admissions]:
Lord Henley Lord Henley moved Amendment No. 1:
Leave out Clause 1.
The noble Lord said: My Lords, in moving Amendment No. 1 I wish to speak also to Amendments Nos. 2 to 40. I believe those are all the remaining amendments on the Marshalled List.
It is with much regret that I move these amendments which remove Parts I and II from this Bill together with their schedules and all the consequential amendments. With the announcement of the general election there has been much negotiation to agree progress on the legislative programme. As part of those discussions, the Government are pleased that we have agreement to proceed with all of the measures in the Bill on discipline and standards.
These clauses account for three quarters of the Bill. However, the Government very much regret that it was not possible also to secure agreement to proceed with the measures in Clauses 1 to 19 which allowed schools more power to select pupils, and which gave grant-maintained schools more power to develop new provision to meet local needs. These clauses would have encouraged more diversity among schools, helping

925
schools to develop particular strengths and giving parents more choice from among a range of different types of good school.
The Government remain firmly committed to extending choice and diversity. That is a powerful way of raising standards in schools because it allows parents to match what schools offer to the individual needs, interests and abilities of their child. But we do not now have time in this Parliament to secure these important measures. Therefore we shall pursue the discipline and standards measures for now, and come back to the selection and grant-maintained deregulation measures at the earliest possible opportunity following the general election. I beg to move.
Baroness Farrington of Ribbleton: My Lords, I wish to speak in support of the amendments moved by the Minister. As my noble friend Lord Morris of Castle Morris stated in the Queen's Speech,
"Selection flies in the face of parental preference".—[Official Report. 29/10/96; col. 305.]
We in the Labour Party have set out our policies with regard to this issue in Diversity and Excellence which states that the party wants to give parents a key role in the education of their children.
Opposition parties have argued throughout the passage of this Bill that the Government's plans would mean not parents choosing the school but the school choosing, or choosing to reject, particular children. This would have happened even more if the Government's plans to give new freedoms had remained in the Bill, but thankfully these are being removed.
This is the 18th education Bill since 1979 and the first where the Government have been defeated on what the Government had declared to be their major policy of giving more freedom to a minority of schools to select more children. There are aspects of the Bill where the opposition parties have provided critical support in keeping with their existing policies: new measures on school discipline, parent partnership agreements, baseline assessment and the merging of SCAA and NCVQ.
Education is the beginning of the process of socialisation, particularly for the young child starting primary school. We believe that that process should occur within the neighbourhood. It should be inclusive rather than exclusive. It should offer opportunities for parents to place all their children in the same school whatever the individual child's talents, ability and aptitude. That is part of the process of people learning from an early age to be aware of the strengths and weaknesses and the needs and potential contributions of their neighbours and friends in their community. That is good comprehensive education. It is comprehensive in that it encompasses the best of what a child needs to learn to grow up in a caring society. We welcome these government amendments.
Lord Tope: My Lords, I join with the noble Baroness, Lady Farrington of Ribbleton, in—rather unusually for both of us—giving a warm welcome to the amendments moved by the Minister today. I recall
926
that at the Second Reading debate I suggested to the Minister that the originally stated objective of Part I of the Bill—which was, apparently, to embarrass the Labour Party over selection—had already achieved its purpose because the Labour Party was at that time adequately embarrassing itself over selection, and that as it had achieved its purpose Part I of the Bill should then be withdrawn.
Unfortunately, the Minister, on that occasion as on so many, chose not to take my advice. I cannot help reflecting now that had he taken my advice on Second Reading and withdrawn that part of the Bill, we would all have saved ourselves an enormous amount of fruitless, wasted and frustrating time and might indeed have been able to spend more time in considering in more depth that part of the Bill which is now to pass, which I believe reflects broad agreement which we all share on the objectives of the Bill. Certainly we are pleased to support that part. Nevertheless, it could still have done with more detailed consideration and could still be improved further. We welcome today the improvements that have so far been made.
However, the commitment of the Liberal Democrats to education, to the provision of high standards and high quality in education is well known, and will become even better known over the next six weeks. We share objectives with noble Lords in all parts of the House. However, we shall be the only party in the coming weeks which will be prepared to say that we will pay for it, and how we shall pay for it. That still remains a fundamental issue. Many important measures need to be taken, but until and unless the chronic underfunding of our education system in this country is tackled many of those problems will remain unresolved.
Whatever the result of the general election in the weeks to come, I look forward to taking part in the debate on the next education Bill, whoever is standing at the Government Dispatch Box; and—who knows?—perhaps I shall be looking forward to it even more. In the meantime, I give my warm support to the amendments.
I have one regret. By agreement with my party, too, Clause 20 is not included in the amendments. Clause 20 extends the assisted places scheme to primary education. During previous debates, I have made clear that my party is opposed to the assisted places scheme and is opposed, therefore, to extending it to primary education. We have readily agreed not to include the deletion of that clause because we understand that commitments have been made to some 1,200 children who would participate in the assisted places scheme in primary education in the summer. I ask the Minister whether that is the case. If that is the case I wish to make clear that my party would honour commitments made, however much we disagree with the scheme. For that reason we keep the clause.
However, if those commitments have been made, how have they been made? Given that the Bill has not been passed, under what legal powers have they been made? If those commitments had not been made, I am sure that Clause 20 would be among the clauses to be deleted in these amendments.
Can the Minister give some explanation as to how commitments are made before a Bill has even completed its Report stage, let alone has passed through this House

927
and through another place? I hope that we can have an answer. However, we are advised that those commitments have been made and my party would wish to honour them. For that reason, and that reason alone, we accept that Clause 20 should remain part of the Bill.
Lord Henley: My Lords, I imagine that the first part of the noble Lord's question was rhetorical. I cannot answer as to why his party or the party opposite made the decisions that they did in terms of negotiations about Clauses 1 to 19 and Clause 20.
As regards the numbers of those benefiting from the new provisions under the assisted places scheme, I cannot confirm the precise figures that the noble Lord gave. Nor can I say whether firm, legally binding commitments have been made. But there will be an expectation among a number of people that they will benefit. For that reason, it is right that they should be allowed to benefit. That is part of a commitment certainly made by the party opposite about the assisted places scheme generally. When the party opposite claims that it would like to phase out the scheme, it has always made it clear that it would do so gradually so that no one individual would suffer.
I hope that I have dealt with the noble Lord's questions to the best of my ability. If there is anything more that I can add, I would prefer to write. I commend the amendment.
On Question, amendment agreed to.
Clause 2 [Duty of governing body to review selective admission policy]:
Lord Henley Lord Henley moved Amendment No. 2:
Leave out Clause 2.
On Question, amendment agreed to.
Clause 3 [Objections on notification to proposals which do not need to be published]:
Lord Henley Lord Henley moved Amendment No. 3:
Leave out Clause 3.
On Question, amendment agreed to.
Clause 4 [Relaxation of controls on enlargement of premises]:
Lord Henley Lord Henley moved Amendment No. 4:
Leave out Clause 4.
On Question, amendment agreed to.
Clause 5 [Relaxation of controls on changes relating to selective admissions]:
Lord Henley Lord Henley moved Amendment No. 5:
Leave out Clause 5.
On Question, amendment agreed to.
Clause 6 [Relaxation of controls on changes in age groups for admission etc.]:
Lord Henley Lord Henley moved Amendment No. 6:
Leave out Clause 6.
On Question, amendment agreed to.
Clause 7 [Consultation and notification where proposals do not need to be published]:
Lord Henley Lord Henley moved Amendment No. 7:
Leave out Clause 7.
On Question, amendment agreed to.
Clause 8 [Schools requiring special measures]:
Lord Henley Lord Henley moved Amendment No. 8:
Leave out Clause 8.
On Question, amendment agreed to.
Clause 9 [Duty of governing body to review selective admission policy]:
Lord Henley Lord Henley moved Amendment No. 9:
Leave out Clause 9.
On Question, amendment agreed to.
Clause 10 [Alteration of admission numbers for grant-maintained schools]:
Lord Henley Lord Henley moved Amendment No. 10:
Leave out Clause 10.
On Question, amendment agreed to.
Clause 11 [Review of approved admission numbers]:
Lord Henley Lord Henley moved Amendment No. 11:
Leave out Clause 11.
On Question, amendment agreed to.
Clause 12 [Notification of proposals in connection with Sex Discrimination Act 1975]:
Lord Henley Lord Henley moved Amendment No. 12:
Leave out Clause 12.
On Question, amendment agreed to.
Clause 13 [Secretary of State's reserved power to limit appropriate threshold]:
Lord Henley Lord Henley moved Amendment No. 13:
Leave out Clause 13.
On Question, amendment agreed to.
Clause 14 [Sponsor governors]:
Lord Henley Lord Henley moved Amendment No. 14:
Leave out Clause 14.
On Question, amendment agreed to.
Clause 15 [Extension of power of funding authority to establish grant-maintained schools]:
Lord Henley Lord Henley moved Amendment No. 15:
Leave out Clause 15.
On Question, amendment agreed to.
Clause 16 [Grants to promoters of grant-maintained schools]:
Lord Henley Lord Henley moved Amendment No. 16:
Leave out Clause 16.
On Question, amendment agreed to.
Clause 17 [Recovery from local funds of sums in respect of start-up grants]:
Lord Henley Lord Henley moved Amendment No. 17:
Leave out Clause 17.
On Question, amendment agreed to.
Clause 18 [Ballot observers]:
Lord Henley Lord Henley moved Amendment No. 18:
Leave out Clause 18.
On Question, amendment agreed to.
Clause 19 [Provision of advice and assistance by funding authority]:
Lord Henley Lord Henley moved Amendment No. 19:
Leave out Clause 19.
On Question, amendment agreed to.
Clause 33 [Corresponding provisions about admissions to grant-maintained schools]:
Lord Henley Lord Henley moved Amendment No. 20:
Page 30, line 6, leave out from ("After") to ("Schedule") in line 8 and insert ("section 425 of the Education Act 1996 there shall be inserted—
425A.").
On Question, amendment agreed to.
Schedule 1 [Schedule inserted after Schedule 5 to the Education Act 1996]:
Lord Henley Lord Henley moved Amendment No. 21:
Leave out Schedule 1.
On Question, amendment agreed to.
Schedule 2 [Sponsor governors]:
Lord Henley Lord Henley moved Amendment No. 22:
Leave out Schedule 2.
On Question, amendment agreed to.
Schedule 9 [Minor and consequential amendments]:
Lord Henley Lord Henley moved Amendments Nos. 23 to 37:
Page 81, leave out lines 5 to 7.
Page 81. leave out lines 8 to 40.
Page 81, line 47, leave out from beginning to end of line 3 on page 82.
Page 82. line 5, leave out ("the words from "the age" to "same age—) and insert (—the age of five"").
Page 82, leave out lines 7 to 9.
Page 82, leave out lines 10 to 13.
Page 82, line 15 at end insert—
(". In section 266(1)(b) of that Act (interpretation of Chapter VII of Part III), for "the age of five" substitute "compulsory school age".").
Page 82, leave out lines 16 to 20.
Page 83, leave out lines 40 and 41.
Page 84, leave out lines 8 to 10.
Page 84, leave out lines 15 to 17.
Page 84, line 18, leave out ("that subsection") and insert ("subsection (2)").
Page 84, leave out lines 26 to 31.
Page 85, leave out lines 3 to 6.
Page 85, leave out lines 8 and 9.
On Question, amendments agreed to.
Schedule 10 [Repeals]:
Lord Henley Lord Henley moved Amendments Nos. 38 to 40:
Page 86, leave out lines 29 and 30.
Page 86, leave out lines 35 to 39.
Page 86, leave out lines 43 to 45.
On Question, amendments agreed to.
Lord Henley: My Lords, I beg to move that the Bill do now pass.
I believe that the noble Lord, Lord Tope, feels that some of the time spent on the Bill has been somewhat fruitless. I accept that another place has spent some 54 hours and 45 minutes debating the Bill through all its stages. In this House, even with a rather truncated Report stage, we have devoted some 35½ hours to the Bill. That is over 90 hours devoted to the Bill. I do not believe that the time spent even on those parts now deleted was fruitless or without purpose. I think that a useful exercise was performed in exercising our views. It will no doubt make it easier after the coming election to get the additional clauses back through Parliament because they will have been debated extensively and thoroughly.
It only remains for me to thank all those involved in the Bill. I shall not name all the individuals. I thank them for their politeness and kindness to me in particular in the long nights that we spent on the Bill. I believe that the debate has remained good humoured throughout the 35½ hours spent on the Bill in this House, even if, as I think the noble Lord, Lord Tope, will remember, sometimes a little after midnight the usual courtesies were not observed in quite the form they normally are. I therefore thank the noble Lord, Lord Tope, and his party, and the noble Lord, Lord Morris, for their help on the Bill throughout its passage. I offer my thanks to all those on the Cross-Benches. In particular on my own Benches, I offer my thanks to my Whip, my noble friend Lady Miller for all she has done during the course of the Bill. I beg to move.
Moved, That the Bill do now pass.—(Lord Henley.)
Lord Morris of Castle Morris: My Lords, was it not Mr. Winston Churchill (as he then was) who said, "In victory, magnanimity, in defeat defiance"? We are happy to welcome the amendments that have been announced this afternoon. I for one receive those amendments in magnanimous silence.
At this point in the long march of any large Bill through your Lordships' House it is customary for us to obey the proposal of the old Hebrew writer who said,
"Let us now praise famous men, and our fathers that begat us",
and thank each other and thank ourselves and thank our fathers that begat us, not forgetting the Vicar for the use of the hall and the ladies for preparing the sandwiches.
I have people whom I wish to thank. I thank, first, my noble friends on these Benches who have borne the heat and burden of the day, and the cold and boredom of the night as well, with a fortitude and enthusiasm which would be hard to match in the annals of your Lordships' House. I thank the noble Baronesses, Lady David, and Lady Ramsay of Cartvale, and the noble Lords, Lord Monkswell, Lord Dormand of Easington and Lord Ponsonby of Shulbrede, and perhaps pre-eminently my noble friend Lady Farrington of Ribbleton whose energy is matched only by her perspicacity, and whose assiduity in her duties is only enhanced by her occasional desire for some of the lesser and legal stimulants like tannin and caffeine to keep her going at full throttle.

931
I wish also to thank my colleagues, if I may call them that, on the Liberal Democrat Benches, the noble Lord, Lord Tope, the noble Baroness, Lady Thomas of Walliswood, and the noble Lord, Lord Addington, for their help and support. It is heartening and fortifying to realise that on education matters, if not on some other matters, there is no more than a pennyworth of difference between the policies of our two parties. There is virtually no difference between our policies and those of the Cross-Benches. So it is a great pleasure to me to thank the noble Lord, Lord Walton of Detchant, the noble Lord, Lord Northbourne, the noble Earl, Lord Baldwin of Bewdley, and the noble Baroness, Lady Warnock. I shall not easily forget the noble Earl, Lord Baldwin of Bewdley, being virtually borne in upon a litter to cast a vote, which by sheer chance was one about which we had taken the trouble to warn him.
But none of this would have been possible without the work of the engine room, by which I mean those who have advised and assisted us in the organisation and presentation of our work and have kept us out of trouble and in order. It has often been remarked that a Government Minister is loyally supported by the entire Civil Service. I remind noble Lords that the Opposition is supported not by the whole Civil Service but by Robert, Clare and David. On this occasion I want to pay a special tribute to Mr. David Melhuish who only joined our researchers' office a few months ago and yet within weeks proved himself able to master all the skills necessary to power us through the Bill. It has been for him a fiery but triumphant baptism and he is to be congratulated on his remarkable achievement. From Mr. Damien Welfare of the AMA we have come to expect administrative and organisational brilliance of the very highest order, and on this occasion he has surpassed even his own high standards in preparing us for all the pitfalls, banana skins and elephant traps in our path. My only worry is that if 1st May proves fortunate for the Labour Party in the phrase so beloved of the classicists o albo dies notanda lapillo, (may the day be marked with a white stone), we may face the daunting prospect of seeing him advising our opponents.
That very word "opponent" brings me to the thanks that we all owe to the noble Lord the Minister, Lord Henley. It reminds me of the newly-elected Member of another place who was being shown around the Chamber by an older colleague. He was told:
"Your opponents sit over there; your enemies sit behind you."
The noble Lord, Lord Henley, has not been troubled by that particular peril on this occasion. The Minister has been a formidable but scrupulously fair and courteous opponent. So far as he is concerned, I only hope that I may have achieved in his estimation the rank, title and status of "enemy in good standing".
Above all, everyone who has been concerned with this Bill has been able to trust everyone else; and when the Minister has assured me that something is going to happen, I have trusted him implicitly and have never been let down. That is important. Trust does not come
932
easily to a Welshman where Englishmen are concerned. There was an old professor of Welsh who once said to me:
"I am a South Walian born and bred. And at my mother's knee I learned that North Walians are not to be trusted. After 60 years, teaching in five countries and four continents, and meeting all sorts and conditions of men, I have learned one other thing … that North Walians are not the only people who are not to be trusted."
It has not been so with us, and I am grateful.
4.30 p.m.
Lord Tope: My Lords, perhaps I should begin by responding to the Minister, who took me to task for saying that much of the time that we had spent on this Bill had been fruitless. What I was struggling to say and perhaps can now say better is that it would have been more fruitful had we been spending more time on the latter parts of the Bill—and had that been the case in the other place as well—to further improve what we broadly agree about, and rather less time on those parts of the Bill which have now fallen, about which, frankly, we were never going to agree, and which, I suspect, were always doomed.
I do not know what our debates have done for the education of the nation because views about that may differ; but they have certainly done something for my education. I pondered at an early stage whether I should come into the Chamber equipped with a dictionary of quotations and the complete works of Shakespeare in some vain attempt to keep up with the noble Lord, Lord Morris of Castle Morris. However, I determined at a very early stage that such a thing would certainly have been a fruitless exercise and so I have not tried to do so. I must confess to one moment of alarm which occurred on the third day of the Committee stage, when we were heading through until some time after 3 o'clock in the morning. At around 1 o'clock in the morning the noble Lord, Lord Morris, came across and whispered to me, "I have got my second wind now". I must say that I had not noticed that his first wind was completely blown out at any stage and did wonder whether the coming of the second wind might indeed keep us in the Chamber until breakfast time. Fortunately that proved not to be the case.
I echo all that the noble Lord, Lord Morris, said, but with one small reservation. He said, if I quote him accurately, that there was not a penny's worth of difference between our policy and that of the Labour Party. "A penny's worth" is of course a very appropriate phrase because there was one important difference, and that is a penny's worth. However, let me say more particularly that it is comparatively easy to agree with what we are opposed to, whereas it is not always quite so easy to agree on measures which we favour. Should the general election turn out in favour of the Labour Party, I certainly look forward to the noble Lord, Lord Morris, or whoever it may be, explaining to me exactly what the difference is between a grant-maintained school and a foundation school: but that is all in the future.
I echo very sincerely the thanks that the noble Lord gave all round, and particularly to those who advised me and my colleagues with equal favour as they did

933
the Opposition. The noble Lord has already mentioned Damien Welfare. I certainly wish to echo the thanks that have been expressed, and also to thank Chris Waterman at the Association of London Government, who, perhaps because I am a London member, has been particularly helpful to me as well.
I pay a very warm tribute to my two colleagues who have helped me very much on this Bill: my noble friend Lady Thomas of Walliswood (who, as I previously explained, cannot be here this afternoon), and my noble friend Lord Addington, who is here at my side. They have been a tower of strength not only in their advice and support but also in keeping me awake at times when it was necessary. I should like to mention the support, help and guidance I have had on this Bill, and throughout my time as our party's education spokesman in your Lordships' House, from my colleague the honourable Member for Bath, Don Foster. He has given tireless support.
Next, and perhaps most important of all—because it is less visible—I want to pay a very warm tribute and say sincere thanks to Carolyn Rampton in our Whips' Office, who has kept me briefed phenomenally well, in addition to all her other duties in a very busy and understaffed office. She has always done so enormously efficiently, always cheerfully and apparently never under pressure, although I know that the opposite has often been the case.
I have also welcomed the interest and support of all Members in this House. It may be invidious to single out some, but I should like to mention, because others have not yet done so, the right reverend Prelate the Lord Bishop of Ripon, to whom I think we owe the demise of QNCA, for which I think the nation will always be grateful. I do not think that any Member of your Lordships' House could have done that with greater delicacy than he achieved at the time. I also thank most sincerely the noble Earl, Lord Baldwin, with whom we have worked closely and well.
Lastly, I should like to join again with the noble Lord, Lord Morris of Castle Morris, in thanking the Minister for the very helpful and courteous way in which he has dealt with this Bill, not only inside the House but also outside it, and the way he has kept us informed of his intentions. I share with the noble Lord, Lord Morris, the view that when the Minister said that something would happen, it did happen; and I have to say that equally when the Minister said that something will not happen, it does not happen. I think we should all pay tribute to the Minister's stamina. It cannot have been easy to have stood for hour upon hour at the Dispatch Box, even with the very able help of his Whip. It was, despite that help, he and he alone who has stood at the Dispatch Box, especially on that third day of the Committee stage which lasted for almost 12 hours. The noble Lord dealt with every amendment and on almost every one of them he had to say "No". It was a remarkable test of stamina. Although we may not always have agreed with what he was saying, we certainly recognised his formidable efforts in saying what he had to say. In the end—for perhaps different reasons—we are about to pass a Bill
934
which is very much better than the one which we started with in your Lordships' House. I pay tribute to all those who have helped to bring this about.
The Lord Bishop of Ripon: My Lords, in the earlier stages of our deliberations on this Bill, reference was made by, I think, the noble Lord, Lord Morris of Castle Morris, to the curate's egg. I think many of us are relieved that the parts of the egg which, dare I say, were less palatable have now been consigned to the waste bin. I have to say that I share the view which has already been expressed that this is now a better Bill than it was when we first received it.
I detected a certain hint in one or two comments made by the Minister that he suspected, to use a mathematical term, that there was a certain correlation between the views expressed on the Bishops' Bench and those expressed on the Opposition Benches. Let me assure the noble Lord that if he looks at the meaning of "correlation", he will find that it does not mean "identity" and that on occasions there has been a good deal more than one pennyworth of difference between the views of this Bench and those of the Opposition Benches. Nevertheless, we have been glad to share with them our concerns on this Bill. I am particularly glad also to express my thanks to all who have shared in our debates.
I express thanks to the staff of my board and their legal advisers, whom we have to thank not only for saving the chief executive of the new QCA from embarrassment but also from the burden of having to carry an inaccurate title. I am glad that we have been able to make that contribution to the Bill. As others have done, I thank the Minister for his unfailing attention, courtesy and stamina, during the very long hours that we have spent on this Bill. I am relieved that he gave us the exact time, because I have been trying to say to my colleagues just how many hours we have actually spent on the Bill. I think by the time we have finished, it may have amounted to about 36 hours. I am grateful to him for that piece of information, and I am glad that we have been able to share those 36 hours to achieve such a profitable outcome.
Lord Beloff: My Lords, I should like very briefly to spoil this "love fest" by saying that there are many Members of your Lordships' House on these Benches and many members of my party outside this House who deeply regret the necessity of sacrificing so much of the Bill to the pressure of time. We hope and believe that this defeat for the accent placed in the original Bill on the need for excellence and for selection as the only method of creating excellence will come back and that when my party is again returned to government, another blow will be dealt against the mediocrity with which the comprehensive system has landed this country for so many years.
Earl Baldwin of Bewdley: My Lords, a Bill which began in high seriousness in your Lordships' House last month has ended in an atmosphere which the noble Lord, Lord Tope, described at the beginning of this week as somewhat "surreal". Not even the powers of

935
intuition which enabled me, to the surprise of the noble Lord the Minister, to arrive in time for a vote on the first night of Committee were capable of predicting the course which this Bill would take in its later stages.
Naturally, I am pleased with the result. It bears saying one last time that no measure which impacts on neighbouring schools, measures such as selection or creating a sixth form, should be capable of being driven through without full consultation and, if need be, arbitration by some body which can hold the ring for those who might be disadvantaged. One of the truly sad features of the Government's educational reforms has been the way in which partnership has been eroded and local consensus and accountability discarded. At one point on Monday the noble Lord the Minister stated:
"We expect schools to act responsibly".
On that expectation, in the present competitive atmosphere, can hang and die the freedoms of others.
So, the prospect of secondary moderns in every town recedes and, with the Opposition parties, I am glad.
I do not wish to take up any more time at this stage of proceedings, but I should like to make one proposal which I believe I aired at the end of the Education Reform Bill in 1988. There are some 26,000 maintained schools in this country and by comparison a handful of independent schools. Your Lordships' House has more than one head teacher from the latter among its Members but none I believe who has come to this House by virtue of a headship from the maintained sector. I doubt whether party leaders comb the pages of Hansard for comments from your Lordships' House. I just wonder whether the party spokespeople present would agree that our education debates, which almost always are about the maintained sector, could be enriched in future by a well chosen appointment or two from that direction and, if so, whether they might drop a word in higher places. We are not short of lawyers, doctors or university academics here, but we could benefit from current mainstream educational experience.
It remains for me to join in thanking and congratulating all those who have played a far more active and consistent part in the passage of this Bill than I have, and in particular noble Lords on the Front Benches, who have been so thoroughly and admirably on top of their briefs, day in, day out, amendment after amendment. It took me years as an education officer in the thick of things to grasp the issues and know what I was doing. The noble Lord the Minister seems to achieve that effortlessly, as do the Opposition speakers, to whom I have listened with interest and much admiration.
So to what remains of this Bill I wish a fair wind but, unlike the noble Lord, Lord Tope, with the hope that we may be spared more education legislation for some time to come.
Lord Howie of Troon: My Lords, I hesitate to intervene so late in the proceedings of this Bill. However, I do not believe that the characteristically intemperate outburst of the noble Lord, Lord Beloff, should be allowed to pass unnoticed. He may be
936
unaware of it but the Scottish secondary education system has been very largely comprehensive for a great many years. Indeed, I was at a comprehensive school before the war and did not realise that it was comprehensive until I came to London many years later. I thought that was what schools were like; and very good they were.
My point is that, despite what the noble Lord, Lord Beloff, regards as a grave disadvantage—namely, having, broadly speaking, a comprehensive educational system—the Scots are not notably under-educated and can certainly hold their own in comparison with other persons in the United Kingdom who have had the disadvantage of a highly selective system for so many years.
On Question, Bill passed and returned to the Commons with amendments.

Royal Assent
4.45 p.m.
The Deputy Speaker (Lord Aberdare): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:

Consolidated Fund Act,

Finance Act,

Criminal Evidence (Amendment) Act,

Policyholders Protection Act,

Pharmacists (Fitness to Practise) Act,

British Nationality (Hong Kong) Act,

Knives Act,

Architects Act,

Lieutenancies Act,

Nurses, Midwives and Health Visitors Act,

Justices of the Peace Act,

Transfer of Crofting Estates (Scotland) Act,

Social Security (Recovery of Benefits) Act,

Merchant Shipping and Maritime Security Act,

Local Government and Rating Act,

Police (Property) Act.

Crime and Punishment (Scotland) Bill
4.46 p.m.
Report received.
[Amendment No. 1 not moved.]
Clause 1 [Imprisonment for life on further conviction for certain offences]:
The Lord Advocate (Lord Mackay of Drumadoon)The Lord Advocate (Lord Mackay of Drumadoon) moved Amendment No. 2:
Page 2, line 16, leave out from ("opinion") to ("decline") in line 19 and insert ("that it would be in the interests of justice for it to pass a sentence other than the sentence which that subsection would require it to pass, it may").
The noble and learned Lord said: My Lords, in moving this Amendment, I should like to speak also to Amendments Nos. 3, 4, 5, 19 and 19A.
At the outset, it may assist our deliberations this afternoon if I inform your Lordships that, following discussions which have taken place over the past 48 hours and following reflections on the time that remains before Parliament is to be prorogued, the Government have decided to table amendments which they believe will command the support of your Lordships' House. If that belief turns out to be correct, it will enable an appropriate course to be followed to allow the Bill to reach the statute book and enable the Government's desire that the provisions that command widespread support should be on the statute book not to fall when Parliament is prorogued. The detail of the amendments will become apparent as we go through them on the Marshalled List.
I regret that the first group of amendments involves considering a number of complicated and inter-related amendments at a very late stage in the Bill's proceedings. But that need has arisen, as I said, in view of the state of play over the past few days. It might be simplest for me to deal first with Amendments Nos. 3 and 5.
Amendment No. 3 is a technical amendment designed to make the list of qualifying offences for the purposes of Clause I more comprehensible. It follows discussion at Committee stage when points were raised by the noble and learned Lords, Lord Hope and Lord McCluskey. I trust that it will prove acceptable to your Lordships.
Amendment No. 5 again is a minor technical amendment. It amends an inappropriate reference to a "qualifying" offence in Clause 2, which deals with a minimum sentence of seven years' imprisonment for a third or subsequent Class A drug trafficking offence, by replacing it with a more accurate reference to a "Class A drug trafficking" offence. The phrase "qualifying offence" is relevant for the purposes of Clause 1, but not for Clause 2. That is why we tabled the amendment.
Now that Amendment No. 1 has not been moved, Amendment No. 2 is of importance. It is tabled in my name and seeks to replace the "exceptional circumstances" test in Clause 1 with a test based on the court's consideration of the interests of justice. In relation to Clause 2, Amendment No. 4 in my name would introduce an "interests of justice" test to that clause as well.
We are mindful of both the emphasis we have placed on the need for cross-Border consistency in sentencing for drugs and concerns expressed by your Lordships in relation to the desirability of such consistency. The amendment therefore seeks to replicate for Clause 2 the precise terms of the provisions in Amendment No. 1 relating to Clause 2. It therefore mirrors the terms of amendments already passed by your Lordships to the provisions for minimum mandatory sentences for drug traffickers which are to be found in the Crime (Sentences) Bill.
It may be helpful to noble Lords if I confirm now that I do not intend moving Amendment No. 4, but intend to commend manuscript Amendment No. 3A to your Lordships in its place. Likewise, Amendments Nos. 19 and 19A are to some extent alternative. I do not intend to move Amendment No. 19 but will move Amendment No. 19A instead, which makes for a simpler provision overall.
Lastly, Amendments Nos. 2 and 3 together provide essentially for the same effects as the effects to Clauses 1 and 2 of Amendment No. 18A tabled in the name of the noble and learned Lord, Lord McCluskey. I understand that the noble and learned Lord is sitting in court in Scotland today and for that reason cannot be with us. However, I trust that those amendments would have proved acceptable to him had he been present.
The question may arise as to where all that leaves us. It may not be helpful at this stage to say too much, but perhaps I can summarise it in these terms. If the amendments I have indicated I intend to move are accepted by your Lordships, Clauses 1 and 2 will require the courts to consider imposing a life sentence in the case of Clause 1 or a minimum sentence in the case of Clause 2 when the appropriate provisions apply. But the amendments will also ensure that the courts retain a discretion, which they presently have, not to impose such sentences in the interests of justice.
Clearly this is not as large a step as the Government were hoping to make. The reasons for that are obvious. I hope noble Lord on all sides will accept that the package of amendments put forward today is both an appropriate and a responsible way to proceed. We believe that in the broad scheme of things the Bill nevertheless involves a small step forward. It may be helpful to encourage those who sit as senators in the High Court constantly to have under review, as I am sure they normally do, their own sentencing practices. In particular it may serve to remind them of the existence of the power of the Appeal Court to issue sentencing guidelines and, if that power were to be used following the passage of this Bill, it would be beneficial to all concerned. It would also encourage the courts to send the right message to those who repeatedly commit serious sexual or violent offences or who repeatedly traffic in Class A drugs. I beg to move.
On Question, amendment agreed to.
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 3:
Page 3, line 2, leave out ("one party does") and insert ("the complainer, that is to say the person against whom the offence was committed, did").
The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 2. I beg to move.
On Question, amendment agreed to.
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved manuscript Amendment No. 3A:
Page 5, leave out lines 8 to 15 and insert—
("(3) The court shall not impose the sentence otherwise required by subsection (2) above where it is of the opinion that there are specific circumstances which—

(a) relate to any of the offences or to the offender; and

(b) would make that sentence unjust.").

The noble and learned Lord said: My Lords, manuscript Amendment No. 3A was spoken to with Amendment No. 2. I beg to move.
On Question, manuscript amendment agreed to.
Clause 2 [Minimum sentence for third conviction of certain offences relating to drug trafficking]:
[Amendment No. 4 not moved.]
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 5:
Page 5, line 18, leave out ("qualifying") and insert ("class A drug trafficking").
The noble and learned Lord said: My Lords, Amendment No. 5 was spoken to with Amendment No. 2. I beg to move.
On Question, amendment agreed to.
Clause 4 [Imposition of supervised release orders on conviction of qualifying offence]:
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 6:
Page 7, line 11, at beginning insert ("Subject to subsection (11) below,").
The noble and learned Lord said: My Lords, in moving Amendment No. 6, with the leave of the House I shall speak also to Amendment No. 7. The two amendments are intended to ensure that supervised release orders are used only in appropriate circumstances. Specifically it relates to the powers of the court to make supervised release orders. I beg to move.
On Question, amendment agreed to.
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 7:
Page 7, line 22, at end insert—
("(10) For the purposes of this section "court" does not include a District Court except where constituted by a stipendiary magistrate.
(11) No court may impose a supervised release order for a period longer than the maximum period of imprisonment which that court may impose for a common law offence.".").
The noble and learned Lord said: My Lords, Amendment No. 7 was spoken to with Amendment No. 6. I beg to move.
On Question, amendment agreed to.
Clause 5 [Restriction of liberty orders]:
Lord Sewel Lord Sewel moved Amendment No. 8:
Page 7, line 28, after ("person") insert ("of 16 years of age or more").
The noble Lord said: My Lords, in moving Amendment No. 8 I shall speak also to Amendments Nos. 9 to 12 and Amendment No. 16. These amendments have the effect of removing from the Bill a provision which was inserted into it at Committee stage in another place; that is, the extension of electronic tagging to persons aged 16 years of age and under.
It is fair to say that that was almost a last-minute addition to the Bill in the other place and was inserted after a limited amount of consultation. In so far as there was consultation, it was overwhelmingly hostile to the idea of electronic tagging being extended to those people aged under 16, mainly because a number of
940
people recognised that it was likely to be counter-productive as well as being ill-conceived in the first place.
The other great threat that many of us saw was that the proposal would erode the strength of the Scottish children's panel hearing system, which is recognised as one of the great advantages of the Scottish criminal justice system, especially in relation to juveniles. I am hopeful and pleased that the Government now feel able to accept these amendments. They significantly improve the Bill. I beg to move.
The Earl of Mar and Kellie: My Lords, perhaps I may speak briefly to Amendments Nos. 13 to 15 in my name. They too are concerned with the removal of children from the remote monitoring system—"electronic tagging" as it has been nicknamed. I acknowledge that the amendments moved by the noble Lord, Lord Sewel, go further than my amendments. That may well be appropriate, in that operational experience should be gained with the new community sentence by applying it to adults and young offenders rather than to children. Perhaps some element of monitoring by humans may be tried later.
Amendments Nos. 13 and 14 are aimed at excluding children from the remote monitoring and will allow human monitoring. Amendment No. 15 is aimed at all offenders and not just children. Remote monitoring may well be a viable alternative to custody but I am keen that it be part and parcel with supervision, preferably through a probation order. I shall be interested to see how the pilot projects work out, especially with regard to the comparison between remote and supervised restriction of liberty orders.
5 p.m.
Lord Mackay of Drumadoon: My Lords, it may be helpful if I deal with the amendments separately. With regard to the amendment moved by the noble Lord, Lord Sewel, the Government's view is that electronic tagging may in the future have a role to play in dealing with some of the small number of young offenders who come before the courts. As I think all noble Lords will appreciate, it was not proposed that electronic tagging should apply to offenders who are dealt with before the children's panel. Therefore we do not accept that this posed any threat to the valuable work which that body does. Nevertheless, the Government are aware that there is a degree of nervousness about the option of tagging offenders dealt with in the courts who are under 16 years of age. We are aware of the view that was expressed that this disposal should be piloted first with adult offenders before being piloted with young offenders. We have therefore taken the view that it is sensible to accept the amendments in the name of the noble Lord, Lord Sewel, and no opposition is offered to them.
I turn to the amendments spoken to by the noble Earl, Lord Mar and Kellie. Amendments Nos. 13 and 14 would have no effect if we agree, as I have already indicated we do, that child offenders should not be liable to receive any form of restriction of liberty order. Amendment No. 15 would remove discretion from the courts. In the courts' view, the courts ought to be left

941
with discretion in this area at least until such time as we have received the results of the proposed pilot schemes. If those results were to indicate that discretion was not being exercised appropriately, the issue would require to be looked at again. However, at this stage, I believe it would be premature to assume that the courts cannot be trusted with the discretion which Clause 5 makes available to them. For that reason, the noble Earl's amendment is unacceptable.
On Question, amendment agreed to.
Lord Sewel Lord Sewel moved Amendments Nos. 9 to 12:
Page 8, leave out lines 4 to 11 and insert ("for any period up to 12 months.").
Page 8, line 45, leave out from beginning to end of line 2 on page 9.
Page 9, line 38, leave out ("or (4)").
Page 10, leave out lines 1 to 5.
The noble Lord said: My Lords, these amendments have already been spoken to. I beg to move.
On Question, amendments agreed to. [Amendments Nos. 13 to 15 not moved.]
Lord Sewel Lord Sewel moved Amendment No. 16:
Page 12, line 7, leave out ("or, as the case may be, (4)").
On Question, amendment agreed to.
Clause 13 [Increase in sentences available to sheriff and district courts]:
The Deputy Speaker: My Lords, I call manuscript Amendment No. 16A in the name of the noble and learned Lord, Lord McCluskey.
The Earl of Mar and Kellie: My Lords, the noble and learned Lord, Lord McCluskey, has sent me a message asking me to apologise on his behalf for his inability to be present due to his sitting in court in Edinburgh.
[Manuscript Amendment No. 16A not moved.]
[Manuscript Amendments Nos. 16B to 16G not moved. ]
Clause 15 [Driving disqualifications]:
The Earl of Mar and Kellie The Earl of Mar and Kellie moved Amendment No. 17:
Page 21, line 44, at end insert—
("(4) A court shall not order an offender to be disqualified for holding or obtaining a licence to drive a motor vehicle under this section unless it has obtained a report as to the circumstances and character of the offender.").
The noble Earl said: My Lords, in moving this amendment, I wish to speak also to Amendment No. 18. These amendments are aimed at ensuring that the courts have a full appraisal of their intended sentencees' circumstances. This will enable them to understand the implications of such a sentence and so to understand the severity of such a sentence. There is nothing new in the idea of the courts seeking suitability reports. This happens with probation, community service, intensive probation and other programmes such as domestic violence projects. The reason for seeking suitability reports is obvious. These sentences need to be
942
accurately imposed. Since I am known to be in favour of effective community-based sentences, I am bound to argue for the accurate targeting of this new community sentence. I believe it to be limited in its application but worth exploring carefully. I understand that the Government have been giving further thought to the administration of this disqualification measure. I am looking forward to hearing the noble and learned Lord the Lord Advocate telling the House about these reconsiderations and new considerations. I beg to move.
Lord Mackay of Drumadoon: My Lords, the appropriateness of this new disposal and when the court will use it or could use it have been discussed at some length during the earlier stages of the Bill both in your Lordships' House and in another place. As I have previously explained, the court can already call for whatever reports it requires to reach a conclusion about how to deal with any offender. In cases of fine default, the court will inquire into the offender's means before deciding how he or she is to be dealt with. That is well-established practice. I can see no reason why the court will not adopt the same approach when contemplating the use of this new disposal.
It is an innovative step and we want to be sure that the new arrangements have the desired positive effect. That is why we have provided for trials of the new measure first through pilot schemes before consideration is given to its more widespread introduction. We shall consult fully on the proposals for pilot schemes before any action is taken. Equally, when the results of the pilot schemes become known, those, too, will be available for public discussion.
I have given a full explanation of what will be involved in the pilot schemes. On that basis I hope that the noble Earl will be satisfied that it would he wrong at this stage to alter what is proposed. If the need for that arises at a later stage, it can certainly be addressed then. On that assurance I trust that he will withdraw the amendment.
The Earl of Mar and Kellie: My Lords, I thank the noble and learned Lord for that assurance that the courts will approach this matter seriously. It sounds to me as though suitability reports will be very much part of the pilot projects. I hope that that will end up in the guidance. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 18 not moved.]
[Manuscript Amendment No. 18A not moved.]
Clause 18 [Automatic sentences: jurisdiction and appeals]:
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved manuscript Amendment No. 19ZA:
Page 26, line 12, leave out from ("decision") to end of line 14.
The noble and learned Lord said: My Lords, this amendment was spoken to with Amendment No. 2. I beg to move.
On Question, amendment agreed to.
[Manuscript Amendment No. 19A not moved.]
Clause 20 [Transfer of rights of appeal of deceased person]:
The Deputy Speaker: My Lords, I call Amendment No. 20 in the name of the noble and learned Lord, Lord Mackay of Drumadoon.
Lord Harris of Greenwich: My Lords, before we go any further, as we are cheerfully agreeing to a number of manuscript amendments and as a number of us do not have the good fortune to have them in front of us, it would be desirable for us as a revising Chamber at least to know what we are talking about.
Lord Mackay of Drumadoon: My Lords, I hope we are aware of what we are talking about. Printed versions of the manuscript amendments are available to noble Lords. I know that a number of noble Lords have them. If they do not all have them, that is a matter of regret. But I think they have been available for some time, albeit that they became available this morning, which is of the very nature of manuscript amendments. I can certainly assure the noble Lord that manuscript amendments in my name were sent, and physically delivered, to the office of the noble Lord and his colleagues.
Lord Harris of Greenwich: My Lords, the point is that if we are to have any more manuscript amendments, it would be extremely helpful if the noble and learned Lord could tell us what their effect will be.
The Earl of Balfour: My Lords, the manuscript amendments are in the Printed Paper Office. They have been available for some time, but not necessarily at either end of this House.
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 20:
Page 28, line 30, leave out ("must") and insert ("may").
The noble and learned Lord said: My Lords, in moving this amendment, I shall speak also to Amendment No. 21. These two amendments would allow the High Court to grant a person authorisation at any time to institute or commence an appeal in respect of a deceased person if cause for that course of action can be shown. These amendments follow from the commitment which I gave to the noble Lords, Lord Macaulay and Lord Sewel, when this Bill was in Committee on 10th March, in response to their own amendment. I stated then that I would be happy to take the amendment away, giving a clear commitment that the Government would come forward with an amendment which took account of certain technical, drafting concerns. That is what these amendments do. I beg to move.
On Question, amendment agreed to.
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 21:
Page 28, line 32, at end insert ("or at such later time as the Court may, on cause shown, allow.").
The noble and learned Lord said: My Lords, I have already spoken to this amendment with the previous amendment. I beg to move.
On Question, amendment agreed to.
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 22:
Page 28, line 33, leave out ("Secretary of State") and insert ("Commission").
The noble and learned Lord said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 23, 26, 43, 45 to 47, 50 to 53 and 55.
Your Lordships will be aware that the Government have been of the view that the need for a commission to review allegations of miscarriages of justice in Scotland, of the type recently set up in England, had not been clearly established. The evidence which the Sutherland Committee had received on this matter was divided and there was no clear evidence that the present appeal system and the procedure for the Secretary of State to refer cases to the Court of Appeal was failing. The committee's main concerns were with the appeals criteria. We believed that our acceptance of virtually all of the recommendations on appeals criteria would effectively address the main concerns of those interested and concerned about alleged miscarriages of justice in Scotland.
We believed that the terms of the committee's report on whether there should be an independent review body did not demonstrate any overwhelming pressure or compelling case for this to be set up. We accepted, like the committee itself, that
"the arguments for and against change seemed fairly evenly balanced".
Ultimately, we came down on one side on this issue whilst the committee came down on the other.
After further consideration and taking account of the views expressed in your Lordships' House at Committee stage, we are prepared to accept that an independent body to review alleged miscarriages of justice should be set up, replacing the current statutory involvement of the Secretary of State.
This group of amendments and in particular Amendment No. 26 provide for that. In general they are based on the recommendations put forward by the Sutherland Committee, but some of the detail and mechanics of what is proposed correspond to some of the provisions of the Criminal Appeal Act 1995, which established the Criminal Cases Review Commission in England and Wales. These have required to be adjusted, where appropriate, for the Scottish context. I am not sure that it is necessary to go through these in detail. I shall be happy to answer any points raised by noble Lords in speaking to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 23:
Page 28, line 34, leave out ("124(3)") and insert ("194B").
The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 22. I beg to move.
On Question, amendment agreed to.
5.15 p.m.
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 24:
Page 30. leave out lines 41 to 44 and insert—
("60A.—(1) This section applies where the court, in respect of a person charged or brought before it, has made—

(a) an order under any of paragraphs (a) to (d) of subsection (2) of section 57 of this Act or such a decision as is mentioned in paragraph (e) of that subsection; or

(b) a hospital order, guardianship order, restriction order or a hospital direction.

(2) Where this section applies, the prosecutor may appeal against any such order, decision or direction as is mentioned in subsection (1) above—")
The noble and learned Lord said: My Lords, in speaking to this amendment, I shall speak also to Amendments Nos. 25, 49 and 54. Clauses 20 and 21 of the Bill make provision for rights of appeal by the prosecutor. All possible disposals following conviction, including mental health disposals, are now covered by these two clauses. However, on closer examination it has been appreciated that the provisions do not cover disposals following a finding of insanity of the accused. The purpose of these amendments is to correct that anomaly. I beg to move.
On Question, amendment agreed to.
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 25:
Page 30, line 45, after ("order") insert (", decision").
The noble and learned Lord said: My Lords, I spoke to this amendment with the previous amendment. I beg to move.
On Question, amendment agreed to.
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 26:
After Clause 24, insert the following new clause—
SCOTTISH CRIMINAL CASES REVIEW COMMISSION
(".—(1) After Part X of the 1995 Act there shall be inserted the following new Part—

PART XA

  SCOTTISH CRIMINAL CASES REVIEW COMMISSION
  The Scottish Criminal Cases Review Commission
  Scottish Criminal Cases Review Commission.
  194A.—(1) There shall be established a body corporate to be known as the Scottish Criminal Cases Review Commission (in this Act referred to as "the Commission").
  (2) The Commission shall not be regarded as the servant or agent of the Crown or as enjoying any status, immunity or privilege of the Crown; and the Commission's property shall not be regarded as property of, or held on behalf of, the Crown.
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  (3) The Commission shall consist of not fewer than three members.
  (4) The members of the Commission shall be appointed by Her Majesty on the recommendation of the Secretary of State.
  (5) At least one third of the members of the Commission shall be persons who are legally qualified; and for this purpose a person is legally qualified if he is an advocate or solicitor of at least ten years' standing.
  (6) At least two thirds of the members of the Commission shall be persons who appear to the Secretary of State to have knowledge or experience of any aspect of the criminal justice system; and for the purposes of this subsection the criminal justice system includes, in particular, the investigation of offences and the treatment of offenders.
  (7) Schedule 9A to this Act, which makes further provision as to the Commission, shall have effect.
  References to High Court.
  Cases dealt with on indictment.
  194B.—(1) The Commission on the consideration of any conviction of a person or of the sentence (other than sentence of death) passed on a person who has been convicted on indictment may, if they think fit, at any time, and whether or not an appeal against such conviction or sentence has previously been heard and determined by the High Court, refer the whole case to the High Court and the case shall be heard and determined, subject to any directions the High Court may make, as if it were an appeal under Part VIII of this Act.
  (2) The power of the Commission under this section to refer to the High Court the case of a person convicted shall be exercisable whether or not that person has petitioned for the exercise of Her Majesty's prerogative of mercy.
  (3) This section shall apply in relation to a finding under section 55(2) and an order under section 57(2) of this Act as it applies, respectively, in relation to a conviction and a sentence.
  (4) For the purposes of this section "person" includes a person who is deceased.
  Grounds for reference.
  194C. The grounds upon which the Commission may refer a case to the High Court are that they believe—

  (a) that a miscarriage of justice may have occurred; and

  (b) that it is in the interests of justice that a reference should be made.

  Further provision as to references.
  194D.—(1) A reference of a conviction, sentence or finding may be made under section 194B of this Act whether or not an application has been made by or on behalf of the person to whom it relates.
  (2) In considering whether to make a reference the Commission shall have regard to—

  (a) any application or representations made to the Commission by or on behalf of the person to whom it relates;

  (b) any other representations made to the Commission in relation to it: and

  (c) any other matters which appear to the Commission to be relevant.

  (3) In considering whether to make a reference the Commission may at any time refer to the High Court for the Court's opinion any point on which they desire the Court's assistance; and on a reference under this subsection the High Court shall consider the point referred and furnish the Commission with their opinion on the point.
  (4) Where the Commission make a reference to the High Court under section 194B of this Act they shall—

  (a) give to the Court a statement of their reasons for making the reference; and

  (b) send a copy of the statement to every person who appears to them to be likely to be a party to any proceedings on the appeal arising from the reference.

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  (5) In every case in which—

  (a) an application has been made to the Commission by or on behalf of any person for the reference by them of any conviction, sentence or finding; but

  (b) the Commission decide not to make a reference of the conviction, sentence or finding,

  they shall give a statement of the reasons for their decision to the person who made the application.
  Extension of Commission's remit to summary cases.
  194E.—(1) The Secretary of State may by order provide for this Part of this Act to apply in relation to convictions, sentences and findings made in summary proceedings as they apply in relation to convictions, sentences and findings made in solemn proceedings, and may for that purpose make in such an order such amendments to the provisions of this Part as appear to him to be necessary or expedient.
  (2) An order under this section shall be made by statutory instrument, and shall not have effect unless a draft of it has been laid before and approved by a resolution of each House of Parliament.
  Further powers.
  194F. The Commission may take any steps which they consider appropriate for assisting them in the exercise of any of their functions and may, in particular—

  (a) themselves undertake inquiries and obtain statements, opinions or reports; or

  (b) request the Lord Advocate or any other person to undertake such inquiries or obtain such statements, opinions and reports.

  Supplementary provision.
  194G.—(1) The Secretary of State may by order make such incidental, consequential. transitional or supplementary provisions as may appear to him to be necessary or expedient for the purpose of bringing this Part of this Act into operation, and, without prejudice to the generality of the foregoing, of dealing with any cases being considered by him under section 124 of this Act at the time when this Part come into force, and an order under this section may make different provision in relation to different cases or classes of case.
  (2) An order under this section shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.
  Powers of investigation of Commission.
  Power to request precognition on oath.
  194H.—(1) Where it appears to the Commission that a person may have information which they require for the purposes of carrying out their functions, and the person refuses to make any statement to them, they may apply to the sheriff under this section.
  (2) On an application made by the Commission under this section, the sheriff may, if he is satisfied that it is reasonable in the circumstances, grant warrant to cite the person concerned to appear before the sheriff in chambers at such time or place as shall be specified in the citation, for precognition on oath by a member of the Commission or a person appointed by them to act in that regard.
  (3) Any person who, having been duly cited to attend for precognition under subsection (2) above and having been given at least 48 hours notice, fails without reasonable excuse to attend shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale or to imprisonment for a period not exceeding 21 days; and the court may issue a warrant for the apprehension of the person concerned ordering him to be brought before a sheriff for precognition on oath.
  (4) Any person who, having been duly cited to attend for precognition under subsection (2) above, attends but—

  (a) refuses to give information within his knowledge or to produce evidence in his possession; or

  (b) prevaricates in his evidence,

  shall be guilty of an offence and shall be liable to be summarily subjected to a tine not exceeding level 3 on the standard scale or to imprisonment for a period not exceeding 21 days.
  1941.—(1) Where the Commission believe that a person or a public body has possession or control of a document or other material which may assist them in the exercise of any of their functions, they may apply to the High Court for an order requiring that person or body—

  (a) to produce the document or other material to the Commission or to give the Commission access to it; and

  (b) to allow the Commission to take away the document or other material or to make and take away a copy of it in such form as they think appropriate.

  and such an order may direct that the document or other material must not be destroyed, damaged or altered before the direction is withdrawn by the Court.
  (2) The duty to comply with an order under this section is not affected by any obligation of secrecy or other limitation on disclosure (including any such obligation or limitation imposed by or by virtue of any enactment) which would otherwise prevent the production of the document or other material to the Commission or the giving of access to it to the Commission.
  (3) The documents and other material covered by this section include, in particular, any document or other material obtained or created during any investigation or proceedings relating to—

  (a) the case in relation to which the Commission's function is being or may be exercised; or

  (b) any other case which may be in any way connected with that case (whether or not any function of the Commission could be exercised in relation to that other case).

  (4) In this section—
  "Minister" means a Minister of the Crown as defined by section 8 of the Ministers of the Crown Act 1975;
  "police force" means any police force maintained for a local government area under section 1(1) of the Police (Scotland) Act 1967 and references to a chief constable are references to the chief constable of such a force within the meaning of that Act; and
  "public body" means

  (a) any police force;

  (b) any government department, local authority or other body constituted for the purposes of the public service, local government or the administration of justice; or

  (c) any other body whose members are appointed by Her Majesty, any Minister or any government department or whose revenues consist wholly or mainly of money provided by Parliament.

  Disclosure of information.
  Offence of disclosure.
  194J.—(1) A person who is or has been a member or employee of the Commission shall not disclose any information obtained by the Commission in the exercise of any of their functions unless the disclosure of the information is excepted from this section by section 194K of this Act.
  (2) A member of the Commission shall not authorise the disclosure by an employee of the Commission of any information obtained by the Commission in the exercise of any of their functions unless the authorisation of the disclosure of the information is excepted from this section by section 194K of this Act.
  (3) A person who contravenes this section is guilty of an offence and liable on summary conviction to a fine of an amount not exceeding level 5 on the standard scale.
  Exceptions from obligations of non-disclosure.
  194K.—(1) The disclosure of information, or the authorisation of the disclosure of information, is excepted from section 194J of this Act by this section if the information is disclosed, or is authorised to be disclosed—

  (a) for the purposes of any criminal, disciplinary or civil proceedings;

  (b) in order to assist in dealing with an application made to the Secretary of State for compensation for a miscarriage of justice;

  (c) by a person who is a member or an employee of the Commission to another person who is a member or an employee of the Commission;

  (d) in any statement or report required by this Act;

  (e) in or in connection with the exercise of any function under this Act; or

  (f) in any circumstances in which the disclosure of information is permitted by an order made by the Secretary of State.

  (2) The disclosure of information is also excepted from section 194J of this Act by this section if the information is disclosed by an employee of the Commission who is authorised to disclose the information by a member of the Commission.
  (3) The disclosure of information, or the authorisation of the disclosure of information, is also excepted from section 194J of this Act by this section if the information is disclosed, or is authorised to he disclosed, for the purposes of—

  (a) the investigation of an offence; or

  (b) deciding whether to prosecute a person for an offence,

  unless the disclosure is or would be prevented by an obligation or other limitation on disclosure (including any such obligation or limitation imposed by, under or by virtue of any enactment) arising otherwise than under that section.
  (4) Where the disclosure of information is excepted from section 194J of this Act by subsection (1) or (2) above, the disclosure of the information is not prevented by any obligation of secrecy or other limitation on disclosure (including any such obligation or limitation imposed by. under or by virtue of any enactment) arising otherwise than under that section.
  (5) The power to make an order under subsection (1)(f) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
  Consent to disclosure.
  194L.—(1) Where a person or body is required by an order under section 1941 of this Act to produce or allow access to a document or other material to the Commission and notifies them that any information contained in the document or other material to which the order relates is not to be disclosed by the Commission without his or its prior consent, the Commission shall not disclose the information without such consent.
  (2) Such consent may not be withheld unless—

  (a) (apart from section 1941 of this Act) the person would have been prevented by any obligation of secrecy or other limitation on disclosure from disclosing the information without such consent; and

  (b) it is reasonable for the person to withhold his consent to disclosure of the information by the Commission.

  (3) An obligation of secrecy or other limitation on disclosure which applies to a person only where disclosure is not authorised by another person shall not be taken for the purposes of subsection (2)(a) above to prevent the disclosure by the person of information to the Commission unless—

  (a) reasonable steps have been taken to obtain the authorisation of the other person; or

  (b) such authorisation could not reasonably be expected to be obtained.".

  (2) After Schedule 9 of the 1995 Act there shall be inserted the following Schedule—

SCHEDULE 9A

  THE COMMISSION: FURTHER PROVISIONS
  Membership
  1. Her Majesty shall, on the recommendation of the Secretary of State, appoint one of the members of the Commission to be the chairman of the Commission.
  2.—(1) Subject to the following provisions of this paragraph, a person shall hold and vacate office as a member of the Commission, or as chairman of the Commission, in accordance with the terms of his appointment.
  (2) An appointment as a member of the Commission may be full-time or part-time.
  (3) The appointment of a person as a member of the Commission, or as chairman of the Commission, shall be for a fixed period of not longer than five years.
  (4) Subject to sub-paragraph (5) below, a person whose term of appointment as a member of the Commission, or as chairman of the Commission, expires shall be eligible for re-appointment.
  (5) No person may hold office as a member of the Commission for a continuous period which is longer than ten years.
  (6) A person may at any time resign his office as a member of the Commission, or as chairman of the Commission, by notice in writing addressed to Her Majesty.
  (7) Her Majesty may at any time remove a person from office as a member of the Commission if satisfied—

  (a) that he has without reasonable excuse failed to discharge his functions as a member for a continuous period of three months beginning not earlier than six months before that time;

  (b) that he has been convicted of a criminal offence;

  (c) that a bankruptcy order has been made against him, or his estate has been sequestrated, or he has made a composition or arrangement with, or granted a trust deed for, his creditors; or

  (d) that he is unable or unfit to discharge his functions as a member.

  (8) If the chairman of the Commission ceases to be a member of the Commission he shall also cease to be chairman.
  Members and employees
  3.—(1) The Commission shall—

  (a) pay to members of the Commission such remuneration;

  (b) pay to or in respect of members of the Commission any such allowances, fees, expenses and gratuities; and

  (c) pay towards the provisions of pensions to or in respect of members of the Commission any such sums,

  as the Commission are required to pay by or in accordance with directions given by the Secretary of State.
  (2) Where a member of the Commission was, immediately before becoming a member, a participant in a scheme under section I of the Superannuation Act 1972, the Minister for the Civil Service may determine that his term of office as a member shall be treated for the purposes of the scheme as if it were service in the employment or office by reference to which he was a participant in the scheme; and his rights under the scheme shall not he affected by sub-paragraph (1)(c) above.
  (3) Where—

  (a) a person ceases to hold office as a member of the Commission otherwise than on the expiry of his term of appointment; and

  (b) it appears to the Secretary of State that there are special circumstances which make it right for him to receive compensation,

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  the Secretary of State may direct the Commission to make to him a payment of such amount as the Secretary of State may determine.
  4.—(1) The Commission may appoint a chief executive and such other employees as the Commission think fit, subject to the consent of the Secretary of State as to their number and terms and conditions of service.
  (2) The Commission shall—

  (a) pay to employees of the Commission such remuneration; and

  (b) pay to or in respect of employees of the Commission any such allowances, fees, expenses and gratuities,

  as the Commission may, with the consent of the Secretary of State, determine.
  (3) Employment by the Commission shall be included among the kinds of employment to which a scheme under section 1 of the Superannuation Act 1972 may apply.
  5. The Commission shall pay to the Minister for the Civil Service, at such times as he may direct, such sums as he may determine in respect of any increase attributable to paragraph 3(2) or 4(3) above in the sums payable out of money provided by Parliament under the Superannuation Act 1972.
  Procedure
  6.—(1) The arrangements for the procedure of the Commission (including the quorum for meetings) shall be such as the Commission may determine.
  (2) The arrangements may provide for the discharge, under the general direction of the Commission, of any function of the Commission—

  (a) in the case of the function specified in sub-paragraph (3) below, by a committee consisting of not fewer than three members of the Commission; and

  (b) in any other case, by any committee of, or by one or more of the members or employees of, the Commission.

  (3) The function referred to in sub-paragraph (2)(a) above is making a reference to the High Court under section 194B of this Act.
  (4) The validity of any proceedings of the Commission (or of any committee of the Commission) shall not be affected by—

  (a) any vacancy among the members of the Commission or in the office of chairman of the Commission; or

  (b) any defect in the appointment of any person as a member of the Commission or as chairman of the Commission.

  (5) Where—

  (a) a document or other material has been produced to the Commission under section 1941 of this Act, or they have been given access to a document or other material under that section, and the Commission have taken away the document or other material (or a copy of it); and

  (b) the person who produced the document or other material to the Commission, or gave them access to it. has notified the Commission that he considers that its disclosure to others may be contrary to the interests of national security,

  the Commission shall, after consulting that person, deal with the document or material (or copy) in a manner appropriate for safeguarding the interests of national security.
  Evidence
  7. A document purporting to be—

  (a) duly executed under the seal of the Commission; or

  (b) signed on behalf of the Commission,

  shall be received in evidence and, unless the contrary is proved, taken to be so executed or signed.
  Annual reports and accounts
  8.—(1) As soon as possible after the end of each financial year of the Commission, the Commission shall send to the Secretary of State a report on the discharge of their functions during that year.
  (2) Such a report may include an account of the working of the provisions of Part XA of this Act and recommendations relating to any of those provisions.
  (3) The Secretary of State shall lay before each House of Parliament. and cause to be published, a copy of every report sent to him under sub-paragraph (1).
  9.—(l) The Commission shall—

  (a) keep proper accounts and proper records in relation to the accounts; and

  (b) prepare a statement of accounts in respect of each financial year of the Commission.

  (2) The statement of accounts shall contain such information and shall be in such form as the Secretary of State may, with the consent of the Treasury, direct.
  (3) The Commission shall send a copy of the statement of accounts to the Secretary of State and to the Comptroller and Auditor General within such period after the end of the financial year to which the statement relates as the Secretary of State may direct.
  (4) The Comptroller and Auditor General shall—

  (a) examine, certify and report on the statement of accounts; and

  (b) lay a copy of the statement of accounts and of his report before each House of Parliament.

  10. For the purposes of this Schedule the Commission's financial year shall be the period of twelve months ending with 31st March; but the first financial year of the Commission shall he the period beginning with the date of establishment of the Commission and ending with the first 31st March which falls at least six months after that date.
  Expenses
  11. The Secretary of State shall defray the expenses of the Commission up to such amount as may be approved by him.".")
  The noble and learned Lord said: My Lords, 1 spoke to this amendment with Amendment No. 22. 1 beg to move.
  On Question, amendment agreed to.
  Clause 28 [Evidence of vulnerable persons: special provisions]:
  The Earl of Mar and Kellie The Earl of Mar and Kellie moved Amendment No. 27:
  Page 36, line 44, at end insert—
  ("(iv) who would be unable to give evidence in open court:7).
  The noble Earl said: My Lords, this amendment to Clause 28 is aimed at extending the range of people who can be accepted as being vulnerable. At Committee stage the noble and learned Lord the Lord Advocate said that the list in the Bill was being kept tight because objective criteria were needed for ease of operation. While I certainly understand his point, I am keen that the Bill should be made to address the whole problem. The tight criteria of the Bill will certainly be operable, but it will also lead to many witnesses suffering unnecessarily and, even worse, not giving evidence.
  This failure to address the whole problem will not assist in the achievement of justice. I believe that the courts will want to experiment with my wider description of vulnerable people. I believe that many citizens are terrified of the judicial process and that

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  serious efforts must be made to explore how far vulnerable people can be enabled to give evidence. I beg to move.
  The Earl of Balfour: My Lords, before my noble and learned friend replies, what happens if somebody is unable to speak and wishes to give evidence in writing? Is that possible in court? I really do not know.
  Lord Mackay of Drumadoon: My Lords, the short answer is that that is correct. Indeed, I have some personal recollection of that happening. Before it could occur, the judge would have to be satisfied that the witness could understand the questions that he or she would be asked and that he or she was unable to communicate his or her thoughts, except in writing, and before that could be established it may be necessary for the court to take evidence (whether orally or by way of a report from someone who knows the witness in everyday life and who is able to assure the court that the witness is fully qualified to follow the proceedings of the court). I have some recollection of seeing that done. Indeed, it happens frequently when there is some concern about a witness's address. The witness can be asked to write down his or her address, which is then shown to the judge and the lawyers but is not read out in open court. I am satisfied, therefore, that our existing court procedures fully meet the concerns of my noble friend.
  The noble Earl's amendment would have the effect of providing for any category of person to give evidence on commission by means of live television link or behind screens. It could apply, for example, to someone who, for a variety of reasons, is unable to be present in court. Perhaps I may take some fairly extreme examples to illustrate the point. Someone could be physically absent from the jurisdiction on a pre-arranged business trip, because of a holiday or for a variety of other reasons. Clearly, it would be wrong to put on the face of the statute a provision which could be construed on that basis.
  There are already provisions for dealing with vulnerable witnesses, and we have already covered those. There are already provisions for taking evidence on commission.
  This amendment comes rather late in the day and has potentially undesirable consequences. Therefore, I invite the noble Earl to withdraw it. From what I said in Committee, I hope it is clear that the Government are aware of the problems of vulnerable witnesses. Some progress has been made and, in the light of experience during the next few years, it may be possible to take that further. However, I believe that we have gone far enough for the moment and that the right approach is to bring these provisions into force, to see how they work and, if there is cause for extending them, to look at the matter again.
  Lord Harris of Greenwich: My Lords, before the noble and learned Lord sits down, I wonder whether I may ask him one question. Obviously, we shall not press the amendment, but what is the position of a woman who is alleged to have been raped? Can
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  arrangements be made to have her screened off from the assailant? I ask this not having followed the details of the previous argument, but because I believe that it would be helpful if the noble and learned Lord could explain the matter.
  Lord Mackay of Drumadoon: My Lords, not purely arising from the fact that she is the victim of a rape or alleged rape—"the complainer" as we would call her in Scotland or, if the lady is under 16, a child—such provisions would already apply. If the lady were to fall under the new provisions extending the definition of "vulnerable witnesses", such arrangements would apply if the appropriate application was made to the court. However, if we are dealing with a lady of mature years who does not fall within the category of "vulnerable witnesses" as defined in the Bill, there is no provision in Scotland at the moment which would allow that to happen.
  Lord Harris of Greenwich: My Lord, before the noble and learned Lord sits down, I repeat that we shall not be pressing the matter but I would be grateful if the noble and learned Lord could look into this. He will be aware that many women—of mature years, I might add—find extremely alarming the idea of being confronted in court by a man who may have subjected them to a violent attack and humiliation. I should be grateful if the noble and learned Lord could consider the matter not in relation to the Bill, but as a general principle.
  Lord Mackay of Drumadoon: My Lords, I am happy to give the assurance that the Crown in Scotland will keep that and other matters under close review.
  The Earl of Mar and Kellie: My Lords, I accept that my amendment was much too wide. I accept also that the Bill makes some progress in the direction in which we should be moving. I suppose that I am giving notice to whomsoever will be responsible for the next Criminal Justice (Scotland) Bill that I shall be back with this type of amendment. Meanwhile, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 32 [Continuity of sentencing]:
  Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 28:
  Leave out Clause 32.
  The noble and learned Lord said: My Lords, Clause 32, which the amendment seeks to delete, is a new clause which was tabled in Committee by the noble and learned Lord, Lord McCluskey. It sought to introduce into the Bill a clause which for all practical purposes was identical to Clause 23 of the Crime (Sentences) Bill. It was inserted into the Bill against the wishes of the Government and against the advice of the noble and learned Lord, Lord Hope of Craighead. I understand that the Government are not the only people to have been reflecting on the contents of this Bill during the past few days. I understand that there is a wide measure of support for the view that it would be undesirable for this provision to form part of the

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  law of Scotland. For that reason, and without going into any great detail, I trust that the amendment will be acceptable to your Lordships. I beg to move.
  On Question, amendment agreed to.
  Clause 33 [Application of provisions with respect to early release]:
  Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 29:
  Page 39, line 41, after ("1993 Act") insert (", and the amendments made to the 1995 Act by paragraph 17(3) of Schedule Ito this Act").
  The noble and learned Lord said: My Lords, this is purely a technical drafting amendment. I beg to move.
  On Question, amendment agreed to.
  Clause 34 [Early release]:
  The Earl of Mar and Kellie The Earl of Mar and Kellie moved Amendment No. 30:
  Page 41, line 9, at end insert ("and "prescribed minimum standard" means that the prisoner has not been charged with a disciplinary offence or been placed on report").
  The noble Earl said: My Lords, my Amendments Nos. 31 and 44 have been grouped with this amendment. They take us back to prison and focus again on the subject of the assessment criteria for good behaviour. In Committee, it was established that the criterion specified in my earlier amendments, which stated that the "prescribed minimum standard" was achieved by not having an offence against the Prison (Scotland) Rules proved, was too low. I have now raised that criterion. This time, being charged and placed on report becomes the criterion. The noble and learned Lord the Lord Advocate told us in Committee that the minimum prescribed standard was effectively floating above my objective standard of a proven offence against the prison rules.
  I am still trying to find objective criteria that can be set down in the Bill and understood by the prisoners and prison officers who have to live with the rules. I believe that we can do it. I believe that we can introduce a specification into the Bill which describes what we really mean.
  Perhaps I may move on to Amendment No. 31, which tries to establish who can sort out the assessments of good behaviour. If the scheme is to work, prison officers and prisoners will need to have confidence in it. In Committee, several amendments were proposed which called for outside agencies to carry out the assessment procedures. All those amendments were rejected. We were told that the task was to be carried out by the Scottish Prison Service. This amendment therefore clarifies the point and states that the function should be carried out by senior members of the prison staff. They are the people who are expected to carry out executive functions on a day-to-day basis within a prison. It is perfectly normal for staff at governor grade to convene meetings and to achieve decisions based on the reports of prison officers. I do not understand why the Bill is so imprecise and I do not believe that that is necessary.
  Finally, I turn to my Amendment No. 44, which seeks to ensure that the Secretary of State does not implement the early release scheme until the Scottish Prison
  956
  Service is capable of withstanding the substantial change involved. With the differing provision in regard to the desirability of sentence reduction, sentences in Scotland will become longer. The increased prison population will be a major burden to shoulder without the imposition of a new liberation scheme that will be a hard sell to prisoners. I look for reassurance on this matter. I beg to move.
  5.30 p.m.
  Lord Mackay of Drumadoon: My Lords, Amendment No. 30 seeks to define the prescribed minimum standard for the purposes of the early release provisions as meaning that the prisoner has not been charged with a disciplinary offence or placed on report. The result, which I am sure the noble Earl does not intend, would be that the mere suspicion of misconduct would mean that a prisoner had not reached the prescribed standard, even if he were subsequently acquitted of the charge. Even if this technical problem were dealt with and the minimum standard were to be defined as an absence of proved misconduct reports, we do not believe that the amendment would be desirable.
  The earning of early release should be about more than simply not breaching prison discipline. Prisoners should be required to demonstrate positive good behaviour and that they are making constructive use of their time in prison in order to address their offending behaviour. As appropriate, that might mean participating in a programme on drug addiction or anger management, as well as working productively in the prison workshops. We therefore intend to set out in the prison rules a wider definition of the prescribed minimum standard. That will provide a real incentive to prisoners to make a positive effort to co-operate with the prison regime and tackle their problems.
  Amendment No. 31 seeks to define the prescribed person in relation to assessments for early release as a person of governor grade. The Government have no problem with the spirit of this amendment, in that they envisage that these assessments will be made by a board chaired by a senior manager. The problem is a technical one, in that since April 1995 some of the senior managers in prisons are no longer described as governor grades but have the job description "managers". I hope that the noble Earl will withdraw his amendment if I assure him that the prison rules, which are required to be in place before these provisions have effect, shall provide for assessments to be made by a governor or a senior manager after an assessment board has met to consider the case.
  I turn to Amendment No. 44 which I believe is also grouped with manuscript Amendment No. 43B that may or may not be moved. The Government have always been open about the likelihood that substantial numbers of additional prison places will be needed as a consequence of their proposals on honesty in sentencing. That was a matter discussed in some detail at the Committee stage of the Bill. The financial memorandum states that these may amount to as many as 2,200 five years after implementation, depending on how the courts sentence under the provisions set out in the Bill and the effect on the behaviour of offenders.

  957
  The Government have consistently said—your Lordships were reminded of it yesterday by the noble Lord, Lord McIntosh—that they do not intend to bring these provisions into effect until additional places are available. Clearly, that is unlikely to be before the end of the century. The Scottish Prison Service is already planning ahead to accommodate whatever the future may hold. The service will clearly be closely involved with all the decisions regarding the implementation of these provisions. Its involvement is an administrative matter with which we believe it would be inappropriate to deal on the face of the Bill as proposed by Amendment No. 44.
  For similar reasons we also consider that it would be inappropriate to make the provision proposed by Amendment No. 43B. The relationship between the design capacity of the prisons and the prison population over the past three months is one factor to be considered before commencing the provisions, but it is not the only one. The number of new places that are about to come on stream will be even more important. The Government shall set themselves a tougher test than is proposed by this amendment as far as concerns the early release provisions.
  For the benefit of noble Lords who do not have a list of the manuscript amendments, manuscript Amendment No. 43B proposes that the following words be inserted:
  "No statutory instrument made under [Section 65] shall be made bringing into force [certain specified sections] … unless—

  (a) the Secretary of State is satisfied that the average daily prison population in Her Majesty's Prisons in Scotland has not exceeded the current design capacity of those prisons by more than 10 per cent. at any time during a continuous period of three months, and

  (b) Her Majesty's Government has published the appropriate statistics as to the average daily prison population and the current design capacity and placed them in the library of [another place]".

  The terms of that amendment illustrate our concerns. For that reason, we find all of these amendments unacceptable. I hope that they will not be pressed.
  Lord Kirkhill: My Lords, before the noble and learned Lord sits down, perhaps I may put a question. If the capacity runs at the 10 per cent. level of which he speaks for a period of three months and then the provisions in the statutory instrument are initiated, where do these prisoners sleep—on mattresses in corridors and so on?
  Lord Mackay of Drumadoon: My Lords, where they sleep is a matter for the governor of a particular institution. It is an unhappy fact of life that there has been overcrowding in prisons. It has reduced but it remains a problem. Undoubtedly, in some institutions more prisoners sleep in cells than was originally intended. No doubt on occasions the facilities leave something to be desired. But to suggest that people regularly sleep on mattresses in prison corridors is not an accurate description of the state of the prison estate in Scotland. There is a measure of overcrowding and it is being addressed.
  I hope that the noble Lord will accept my assurance—which I am sure will be received with sympathy by noble Lords on all sides of the House—that these
  958
  provisions will not be introduced until any increased prison population that may result can be accommodated by the estate. One hopes that as slow but steady progress is made in dealing with the overcrowding that presently afflicts our prisons, by the year 2000, whenever, if in the past there had been occasions when people slept on mattresses in corridors that would not occur at that stage.
  The Earl of Mar and Kellie: My Lords, I thank the noble and learned Lord for his answers. I am disappointed by his reluctance to define "minimum prescribed standards of behaviour". That will have to be worked out somewhere else eventually. In regard to the amendment dealing with governors, the noble and learned Lord is quite right. My terminology is slightly out of date in regard to prison staff. I have been visiting prisons for a while, and I still visit prisons. I will make certain about that in future.
  Referring to the final amendment dealt with by the noble and learned Lord, one knows that there are plans to build a private prison in Kilmarnock. That suggests that there will be an increase in prison places. One notes that at present the prisons in Scotland are full so perhaps judges are doing the business. I suspect that the measures introduced by this Bill which provide other ways of dealing with fine defaulters and may be implemented sooner than some other measures, will remove a large number of fine defaulters from prison and help to reduce overcrowding. That said, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 31 not moved.]
  [Manuscript Amendment No. 31A not moved.]
  Clause 49 [Criminal Legal Assistance]:
  [Amendments Nos. 32 and 33 not moved.]
  Clause 50 [Employment of solicitors in relation to criminal legal assistance]:
  The Earl of Mar and Kellie The Earl of Mar and Kellie moved Amendment No. 34:
  Page 66, line 23, leave out ("require") and insert ("give the opportunity to").
  The noble Earl said: My Lords, I shall speak also to Amendment No. 35. The amendment has been suggested to me by the Glasgow Bar Association. Here we are talking about changes in legal aid. It seeks to soften the impact of the Bill in respect of ordering accused persons to go to the proposed Legal Aid Board employed solicitors. I can see the general idea that the board's salaried solicitors should be fully employed. That is generally sensible, but there are bound to be occasions when accused persons do not get on with, or do not have faith in, certain solicitors. We all recognise that. It happens already. It will happen in the future. Amendment No. 34 meets the problem head on and supplies a solution.
  Amendment No. 35 was, again, suggested by the Glasgow Bar Association. I recognised the concept of a standard fee being offered for legal aid work. The administrative merits stare us in the face. But there will also be occasions when the standard fee will be woefully

  959
  inadequate. I recognise that a busy office doing a great deal of legal aid work will enjoy the swings and roundabouts effect, but that will not be true of the office which does little criminal legal aid work or the new firms which are just starting up, and have cashflow problems. The amendment lives within the strictures of the fixed payment scheme. It seeks to clarify the position regarding disproportionately extensive and expensive cases. I beg to move.
  Lord Mackay of Drumadoon: My Lords, Amendment No. 34 is unacceptable. The Government have already explained in some detail the necessity for the Secretary of State to be able to give the board power to direct applicants for criminal legal assistance to directly employed solicitors. Given that the pilot scheme provided for in Clause 50 must be evaluated within three years, it will be essential to ensure an adequate build up of business in the initial stages. That cannot be done without a power of direction. The amendment would remove such a power.
  The noble Earl raises on behalf of the Glasgow Bar Association a practical problem which is one of the issues that will be looked at in any pilot scheme. I have no doubt that given good will and common sense on all sides, particularly by solicitors employed in the pilot scheme, the staff—both legally qualified and others—of the Legal Aid Board, other members of the profession, and indeed the accused himself, if the particular problem adverted to arises it can and will be responsibly addressed.
  Amendment No. 35, too, is unacceptable. The whole point of fixed fees is to ensure that, overall, solicitors are fairly rewarded for work necessarily and reasonably done with due regard to economy. It is also undesirable because it removes from Clause 51 the provision enabling the solicitor to be reimbursed for outlays not included in the prescribed fixed payment. For those different reasons, I hope that the amendment will not be pressed.
  5.45 p.m.
  The Earl of Mar and Kellie: My Lords, I am certain that my advisers from the Glasgow Bar Association will be interested to read the noble and learned Lord's answers. It sounds as though the issues will come up in the pilot projects. We look forward to dealing with this matter at some time in the future. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 51 [Fixed Payments]:
  [Amendment No. 35 not moved.]
  Clause 52 [Contracts for the provision of criminal legal assistance]:
  [Amendment No. 36 not moved.]
  Clause 53 [Power of investigation of Scottish Legal Aid Board]:
  [Amendments No. 37 and 38 not moved.]
  Clause 60 [Grants for forensic medical services]:
  The Earl of Mar and Kellie The Earl of Mar and Kellie moved Amendment No. 39:
  Page 75, line 24, leave out first ("person") and insert ("public body").
  The noble Earl said: My Lords, I shall speak also to Amendment No. 40. I tabled these amendments because I believe, in principle, that the courts and their ancillary services belong in the public sector. When a citizen's liberty is at stake, I am keen that the state should supply the scientific evidence.
  I understand that there are four forensic laboratories in Scotland, all of which are in the public sector. They work within the Strathclyde, Lothian and Borders, Tayside and Grampian police forces. I believe that there are no private forensic laboratories in Scotland. It seems to me that the clause is an unnecessary enabling clause. I beg to move.
  Lord Mackay of Drumadoon: My Lords, these amendments seek to ensure that grants for forensic medical services can be made only to public bodies. At present the Crown Office in my department provides grant-in-aid to the four Scottish universities with departments of forensic medicine. I give a clear undertaking that there are no plans to change that arrangement. However, it would be wrong to restrict the Lord Advocate's freedom to obtain forensic medicine services from whichever body or person was willing and able to provide those services.
  If one or more of the universities chose not to provide such services, or for some technical reason in the hospital within which they work that proved impossible on a short-term basis, the Lord Advocate of the day would require to look elsewhere. There clearly would not be time to come to Parliament to obtain authority to start funding another body. I do not envisage that happening, because the universities concerned are of long standing and have served the Crown in Scotland well. I believe—I say this not just in my capacity as Lord Advocate, but with my experience in the Crown Office at present and earlier in the 1980s—it would be wrong to restrict the statute in the way proposed. In those circumstances, I hope that the noble Earl will feel able to withdraw the amendment.
  The Earl of Mar and Kellie: My Lords, the noble and learned Lord's answer was better than I had expected, I have to say.
  Lord Mackay of Drumadoon: My Lords, before the noble Earl sits down, may I take it that that was a compliment?
  The Earl of Mar and Kellie: My Lords, yes, that constituted a compliment. I had not appreciated that the forensic medical services came from the universities. I was thinking more in terms of the police laboratories. The noble and learned Lord said that there was no one yet from whom he could obtain such services. So broadly speaking he agreed with my last remark that the clause at present was an unnecessary enabling clause. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 40 not moved.]
  Clause 61 [Confiscation of alcohol from persons under 18]:
  The Earl of Mar and Kellie The Earl of Mar and Kellie moved Amendment No. 41:
  Page 75, line 33, at end insert ("but it shall not be an offence to fail to comply with any such requirement.").
  The noble Earl said: My Lords I speak also to Amendment No. 42. These amendments relate to the clause providing for the confiscation of alcohol in public places. They were tabled to clarify the situation. In the event of compliance with the police request, no offence is committed. Since tabling the amendments two things have occurred. First, I received a helpful letter from the noble and learned Lord the Lord Advocate—another compliment—explaining that it was not an offence under the 1976 Act, but he went on:
  "It may he an offence against the local by-laws".
  I found that interesting to note. These local by-laws operate mainly in cities. My favourite local authority, the Clackmannanshire Council, is developing a by-law prohibiting drinking in public outdoor places by people of all ages. Other authorities may follow the lead.
  That brings me to the most serious and new point. The Bill deals with the possession of alcoholic liquor but not with its consumption. I am sure that it is intended to be aimed at youngsters drinking in public and being a nuisance while doing so, but it does not say so. The Bill allows the police to confiscate unopened cans of beer, alcopops or whatever, which may be in a shopping bag being transported between the child's home and the grandparents' home, being consumed or in a picnic basket and possibly even supervised by a parent. I wonder whether that is the intention of this part of the Bill. I beg to move.
  The Earl of Balfour: My Lords, the amendment seriously weakens the powers of the police. I do not believe that that is the kind of thing we want to do.
  Lord Mackay of Drumadoon: My Lords, I am grateful to my noble friend for taking the words out of my mouth. I understand why the noble Earl, Lord Mar and Kellie, brings the matter forward, but, unfortunately, the amendments are entirely at odds with the provisions in subsection (3)—
  The Earl of Mar and Kellie: My Lords, I must apologise to the House for the wording of the amendments. It was my intention that they should read:
  "but it shall not be an offence to comply with any such requirement".
  I appreciate that the wording in the Marshalled List is entirely wrong.
  Lord Mackay of Drumadoon: My Lords, if it is entirely wrong, I compliment the noble Earl for acknowledging that and I trust that he will not press the matter. Clearly, the purpose of the provision is not to give people criminal convictions unnecessarily, but to give the police power to deal with a few children who brazenly refuse to comply with requirements, which
  962
  I believe have the vast support of the majority of the population who are concerned about drinking in public on repeated occasions. For whatever reason, I hope that I have persuaded the noble Earl to withdraw the amendment.
  The Earl of Mar and Kellie: My Lords, having tabled the wrong amendment, I certainly am persuaded to withdraw it. However, I remain concerned that there will be an issue about unopened bottles of drink if a zealous policeman were pursuing that. I put that forward as a problem for the future and beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 42 not moved.]
  Clause 63 [Financial provisions]:
  Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 43:
  Page 76, line 31, at end insert—
  ("() Part XA of the 1995 Act (Scottish Criminal Cases Review Commission) (as inserted by section 24A of this Act);").
  The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 22. I beg to move.
  On Question, amendment agreed to.
  [Manuscript Amendments Nos. 43A and 43B not moved.]
  Clause 65 [Short title, commencement and extent]:
  [Amendment No. 44 not moved.]
  Schedule 1 [Minor and Consequential Amendments]:
  Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendments Nos. 45 to 47:
  Page 78, line 3, at end insert—
  ("The Public Records Act 1958 (c.51)
  . In the First Schedule to the Public Records Act 1958 (definition of public records), in Part II of the Table at the end of paragraph 3, at the appropriate place insert—
  "Scottish Criminal Cases Review Commission.".").
  Page 78, line 31, at end insert—
  ("The Superannuation Act 1972 (c.11)
  . In Schedule I to the Superannuation Act 1972 (kinds of employment to which a scheme under section 1 of that Act may apply), at the end of the list of "Royal Commissions and other Commissions" insert—
  "Scottish Criminal Cases Review Commission."
  The House of Commons Disqualification Act 1975 (c.24)
  . In the House of Commons Disqualification Act 1975, in Part II of Schedule 1 (bodies of which all members are disqualified), at the appropriate place insert—
  "The Scottish Criminal Cases Review Commission.".").
  Page 78, line 37, at end insert—
  ("The Law Reform (Miscellaneous Provisions) (Scotland) Act 1980 (c.55)
  . In Part I of Schedule 1 to the Law Reform (Miscellaneous Provisions) (Scotland) Act 1980 (persons ineligible for jury service), in Group B, after paragraph (w) insert—
  "(wa) members and employees of the Scottish Criminal Cases Review Commission;".").
  The noble and learned Lord said: My Lords, I spoke to these amendments with Amendment No. 22. I beg to move.
  On Question, amendments agreed to.
  Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 48:
  Page 89, line 5, at end insert—
  ("() In section 46 (presumption and determination of age of child)—

  (a) in subsection (1), after the word "offence" there shall be inserted the words ", whose age is not specified in the indictment or complaint in relation to that offence,";

  (b) in subsection (3) at the beginning there shall be inserted the words "Without prejudice to section 255A of this Act,".").

  The noble and learned Lord said: My Lords, the amendment was grouped with Amendment No. 27. I beg to move.
  On Question, amendment agreed to.
  Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 49:
  Page 89, leave out lines 31 to 33 and insert—
  ("() In section 63 (appeals by prosecutor in cases involving insanity)—

  (a) in subsection (I), paragraph (d) shall cease to have effect;

  (b) in subsection (2)(b)(ii), the words "or (d)" shall cease to have effect; and

  (c) in subsection (5)(b)—

  (i) for the words "or order", in the first place where they occur, there shall be substituted the words "order or disposal"; and

  (ii) for the words "or order", in the second place where they occur, there shall be substituted the words "or acquittal".").

  The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 24. I beg to move.
  On Question, amendment agreed to.
  Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendments Nos. 50 to 53:
  Page 90, line 23, at end insert—
  ("() In section 113(2)(c) (recipients of copy of judge's report) for the words "section 124(3) of this Act, to the Secretary of State" there shall be substituted the words "Part XA of this Act. to the Commission".").
  Page 90, leave out lines 29 to 31 and insert—

  ("(16) In section 124 (finality of proceedings and Secretary of State's reference)

  (a) in subsection (1), after "this Part" there shall be inserted the words "or Part XA";

  (b) in subsection (2), for the words "subsection (3) below" there shall be substituted the words "Part XA of this Act"; and

  (c) subsections (3) to (5) shall cease to have effect.").

  Page 91, leave out lines 47 and 48 and insert—
  ("() In section 298 (trial judge's report)—

  (a) in subsection (1)(a), after the words "108" there shall be inserted the words 108A"; and

  964

  (b) in subsection (2), for the words "section 124(3) of this Act, the Secretary of State" there shall be substituted the words "Part XA of this Act, the Commission".

  Page 91, line 49, after ("(interpretation)") insert ("—
  (a) after the definition of "Clerk of Justiciary" insert—
  "the Commission" has the meaning given by section 194A(1) of this Act;"; and.
  (b)")
  The noble and learned Lord said: My Lords, these amendments were spoken to with Amendment No. 22. I beg to move.
  On Question, amendments agreed to.
  Schedule 3 [Repeals]:
  Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 54:
  Page 97, line 5, column 3, at end insert—
  ("In section 63, subsection (1)(d) and in subsection (2)(b)(ii) the words "or (d)".")
  The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 24. I beg to move.
  On Question, amendment agreed to.
  Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 55:
  Page 97, line 16, column 3, at end insert—
  ("In section 124, subsections (3) to (5).")
  The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 22. I beg to move.
  On Question, amendment agreed to.
  Then, Standing Order No. 44 having been suspended (pursuant to Resolution of 18th March), Bill read a third time.
  Lord Mackay of Drumadoon: My Lords, I beg to move that this Bill do now pass. In speaking to that Motion, I hasten to assure your Lordships that I do not intend to speak for 52 minutes, which was one of the longer contributions during the Bill's Committee stage.
  Obviously, your Lordships have given careful scrutiny to the Bill, albeit that the Report stage lasted a shorter period than might otherwise have proved to be the case. The Government believe—and I believe—that the Bill contains many useful provisions, some of which have perhaps attracted more attention during your Lordships' deliberations. We believe that they offer much protection and reassurance to the people of Scotland and that in many respects they will further improve the administration of Scotland's criminal justice system.
  I wish to acknowledge and offer considerable personal thanks to noble Lords who have contributed to our deliberations. The consideration of the Bill in your Lordships' House followed upon and to some extent ran in tandem with consideration of the Crime (Sentences)

  965
  Bill. There was some similarity between certain of the provisions. Nevertheless, noble Lords who took part contributed much and I am grateful to them.
  On my own Benches, I thank my noble friends, in particular Lady Carnegy and Lord Balfour. I personally enjoyed the exchanges over the Dispatch Box with the noble Lord, Lord Sewel, and my colleague in the Faculty of Advocates, the noble Lord, Lord Macaulay. I regret that he cannot be with us today. I enjoyed my exchanges with my former colleague on the Criminal Injuries Compensation Board, the noble Lord, Lord Thomas of Gresford. During the past three months he has been on a steep learning curve about the law of Scotland, but I hasten to assure him that it is not as steep as the learning curve I have been on in respect of the law of England. However, I have certainly enjoyed and much appreciated the contributions made by the noble Earl, Lord Mar and Kellie, and the noble Lord, Lord Mackie, whom I am pleased to see in his place.
  I said on Second Reading that I welcome the contribution which noble and learned Lords can make to the deliberations of your Lordships' House. It would be wrong for me to suggest that I have always agreed with them. But it is quite obvious that the noble and learned Lords, Lord Hope of Craighead, Lord McCluskey and Lord Clyde, have put a great deal of thought and preparation into the speeches which they made. I am sure that they have proved to be of benefit to us all.
  I am grateful to the Whips who have supported me; in particular, my noble friend Lord Courtown. He has been involved with many other major Bills in this current Session. He has constantly had to be in touch with my officials, who are also due considerable thanks.
  It is unfortunate that the timetable for the Bill has to some extent been restricted. However, there can be no doubt that your Lordships' House has performed a very valuable role in giving detailed scrutiny to this very important piece of legislation.
  Moved, That the Bill do now pass.—(Lord Mackay of Drumadoon.)
  Lord Sewel: My Lords, this has not been a particularly easy Bill, especially for those of us who are not lawyers. We have listened to the lawyers and have benefited from their contributions.
  There have been a number of magic moments in our discussions and debates, not least the recent one when the noble Earl, Lord Mar and Kellie, drew our attention to the problem of unopened bottles of drink. I must tell the noble Earl that I have a solution for that problem and I am quite happy to share it with him afterwards.
  We have undoubtedly improved this Bill as we have considered it in this House. It is a much improved Bill from that which we received from the other place. During our discussions, we have been indebted to the noble and learned Lord the Lord Advocate for his continuing patience and courtesy to all of us who have participated in the debate. Indeed, he has been painless—I was going to say painful—in the length of
  966
  his explanations on occasion. In fact, on some occasions it seemed that it was not so much Drumadoon as the full text of "Brigadoon" which we were hearing.
  It is customary on these occasions, and rightly, to thank those who have contributed to the work of the Opposition Benches. Our researcher, Robert McGeachy, has been outstanding in giving us the support which we clearly needed. I should like to thank also Mr. Michael Clancy of the Law Society and representatives of CoSLA, who have made us aware of its concerns. As I say, we have improved the Bill and it is now in a position to make a contribution to the criminal justice system in Scotland.
  6.3 p.m.
  The Earl of Mar and Kellie: My Lords, on these Benches we are extremely grateful for the Sutherland Committee Report which has led to the establishment in the Bill of the Scottish Criminal Cases Review Commission. We are also extremely grateful for Amendments Nos. 2 and 4 on today's Marshalled List.
  I too should like to express my thanks to the noble and learned Lord the Lord Advocate, everyone on the Treasury Bench and, undoubtedly, all their advisers for handling all my amendments, which were designed to put up markers for the future as much as anything else. It was a trial to have two major criminal justice Bills running in parallel, particularly as they were not the same despite the fact that they were often referred to as being so.
  I believe genuinely that this Bill continues the search for effective community sentences, and I certainly welcome that. I have to say that this may be the last Scottish criminal justice Bill to be discussed in this Parliament. That depends on the outcome of the election on 1st May and possibly a number of referenda.
  I came to this Report Stage regretting the lack of opportunity to scrutinise the Bill. But I am now satisfied with the issues which were concerning me. I understand why we are in this position and, again, I thank the noble and learned Lord the Lord Advocate for answering all my points.
  6.5 p.m.
  Lord Hope of Craighead: My Lords, I should like to add my words of thanks to the noble and learned Lord the Lord Advocate for the constructive way in which he has approached the remaining stages of the Bill. Some parts of the Bill will remain controversial but there is no doubt that, as the noble and learned Lord said, the Bill contains a number of very important and useful provisions.
  I am glad to see the provisions in Part II pass through this House. Those deal in particular with the problem of miscarriages of justice. We must remember that those provisions are not retrospective and clearly it is important that they be brought into force as soon as possible. It is perhaps moving rather quickly to look ahead to the commencement order but there are certainly provisions in the Bill which deserve to be part of the

  967
  law of Scotland without delay. For that reason alone, I look back with gratitude at what the noble and learned Lord has been able to achieve.
  I am grateful also for the care which the noble and learned Lord has taken in responding to one or two suggestions which I made in relation to both this Bill and the English Bill. Overall, I am quite sure that this is a much-improved Bill from that which reached this House from another place. For that, much of the thanks must go to the noble and learned Lord and those who have advised him.
  6.7 p.m.
  The Earl of Balfour: My Lords, I should like to thank my noble and learned friend for the many letters which he has answered about technical questions which I have asked. I wish that that I had had more time to study every single word in the Bill. It was not an easy Bill to follow because, for the most part, it amended other legislation. I find that, therefore, it takes a long time to read the Bill. However, I am most grateful to my noble and learned friend the Lord Advocate.
  Lord Mackie of Benshie: My Lords, I add my thanks to the noble Lord, Lord Thomas of Gresford, for taking on a great measure of work on the Bill. Perhaps I may say as a Scottish Peer, that that is a sign of co-operation between Scotland and Wales which is not always evident. I should also like to thank my colleague, my noble friend Lord Mar and Kellie, for doing a great deal of the work.
  6.8 p.m.
  Baroness Carnegy of Lour: My Lords, I should quite simply like to say that the way in which my noble and learned friend the Lord Advocate has conducted the Bill has been quite remarkable. He has shown the most astonishing stamina. Moreover, at times he has been subjected to a good deal of difficult argument. Sometimes his temper must have been severely tested. But he passed the test and I believe that the whole House will agree with me that he has acquitted himself admirably on this occasion.
  On Question, Bill passed and returned to the Commons with amendments.

  Building Societies Bill
  6.9 P.m.
  Lord Mackay of Ardbrecknish: My Lords, I beg to move that this Bill be now read a second time.
  It gives me great pleasure to propose that the Building Societies Bill be read a second time this evening. The Bill has strong support from societies themselves, and from their representative organisation, the Building Societies Association. I am pleased to say, too, that in another place Opposition parties co-operated fully to ensure its successful passage through all its stages on 10th March, and again on Monday of this week.
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  It is vital for the long-term viability and competitiveness of building societies that this measure completes its passage through both Houses before the election. So I am sure that all those who support building societies—and I know that there are many in your Lordships' House who do that actively as well as passively—will wish to facilitate its passage here so that societies can enjoy the benefits which it brings as soon as possible.
  As noble Lords will know, the Bill has three objectives. The first is to increase societies' commercial freedom, so that they will be able to compete more effectively in providing a wide range of retail financial services, giving customers more choice. At the moment, societies' boards spend a lot of time examining with their lawyers whether a new service or product which they want to provide falls within their current powers. The new permissive approach that the Bill introduces will make such difficulties unnecessary.
  Societies will no longer be in danger of finding themselves unable to participate in new developments in the areas where they operate. For example, the Bill will sweep away the qualified asset holdings regime which places stricter limits on smaller societies. Societies will also be able to conduct, in their own name, a range of commercial activities which at present require them to set up subsidiaries. The scope of a building society's principal purpose will also be extended so that lending to finance rented housing will, in future, be regarded as part of core business.
  The second objective of the Bill is to update the prudential supervision powers of the Building Societies Commission, so that the reputation for safety and security that building societies rightly enjoy as the home for the savings of millions of members can be maintained in the new, more permissive regime that will exist in the future. Examples of the commission's new powers include the ability to require societies to restructure their business profile if, for example, considerable growth in one area begins to push it outside even the more generously defined limits in the new Bill. The commission will also be able to direct a society to merge or be taken over in extreme circumstances if that becomes necessary in order to protect savers' funds.
  The Bill's third objective is to bring societies even closer to their customers by underlining their mutual identity and making it easy for ordinary members to play a full part in their affairs. Many building society customers appreciate their position as members and the extra relationship that that brings. One of the virtues of mutuality is that members count. They, and they alone, are the people for whom a society is run. But time moves on, and the Bill gives us the chance to identify new ways in which that relationship can be further improved by increasing the availability of information and enhancing members' ability to have a say in what their society does and how it does it. Under the Bill, borrowing members will be given broadly similar rights to investing members in deciding how a society is run. Members will receive a statutory right to call a special general meeting; there will be tiered and, in a number of cases, lower limits on the number of backers required by someone standing for election to the board, and the

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  period when a would-be director may submit a nomination has been extended. Any proposal to expend more than 15 per cent. of a society's own funds on a new business outside its core activity will also need members' approval.
  This Bill is urgently needed. It has been the subject of extensive consultation with the industry, consumer groups and other interested parties. The Bill before your Lordships today fully reflects that. I believe that it is a balanced Bill. It leaves with societies and their members decisions about whether or not they want to remain mutuals—but, if they do, it gives them the freedom to extend their operations in new and exciting ways to their benefit and that of their customers. For those societies that have already decided to convert to PLCs, it offers relief from the costly requirements of the priority liquidation distribution right provisions in the 1986 Act and continues to give them five years' protection from takeover unless they choose to give it up either by a vote of 75 per cent. of their shareholders or, if they enter the takeover business themselves, by acquiring another authorised financial institution operating in the United Kingdom.
  Building societies have a glorious past. The Bill gives them an assured future. With it, they will be able to carry into the next century those traditions of self-help and mutual support out of which the movement grew in this century. I commend the Bill to your Lordships.
  Moved, That the Bill be now read a second time.— (Lord Mackay of Ardbrecknish.)
  6.14 p.m.
  Lord Eatwell: My Lords, I should like to thank the noble Lord, Lord Mackay, for introducing the Building Societies Bill and to assure him that from these Benches we welcome the legislation. We regret that the Government did not see fit to introduce such an important measure earlier in the parliamentary Session; for this Bill affects the financial affairs of 17 million building societies members, and it affects the future of the building societies industry as a whole which has, without doubt, been one of the success stories of post-war Britain.
  Home ownership has become a fundamental part of British democracy. There can be no doubt at all that it has been the mutual building societies which have played the predominant role in the growth of our property-owning democracy. It is a growth which the Labour Party enthusiastically applauds. I said that the Labour Party regrets that the Bill has appeared so late in the parliamentary Session. It is indeed regrettable that noble Lords will not have an opportunity to give such an important financial measure the careful and detailed scrutiny which it deserves.
  Having got that gripe out of the way, perhaps I may emphasise the commitment of the Labour Party to do everything possible to support and strengthen the mutual sector. As organisations owned by both borrowing and depositing members, building societies can provide highly competitive financial services to their members. This Bill gives them the freedom to do just that. The removal of the prescriptive regime of the 1986 Act, and
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  its replacement by a permissive structure (suitably buttressed by the requirements on lending for house purchase, and the requirements on the acquisition of finance and by the regulatory regime, outlined by the Minister) provides a new secure base from which building societies can compete.
  I must express some disappointment that the Government have not seen fit to enforce the two-year rule. There is a considerable danger of the building societies' movement being destabilised by speculative flows of capital in search of likely candidates for conversion. It is not good for building societies or for the financial services industry as a whole that that situation should pertain. I would be grateful if the Minister would reassure us that adequate safeguards are in place, and that new speculating members will not overwhelm older members who want their society to remain as a mutual.
  The Labour Party enthusiastically supports the building societies' movement. The Labour Party also enthusiastically supports the extension of competition and choice in financial services. For those reasons, we are happy to support the Bill.
  6.16 p.m.
  Lord Kimball: My Lords, one of the first public functions that I ever attended was when my father represented the Loughborough division of Leicestershire in another place. In 1943 I accompanied him to Loughborough for the opening of the first office that the Leicester Permanent Building Society opened outside the City of Leicester. On that occasion I was given one of the first numbered accounts that were available. I should tell noble Lords that it was an account which failed to stand up to the pressures of undergraduate life at Cambridge, and was soon emptied. Therefore, I have no real interest to declare beyond the fact that, as a Leicestershire Peer, I realise what a major player in the financial field the Alliance & Leicester Building Society is now. I also realise what an important and historic role the whole movement has played. I am sure that the Bill will strengthen the movement and will help building societies, as we know them today, to achieve a secure future. In that way, the Bill is helpful. I fully understand the Government's good intentions and the support of the Opposition in that respect.
  However, I believe that an amendment to the Bill is necessary but, before discussing its substance, I should like, first, to raise a number of points relating to the legislation. My noble friend the Minister said that the Bill was urgently needed, but it has been lying about for some considerable time. Indeed, there was no reason why it could not have been brought forward at a sensible time so that we had a proper opportunity to look at all its clauses and the schedules attached to it.
  In fact, the Bill has been lying about for over 10 years and we have now reached a situation where this important legislation is being rushed through all its stages. I should like to be assured that we will not make the mistakes that were made in the 1986 Act. One might have thought that the priority for all concerned this time would be to see the Bill through and ensure that we get

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  everything right. How are we to know that, when the Bill is being pushed through in this extraordinary manner, or are we about to inflict some more unsatisfactory legislation on the industry? I ask your Lordships to consider this carefully.
  In addition there is another great failing in this Bill in that I believe certain aspects of it represent that thoroughly reprehensible principle of retrospective legislation. On Monday night this Bill of 47 clauses and nine schedules—none of which will receive detailed consideration—was pressed through another place. I believe that it is our duty to scrutinise this legislation properly. I do not see how we shall be able to do that today. If this Bill is so important, surely more time could be found for it after the general election. Both sides of the House agree that this is an important Bill. Whoever wins the general election, there is always a slack period from the opening of Parliament until a new government—
  Noble Lords: Oh!
  Lord Kimball: My Lords, there may not be, but I think your Lordships will agree that usually there is a period when people may even introduce mischievous legislation. I hope that after further consideration my noble friend will agree that the sensible thing to do is to withdraw the Bill now and come to an agreement that, after the opening of Parliament, and before other Bills are ready, we should get down to a month's sensible consideration of this Bill in all its aspects.
  Shortly my noble friend Lord Brabazon and I will move an important amendment. However, the real reason for asking for this Second Reading debate is that we should realise that there is a certain amount of unhappiness in certain sections of the building society industry as regards this Bill. My noble friend will say that there was massive consultation before the Bill was brought forward. However, despite that, no agreement was reached on the particular points put forward by the Alliance & Leicester Building Society.
  With those words of warning, I hope that if other objections are raised my noble friend will seriously consider whether it is right to push on with such haste on a Bill that could well be given proper and due consideration in May.
  6.23 p.m.
  The Earl of Kinnoull: My Lords, in taking part in this Second Reading of the Building Societies Bill I should first declare an interest in that I have the honour to be a director of the Woolwich. I speak of course in a personal capacity and am not putting forward any Woolwich policy. I add that I fully supported its decision to go down the plc route, which recently received overwhelming approval from its members and, I believe, offers an exciting future.
  Times have changed dramatically over the past few years in the financial services market. Banks, building societies and insurance companies are all competing as never before to maintain or to gain their market share,
  972
  largely to the benefit of consumers. Almost every week one sees a new and innovative financial product being launched, and the industry becomes almost as bewildering as the air travel fares jungle if one wishes to fly abroad. One thing appears certain; namely, that the financial services industry will contract in significant numbers in the future through either friendly or hostile mergers or takeovers. Mutual building societies or mutual insurance companies are not immune from that competitive world. One could cite the Scottish Amicable in that regard.
  Building societies are valuable targets for banks or financial institutions with their large membership and often considerable spread of branch offices. A great deal of profitable cross-selling can be achieved with new financial products from their large base of members. All of us, I am sure—as we have already heard—have admired the valuable role that mutual building societies have played over the past 150 years not only in providing mortgages for millions of members and helping to increase home ownership, but also in providing a safe haven for their precious savings. It is a special movement and has played a most valuable role in our society. No investing member has ever lost a single penny through investing in a building society. One cannot claim the same for other financial institutions. One might ask why that is. The answer is that if a society runs into difficulties the movement generally will stand behind it and perhaps a large society will take over the problem. The Woolwich has had a proud record of such action in the past. This valuable movement, caught up in a highly competitive and changing market-place, deserves in my view—as my noble friend Lord Kimball said—the most careful parliamentary scrutiny as regards any new framework that is designed for societies to operate in during the next decade.
  I regret very much this poor procedure today, just before an election, which reduces this important Bill to being treated like some unattractive horse deal to be whistled through this House in one day. One has to ask what is the urgent rush. My noble friend asked exactly the same question. Why could not both main parties give an undertaking to introduce a Bill giving Parliament a right to scrutinise the new powers?
  I appreciate that the provisions of the Bill have been thoroughly discussed, as my noble friend said in his introductory speech. They have been thoroughly discussed within the industry. I pay tribute to the Building Societies Association for the work it has done in that regard. Nevertheless not all opinion is unanimous, as my noble friend said and as those of us who have received briefings from the Alliance & Leicester can see.
  I support the general tenor of the Bill. It seeks to modernise the operational envelope within which the mutual building societies can operate in the future. That largely meets the current criticism of the limitations of the 1986 Act and will no doubt help societies to compete in tough financial markets. I have no quarrel with that. My quarrel concerns the future, and the danger that a contracting industry is faced with as regards hungry predators jockeying for position to snap up societies.

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  Those predators are likely to be banks and insurance companies rather than building societies—because, of course, building societies fit so well into their plans.
  My honourable friend the Minister in another place gave some assurances last Monday that the mutual building societies are not sitting ducks waiting to be snapped up by City predators. I must say that I do not share her confidence. We could have added to the Bill some additional defence to enable the genuine mutual societies to operate with stability. The problem she did not address is how one counters a leaked bid from a large predator which is immediately taken up in dramatic form by the media, which list in detail the benefits to members. The bid will probably value the society way above its existing performance in the form of a knock-out bid. It would take a very skilful board and advisers to counter such tactics, to remain credible, and to keep the confidence and support of members. The evidence does not support any complacency on the part of mutual societies that they are immune from the market-place.
  I find unfortunate the timing of the announcement by my honourable friend the Minister of a change in the protection clause for those societies already declared to be proceeding down the plc route. First, to confirm last March that there would be no change in the protection clause when aware of the four societies moving down the plc route, and then to change the rule at virtually the last minute, was somewhat confusing. I am not sure that this move will have much effect in deterring carpet baggers.
  Certain reasonable compromise amendments were put forward in another place and rejected on the ground of lack of parliamentary time. I think that such a parliamentary pickle is a poor reflection on the need to provide the best possible framework that building societies deserve to take them safely into the next century.
  6.30 p.m.
  Lord Brabazon of Tara: My Lords, I am grateful to the Minister for his explanation of the Bill. It was only after considerable thought within the final hours of this Parliament that I decided to speak in the debate, and to do so from a starting-point of considerable sympathy with and support for the objectives of the Bill and the efforts of the Government to complete their legislative goals with time pressing.
  I come to this issue having had some experience in a former existence as a Treasury spokesman. I took the Building Societies Act 1986 through this House. I am glad to see my noble friend Lord Stewartby in his place. He was the Treasury Minister with responsibility for that Bill at that time; and we worked well together, if I may say so.
  There was recognition then that building societies needed greater commercial freedom within defined limits to be able to compete more effectively in the increasingly competitive financial services market. I am pleased to see that the Bill necessarily updates and improves on that job.
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  As has been said, building societies are an extraordinary creation founded on the collective savings of individuals and families of often modest means. In the last century few would have predicted that they would become the central part of the financial service providers that they are today, with the most distinctive brand names on the high street among their number.
  Quite rightly, the Bill seeks to broaden the financial scope of building societies while maintaining their fundamental character. As a result of the Bill we should see greater accountability to members and the removal of some of the restrictions imposed by the 1986 Act, while the fundamental purpose and character of mutual building societies are maintained. To that extent, the Bill is the product of diligence, consultation and not a little good fortune with the legislative timetable.
  Perhaps the Bill is an apt demonstration that, however much consultation a Bill may go through, changes introduced at the eleventh hour may upset the good work undertaken and have adverse consequences.
  I stress that the Bill, which is in many ways one for the industry and ultimately for the good of the consumer, must be based on consensus. It is not a flagship Bill defining the Government's mission. It is not, I believe, an electorally sensitive Bill. It therefore falls on all our shoulders to ensure that the Bill contains consensus measures, particularly given the shortage of time, to iron out any wrinkles.
  To a large degree, the Minister can claim great credit. The Bill has been seriously canvassed since 1994. A draft Bill was published in March 1996. Comments on the contents were submitted from many parties including many building societies; and there was a good deal of disappointment when the Bill did not appear in the Queen's Speech.
  Having said that, we now have before us a Bill of 47 clauses and 9 schedules which we shall take through all its stages this evening. It was introduced into this House only yesterday, having received a three-hour Second Reading in the Commons on 10th March, with Committee and remaining stages taking place only two days ago, on 17th March, again in under three hours.
  I was alerted to a potential cause for concern by representatives of the Alliance & Leicester building society; and for the avoidance of doubt I should emphasise that I have no connection with any building society and am neither a borrower nor a lender with one. I shall expand on that cause for concern at Committee stage, but should point out that I met them only last Thursday. I have also had the opportunity to speak on the point to my honourable friend the Economic Secretary, for which I am grateful. But there has been little time for building societies or other financial institutions to make their points to noble Lords. It is all very well having lengthy consultation with the industry—that is good, but not at the expense of leaving Parliament out of it. I must ask my noble friend the Minister, as did my noble friends Lord Kimball and Lord Kinnoull, whether it is really necessary to rush this Bill through at the speed with which it is being taken. I remind my noble friend that when I took the Building Societies Act through this House in 1986 in Committee

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  we had to have something like 200 drafting amendments before the Bill was in the right shape. Some of those amendments were moved by me for the Government, and some by one of my noble friends on behalf of the Building Societies Association. Altogether the amendments amounted to some 200 before the Bill was right. I only hope that my noble friend can assure the House that this Bill is really well drafted and will not lead to the kinds of problems that would have resulted had the previous Bill been rushed through. With those words of caution, I welcome the general principles of the Bill.
  6.36 p.m.
  Lord Ezra: My Lords, I had submitted my name for inclusion on the list of speakers but for some reason it was not included. It has been suggested that I speak in the gap. I do so briefly.
  I make it clear from these Benches, that we, too, support the thrust of the Bill. We think it timely and important. We fully support the mutual movement. We think that the changes which the Bill proposes to make the regime more permissive, rather than the prescriptive regime of the 1986 Act, are wholly desirable. We believe that if the mutual societies feel, with the support of their members that they want to demutualise they should be able to do so. Broadly, therefore, we are in agreement with the Bill.
  However, there are two issues on which I hope the noble Lord will comment when he replies. Both have already been mentioned. First, I refer to the two year rule. That led to considerable discussion in another place at Committee stage. There is the feeling—to some degree I share it—that the handouts which have been proffered as a result of demutualisation have led to a good deal of speculative movement in the membership of the mutual societies which is contrary to the spirit in which those societies were originally established. The two year rule was intended to limit that but in practice the arrangements appear now to be that each society decides for itself the limits that it places on the handing out of the benefits arising from demutualisation. I should have thought that it was a situation which requires clarification. I share the views expressed by the noble Lord, Lord Eatwell, on the subject.
  Secondly, I sympathise with the views expressed by the noble Lord, Lord Kimball, the noble Earl, Lord Kinnoull, and the noble Lord, Lord Brabazon, on the modification of the protection clause. While I agree with the modifications proposed, there is a retrospective element about them. That is causing, I think rightly, concern among certain societies. Those societies decided, on the basis of the existing protection clauses, to demutualise. This now puts them in a difficult position. I know that some are pondering seriously what they should do next. I very much hope that in dealing with the amendment to be introduced later at Committee stage the Government will be able to suggest some way in which at least the retrospective element in the proposal, which is otherwise acceptable, can be introduced. Apart from those two comments, I support the Bill.
  6.40 p.m.
  Lord Mackay of Ardbrecknish: My Lords, I am grateful to those of your Lordships who have spoken for the general level of support for this Bill. My noble friend Lord Brabazon of Tara mentioned the time it took for the 1986 Bill. When I was thinking about what I might have to do in this Session of Parliament I reckoned that perhaps if this Bill was introduced at the beginning of the Session I might get a few more hours of parliamentary time under my belt and another large notch, if I can so describe it, on my gunbelt, to use the jargon of the western. Instead, I suspect I shall only be able to make a very tiny notch there. However, perhaps your Lordships might be relieved at that because some of your Lordships might feel that I already spend more than enough time at the Dispatch Box—and certainly may feel that the clan does, if today is anything to go by.
  Can I start by answering a question put by my noble friend Lord Kinnoull: what is the rush? I believe that that was also a point put by my noble friends Lord Brabazon of Tara and Lord Kimball. The reason for the rush is that there has been extensive consultation, to which I shall refer later; but the Building Societies Association was very keen for the Bill to go ahead now. They did not wish us to wait until after the next election.
  This is one of the first Bills to be published as a draft in advance, and is part of our initiative towards better legislation. The very fact that it has been published in draft means that there has been quite a long time in which to discuss and amend it. I hope that that goes some way towards explaining to my noble friend Lord Brabazon why, unlike some other Bills, this Bill is probably less in need of detailed scrutiny and amendment than some others that have been brought before to your Lordships' House.
  The Bill was announced in 1994, in the review of the Building Societies Act. It was stated that the Government were contemplating a Bill of this nature. That was followed by consultations on the framework. The draft Bill, which I have already mentioned, was published for consultation in 1996 and the revised Bill was published in December 1996. We introduced it as soon as we possibly could. As your Lordships may recall, back in the autumn there was speculation about this Bill forming part of the Queen's Speech. Unfortunately, it did not manage to achieve its place in the main timetable, so to speak. However, I think that my honourable friend Mrs. Angela Knight made it clear that we would seek any opportunity to introduce the Bill and try to get it through in this Session, if that was possible. That indeed has been made possible with the agreement of both Opposition parties in this House and in another place.
  We have received very useful and thoughtful comments over quite a long period of time from the building societies themselves, private individuals, professional organisations and a number of legal practices. We are very grateful to all those who responded for devoting time and resources to consider a Bill which at the time was actually not assured of a slot in the parliamentary timetable. They raised new issues

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  and brought a range of different perspectives to bear on the legislation, and we are indeed very grateful to them for their help.
  Perhaps I may now deal with one or two matters and leave the point about the five-year protection until the Committee stage when we deal with the amendments, if that is agreeable to my noble friends, rather than repeating an argument in a very short period of time.
  My noble friend Lord Kinnoull asked how a building society resisted a leaked bid from a predator. The noble Lord, Lord Eatwell, asked what safeguards there were for societies against speculators. The primary safeguard is that only the board of a society has the ability to put transfer proposals to the members. If the board intends to remain mutual, neither speculators nor would-be purchasers can compel it to act against that decision. I hope that that explains the defensive position of a building society.
  The main point that was mentioned concerned the two-year rule, and perhaps I may say just a few words about that. The 1986 Act forbade the distribution of cash bonuses to share-holding members who had been shareholders for less than two years and to borrowers; but it has been held by the courts not to rule out certain flat rate distributions of free shares to less than two-year members. The societies and others have asked Parliament to go back and change this rule, which is what we are addressing at this moment. There are a number of reasons, but perhaps I can give two of them. The first is that a society which wishes to convert or to be taken over already has the discretion, by choosing a qualifying date for bonuses, to rule out recently arrived members if it chooses. I do not think it is for government to dictate to a society which members it should rule in or rule out. I think the societies should have the freedom to make that decision.
  The second point I wish to make is that the law, as it has been interpreted by the courts, has now stood for something like eight years. During that time we have seen a number of societies convert or be taken over. Indeed, in terms of the number of members, it has been a very much bigger shift than any we are likely to see in the future. I think that a change made now regarding possible future mergers or takeovers would be seen to be unfair and incomprehensible by that society's members and indeed by the wider public, when we compare this situation with what has happened in the round of conversions that we are already seeing coming to an end.
  I suspect that if the Government had decided to rule out any distribution to a member of less than two years, then, should another society decide to convert, the Government would be immediately under pressure to bring those people in by means of a change of rule. We should not forget that people open building society accounts and take mortgages from building societies in quite considerable numbers. Either they are looking for a new home for themselves or for their savings. I understand that there is quite a lot of movement between building societies and with new people opening accounts. If I read the newspaper advertisements correctly, the building societies
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  themselves indulge in very aggressive campaigns to persuade us to shift our savings from one building society to another, or indeed to shift our savings into the building societies from some other place. And of course they also advertise their services as people who are prepared to lend money. I am not sure whether or not at the beginning I should have declared a small interest, as a very small and very modest person who will perhaps gain a little from the Halifax conversion. However, unfortunately, it will not keep me in a life of luxury. We all know that building societies are keen to attract new members and I do not think that there is any evidence that people have joined building societies on a sort of speculative venture that they might shortly thereafter gain from any conversion.
  I said earlier that I would leave the question of Clause 41 and the five-year protection to the debate we shall be having on the Committee stage of the Bill. I hope that your Lordships will feel that that is a sensible way to proceed in the circumstances.
  I should like to say that it is pleasant, in the last debate of this Session, where the noble Lord, Lord Eatwell, and I are exchanging compliments, to say that I agree with the point he made on the importance of the mutual building societies and the important role they have played in extending home ownership in this country, and equally the important role they have played in providing many millions of people with a savings haven in which they can invest their money safely, whether for special events or indeed for retirement. I am very pleased that I have been able to come forward with a Bill which has met, apart from one or two problems that I have addressed already and the ones we shall address at the Committee stage, with such support from all sides of the House and especially from the noble Lord, Lord Eatwell.
  It is not usually my fate, as your Lordships will know, to find such universal support from all sides of the House for legislation I bring before your Lordships. However, in this case, if I may say so, I think the building societies have thoroughly merited the support that your Lordships have given to them. I hope that your Lordships will give this Bill a Second Reading.
  On Question, Bill read a second time, and committed to a Committee of the Whole House.
  Then Standing Order No. 44 having been suspended (pursuant to Resolution of 18th March):
  6.50 p.m.
  Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
  Moved, That the House do now resolve itself into Committee.—(Lord Mackay of Ardbrecknish.)
  On Question, Motion agreed to.
  House in Committee accordingly.
  [The LORD ELLIOTT OF MORPETH in the Chair.]
  Clauses 1 to 40 agreed to.
  Clause 41 [Protective provisions for specially formed successors]:
  Lord Brabazon of Tara Lord Brabazon of Tara moved Amendment No. 1:
  Page 58, leave out lines 5 to 9 and insert—
  ("(a) a company or a subsidiary undertaking of the company acquires the whole, or substantially the whole, of the business of a mutual financial institution;").
  The noble Lord said: In moving this amendment, which stands in the names of the noble Lord, Lord Kimball, and myself, I shall speak also to Amendment No. 2.
  This matter was referred to at Second Reading. The problem with the changes to the five-year protection rule caused some degree of consternation among the converting building societies when the Minister announced the plans to change them. I hope that my noble friend the Minister will confirm that there was no mention of changes to the five-year protection in the draft Bill of March 1996. No mention was made until my honourable friend the Economic Secretary answered a Question for Written Answer on 5th November last. In the meantime, societies such as the Alliance and Leicester had long since announced their plans to recommend conversion to their members, which is a lengthy and costly process. The society was advised to encapsulate the proposals in a transfer document to be sent to its voting members. That document was scrutinised by the Bulding Societies Commission before release to ensure that there were no inaccuracies or falsehoods in that most important prospectus.
  That document recognised that the society would be given protection from takeovers for five years after conversion. Only then, well after the document was sent to members and votes were being cast, did the Economic Secretary to the Treasury announce a fundamental turnround. It cannot be reasonable that we in this Chamber are willing to legislate in a way that leaves 2.4 million people to take the consequences of having voted on a financial proposal which we have made invalid.
  The Alliance and Leicester, like other converters, will have to diversify, alter its structure and acquire other financial services companies in order to grow and survive after conversion. This Bill will fundamentally alter the terms of that conversion after a decision has already been taken by its members. That is what the Alliance and Leicester means by the impact of this Bill being retrospective in effect. After close examination, I concur with that view.
  I remind noble Lords that we introduce retrospective legislation with the greatest foreboding. We have a double responsibility to ensure, if we are to pass legislation which on other occasions would be given more consideration, that we do not make rash decisions in haste. I draw noble Lords' attention to the problems of over-hasty legislation. We have passed anti-terrorism legislation swiftly out of urgency but that should be a rare occurrence required in extreme circumstances. One only has to look to another place to see a dangerous dogs Bill going through its remaining stages, a Bill which seeks to rectify failings of the Dangerous Dogs Act 1991 that was passed with undue haste.
  The amendment that my noble friend Lord Kimball and I propose rightly strikes a balance. After all, the Bill, with great support from all sides of the Chamber, seeks to protect and enhance mutuality. That is a fitting objective. But the constraints imposed by Clause 41 go further than protecting the mutual building societies. They impose a straitjacket on the commercial freedom of converted societies with no obvious merit. These amendments protect mutual building societies, friendly societies and mutual insurers. They seek a consensual way out of the problems created by Clause 41 without upsetting or affecting the central thrust of the Bill.
  Therefore, I urge the Minister and the Committee to support the amendment and indeed to welcome the compromise. Without it, we take away rights from the companies that are converting without an opportunity for them to adjust their plans so late in the day. I hope that by accepting this amendment we shall spare future governments the task of revisiting this area of policy again in the near future. I beg to move.
  Lord Stewartby: I begin by declaring an interest as a non-executive director of the Portman Building Society, which has no intention of converting itself into a public limited company. Also, and more relevantly to what I want to say now, as my noble friend Lord Brabazon reminded the Committee, I was the Minister responsible for the 1986 Act. It is in that former capacity that I should like to make a few remarks on these amendments.
  Perhaps I might also be permitted one or two introductory remarks about the nature of the legislation, which is specifically relevant to this amendment. I did not speak at Second Reading as I should have had to repeat myself on two occasions during the progress of the Bill. When the legislation was introduced in 1985, I was very worried that it might not last even 10 years because of the pace of change in financial markets. I am quite pleased that it has in fact, although becoming progressively more out of date in the past few years, enabled a very remarkable change in the building society movement to take place during that time.
  We need to remember that before that Act, building societies were in a very much more primitive condition, largely depending on Victorian legislation. So Section 101 of the 1986 Act, which is the nearest equivalent to Clause 41 of the present Bill, was a very necessary protection for societies which wished to convert. Up to that time they had not had any opportunity of diversifying their activities or becoming more competitive over a range of financial services, which would enable them to stand on their own feet. If they had become public companies without the five-year protection which we built in at that stage, it would have been a turkey shoot. They would not have been sufficiently diversified or had sufficient experience of the competitive market place in a wide range of areas to ensure their independence for very long.
  Therefore, the 1986 Act brought in a considerable range of additional permitted activities for building societies. But the difference between that Act and the present Bill is that the 1986 Act was a prescriptive piece of legislation. It laid down what building societies could

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  do in addition to what they had previously been able to do, whereas the new Bill is substantially a permissive piece of legislation which places some constraints but does not try to specify all the individual activities that a building society can undertake. That is a very big difference in the nature of the two Bills. Perhaps I may say in parenthesis that it is one of the reasons why the previous legislation was so complicated and needed so much attention in this Chamber.
  But I must ask myself, if I were now the Minister responsible for a new building societies Bill 12 years later, whether that five-year protection provision would still be necessary at all, whether or not it was qualified; because during the intervening time, building societies have been able to take advantage of the provisions of the 1986 Act to become much more widely based financial organisations, which are themselves rather competitive, even if they retain their mutual status. So the point made by the Alliance and Leicester about this clause has to be seen against that background.
  If there is a need for protection now, I believe that that need is much less than it was 12 years ago. I am not entirely convinced that it is still a need at all. But my main concern about this amendment is that it would produce an asymmetrical situation for converting societies. They would be in a position where they could he predators but nobody could take them over. We have to look beyond the building society movement and ask whether that is the kind of structure that we want to build into the regime for substantial quoted companies. I am not persuaded that it is. On those grounds alone I would oppose Amendment No. 1 I do not say that the Alliance and Leicester does not have a point; it has something of a point for the reasons raised by my noble friend. But my judgment, having been through the whole process in great detail 12 years ago and having considered all these issues of protection and vulnerability, is that the case is not strong enough to override the distortion which it would bring into the market place as a whole.
  In respect of the retrospective argument, it is not really true that a provision which is not yet in force and will only come into force after the passage of the Bill, when it is enacted, can be regarded as being retrospective. If a Bill had been brought forward, say early in the next Parliament, which contained provisions of a similar kind to those in the Bill before us today, it would have been perfectly in order for Parliament to amend it or, indeed, for Ministers to include in it provisions of this kind. But it would still have been within the five-year period from the flotation of the Alliance and Leicester. One specific society could not reasonably argue that there was an embargo for five years on this House or another place introducing a measure in the form in which it is drafted in the Bill. The amendment therefore ought not to proceed, quite apart from the situation of the Bill itself; that is, that there is a general view for it to proceed and the passing of amendments would put that at risk. I hope that the Bill will succeed. The Committee would be wise not to accept the amendments.
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  Perhaps I can conclude by saying that I am pleased to note the general support for the Bill from my noble friend Lord Eatwell, and other Members of the Committee who have spoken. I have a great respect for the building society industry. It has made a major contribution to British life over a period of more than a century. I did my best 12 years ago to enable it to go through a rapid period of transition and change. I am pleased to have the opportunity to be here at the initiation of what I hope will be another successful period in its existence.
  7 p.m.
  Lord Kimball: I rise to support Amendment No. 1 and I hope my noble friend will find it possible to accept it. It protects mutuality; it will better treat converters, and better serve the interests of the savers.
  If the architects of the 1986 Act supported the concept of a five-year protection period as being necessary for the converters, it seems illogical to change the vision so radically now. The protection is necessary for converters to reach a critical mass in the market place. That is because building societies have been legally restricted in their activities.
  The part of the Bill that proposes to remove protection from a converting society, should it take over an authorised institution, goes too far. Even the Building Societies Association did not propose such a wide-ranging clause when it made its original submission in June 1996. I hope that my noble friend will be able to give a sympathetic reply to the amendment.
  Lord Ezra: At Second Reading I spoke briefly about this issue. I said that I had nothing against Clause 41 as now drafted; but I was concerned about the element of retrospection. Certain societies took the effective decision to convert under the assumption that the existing protection rules would continue. This is something that raises doubts in our minds and I shall be glad if the noble Lord, in replying, will take that into account.
  Lord Mackay of Ardbrecknish: In addition to my noble friend Lord Brabazon of Tara, who took the 1986 Bill through this Chamber, I am now faced by my noble friend Lord Stewartby who had to look after it in those days in his capacity at the Treasury in another place. I am delighted that they both believe the 1986 Bill needs updating and changing, otherwise I might have a rather difficult feeling going up and down my spine with the two authors of the 1986 Act, which I am changing so radically, sitting behind me. I am glad for their support in general and turn to Amendment No. 1 and the issue of the five-year protection rule.
  The converting societies knew that we planned to introduce a Bill. My noble friend Lord Brabazon of Tara pointed out that initially the five-year protection point was not contained in it. They were able to see all the non-confidential responses to the consultation process which we held last year and it was clear early on in the process that the five-year protection was a matter of concern. The Alliance and Leicester was represented at

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  the meeting of the Building Societies Association Council held last June when the BSA response calling for changes to the five-year protection rule was finalised. The converting societies therefore knew last June that the Building Societies Association Council was calling on us to make the changes that I am now presenting to the Committee.
  With that as the background perhaps I can say that the clause as it stands, unamended, will give a converted society the five-year protection in which it may consolidate its position, and may grow by acquisition of assets—such as mortgage books—and by acquisition of companies which are not authorised financial institutions, without any effect on that protection. The protection will lapse only if the new bank carries through an acquisition of an authorised institution, or if a high proportion of shareholders support a resolution to waive the protection.
  Amendment No. 1 would let the new bank mount unlimited acquisitions of its immediate competitors—other Plcs in the financial sector—provided it did not bid for mutual institutions. For example, this bank could take over a former mutual insurer, which would have no protection following conversion, but such an insurer would be forbidden by law from making a bid for the new bank. Moreover, despite recent developments, takeovers of mutual institutions are very rare indeed. The vast majority of takeovers are of Plc structures as, no doubt, are the majority of takeovers that a new bank would undertake. So the effect of this amendment on the new bank would be that it could more or less carry on as planned, fully protected for five years. The umbrella of that protection would be widened to cover all the institutions acquired as well.
  The amendment would therefore perpetuate the unfair advantage the five-year protection confers. As my noble friend Lord Stewartby said, the five-year protection was initially included in appreciation of the fact that at that time the building societies had not yet had an opportunity to widen their base, to bring new products into the range and to become conditioned to the more competitive market place prior to any conversion. They therefore needed time to learn and adapt. Now the building societies operate in a much more competitive market place and some of the powers in the Bill will help to improve their competitiveness in the market place.
  My noble friends and, indeed, the Alliance and Leicester itself, made much of the retrospective nature, as they claim, of the Bill. I understand the point that is being made but, strictly speaking, it is not retrospective. It will be enacted after the Bill passes. My understanding of retrospective legislation is that it is legislation which takes effect prior to the passage of a Bill. In fact therefore it is not retrospective.
  In any case, even for a society like the Alliance and Leicester which is going through its conversion—in fact it made an announcement today about the next step—the loss of the five-year protection is in its own hands. It can only be triggered by the successor company's
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  decision either to make an acquisition or by 75 per cent. of all shareholders agreeing to support a resolution to drop the protection.
  I do not believe the changes are unfair. I think it would be unfair to leave the converted societies—some are actually banks in the FTSE 100 and are powerful institutions—in this very privileged position. I understand the point my noble friends are making about the Bill being retrospective. But, strictly speaking, as we all understand it, it is not retrospective. Indeed, if one were to take the view that one could not do anything after the date of a new Bill being enacted that affected decisions which had previously been taken, it would be hard for a Government to make any changes in the financial sector because they could always be claimed to be affecting decisions which people had already taken; "and if they had known at the time, would they have taken them?". I suspect that even if the Alliance & Leicester had known at the time, it would probably still have taken them. Who am I to judge that? But certainly the vote it got to make the move was fairly substantial.
  Perhaps I may put it this way and name terms to your Lordships. Under the amendment the Alliance & Leicester or any other plc would be discouraged from, for example, taking over the Airdrie Savings Bank, which is one of the few of that kind left, because it would lose protection. However, it could look at the Airdrie Saving Bank's bigger brother in Edinburgh and attempt to take over the Royal Bank of Scotland and yet retain its protection. In those circumstances, the Royal Bank of Scotland would be forbidden from mounting a counter bid. That is a serious distortion of everyday competition among the financial service providers. Put like that, I hope my noble friends will see that it is quite unfair that major institutions should be ring-fenced in a one-way ring-fence. They can do things out the way but no one can do things in the way.
  While I understand the argument my noble friends have made, when one looks at the new scene, it would be quite unfair in the circumstances I have put for the Airdrie Savings Bank to be safe and the Royal Bank of Scotland not to be safe. There does not seem to be too much logic in that, especially when the Royal Bank of Scotland could not counter bid or put in a bid for any of the new converting building societies—now banks. It is not the intention of the clause to expose them necessarily and immediately to competition or to a bid. The protection is still there. If they do not bid, no one can bid for them. That is a reasonable protection which they will have to take into account if they decide to make a bid for any other financial institution. In addition to that, if someone suggested that they might bid and the shareholders themselves, by an overwhelming majority—75 per cent. of them voting—agreed to drop their protected status, that is wholly reasonable as well.
  I appreciate that we would have liked a longer Committee stage in order to look at other aspects of the Bill. However, I know that this is one aspect, along with the two-year rule, which I hope I have explained, that has concerned at least two of the building societies which are converting and has concerned some of my noble friends and some Members of another place. I particularly think that the example I gave was a

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  graphic one. I hope that explains why I believe the amendment would not be sensible. We should leave the Bill as it is. There is limited protection for a converting building society. If it wishes to drop that protection, it must make a positive decision either to do it by a vote of the shareholders or to drop the protection by bidding to take over another financial institution.
  I hope that explains the position to my noble friends. I thought that my noble friend Lord Stewartby clearly explained the same case from the experience he had in 1986 and what he has seen develop since. I trust therefore that my noble friend will feel able to withdraw the amendment.
  Lord Brabazon of Tara: I am grateful to my noble friend for his reply and I am grateful to all Members of the Committee for taking part in the debate. As my noble friend Lord Stewartby said, this is a change to the protection which was offered originally. It is natural that if a building society converts and if it is to progress its business, it will have to make changes to the way it operates. One of those changes may be to make a bid for a financial institution. My noble friend made a comparison between a small savings bank and the Royal Bank of Scotland. As far as I see it, the operation of Clause 41 will not even allow it to take over the tiniest financial institution without losing its protection.
  My noble friend said in his speech in reply to the Second Reading debate that the Bill was warmly supported on all sides of the House, including by my noble friends on this side of the House. It is indeed true that the Bill is warmly supported. What we are criticising is the speed with which it has been brought forward. It will have spent under three weeks in both Houses. I should certainly qualify my support for the principles of the Bill and I would have been much happier if it had been brought forward at a more leisurely pace so that both Houses could have examined it a good deal more closely. It has been pointed out to me that the Delegated Powers Scrutiny Committee of this House has looked at the Bill and has found that it contains no fewer than 10 Henry VIII clauses. It has let that go. Nevertheless, it is a point that might be made.
  However, the purpose of the amendment was to protect the other mutual societies—whether building societies, mutual insurance companies or whatever. I have listened carefully to my noble friend's reply. I certainly do not propose to divide the Committee on the amendment at this stage of the Parliament, especially as I have had no indication from the party opposite of its views on the amendment. I do not know where it stands on the amendment. I can only assume that it does not support the amendment; otherwise it would have said so. On the other hand, nor did it say that it opposed the amendment. Never mind. With those few words, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 2 not moved.]
  Clause 41 agreed to.
  Clauses 42 to 47 agreed to.
  Schedules 1 to 9 agreed to.
  House resumed: Bill reported without amendment.
  Report received; Bill read a third time.
  Lord Mackay of Ardbrecknish: My Lords, I beg to move that the Bill do now pass. In doing so, perhaps I may thank those noble Lords who have taken part in this short debate. I appreciate the points made by my noble friends about the shortness of the debate and I thank them for their understanding. This also gives me an opportunity to thank the noble Lords, Lord Eatwell and Lord Ezra, not only for their co-operation on this Bill but for their interesting views—I would not go so far as to say co-operation—on some of the other Bills and in some of the other debates on economic matters.
  The noble Lord, Lord Ezra, has had a distinguished career in British industry and I have always listened with some care to all the points that he has made and attempted to answer them as best I could. In matters of economics I have occasionally felt, facing the noble Lord, Lord Eatwell, something like the enthusiastic amateur facing the professional. I have learnt a lot, not just from the noble Lord in his capacity as an economist, but also from the team of academic economists who are usually ranged behind him when I stand at the Dispatch Box to answer debates and pilot financial matters through your Lordships' House. I shall not ask noble Lords even to tempt me to say which of the academic Lords opposite I prefer when it comes to proffering advice on economic matters. At this stage of the Parliament that would be far too divisive.
  My task is to say to the noble Lord, Lord Eatwell, how much I have appreciated the debates that we have had. Not much quarter has been given in them, but they have been conducted in a good-humoured debating spirit. I am not entirely sure whether translating economists from academia and putting them in charge of the real economy would be a sensible move for the British public, but that is something they will have to decide on 1st May. Sufficient for today is my gratitude to both noble Lords for the part they have played in the debates we have held in this House. Speaking for all three of us, I hope that we have educated, amused and stimulated your Lordships, at least on some occasions.
  Moved, That the Bill do now pass.—(Lord Mackay of Ardbrecknish.)
  On Question, Bill passed.

  Confiscation of Alcohol (Young Persons) Bill
  7.22 p.m.
  The Earl of Kinnoull: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
  Moved, That the House do now resolve itself into Committee.—(The Earl of Kinnoull.)
  On Question, Motion agreed to.
  House in Committee accordingly.
  [The VISCOUNT OF OXFUIRD in the Chair.]
  Clause 1 [Confiscation of intoxicating liquor]:
  Lord Monson Lord Monson moved Amendment No. 1:
  Page 1, line 5, at beginning insert ("Subject to subsection (IA) below,").
  The noble Lord said: With the leave of the Committee, in moving this amendment I shall speak at the same time to Amendment No. 2 to which Amendment No. 1 is a paving amendment. At Second Reading I pointed out that, as drafted, the provisions of the Bill, which allow for people who are innocent of any criminal offence to be challenged and, in certain circumstances, their goods confiscated, could embarrass, annoy and inconvenience respectable families with teenage children, including foreign tourists, who happen to be having a picnic which included beer, cider, wine or even Pimms, for example, on a public beach or at a public beauty spot.
  The noble Earl, Lord Courtown, replied in effect that that was certainly not the intention of the Bill and that the police would be urged to be extremely tactful in their application of the new law. They should not bother, let alone target, such family groups. The trouble is that once one gives the police or anybody else, particularly in uniform, excessively wide-ranging powers in any area, sooner or later they are bound to be misused. Such is human nature. That creates bad blood. One remembers the "sus" laws and the random use of the breathalyser. That is bad for the community at large and for the long-term and medium-term interests of the police themselves.
  This pair of amendments is designed to obviate that by providing that police powers should not operate when teenagers are accompanied by their parents or guardians—not only their legal guardians, but their de facto guardians like uncles and aunts, godparents or even a brother or sister who happens to be in his or her late 20s or early 30s. I beg to move.
  The Earl of Kinnoull: My noble friend Lord Monson will be surprised, I believe, that I am grateful to him for putting down these amendments. They give an opportunity to explain again the benefits of this small Bill and to try to answer and allay some of the fears and worries that he expressed at Second Reading.
  One has to remember that this small Bill is designed specifically to tackle the problem of the drinking of alcohol by young people on our streets. It has been drafted to cover adults who may be in their company and whom the police believe are holding, supplying and encouraging drinking by young people. The noble Lord quite rightly raised his worry at Second Reading about the family picnic. I am advised that the Home Office guideline. which I know worries the noble Lord, Lord Harris of Greenwich, will refer specifically to the parliamentary concerns of these powers and also give advice as to how they should be interpreted.
  With this power the police officer tackling young people will perhaps be able to nip in the bud a problem before the young people cause an offence. It is a most imaginative power because it will allow a young person to receive a severe ticking off without being arrested or becoming a criminal. I have been very struck by the
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  evidence I have received as a result of ringing around the police, local authorities and schools and anyone who is in touch with this problem. There is not one person who has not warmly welcomed the powers that this Bill will give.
  The amendment which the noble Lord puts before us, as presently drafted, is technically defective, because it does not define "guardian". That will have to be defined in this Bill. The other practical problem is how a police officer could possibly identify among young people, with perhaps a 25 year-old adult, who is a parent and who is a guardian. It has been cited to me that one could have a situation of a police officer finding a group of youngsters drinking outside a bus shelter, following complaints about their behaviour. He decides that the powers contained in this Bill are just what he needs because he will be able to take away the drink, pour it down the drain, tick the youngsters off and probably notify their parents. But one of the lads, who looks about 24 years of age, claims to be the father of one of the youngsters who looks about 13. The officer will not know for certain whether that is or is not the case. He might consider that it is highly unlikely, but he will not be able to establish with certainty on the spot that it is not the case. The two boys might be brothers and perhaps they can produce the same form of identification with the same name. It would not prove their relationship, but the officer would be deprived of the useful power. The youngsters will quickly learn that all they have to do to frustrate the powers of this Bill is to claim that the oldest person in their midst is the parent of one of the others. That is a practical example of why, on reflection, one is unable to advise the Committee to accept the amendment. I hope that the noble Lord, Lord Monson, can accept what I have said.
  7.30 p.m.
  Lord Graham of Edmonton: I rise to speak in the absence of my noble friend Lord McIntosh of Haringey who, as the Committee knows, dealt with the matter on Second Reading. My noble friend has asked me to say that he supports the Bill and its intentions, but that he takes the view that, although there is some sense in some of the amendments and he has sympathy with them, in view of the timetable he feels that the Committee should not accept them.
  Much as my noble friend would like to debate the matter at greater length—indeed, on Second Reading, he made particular reference to the exclusion of low alcohol wine and lager—he feels that given the parliamentary timetable it would be pointless for such amendments to be passed because of the danger of losing the Bill. As I have said, my noble friend supports the Bill but, in general, is unable to support amendments to it because of the matters that I have just raised.
  Lord Harris of Greenwich: I believe that most of us accept the Bill and the desirability of having a Bill on this subject. What worries me and the noble Lord, Lord McIntosh of Haringey—I know that on this matter I can speak with his full agreement—is that we have now had a clutch of Bills, supposedly private Member's Bills, which are in reality government Bills, being

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  presented to your Lordships in the last few weeks before Prorogation. Somebody who is far better at statistics than I am has calculated that in the present Session there have been 28 Home Office Bills, the overwhelming majority in the names of private Members. Any department that produces 28 Bills, even when they aim to deal with real problems, really is pushing its luck.
  Having said that, although I am certainly not of a mind to try to obstruct the Bill, what worries me is the reference to "Home Office guidelines", which means "Home Office circulars", I presume. As a Minister at the Home Office, I was involved in agreeing Home Office circulars on a whole series of matters, but I am far more worried about publishing circulars which attempt to interpret an Act of Parliament. If the matter ever came before a judge, it would not help a great deal to say, "The real intentions of Parliament were explained in a circular" because the judge could perfectly reasonably say that Acts of Parliament, not Home Office circulars, are what explain Parliament's intentions. I do not propose to go on about this, but merely say to my old department that I hope that no future Home Secretary will ever be inclined to produce quite so many Bills in such a short period of time.
  The Earl of Courtown: I congratulate my noble friend Lord Kinnoull on his response to this group of amendments. Perhaps I may pick up the point raised by the noble Lord, Lord Harris of Greenwich and say that I know that the noble Lord, Lord McIntosh of Haringey, is equally concerned about guidance notes and Home Office circulars, and that that concern is shared by the noble Lord, Lord Monson. As I understand it, when the Secretary of State issues guidance to the police, he naturally expects chief police officers to take account of it. It is therefore unnecessary to have such a provision on the face of the Bill.
  In the Public Entertainments Licences (Drug Misuse) Bill, we shall be speaking about closing down businesses which are possibly worth hundreds of thousands of pounds. Noble Lords considered that they wanted to reinforce the necessity for local authorities to take account of the detailed guidance on the circumstances in which that could happen. In the Confiscation of Alcohol (Young Persons) Bill, we are talking about taking a can of lager away from a young person. The scale is slightly different, as all noble Lords are aware. I suggest to the Committee that it is therefore unnecessary to give the same emphasis to guidance on the face of the Bill. Indeed, to do so might even suggest that the police need not take account of guidance where the legislation does not specify that they should.
  Turning now to Amendment No. 1, I should point out that it does not disapply the power only in respect of parents, but of guardians also. As my noble friend said, the amendment does not define what constitutes a guardian. I presume that the noble Lord means a guardian who has been appointed by a court, but that is not specified. I am concerned that that would cause serious trouble in practice and I therefore invite the noble Lord to withdraw his amendment.
  Lord Monson: I am grateful to all noble Lords who have spoken, and in particular the noble Lord, Lord
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  Harris of Greenwich, who raised an important point about Home Office guidance and the possible difficulties that could arise with interpretation. That point was answered to my partial satisfaction by the noble Earl, Lord Courtown, but not to my entire satisfaction.
  The noble Lord, Lord Graham of Edmonton, spoke of the danger of losing the Bill if any amendments are accepted. That is not so because no fewer than 19 amendments have been tabled to the next Bill that we are to consider and nobody is suggesting that there is any danger of that Bill being lost.
  The noble Earl, Lord Kinnoull, cited the practical problem of how the police can judge who is a parent or a guardian. True, but one might as well ask the noble Earl how a police constable can judge who is 17 (and can therefore be caught by the provisions of the Bill) and who is 18 (and therefore cannot be so caught but who might be able to take some legal action against the police if he was unjustly detained, even temporarily, as a consequence of a police constable mistaking his age). We have had a fairly good run on this group of amendments, so I beg leave to withdraw Amendment No. 1
  Amendment, by leave, withdrawn.
  [Amendment No. 2 not moved.]
  Lord Monson Lord Monson moved Amendment No. 3:
  Page 1, line 17, at end insert ("and shall give a written receipt for the intoxicating liquor so surrendered if he does not dispose of it forthwith.").
  The noble Lord said: This amendment provides that if the confiscated drink is not disposed of straightaway in front of the person from whom it was confiscated by, for example, being poured down a drain or on to the grass, the constable must give a written receipt. If the constable removes the drink for later disposal, the suspicion (doubtless mainly unjust) will inevitably take root among young people—and not necessarily only among young people—that the drinks are being removed only to be consumed later, surreptitiously or otherwise, by the police themselves. That would, of course, be a disciplinary offence, but it would be very difficult to prove in the circumstances. The obligation to give a receipt would help to allay such suspicions, which I repeat would largely be unjust, thereby fostering improved relations between the police and the public, and particularly younger members of the public, to the great benefit of the community as a whole. I beg to move.
  The Earl of Mar and Kellie: I support this amendment. I am concerned that this Bill, and the similar provisions in the Crime and Punishment (Scotland) Bill, refer to the "possession" of intoxicating liquor rather than to its "consumption". That suggests to me that we could see over-zealous policemen taking unopened cans and bottles from people who may only be transporting them. Perhaps I may present an easy scenario: young people may be taking the cans from their own home to the home of their grandparents. I hope that whichever noble Earl replies to this amendment will assure the Committee that the intention

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  of the Bill is only to remove intoxicating liquor that is being consumed rather than intoxicating liquor that is still in an unopened bottle and is merely being transported between two places.
  The Earl of Kinnoull: There is some confusion as to who should be guiding the Committee. Perhaps my noble friend will guide us further following my reply. I appreciate the reason for the amendment but not its merit. As to the merit, one must remember that a police officer is using his commonsense in these situations. Equally, the police officer will know that it is a very serious disciplinary offence for him to take confiscated alcohol for his own use. I believe it is unthinkable that any officer would risk his career in such a way.
  Regulations made under the Police (Property) Act 1897 provide that if the chief officer is satisfied that the nature of the property is such that it is not in the public interest for it to be sold, it shall be destroyed or otherwise disposed of in accordance with his directions. It is such a serious matter for a police officer to go astray in this way that the last thing he will do is risk his career in that way.
  As for giving a receipt for something that will be poured away anyway, he can hardly give a receipt because there is nothing to come back. I appreciate the point made by the noble Earl, Lord Mar and Kellie. He spoke well on the powers in the Crime and Punishment (Scotland) Bill earlier this afternoon. I shall leave my noble friend to explain this with his great guidance. I do not believe that it is a problem.
  The Earl of Courtown: First, I should like to deal with the point relating to unopened bottles and cans raised by the noble Lord, Lord Monson, and the noble Earl, Lord Mar and Kellie. The Bill makes no distinction between open cans of alcohol and those which are closed. I would expect the police to act sensibly in this matter. If an officer found a group of youngsters drinking in public he might pour away the contents of the open can and tell the youngsters to take the rest away or, depending on the age of the youngsters, take the cans and the young people home to their parents. If a large amount of alcohol were involved, the police would almost certainly wish to investigate it further. It might be stolen. A supplier might be illegally selling it to young people. In such circumstances it is more likely that the cans or bottles would be taken back to the police station as potential evidence in respect of an entirely different offence. These are operational matters. As such, they are best left to the police. However, as I have made clear, property taken back to the police station could be disposed of only under the regulations made under the Police (Property) Act 1897.
  The noble Earl also painted the scenario of a youngster taking cans of beer from one member of a family to another. As I understand it, this would fall outside the scope of the Bill as far as concerns guidance to the police. I apologise for using the word "guidance"
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  again. For a good part of this, how the police will behave in such circumstances will be an operational matter and a matter of police training.
  Lord Monson: I am grateful to all noble Lords who have spoken, including the noble Earl, Lord Mar and Kellie, and the Minister. As I said in my introduction, it is a disciplinary offence for a police constable to purloin a can of drink that is confiscated to drink himself on his way home, but it is a matter that is extremely difficult to prove. I suggest that it requires only one rogue officer to go astray briefly for the whole law to be brought into disrepute. One can visualise what a field day the tabloids would have in such circumstances. But I believe that we have gone as far as we can on this amendment. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  7.45 p.m.
  Lord Monson Lord Monson moved Amendment No. 4:
  Page 2, line 11, at end insert ("save that for the purposes of this section, products containing less than 1.2 per cent. alcohol by volume shall not be deemed to constitute "intoxicating liquor".").
  The noble Lord said: Amendment No. 4 is designed to remove very low alcohol beers and lagers from the scope of the Bill. These low alcohol beers and lagers—ranging from 0.5 per cent. in the case of most low alcohol lagers to just over 1 per cent. in the case of the average low alcohol beer—are considered so innocuous that they can be sold quite legally to minors. As I understand it, they can also be sold at motorway service stations. However, they had not been invented when the 1964 Act, which is referred to in Clause 1(7), was framed. Therefore, no exemption was provided for those products in the original Act, which I have checked. I beg to move the amendment.
  The Earl of Kinnoull: I am grateful to the noble Earl for tabling this amendment. I am, however, advised that it is not necessary because the point is already covered by Clause 1(7) under which "intoxicating liquor" has the same meaning as in the Licensing Act 1964. I suggest to the noble Lord that it is not necessary.
  Lord Monson: I have checked the Licensing Act 1964. As originally drafted, the Bill does not do what the noble Earl suggests. I give way to the Minister.
  The Earl of Courtown: Perhaps I may seek to assist the noble Lord, Lord Monson. I understand that as far as concerns this clause the Licensing Act 1964, as amended, provides in its definition that:
  "'intoxicating liquor' means spirits, wine, beer, cider and any other fermented, distilled or spirituous liquor, but does not include any liquor which, whether made on the premises of a brewer for sale or elsewhere, is found on analysis of a sample thereof at any time to be of an original gravity not exceeding 1016" and of a strength not exceeding 1.2 per cent.".
  The definition goes on to include perfumes, flavouring essences and medications. I will let the noble Lord, Lord Monson, have a copy of that definition.
  Lord Monson: I am grateful to the noble Earl for clarifying the matter. It is quite clear from what he says

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  that the original Act of 1964 has been updated by subsequent legislation which has the effect of excluding low alcohol beers and lagers. That is a very satisfactory state of affairs. Accordingly, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 1 agreed to.
  Clause 2 agreed to.
  House resumed; Bill reported without amendment; Report received.
  Then, Standing Order No. 44 having been suspended (pursuant to Resolution of 18th March), Bill read a third time.
  The Earl of Kinnoull: My Lords, I beg to move that this Bill do now pass. I am extremely grateful to all noble Lords who have taken part in the proceedings on this Bill. I am sure we all hope that this Bill achieves what is intended.
  Moved, That the Bill do now pass.—(The Earl of Kinnoull.)
  On Question, Bill passed.

  Public Entertainments Licences (Drug Misuse) Bill
  7.50 p.m.
  Report received.
  Clause 1 [Licensing outside Greater London]:
  Lord Meston Lord Meston moved Amendment No. 1:
  Page 1, line 16, leave out ("or near the place") and insert ("the place or at any place nearby which is controlled by the holder of the licence").
  The noble Lord said: My Lords, I shall speak also to Amendments Nos. 3, 5, 7, 9, 10, 12 and 13. I see from the grouping that Amendment No. 14 in the name of the noble Baroness, Lady Anelay, is included.
  The amendments return the House to the topic which was raised at previous stages of the Bill; that is, whether the licence holder should be vulnerable to the loss of his licence if the drug misuse is going on at a place near the licensed premises, over which he has no control. I, and several other noble Lords, have already expressed the view that that should not be the position. The licence holder should be vulnerable to the drastic provisions of the Bill only in respect of premises over which he has some control.
  The arguments have been fully rehearsed at all previous stages of the Bill. The problem, in part at least, is the lack of definition of the expression "near the place" within the Bill as it is presently drafted. There is a vagueness about it which means that, in theory at least, the licence holder could be held responsible for a car park or something similar some distance away from his licensed premises.
  More fundamentally, as presently drafted, the Bill would make the licence holder vulnerable to the misuse of premises over which he has no responsibility whatsoever. It is wrong that someone should lose his
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  licence and his livelihood, and the livelihood of a considerable number of employees, if premises over which he has no power or authority are being used, and he can do nothing about it. Even if the licence holder himself is acting responsibly, and taking all possible precautions at the premises—in other words, it may well be that the licence holder is doing his best, or can be made to do his best, to put in place proper security at the door and proper surveillance within the licensed premises—he may still be vulnerable to the Bill's drastic provisions.
  It has to be remembered that the Bill is drastic. It provides for the closing down of clubs. It must be remembered that in some of these situations closing the club will not necessarily deal with the drug pushers. It will merely transfer the problem elsewhere. If the problem is outside the control of the club owner, he should not be vulnerable, and so I propose the amendment. If there is a problem nearby over which the licence holder has realistically no control whatsoever, it is not for him to deal with it; it is for the police to deal with it, and the police can deal with it under their existing powers. I beg to move.
  Viscount Ullswater: My Lords, before I address the amendment, I make the declaration of interest, as I have on previous occasions, as I am a director of Rank Leisure Limited. At previous stages of the Bill, it has been made clear that without an amendment such as the one just moved by the noble Lord, Lord Meston, there would be a serious risk that the requirements of natural justice might not have been met. I hope that my noble friend Lady Anelay of St Johns will look kindly upon this series of amendments. I am glad to say that she nods her head, so that is good news.
  In Committee, the noble Lord, Lord Harris of Greenwich, stressed how a wide interpretation of the phrase "or near" could destroy someone's business, possibly even a small business, on the basis of a police report. I have to agree with that. That is the concern which has worried the Committee and now worries the House.
  The amendment affords some protection to the licence holder with a well-run club from losing his public entertainments licence through no fault of his own. That is the crux of the matter. I am grateful to my noble friend Lady Anelay, because she has been most anxious to see that this small piece of legislation can be properly interpreted by local authorities in an even-handed way across the country. The amendment she moved in Committee, and will move on Report, has gone a long way towards assisting that. I support the amendment.
  Lord Gladwin of Clee: My Lords, in Committee I spoke against an amendment which was designed to remove the words "or near the place", and was chastised by the noble Lord, Lord Harris of Greenwich, for so doing. I still hold the view that I expressed then. I believe that the amendment weakens the Bill considerably. We shall still have problems with drug dealing in places nearby, in areas adjacent to discos, nightclubs, or raves which are not under the control of the licence holder.

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  I gave the example before of problems in car parks owned by local authorities and car parks which are privately owned. We know that goes on. Drug dealing goes on in those car parks because of the nearby place of entertainment that has been licensed. However, the police will have to deal with that problem. I repeat that I believe the amendment considerably weakens the Bill, but in the interests of getting the Bill on to the statute book I reluctantly acquiesce.
  Baroness Masham of Ilton: My Lords, perhaps I may ask a question relating to the car parks. I was under the impression that if the car park belonged to the club it would be covered. I support the amendments because the insurance for a member of staff who might be beaten up at a bus stop might be complicated. Who would be responsible for that member of staff's insurance if they were off the premises? Therefore I believe that the amendments are an advantage.
  Lord Harris of Greenwich: My Lords, I shall be brief, because I know that others want to move on to other business. I am glad that we have managed to reach an agreement with the noble Baroness. My noble friend and I had the opportunity to discuss this issue with her, and with the Bill's sponsor from the other place. I believe that she will indicate her support for the amendments.
  The noble Baroness, Lady Masham, is right. If the car park is owned or controlled by the licence holder, he can be caught by the Bill. So that deals with the problem. If it is a municipal car park, he would not be. As a matter of common sense, he should not be. Because how can the proprietor of a club protect himself from the activities of drugs dealers in a car park which he neither manages nor controls? It would be most unjust—to put it mildly—for there to be such an outcome. I very much agree with the noble Viscount: I believe that the amendments substantially improve the Bill. I and my noble friend believe that they remove many of the anxieties that we expressed on a previous occasion.
  8 p.m.
  Lord Monson: My Lords, I am glad to support these important amendments which were explained so well by the noble Lord, Lord Meston. They echo amendments similar to those which I backed previously and which accord with natural justice, as pointed out by the noble Viscount, Lord Ullswater. I very much hope that they will be accepted.
  Baroness Anelay of St Johns: My Lords, I recognise that for some noble Lords the concept in the Bill as it stands of "near the place" and how that might be defined by local authorities has caused some difficulty. I am also aware of the concern expressed by some noble Lords that innocent club owners will be penalised for problems that occur in locations not directly under their control.
  I understand those concerns, but I believe that tonight we must remind ourselves of the nature and scale of the problem that we are seeking to address. Drugs are posing a threat to the lives and well-being of a whole generation
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  of young people. It is our young people who are being targeted by the drug dealers. Like it or not, clubs and similar venues where youngsters go to enjoy themselves act as a magnet for the drug dealers. Let us not delude ourselves about the grim consequences of a club becoming a focus for drugs.
  Recently, a Channel 4 programme in the "Dispatches" series set out graphically how a club in Basildon, where corrupt door staff were actively managing drug dealing on the premises, seemingly without any intervention by the management became a central feature of a drugs and crime wave in the town. That was the club where the ecstasy which killed Leah Betts was purchased.
  Local authorities need to have tough powers to deal with problems when they reach such proportions. I hear what the noble Lord, Lord Gladwin of Clee, says tonight and I understand his comments with regard to these amendments. I sympathise with the principles behind his comments, but I appreciate that I must be realistic. I accept the amendments as the way forward for this Bill. However, I feel sure that both noble Lords whose names were put to the amendments will join me in recognising that the club trade has responsibility to play its part in society's struggle against illegal drugs and the criminals who peddle them. I hope that the Home Office, in the consultations due to take place on the draft guidance on the new powers, will encourage further co-operation between the club owners, the police and the local authorities to deal with the drug problems on club premises and wherever else club staff observe such problems occurring.
  Earlier, the noble Lord, Lord Meston, referred to the fact that I shall speak also to Amendment No. 14. It does no more than Amendment No. 12 in the names of the noble Lords, Lord Meston and Lord Harris of Greenwich. It clarifies in respect of the powers of the court to revoke a licence that "premises" and "place" have the same meaning in both Acts with which we are concerned; namely, the Local Government (Miscellaneous Provisions) Act 1982 and the London Government Act 1963.
  The Earl of Courtown: My Lords, I agree entirely with the sentiments expressed by my noble friend. The serious problem that drug misuse poses to young people is there for all to see. The Government want to see this Bill make progress and hope that these amendments will be accepted by the House.
  Lord Meston: My Lords, I am grateful to all noble Lords who have spoken. I understand the point of view of the noble Lord, Lord Gladwin of Clee, and the point that such clubs are magnetic to drug pushers. The fact is that clubs are responsible for what goes on there and what goes into them through the front door. It is the responsibility of clubs to protect their customers from drug dealers at those points. However, they cannot be responsible for what goes on in areas outside the clubs over which they have no control. That is the responsibility of the police. It is not an answer simply to move the problem elsewhere by closing the club. I am grateful for the support and I commend the amendment to the House.
  On Question, amendment agreed to.
  Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 2:
  Page 2, line 8, at end insert—
  ("(6) The authority shall have regard in exercising their functions under this paragraph to such guidance as may be issued by the Secretary of State."").
  The noble Baroness said: My Lords, I shall speak also to Amendments Nos. 4, 8 and 11. We have discussed the status and content of the circular that is to be issued before these new powers come into effect. We have seen an early draft of the guidance and we have been given assurances that the key players involved—namely, the local authorities, the police and the club trade—will be consulted on the contents of the final version to be published before the new powers come into effect.
  I hold firmly to the view that the circular should not be prescriptive. It should not be binding on local authorities because that would merely stifle the co-operation and development of local solutions to local problems, which must be the best way forward. However, I see merit in providing a marker in the Bill of advice that is available, particularly for those local authorities which have infrequent dealing with the club scene and in requiring the local authorities to have regard to it. I beg to move.
  Viscount Ullswater: My Lords, I thank my noble friend for introducing the amendment. In Committee, a great deal of attention was paid to the draft circular of guidance notes. Since then, matters have changed and they are already out of date. Of course, they will be further out of date after the passing of amendments here tonight.
  However, I believe that without the amendment the guidance notes would have no status. As the noble Lord, Lord Meston, said in Committee, they do not even have the statutory status of the Highway Code. They should be given greater status on the face of the Bill.
  The amendment recognises the fears expressed by many noble Lords and I am grateful to my noble friend for introducing it tonight. In Committee, I spent some time indicating how the guidance notes deal with the police report and the hearings, and how that will improve the consistent way in which local authorities should apply this legislation. I do not intend to repeat what I said at this late hour, but I would make one point. Perhaps the most important step is that the Home Office should undertake a further consultation process with the local authority associations, the Association of Chief Police Officers and representatives of the club trade so that the guidance note can be tightened up. That was recognised all around the Committee. Whether they should become more prescriptive can be dealt with in those consultations and I do not seek to comment on that now.
  The British Entertainment and Discotheque Association, BEDA, has communicated its continued worries to me about the draft circular. Now is the time to address those worries and perhaps I may ask my noble friend Lord Courtown to assure the House that
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  BEDA'sviews, among others, will he seriously considered now that so many amendments have been made to the Bill in further consultation.
  Lord Harris of Greenwich: My Lords, I echo what was said by the noble Viscount. I agree with him entirely. The measure is appropriate and I hope that the Minister will agree that the trade and all the other interests concerned should be consulted before the circular is issued, particularly in the light of the amendments that have been agreed.
  Lord Meston: My Lords, I, too, am grateful for the amendment. Guidance is genuinely needed. I wish to say more on the extent to which it is to be prescriptive in relation to Amendment No. 16.
  I wish to emphasise the point that consultation is important. If I have learnt nothing else about the club trade as a result of this Bill, I have learnt that there is an extraordinarily large number of different trade organisations and associations, all with bewildering acronyms. I have no doubt that they would all wish to be consulted and quite properly they ought to be.
  The Earl of Courtown: My Lords, I assure all noble Lords who have raised the matter that the Government have given an undertaking to consult interested parties such as BEDA, the local authorities and other trade associations on the terms of the guidance to be issued in connection with those new powers. The final version of the circular will be issued before the new powers come into effect. Therefore, consultation will take place on the Bill as amended.
  The Government fully support the noble Baroness's amendment and hope that it will be accepted by the House.
  On Question, amendment agreed to.
  Lord Meston Lord Meston moved Amendment No. 3:
  Page 2, line 14, leave out ("or near the place") and insert ("the place or at any place nearby which is controlled by the holder of the licence").
  On Question, amendment agreed to.
  Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 4:
  Page 2, line 33, at end insert—
  ("(5) The authority shall have regard in exercising their functions under this paragraph to such guidance as may be issued by the Secretary of State.").
  On Question, amendment agreed to.
  Lord Meston Lord Meston moved Amendment No. 5:
  Page 2, line 39, leave out ("or near the place") and insert ("the place or at any place nearby which is controlled by the holder of the licence").
  On Question, amendment agreed to.
  Lord Meston Lord Meston moved Amendment No. 6:
  Page 3, line 19, at end insert—
  ("(7B) An authority which refuses to renew or revokes a licence under paragraph 6A or 11A above may order that the licence shall remain in force (subject to such terms, conditions and restrictions as may be imposed)—

  (a) until the time for bringing an appeal against the refusal to renew or revocation has expired; and

  (b) if such an appeal is duly brought, until the determination or abandonment of the appeal,

  and if such an order is made any special hours certificate granted under section 77 of the Licensing Act 1964 shall also remain in force for the same period.").
  The noble Lord said: My Lords, this amendment replicates an amendment which I moved in Committee to draw attention to what appeared to be an anomaly on the face of the Bill which was explained by the noble Earl, Lord Courtown, on Second Reading; namely, if the court revokes a licence, it has power to direct that a licence may remain in force pending appeal but a local authority, licensing authority or council does not have that same power. For that reason, I return to the matter now.
  It is an anomaly. The noble Earl was kind enough to write to me on the subject and explain that the difference is that the courts are not empowered to impose or vary conditions of the licence in the same way as a licensing authority is empowered to do under the provisions of the Bill.
  I understand that that difference exists, but I wonder whether it is a difference sufficient to justify that anomaly. For that reason, I bring the matter back and I beg to move.
  Baroness Anelay of St Johns: My Lords, I know that the noble Lord, Lord Meston, finds it anomalous that the courts have the power to order that a club can stay open pending an appeal while local authorities are not similarly empowered. In fact, that power has been given to the courts to give them a degree of compatibility with the options already available to local authorities.
  By now noble Lords will be familiar with the courses of action open to local authorities proposed in this Bill. First, the local authority has to apply the two-stage test of establishing that there is a serious drugs problem; and then, whether action by the authority will assist significantly in dealing with the problem.
  After due consideration, a local authority may then decide that neither of the tests is satisfied and so take no further action. But at the other end of the scale, the local authority may decide that the nature and seriousness of the problem is such that the licence should be revoked. The licence holder then has established avenues of appeal to the courts which this Bill does not disturb in any way.
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  However, a local authority can opt to take a middle course. It might decide, perhaps on the basis of the representations made by the licence holder, that the drug problem can be addressed properly by, for example, changes in the management of the door staff or by the adoption of other security measures. In such cases, it may be sufficient simply to impose new terms or to vary existing conditions of the licence in order to assist significantly in dealing with the problem.
  The courts are not empowered to impose or vary licence conditions in that way. Therefore, bearing in mind the sort of circumstances to which I referred earlier where a local authority might impose or vary conditions, I believe that it is right that the courts should be able to order that a licence should remain in force pending appeal.
  Tacking on a further stage in a local authority's consideration of a case is unnecessary. I remain convinced that local authorities are more than capable of reaching a decision in the light of all the evidence and/or the options open to them at that stage. I hope that in the circumstances, the noble Lord will agree to withdraw his amendment.
  The Earl of Courtown: My Lords, when this amendment was debated in Committee, the noble Lords, Lord Meston and Lord Monson. queried why the Bill did not give local authorities the same powers as it gives to the courts; namely, to order that a licence should remain in force after revocation pending appeal.
  At the time I undertook to write to the noble Lord setting out the position, which I have done. As my noble friend Lady Anelay said, the options available to a local authority, after hearing all the evidence of a serious problem concerning drugs, are that it may take no action, impose terms and conditions or revoke the licence where doing so would assist in dealing with the problem.
  The courts are not so empowered and for that reason a provision has been included in the Bill to enable them to grant a stay in revoking the licence until the time for bringing an appeal against revocation has expired or until an appeal has been determined or abandoned.
  I agree with my noble friend that granting a similar power to local authorities is unnecessary. In any event, the issues surrounding the revocation are addressed in the first draft of the Home Office circular. The seriousness of the consequences of non-renewal or revocation—that the licensees will not be able to operate the club pending the hearing of any appeal—are referred to in the circular. No doubt the advice in the circular on that and other issues will be refined further in the course of the consultation process which we have agreed to undertake. I hope that the noble Lord will not press the amendment.
  Lord Meston: My Lords, I am grateful for the explanation both from the noble Baroness and the Minister. It seems to me that that makes it all the more important that the guidance should provide for a sufficient hearing before the licensing committee which enables the licence holder to state his case fully and properly.

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  However, I accept the further point made by the noble Baroness that under the machinery of the Bill as it now remains, there is the further stage of ability to make representations after the event which, in a sense, is a form of appeal. For that reason, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 2 [Licensing in Greater London]:
  Lord Meston Lord Meston moved Amendment No. 7:
  Page 3, line 34, leave out ("or near the premises") and insert ("the premises or at any premises nearby which are controlled by the holder of the licence").
  On Question, amendment agreed to.
  8.15 p.m.
  Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 8:
  Page 4, line 8, at end insert—
  ("(6) The Council shall have regard in exercising their functions under this paragraph to such guidance as may be issued by the Secretary of State.'").
  On Question, amendment agreed to.
  Lord Meston Lord Meston moved Amendments Nos. 9 and 10:
  Page 4, line 8, at end insert—
  ("() In this paragraph "premises" includes any place."").
  Page 4, line 14, leave out ("or near the premises") and insert ("the premises or at any premises nearby which are controlled by the holder of the licence").
  On Question, amendments agreed to.
  Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 11:
  Page 4, line 33, at end insert—
  ("(5) The Council shall have regard in exercising their functions under this paragraph to such guidance as may be issued by the Secretary of State.").
  On Question, amendment agreed to.
  Lord Meston Lord Meston moved Amendments Nos. 12 and 13:
  Page 4, line 33, at end insert—
  ("() In this paragraph "premises" includes any place.").
  Page 4, line 40, leave out ("or near the premises") and insert ("the premises or at any premises nearby which are controlled by the holder of the licence").
  On Question, amendments agreed to.
  Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 14:
  Page 4, leave out lines 43 and 44 and insert—
  ("(4B) The standard of proof for the purposes of sub-paragraph (4A) of this paragraph is that applicable in civil proceedings and in that sub-paragraph "premises" includes any place.").
  On Question, amendment agreed to.
  [Amendment No. 15 not moved.]
  Lord Meston Lord Meston moved Amendment No. 16:
  Before Clause 3, insert the following new clause—
  GUIDANCE BY THE SECRETARY OF STATE
  (" . The Secretary of State may issue guidance providing (among other matters)—

  (a) that, except in an emergency, the licensing authority or Council shall not revoke or refuse to renew or transfer a licence or impose terms, conditions or restrictions thereon unless satisfied that the owners or managers of the place have been informed by the police of their concerns about the supply or use of controlled drugs at or near the place and have had a reasonable opportunity to meet those concerns;

  (b) that any report by the police to the licensing authority or Council shall summarise previous exchanges between the police and the licence holder, owners or managers of the place about their concerns about the supply or use of controlled drugs at or near the place;

  (c) that, except in an emergency, the licensing authority or Council shall not revoke or refuse to renew or transfer a licence or impose terms, conditions or restrictions thereon without first affording the licence holder an opportunity of being heard by the authority or Council and of making representations to them;

  (d) that, in considering whether action by the licensing authority or Committee will significantly assist in dealing with a serious problem relating to the supply or use of controlled drugs near the place, the authority or Council shall also consider what control the licence holder, owners or managers have over any place outside the licensed premises, what security and surveillance measures are, or will be in force at the licensed premises and what other powers the police could exercise apart from under this Act; and

  (e) explanations of what may constitute a "serious problem" and of what is meant by "will significantly assist in dealing with the problem.").

  The noble Lord said: My Lords, we have progressed considerably with this Bill in that on the face of the Bill there is provision for there to be guidance and I suggest that that is a considerable improvement. But it must be remembered that guidance is only guidance and we are legislating in a field in which at present, there are no uniform procedures as between different licensing authorities. For that reason, I suggest in this amendment that certain minimum provisions should appear in the guidance and I have set those out in the amendment.
  Those provisions are familiar topics in the context of the discussions that we have had while the Bill has passed through your Lordships' House. First, "except in an emergency", a licence should not be revoked or terms be imposed unless the police have informed the owners or managers of the place of their concerns and those people have had a reasonable opportunity to meet such concerns. Secondly, the amendment provides that any report by the police should summarise previous exchanges between the police and the licence holders, and others. I have shamelessly lifted that from the first draft of the guidance. I hope, therefore, that it will not be controversial.
  Thirdly, the amendment provides that, except in an emergency, the licensing authority should not exercise its powers to revoke, and so on, without giving the licence holder the opportunity to be heard and to make representations. The fourth provision which I seek to

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  introduce is, I suspect, now otiose, because it is covered by the amendments which have already been accepted relating to the removal of the expression "near the place". Nevertheless, I hope that the point that I am trying to make is a good one; namely, that if the operation of the Bill is to be fair, and is seen to be fair to all concerned, there ought to be some minimum provision to ensure fair procedures on the face of the Bill, and provided for within the guidance. At the very least, I hope that the Government can give an assurance that all of these matters will be adequately covered within the guidance. I beg to move.
  Baroness Anelay of St Johns: My Lords, a clear undertaking has been given to produce a circular in consultation with local authorities, the police and the club trade with advice on all the issues covered by the amendments. There is a first draft which the Home Office will use as the basis for the consultation process. I am sure that the points raised during our debates in this House will be taken into account at that stage.
  The guidance in the circular cannot, and I believe should not, he prescriptive. It is designed to extend and develop the many examples across England and Wales where the police, local authorities and club owners are already working together and where local procedures have been devised to counter the threat posed locally by drugs. I do not believe that we should include such detail on the face of the Bill. It would complicate the issue and could hamper the very process of developing the co-operation and flexibility for which we should be looking. In the circumstances, I hope that the noble Lord will agree to withdraw the amendment.
  The Earl of Courtown: My Lords, I agree with the point made by my noble friend. As I said earlier, the Government have given a clear undertaking to consult all interested parties on the circular. All the issues covered by the amendments will be addressed in the guidance. Given those assurances, I hope that the noble Lord will agree not to press his amendment.
  Lord Meston: My Lords, I am both reassured and grateful. I have qualified most of the provisions within the amendment with the expression, "except in an emergency". The only point that I should like to add is that I hope the guidance will recognise that there must be very few emergencies so great as to preclude some warning to the licence holder of the concerns of the police and some warning, even if it is a matter of a few minutes or a few hours, of the imminent meeting of the relevant licensing authority. As I said, I am reassured, and on that basis I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 3 [Consequential provision for special hours certificates]:
  Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 17:
  Page 5, line 37, leave out from ("of') to second ("reinstated") in line 42 and insert ("—

  (a) an application for the renewal of a licence being refused under paragraph 6A(2) of Schedule 1 to the Local Government (Miscellaneous Provisions) Act 1982 or
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  paragraph 2A(2) of Schedule 12 to the London Government Act 1963, or

  (b) a licence being revoked under paragraph 11 A(2) or 12(5) of Schedule 1 or paragraph 9A(2) or 10(4A) of Schedule 12,

  the certificate shall be reinstated if the licence is subsequently renewed under paragraph 17 of Schedule 1 or paragraph 19 of Schedule 12 or if the licence is subsequently").
  The noble Baroness said: My Lords, I recognise that we need to look again at the provisions for safeguarding the special hours certificates in the event of a local authority accepting representations against revocation or a successful appeal in the courts. I suggest that my amendment now covers both those eventualities. However, I am not sure that the amendment tabled in the name of the noble Lord would quite fulfil that purpose. I also question whether the reference in that amendment to the circumstance of a licence transfer is appropriate as refusal to transfer an entertainments licence does not in itself mean that the licence comes to an end. In those circumstances, I hope that the noble Lord will accept that my amendment deals adequately with the issue and that he will agree not to press his amendment. I beg to move.
  Lord Meston: My Lords, I can assure the House that drafting Amendment No. 18 was a painful process. However, I am quite prepared to accept that Amendment No. 17 is much better.
  The Earl of Courtown: My Lords, further consideration has been given to ensure that club owners whose representations or appeals are successful would not be disadvantaged if they then had to wait while their application for a special hours certificate was being processed. My noble friend's amendment gives further safeguards and is supported by the Government.
  On Question, amendment agreed to.
  [Amendment No. 18 not moved.]
  Clause 4 [Short title, commencement and extent]:
  Lord Meston Lord Meston moved Amendment No. 19:
  Page 6, line 4, after ("appoint") insert ("after the issue by the Secretary of State of guidance under sections (Guidance by the Secretary of State").
  The noble Lord said: My Lords, the amendment simply seeks to provide that the legislation shall not come into force until the issue by the Secretary of State of the guidance which has already been provided for within the body of the Bill as it now stands amended. I hope that it is consistent with an indication given at an earlier stage by the Government. On that basis, I beg to move.
  Baroness Anelay of St Johns: My Lords, my comments on this amendment refer back to what I said

  1005
  when responding to Amendment No. 16. For the reasons that I expressed then, I hope that the noble Lord will see fit to withdraw the amendment.
  The Earl of Courtown: My Lords, I concur with my noble friend. I also spoke to the amendment when responding to Amendment No. 16.
  Lord Meston: My Lords, I am, therefore, hopeful that the spirit of the amendment will be observed. On that understanding, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Then, Standing Order No. 44 having been suspended (pursuant to Resolution of 18th March), Bill read a third time.
  Baroness Anelay of St Johns: My Lords, I beg to move that this Bill do now pass.
  Given the amount of business yet to pass through this House tonight, I hope that noble Lords will understand if I cut short the usual courtesies in expressing my thanks to all noble Lords who have taken part in the proceedings on the Bill from Second Reading onwards. I am most grateful to all those who have underlined their commitment to the principles behind the legislation.
  Moved, That the Bill do now pass.—(Baroness Anelay of St Johns.)
  Baroness Masham of Ilton: My Lords, I should like to congratulate the noble Baroness, Lady Anelay of St Johns, for the sterling work that she has undertaken during the passage of the Bill in your Lordships' House. There have been some concessions to the Bill, so I hope that the public entertainment industry will do all that it can to eliminate drug use at premises where many young people go to enjoy themselves.
  As I said at Second Reading, I hope that the health and safety regulations will be put in place as soon as possible. That should be done before the hot summer. It should not be too difficult as Scotland already has them. It really is inhuman to turn off the water so that desperately thirsty young people who have been dancing for long periods are forced to buy expensive bottles of drink. The country was alerted to the very difficult problems of the drug culture by the Daily Express campaign last week. I hope this Bill will send a positive message to clubs and local authorities that they have to take this matter seriously.
  Lord Gladwin of Clee: My Lords, I wish briefly from these Benches to congratulate my noble friend—I must be careful about this—Lady Anelay of St Johns—on carrying through this Bill which I think has been described as a small Bill. However, it is an important weapon in the fight against drugs dealing and drugs misuse in this country. I warmly congratulate the noble Baroness on the work that she has done. I also thank the noble Earl, Lord Courtown, for his co-operation and help as this Bill has proceeded.
  Lord Meston: My Lords, I, too, warmly congratulate the noble Baroness on her conduct of this Bill through
  1006
  your Lordships' House. It was important that this Bill had some scrutiny in your Lordships' House, particularly as it received only a Second Reading in another place. That has enabled us to look at this Bill and to improve it somewhat. It is perhaps fortunate that most of the improvements were foreshadowed by debates which we were able to have at a more leisurely pace than during the accelerated procedures of recent days. I thank the noble Baroness and the Minister for their responsiveness to the suggestions which have been made at various stages. I certainly hope that this Bill achieves all that it sets out to achieve.
  The Earl of Courtown: My Lords, I shall speak briefly. I can probably agree with everything that has been said, in particular as regards my admiration for my noble friend and the way she has handled the Bill. It has not been an easy process. When I came to this House I presented a Private Member's Bill before I joined the Front Bench. The noble Lord, Lord Meston, smiles. That Bill was debated and it went to Committee stage. As the noble Lord, Lord Gladwin, has said, this Bill is an important weapon and we wish it well.
  On Question, Bill passed, and returned to the Commons with amendments.

  Police and Firemen's Pensions Bill
  Brought from the Commons; read a first time, and to be printed.

  Contract (Scotland) Bill
  8.32 p.m.
  Lord Mackay of Drumadoon: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
  Moved, That the order of commitment be discharged.—(Lord Mackay of Drumadoon.)
  Lord Carmichael of Kelvingrove: My Lords, the noble and learned Lord the Lord Advocate will realise that because of the unnatural nature of our Sitting tonight we have not really had any time to receive anything from our normal sources in Scotland in terms of an examination of the Bill. However, we trust in the good faith of the noble and learned Lord the Lord Advocate and we have no comments to make on the Bill as it stands.
  On Question, Motion agreed to.
  Then, Standing Order No. 44 having been suspended (pursuant to Resolution of 18th March):
  Lord Mackay of Drumadoon: My Lords, I beg to move that this Bill be now read a third time. This Bill is the result of careful work by the Scottish Law

  1007
  Commission whose proposals for the reform of the three bad rules of contract law received virtually unanimous approval. This is a technical provision but it nevertheless removes the risk of injustice and confusion. I hope that it is accepted as being a valuable and much needed reform. I strongly commend it to the House.
  Bill read a third time, and passed.

  Scottish Legal Services Ombudsman and Commissioner for Local Administration in Scotland Bill
  Lord Mackay of Drumadoon: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
  Moved, That the order of commitment be discharged.—(Lord Mackay of Drumadoon.)
  On Question, Motion agreed to.
  Then, Standing Order No. 44 having been suspended (pursuant to Resolution of 18th March):
  Lord Mackay of Drumadoon: My Lords, I beg to move that this Bill be now read a third time.
  The Bill will increase and clarify the powers of the Scottish Legal Services Ombudsman and will strengthen the powers of the Commissioner for Local Administration. The additional powers will bring the Scottish ombudsman broadly in line with counterparts in England and Wales. It is appropriate that I deal briefly with two points which were raised at Second Reading, about which I wrote separately to the noble Lords involved.
  First of all, there was a concern about the ombudsman's powers to require the production of relevant documents and information. I have now considered this matter further and I am satisfied that the ombudsman's powers are appropriate. It is very much in the public interest that the ombudsman should have access to all relevant information and documents even if these would otherwise be confidential. I should, however, stress that the ombudsman can only require information or documents of relevance to his investigation of how a professional organisation such as the Law Society of Scotland or the Faculty of Advocates has handled a complaint.
  The second point raised at Second Reading concerned what would happen if professional organisations refused to provide the ombudsman with documents and information. These organisations are already under a statutory duty to comply with the ombudsman's requirements and there have been no difficulties over compliance in the past, nor any suggestion that there would be in the future. I am satisfied that the strengthened powers, such as those proposed for the Scottish Legal Aid Board in the Crime and Punishment (Scotland) Bill, are neither necessary nor appropriate. I commend the Bill to the House.
  Moved, That the Bill be now read a third time.— (Lord Mackay of Drumadoon.)
  On Question, Bill read a third time.
  Lord Mackay of Drumadoon: My Lords, I beg to move that this Bill do now pass.
  Moved, That the Bill do now pass.—(Lord Mackay of Drumadoon.)
  On Question, Bill passed.

  Flood Prevention and Land Drainage (Scotland) Bill
  8.37 p.m.
  The Parliamentary Under-Secretary of State, Scottish Office (The Earl of Lindsay): My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
  Moved, That the order of commitment be discharged.—(The Earl of Lindsay.)
  On Question, Motion agreed to.
  Then, Standing Order No. 44 having been suspended (pursuant to Resolution of 18th March), Bill read a third time.
  The Earl of Lindsay: My Lords, I beg to move that this Bill do now pass.
  I am pleased to say that this uncontroversial but important piece of legislation has moved quickly to this final stage before Royal Assent. I am grateful to noble Lords for their co-operation in allowing such speedy progress.
  Moved, That the Bill do now pass.—(The Earl of Lindsay.)
  On Question, Bill passed.

  Welsh Development Agency Bill
  Lord Lucas: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
  Moved, That the order of commitment be discharged.—(Lord Lucas.)
  On Question, Motion agreed to.
  Then, Standing Order No. 44 having been suspended (pursuant to Resolution of 18th March), Bill read a third time, and passed.

  Prisons (Alcohol Testing) Bill
  Baroness Berners: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
  Moved, That the order of commitment be discharged.—(Baroness Berners.)
  On Question, Motion agreed to.
  Then, Standing Order No. 44 having been suspended (pursuant to Resolution of 18th March), Bill read a third time, and passed.

  Sexual Offences (Protected Material) Bill
  Read a third time.
  Baroness Byford: My Lords, I beg to move that the Bill do now pass. I should like to thank all noble Lords who participated in the Bill, in particular the noble Lord, Lord Monson, for his interest and support.
  Moved, That the Bill do now pass.—(Baroness Byford.)
  On Question, Bill passed.

  Pensions Measure
  8.41 p.m.
  The Lord Bishop of Bristol The Lord Bishop of Bristol rose to move, That this House do direct that, in accordance with the Church of England Assembly (Powers) Act 1919, the Measure be presented to Her Majesty for the Royal Assent.
  The right reverend Prelate said: My Lords, I beg to move the Motion standing in my name on the Order Paper.
  If in the 1950s you were to ask any clergy wife what she most feared, she would have answered, the death of her husband while in service. Living in a tied house with limited pension provision, her fears were very real. In 1954 the Church Commissioners undertook the whole cost of clergy pensions on a pay-as-you-go basis. There was no lump sum on retirement. A pension consisted of approximately half the average clergy stipend. With the introduction of compulsory retirement of clergy at the age of 70 in 1976, the issue of retirement benefits came into sharper focus. Today a full service clergy pension stands at £8,533 per annum; the lump sum payment is £25,600 towards the cost of retirement housing. That is thought by many to be adequate but not princely.
  There are now nearly as many pensioners as clergy in active ministry and so the calls on the Church Commissioners' income to pay pensions on a pay-as-you-go basis are increasing year by year. In 1955 pensions accounted for 7 per cent. of the commissioners' income. In 1990 it was 35 per cent. In the year 2010 it could absorb 90 per cent. of the commissioners' income. There are no doubt those in
  1010
  your Lordships' House who will make a connection between this situation and the poor performance of the commissioners' property investments in the late 1980s. It certainly exacerbated the problem, but the roots lie in the policy of pay-as-you-go which had the potential to present problems when clergy were forced to retire from stipendiary ministry at the age of 70.
  If something is not done now, then the historic trusts of the commissioners will not be able to support the ministry of the clergy in needy parishes and dioceses as well as their statutory obligations to bishops and cathedrals from whom much of the present assets of the commissioners derive. The primary role of the Church Commissioners is to support and maintain a nationwide parochial ministry, a role which the Church of England is anxious to continue.
  It is against this background that I present the Pensions Measure to your Lordships' House. This Measure, after long consultation with diocesan boards of finance, dioceses, the General Synod, and consultation with parliamentarians in the wake of the reports of the Social Security Committee on financing clergy pensions, was passed by the General Synod in November last year with only three votes cast against it. That is as near unanimous a vote as one is likely to get, given the nature of the Church of England. The Ecclesiastical Committee unanimously declared the Measure to be expedient.
  The essence of the Measure is to be found in Clause 1. It is proposed to reconstitute the pensions board which will be responsible for the payment, out of the Church of England's pension fund, of pensions to clergy, their dependants and others. The clergy will receive their pensions from two schemes, both administered by the pensions board: one called the Church of England Pensions Scheme, which relates to past service to which the Church Commissioners will from time to time transfer sums made up of capital and income on a pay-as-you-go basis; and the other called the Church of England Funded Pensions Scheme which relates to present and future service and will in the main be funded by contributions from dioceses. There are two schemes, one fund, one cheque.
  In Clauses 3 and 4 the Measure describes the funded scheme. This is a new scheme for future service pensions under a separate trust to be operated under rules similar to those of a normal occupational pension scheme but varied to take account of the fact that the employer-employee relationship is absent because most clergy are office holders not employees. Contributions to that scheme will be made by dioceses from money raised in the parishes and by other organisations which employ clergy. Noble Lords will no doubt be aware of the concerns expressed as to whether or not dioceses would be able to raise what in effect would be a 16 per cent. increase in income. After some hesitation, dioceses were convinced that with the transitional help, about which I shall say more later, they will be able to meet this target. All dioceses have already signalled their ability to do so.
  In Clauses 5 to 7 the Measure sets out the role of the Church Commissioners. The commissioners, in continuing to meet the cost of past service pensions, will

  1011
  also be empowered to use both capital and income for transitional payments; that is, to assist dioceses and perhaps others—for example, missionary societies—to make their contributions on behalf of their members to the pensions fund for present and future liabilities. The period envisaged in the Measure is for up to seven years. This will be a significant sum, in the region, it is estimated, of some £60 million. And there is every sign that the transitional period is likely to be between five and six years and not the whole seven.
  By allowing the commissioners to pay for past service on a need-to-pay basis, using both capital and income, the commissioners will be able to invest their monies so that the best return can be made and the most efficient use made of resources under their control. Before the seven years elapse, during which time the commissioners would have the authority of Parliament to use both capital and income, the Church will need to frame new proposals to Parliament to facilitate the commissioners' continuing responsibility for past service pension liabilities. Such proposals will need to show that the proposed arrangements are working well and command the confidence of both Church and Parliament. By this time transitional payments will have ceased.
  The final clauses deal with the reconstitution of the pensions board and the taking and using of actuarial advice both by the commissioners and the new pensions board.
  There were some who expressed a wish that there be the possibility of a money purchase approach through a group personal pension arrangement. It was, however the overwhelming wish of the Church of England, not least among the clergy, to support the proposed scheme which provides uniformity and equity whether one ministers in a rich or a poor parish, within a rich or a poor diocese. The proposals I bring to your Lordships' House command, as I have indicated the widest possible support.
  The effect of the Measure is to put the costs of ministry on a more secure and more sustainable basis. The clergy and their dependants will be clear that their pensions are fully protected. The Church Commissioners will have the capacity to honour their historic trusts and support the maintenance of a nationwide parochial ministry. The dioceses are ready to meet the demands that the measure will make on their giving. To delay implementation would undermine much of what has been achieved in the past five years. I beg to move.
  Moved, That this House do direct that, in accordance with the Church of England Assembly (Powers) Act 1919, the Measure be presented to Her Majesty for the Royal Assent.—(The Lord Bishop of Bristol.)
  Lord Williams of Elvel: My Lords, the House will be grateful to the right reverend Prelate the Bishop of Bristol for introducing this resolution. As the right reverend Prelate will know, I am a member of the Ecclesiastical Committee and discussed this Measure at some length when it came before us.
  I have two questions to put to the right reverend Prelate. Given a funded pension scheme—I think we all agree that that would be right—let us suppose that the investments
  1012
  are unfortunate. The market can go up and it can go down. Judging from the record of the previous Church Commissioners, one would estimate reasonably enough that the market might go down on their investment. What happens then? Is that another burden on the parishes of the Church of England?
  The second question is, while I accept absolutely that the Ecclesiastical Committee deemed this measure to be expedient and certainly it is a realistic approach to the future of clergy pensions, what then happens if, within the time period before the guaranteed period, existing clergy who retire under the existing scheme have not yet built up any fund under the measure? What happens to them? Are they to be excluded from this new scheme?
  The Lord Bishop of Bristol: My Lords, I thank your Lordships for the time which has been given. I will try to answer the two very pertinent questions put by the noble Lord, Lord Williams of Elvel. The first is hypothetical but is nevertheless well asked. I think it would be true to say that the cover that the Church Commissioners' present assets provide in relation to any demands that could be made in the future over a very large number of years is, in fact, twice as much as is asked for. If the hypothetical state suggested by the noble Lord, Lord Williams, came about, I suspect that not only the Church Commissioners and the pension scheme but everybody else would be in trouble. I believe that the cover presently given to past service liability is more than adequate to allow for any fluctuations in the market—other than in the event of a total disaster in the market, in which case everybody would be in the same situation.
  Lord Williams of Elvel: My Lords, I apologise for interrupting the right reverend Prelate. There was a disaster, and the Church Commissioners did invest in what many people would regard as an unwise manner. They lost what was by any standards a very great deal of money. What guarantee do the clergy have that such behaviour will not recur?
  The Lord Bishop of Bristol: My Lords, I believe that the Church Commissioners, were they present to defend themselves, would say that they have learnt from their past experience and have put into place the kind of support and oversight which will avoid that happening again. If in fact it were to happen, which is highly unlikely, and given the cover that is presently available—that is, 2:1, which is more than anybody else would have—then I believe that the Church as a whole would be able to respond. It may take time and there may have to be a lot of talking, but I believe that we are responsible for our clergy and we accept that responsibility.
  With regard to the second question asked by the noble Lord, Lord Williams of Elvel, if I understand him correctly, those who have received a pension on the basis of past liability that is guaranteed by the Church Commissioners on a pay-as-you-go basis, and those who are for their present and future liabilities dependent upon dioceses contributing sums to the funded scheme, there is every indication—and the House will remember that the Church of England has had to go through a dramatic change in its financial organisation—that the majority of

  1013
  dioceses already have an excess of income over expenditure despite the diminution of income from the Church Commissioners which was annually theirs. There is a commitment on the whole of the Church of England in its two promises: that we stand together and support each other whatever happens in the future. Therefore I believe that we can say with some confidence that, if there is any shortfall in those incomes in dioceses in the future, we will stand alongside each other. I have already shown that our giving levels have increased significantly and can continue to do so to meet the needs of the clergy, which by and large parishioners see as their responsibility.
  I thank the House for having listened to me and for providing the time. I commend the measure to the House.
  Lord Thurlow: My Lords, as a member of the Ecclesiastical Committee, I should like to emphasise the unanimity with which the committee agreed that this measure was expedient. We were entirely satisfied, after discussion; and while an element of hypothesis is inevitably attached to some of the figures that may eventuate in five or six years' time, I entirely accept the right reverend Prelate's view, the view of the Synod and the Church as a whole, that the future can be faced with confidence and that we need not fear the kind of dreadful contingencies that were mentioned. Anything is possible, but is not, to any informed view, likely. I support the Motion.
  The Lord Bishop of Bristol: My Lords, I thank the noble Lord for his support and for the comments he has made.
  On Question, Motion agreed to.

  Town and Country Planning (Compensation for Restrictions on Mineral Working and Mineral Waste Depositing) Regulations 1997
  8.56 p.m.
  The Minister of State, Department of the Environment (Earl Ferrers)The Minister of State, Department of the Environment (Earl Ferrers) rose to move, That the draft regulations laid before the House on 19th February be approved [13th Report from the Joint Committee].
  The noble Earl said: My Lords, these regulations simply update, replace and simplify the existing regulations, which date from 1985. The regulations and the associated draft guidance have been the subject of full consultation with the minerals industry, mineral planning authorities, environmental and amenity bodies and other professional groups. A summary of the main points that they raised, together with the Government's response, was placed in the Library on 17th February.
  As the regulations are technical and as they were discussed with the industry, it might be for the convenience of the House if I were not to go into a great deal of explanatory technical detail but to move the regulations formally. Of course if any of your Lordships has a problem relating to them I shall be only too glad to enter into the detail. I beg to move.
  Moved, That the draft regulations laid before the House on 19th February be approved. [13th Report from the Joint Committee].—(Earl Ferrers.)
  Lord Williams of Elvel: My Lords, I am most grateful to the noble Earl for introducing these regulations. Could he perhaps define further the reference in paragraphs 3 and 4 to "working rights"? What does the phrase mean?
  Earl Ferrers: My Lords, the rights to work minerals.
  Lord Williams of Elvel: My Lords, does that not infringe on certain agreements which may be entered into between people who work minerals and people who do not work minerals—employers, employees? Is this not a matter on which the noble Earl might wish to take advice?
  Earl Ferrers: My Lords, I cannot think what the noble Lord, Lord Williams, is worried about. It is all set out in Regulation No. 2.
  On Question, Motion agreed to.

  Deregulation (Public Health Acts Amendment Act 1907) Order 1997
  8.59 p.m.
  Earl Ferrers rose Earl Ferrers rose to move, That the draft order laid before the House on 3rd March be approved [19th Report from the Deregulation Committee].
  The noble Earl said: My Lords, at present boat owners who want to take their boat down a river which is managed by British Waterways need a licence from it. British Waterways is a navigation authority for over 2,000 miles of canals and navigable rivers across Britain. Local authorities also have a power to license pleasure boats under the Public Health Acts Amendment Act of 1907.
  The draft order before your Lordships will remove the local authority's powers where there is already provision for British Waterways to issue licences. No protection which is currently provided by the local authorities will be lost. The deregulation order will not prevent a local authority from exercising its licensing powers where necessary on waters which are not owned or managed by British Waterways.
  It makes no sense for two public authorities to license the same pleasure boats. It clearly imposes an unfair burden on hire boat businesses. I am satisfied that there will be no adverse effect on public safety. If approved by your Lordships, the regulations will come into effect on 1st January 1998. I beg to move.
  Moved, That the draft order laid before the House on 3rd March be approved [19th Report from the Deregulation Committee].—(Earl Ferrers.)
  Lord Williams of Elvel: My Lords, the House will be grateful to the noble Earl for introducing the order.

  1015
  For the benefit of the House, can he explain what is the British Waterways Board? Who are the members? Are they paid or unpaid?
  Earl Ferrers: My Lords, the British Waterways Board is a board which is responsible for running such things as canals, waterways and so forth. They are paid members and they do their job with remarkable expedition and efficiency.
  On Question, Motion agreed to.

  Social Security (Incapacity for Work and Severe Disablement Allowance) Amendment Regulations 1997
  9 p.m.
  Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish rose to move, That the draft regulations laid before the House on 24th February be approved [14th Report from the Joint Committee].
  The noble Lord said: The main purpose of the proposed changes is to simplify existing medical test arrangements for applicants for severe disablement allowance and incapacity benefit. In the case of severe disablement allowance they also target resources more closely on people who are most severely disabled, for whom the benefit has, of course, always primarily been intended.
  To be entitled to severe disablement allowance, claimants must pass the all work test of incapacity and, where incapacity began after the age of 20, they must also pass an 80 per cent. disablement test. To simplify arrangements, we propose that those who satisfy the 80 per cent. disablement test would be automatically deemed to satisfy the all work test. We also propose to deem those assessed as at least 80 per cent. disabled for the purposes of industrial injuries and war disablement pension as satisfying the all work test.
  We have looked closely at the passporting criteria, under which people can be automatically treated as satisfying the 80 per cent. disablement test. These provisions were introduced as an administrative easement based on the principle that people should not require a medical examination if it is clear that they would be found 80 per cent. disabled.
  The latest medical advice, which is supported by operational experience, is that some of the passporting criteria can no longer be regarded as adequate measures of 80 per cent. disablement. We propose therefore to limit the passporting criteria to those which are. It is only right that where the evidence is not so clear-cut, people should be expected to undergo the same scrutiny as the majority of severe disablement allowance applicants. Those people who will no longer be automatically passported can still undergo the test and can still be accepted for severe disablement allowance if they pass that test.
  I believe that these regulations introduce some important improvements. I commend them to the House.
  Moved, That the draft regulations laid before the House on 24th February be approved [14th Report from the Joint Committee].—(Lord Mackay of Ardbrecknish.)
  Baroness Gould of Potternewton: My Lords, I am grateful to the Minister for moving these regulations. We welcome any moves to simplify the complex medical arrangements for benefits, especially where those medicals overlap, which, I understand, is the principal aim of the regulations. We also welcome the continuation of higher rate DLA care component as a passport to the benefit.
  However, we should like to make a few comments about some aspects of the regulations. We would ask that the middle rate DLA care be kept under review, especially as classes of people in receipt of middle rate are often on it because drugs or other treatment may sedate them, preventing them from qualifying for the night condition. We would also suggest that there may be a need for a review in future for some categories of disabled people. We are also not convinced of the need to remove the mobility higher rate. It is an extremely difficult benefit to claim. Two thirds of all claims are determined after some form of medical report and more than 25 per cent. after a medical examination. The toughness of the benefit application should be self-evident and should qualify as a pass for the all work test.
  Evidence from the RNIB highlights its concern about proposals within these regulations on ending automatic passporting to be regarded as 80 per cent. of disabled and above for certain groups for severe disablement allowance. In particular, the RNIB is completely opposed to ending the automatic passporting of registered partially sighted people. One suggestion is that the reason for it is that it relates to the uncertainty that people who could be registered as partially sighted would be found to be 80 per cent. disabled. However, we ask why the Government have decided to end automatic passporting for certain groups.
  We understand that the DSS bases the changes on the assumption that 50 per cent. of those currently passported through the medical test would fail it if medically examined. Again, we ask the basis for that assumption. We know from the estimates that were made on incapacity benefit savings, for instance, that that figure is probably overstated.
  Regulation 4 deals with transitional protection for those undertaking therapeutic work. Can the Minister give us an assurance and endorsement that claimants of severe disablement allowance who undertake work deemed to be therapeutic will remain in receipt of the benefit? I also add that to stop the partially sighted and others being automatically passported to that benefit for a saving of £5 million in two years' time seems to be unnecessary and not worth the effort.
  Nevertheless, having said that, I repeat that we welcome any moves that are made to simplify the complex medical arrangements for benefits.
  Earl Russell: My Lords, the Minister has had a small timing problem with these regulations. They are to come

  1017
  into force on April Fool's Day, which is in the very near future. So they come within the squeeze which has entered into the business of the past few days.
  When we reach the end of a Parliament, there is a problem of arranging the business of regulation, just as there is of arranging the business of legislation. Perhaps 1 may ask first why it was necessary to proceed with these regulations before the end of this Parliament; and secondly, whether any consultation took place within the usual channels plus those tributaries to them which in this House are necessary, in order to reach an agreement on which regulatory material should be brought forward and which should not? That is something which might well be considered at the end of a future Parliament.
  With these regulations, I accept that the Department of Social Security had a problem. It does not necessarily follow that the department has the solution. We have two separate tests of unfitness to work: the test for severe disablement allowance and the all-work test for incapacity benefit. There was a partial system of passporting which exempted some people from those tests. Therefore we have a system of double testing which is necessarily confusing and expensive.
  I understand fully why the department wished to take action. As I understand it, it discovered that all people qualifying for severe disablement allowance were found to be incapable of work under the all-work test, but not all people found incapable of work under the all-work test were found to qualify for the severe disablement allowance. That is the problem. I accept that something had to be done about it; the question is whether the department has got it right.
  The department has confined the passporting (which takes people through the all-work test and confers an exception) to those thought to reach the standard of the severe disablement allowance. It is a solution which has considerable virtue in logic and is probably not quite so easy in practice. We are facing the same problem as we were facing in the Crime (Sentences) Bill when dealing with the sentence which the judge would have passed under a previous system. Indeed, when one looks at Appendix 2 of the regulations it looks remarkably like a Fahrenheit-centigrade conversion table—we all know the problems that that causes for most of us.
  It is estimated that the effect of the regulation will be to bring in 3,500 extra medical examinations per annum. The question is whether or not the extra work and the extra anxiety involved are to good purpose. It is thought—this is necessarily conjectural and that is not disputed—that there may be a saving of £5 million. One is reminded of Sir Alan Herbert's epitaph on an archbishop:
  "My predecessors, fighting sin,
  Did their best to bring men in.
  But I was best without a doubt
  At keeping the unworthy out.-
  So when I died, the church was one, and that was me".
  That sometimes seems to be the motto of the Department of Social Security. It is trying, by having fewer passports to severe disablement allowance, to funnel people through into the all-work test, and it has run into one or two problems as a result. The Social Security Advisory Committee, in its usual excellent
  1018
  report, drew attention to some of them. I should perhaps pay tribute to the work of Sir Thomas Boyd-Carpenter as chairman of that committee. He fully maintained the high standards of Sir Peter Barclay whom he succeeded.
  It pointed out in paragraphs 42 and 43 that there is a problem because severe disablement allowance is a non-contributory benefit whereas incapacity benefit is a contributory allowance. That means of course that a much smaller proportion of women qualify for incapacity benefit than would have done for severe disablement allowance. The committee says—not at all to my surprise—
  "we draw the Department's attention to the view expressed to us that the proposal is contrary to equal treatment legislation in the European Union".
  I should like to know whether the Minister has legal advice on that point; whether he has a law officer's opinion on it. What is the department's main source of advice on European law? If it believes, as I presume it does, that that view is mistaken, on what grounds does it believe it? I hope it is right.
  My next point concerns the question asked by the noble Baroness, Lady Gould of Potternewton, in regard to partially sighted people. There is also considerable doubt about the department's view on what actually constitutes meeting the standard of severe disablement allowance. The department took the view that medical advice is that it cannot be assumed from some of the current passporting criteria that a claimant is necessarily 80 per cent. disabled. The committee points out that the department presented no evidence in its note to the committee for that assertion. The department says it had medical advice. Can the Minister tell us what advice? From whom did it come? In what words was it expressed? How wide a range did it meet?
  One cannot altogether deal with the issue by looking simply at the number of people who fail the all-work test. I will not repeat my views on that; the Minister knows them perfectly well. But I will point out that the success rate of appeals against that test is 47 per cent. That is remarkably high. Subject to some allowance for the appeals being a pre-selected sample, it gets quite near the view that with a 50 per cent. success rate on appeal, the accuracy of the test would prove to be nearly completely random. That is just about the opinion I have always had of that test. I am interested to find so much confirmation of it.
  On the point about people who are partially sighted, it must be understood that partial sightedness is registered—these are the direct words in paragraph 33 of the committee's report—
  "only after an examination by an ophthalmic consultant who certifies that the person is 'substantially and permanently handicapped as a result of defective vision caused by congenital defect, illness or injury—.
  One would have thought that that finding would have been treated with some respect. Subjecting these people to all the anxiety involved in extra and perhaps unnecessary medical examinations is something that requires some justification. The Royal National Institute for the Blind described this as "a senseless change".

  1019
  Those are strong words. I hope the Minister can give the House some reason for believing that those words are not justified.
  9.15 p.m.
  Lord Mackay of Ardbrecknish: My Lords, I thank the noble Baroness and the noble Earl for their welcome of the first part of the regulations which will prevent the double testing between SDA and the all-work test. Those are sensible provisions and will mean that around 8,500 people will not require to go through the double test.
  The noble Earl asked about consultation. In some ways he answered his own question because he read from the report of the Social Security Advisory Committee. We have, as always, consulted the committee. I was asked whether the debate on the regulations this evening was arranged through the usual channels. I suspect that I would not be standing here if it had not been. Whether it has been done through the tributaries is, I suspect, part of the trickle up or the trickle down process, but I do not know much about that.
  The noble Baroness and the noble Earl were less happy about the second part of the regulations. We have arrived at these conclusions because the latest medical advice which is supported by operational experience is that some of the current passporting criteria can no longer be regarded as adequate measures of the 80 per cent. disablement. We thought it was right and fair to limit the passporting criteria to what they are really intended to do; namely, to those tests which give a clear indication of the 80 per cent. disablement and thereby reflect the original policy.
  Earl Russell: My Lords, I am most grateful to the Minister for giving way. He tells us what we know. But can he tell us what was the source of that medical advice?
  Lord Mackay of Ardbrecknish: My Lords, as I understand it, it was the doctors of the Benefits Agency Medical Service who worked on these issues plus a little survey we carried out. As the numbers were small enough, we were able to track back clerically and look at the small sample that was taken. It was a small sample but we are talking about small numbers of people. We believe that the second part will mean that around 3,500 people will have to take the additional test. While the whole package will still reduce the number of people who have to take two tests, there is a netting off of the additional test on the second half of the regulations against the gains in the first half.
  I think I ought to say—and I think I said it in my opening remarks—that those people who will no longer automatically be passported through the 80 per cent. test are not being denied severe disablement allowance. They are simply being required to satisfy the test in the same way as other claimants. Such people will require a medical examination only if the adjudicating medical authority is not satisfied on the paper evidence that they are 80 per cent. disabled.
  1020
  The noble Baroness and the noble Earl asked me about the assumptions. Those are the assumptions we have made. We believe, based on the assumptions we have made, that around £5 million of savings will be achieved by 1999–2000. We shall monitor the effect of these changes and we shall certainly review the issue in the light of the savings that are made and the data we collect on the tests themselves.
  The noble Baroness asked me a personal question about therapeutic work. I can assure her that SDA claimants who are deemed to be undertaking therapeutic work will remain in receipt of the benefit.
  Both the noble Earl and the noble Baroness asked me about partially sighted people. We are removing this passport because we cannot be sure that those people who could be registered as partially sighted would necessarily be found to be 80 per cent. disabled. The current statutory definition of blindness is:
  "A person should be so blind as to be unable to perform any work for which eyesight is essential".
  Partial sightedness is not defined in legislation but must, by inference, be something less disabling than the definition I have read out. The criteria for partial sightedness is set out in guidance to certifying ophthalmic medical practitioners. To be registered as partially sighted the requirement is either vision of 6–60ths or worse, in both eyes—that approximates to 80 per cent. disablement—or visual acuity between 6–0ths and normal, but with restricted visual fields, which often does not equate with 80 per cent. disablement, as may be found, for example, in glaucoma or the eye complications of diabetes mellitus. These criteria are widely drawn and the ophthalmic consultants use considerable clinical discretion when applying them. It does not therefore follow that such people will inevitably satisfy the 80 per cent. disablement test.
  Neither does it follow that such people would need to be examined if the adjudicating medical authority is satisfied on the paper evidence that they would indeed meet the 80 per cent. disablement test. So the removal of the passport means that each case can be medically assessed by the adjudicating medical authority on the specific medical circumstances which pertain to that individual. I underline the point that if the adjudicating officer is satisfied, then he does not need to go to the next step which is to have a medical test.
  We are making these changes in order to ensure, as I have said, that only those with disability clearly equating to 80 per cent. are passported through the severe disablement allowance 80 per cent. disablement test. It is important to remember, as I say, not just for the partially sighted, but for all those who will no longer have automatic passports, that they are not being denied this allowance, but they are going to be treated in the same way as other applicants who are not passported. As I say, they may well not even need a medical test if the evidence satisfies the adjudicating medical authority.
  I was asked by the noble Baroness, Lady Gould, about the mobility component of the disability living allowance. I say to her that the disability living allowance mobility component, which is a successor to the mobility allowance, is one where the recipients had

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  to pass a medical examination which was considered to equate to 80 per cent. disablement. However, since the introduction of DLA some higher rate mobility component beneficiaries will have been awarded benefit following self-assessment rather than a medical assessment. While we may have considered that recipients of the old mobility allowance could be considered 80 per cent. disabled and carried this through its successor, the higher rate mobility component of the disability living allowance can no longer be sustained with self-assessment coming in.
  The noble Earl asked me about the changes and whether they would adversely affect women disproportionately and hence we may be in breach of our EU obligations. I say to him that we have no reason to believe that there is a greater proportion of women in the group who will no longer be automatically passported onto the severe disablement allowance. It is the departmental solicitors we look to to give us advice on whether legislation is discriminatory. In this case their advice is that it is not.
  I believe that I have answered this before, but the noble Earl asked me. I mentioned the BAMS people. The department's chief medical adviser and his medical experts were also involved in that medical advice. I hope that I have answered all the various points put to me by the noble Earl and the noble Baroness. I commend this regulation to the House.
  On Question, Motion agreed to.

  Felixstowe: Rail Links
  9.24 p.m.
  Lord Marlesford Lord Marlesford rose to ask Her Majesty's Government, in the context of their desire to reverse the decline in rail's share of the freight market as stated in Transport—The Way Fonvard (Cm. 3234), whether the rail links to and from the Port of Felixstowe are adequate for the purpose of carrying freight and to respond to the growth of container traffic on Britain's trunk roads.
  The noble Lord said: My Lords, I should first like to thank my noble friend Lord Goschen for being with us tonight. I know that it is at some inconvenience to him personally and so I particularly appreciate it. I am delighted that the noble Lord, Lord Gladwyn, is going to make his maiden speech tonight. He is an old and very dear friend of my family, as indeed was his remarkable father.
  Ports are a crucial part of our economic infrastructure. To understand the situation which I wish to draw to the attention of the House and the Government tonight, I should briefly set out the historical context.
  The history of industrial relations in British ports is tragic. In the 19th century and the first part of the 20th century, there were some callous and sometimes brutal port employers and the consequence was the 1946 dock labour scheme which was intended to replace the undoubted evils of casual employment, but which itself became an obstacle to containerisation and other
  modernisations. It was rather like the print workers who later resisted computer typesetting. Eventually the scheme cost many dockers their jobs.
  Felixstowe is a product of the frustration of shippers in those days. Effectively, it is a greenfield site. Indeed, Felixstowe is sometimes known as "the port without a city"—a rare phenomenon—and that is one of the reasons for its problems with inadequate rail links. Its first container terminal opened in 1967. It is all based on what had been a tiny provincial port and seaside resort whose main claim to fame was to be the sunniest place in Britain. In 1957 I started my working life in Felixstowe with Fisons, the chemical company, which then had its head office in the old Felix Hotel where, amazingly, before the First World War, the Kaiser apparently used to spend part of his summer holidays. I went back to Felixstowe on Monday and, frankly the port is totally unrecognisable from what it was 40 years ago.
  By 1975, Felixstowe was taking 200,000 containers a year. It and the other independent ports were beginning to threaten the security of dockers in the big labour scheme ports. By that time, there had been two major dock strikes—in 1970 and 1972—with further strife in 1975. By then we had a Labour Government whose priority was industrial peace at any price rather than an efficient port system. To buy that peace, the then Secretary of State for Employment, Mr. Michael Foot, in February 1976 introduced his notorious Dock Work Regulation Bill, which sought to give registered dock workers a monopoly on all cargo handling at every port and at any installation within five miles of the sea or any major inland waterway. Yesterday I read the Second Reading debate on that Bill in another place when Mr. Foot admitted that,
  "the introduction of the scheme could cause problems at some non-scheme ports".—[Official Report, Commons, 10/2/76; col. 263.]
  That must have been the understatement of the year. It would have killed Felixstowe stone dead! Fortunately, even Labour MPs of the time found the proposals too much to stomach and the five-mile provision never reached the statute book. The whole wretched cabouche was finally repealed by the Dock Work Act 1989 and since then our ports, and Felixstowe in particular, have never looked back.
  Today Felixstowe is Britain's biggest container port. In 1996 it handled 2 million containers (or to use the jargon TEUs which are equivalent to 20ft containers) so the total number of actual boxes was about 1.5 million. It is the fourth biggest port in Europe (after Rotterdam, Hamburg and Antwerp). It is the 12th biggest in the world.
  Since 1991 the Port of Felixstowe has belonged to the giant Hutchison Wampoa group of Hong Kong, the home of the biggest container port in the world. So there is first-class management, state of the art technology, plenty of overseas capital for expansion and excellent labour relations. Indeed, it is one of the great success stories of the restructuring of Britain over the past 20 years.
  So what is the problem? Why are we debating this triumph at this late hour on practically the last day of this Parliament?
  Lord Graham of Edmonton: That's right! Why?
  Lord Marlesford: Wait a moment, and I shall try to explain.
  My Lords, the answer is that a port is only a part of a nation's transport system. The problem is in the rest of that system. The simple fact is that at present of the million containers which arrive at or depart from Felixstowe each year by land the great majority, over 80 per cent., do so by road. The basic link to Felixstowe is the recently completed A.14 which provides links to the M.1 and the M.6 and, through the A.12, to the M.25. However, already the A.14 is becoming hopelessly congested with Felixstowe's container traffic.
  I have been involved with transport policy since 1963 when as a very junior fonctionnaire for the Conservative Party I carried the bag for Ernest Marples, who was probably the most innovative and certainly the most entrepreneurial Minister of Transport that this country has ever had. It was what I learned from him that put me on the track that led to my having the very great privilege of being a Member of your Lordships' House. Since then all governments have expressed a desire to move freight from road to rail. Usually this is no more than a pious hope. Yet in 1997 the rail link between Felixstowe and the outside world is still a single track with (literally) a 19th century physical token system to allow trains to use that line. There are two junctions on it: Trimley and Westerfield Junction. I have travelled on the Lowestoft line that goes through Westerfield all my life. An outsider viewing them would believe that he was on the stage set of an early Western movie.
  How can it be that our greatest container port is so constrained and handicapped? One answer is that until very recently our railways were a nationalised industry with all that that meant. First, there was never sufficient capital for investment. All of it had to come from the Treasury and therefore it had to compete with other social priorities. Secondly, and partly consequently, there was a remarkably low standard of management. I speak from experience, since from 1988 to 1992 I was on the board of British Rail Anglia. Frankly, it was one of the most frustrating and unsatisfactory experiences of my life. In the four years that I was associated with BR I met only one senior executive who I would myself have unhesitatingly employed. That was Mr. Peter Trewin, the secretary of the British Rail main board.
  Another answer is that the Department of Transport failed in its duty to recognise and deal with the problem of the rail link. When at a meeting last year with the Secretary of State I asked a group of his senior officials why they had allowed this situation to develop. They shuffled their feet and eventually one replied, "We had not realised that Felixstowe would be such a success". Need I say more?
  Now, of course, our railways are privatised, although not perhaps in the way that I would have wished. I would have preferred to keep track and services
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  together. The divided responsibility between the two is, I believe, one of the causes of the problems at Felixstowe, but at least it now has access to the world's capital markets. However, I have felt it necessary to press for this debate because I have been much concerned by the suggestion of the Government that somehow now the railways are privatised they have no responsibility. There are two reasons why this is simply not true. First, the Government are responsible for seeing that we have a first class transport system, and by that I mean one that is both economically efficient and environmentally sustainable. The Government still have to make decisions on, for example, road building and truck licensing, which have a most direct impact on our transport system and the road/rail equation. The Government state their wish in the Green Paper, to which my Question specifically refers, for a shift of freight from road to rail. Secondly, the Government have a regulatory role. As a Tory I believe passionately that a crucial role of the state is to protect employees, consumers, investors and the environment from abuse or exploitation. I believe that it can do so much more effectively when it does not also own what it has to regulate; otherwise, legitimate regulation becomes convenient tinkering. We all remember the endless interference with purchasing, pricing, investment, employment and the other activities of the nationalised industries—interference which made it so hard for such industries to attract and keep good management.
  At this point I highlight the threat to the rail freight industry which would result from an increase in lorry weights to 44 tonnes. This would certainly cause a shift from rail to road which is not only contrary to the Government's aspirations but would be environmentally damaging. There is no requirement under European legislation to do so. There is no way that such giant vehicles could be kept off small roads, and the quality of life, especially of those whose communities are already bisected by trunk roads, would be made even more intolerable than it already is. The Government slashed nearly 100 motorway and trunk road projects from their road programme on 26th November last year. It is therefore most unlikely that any government over the next decade would be able to afford to build roads to cope with these monsters. Nor do I believe they should do so. How much more cost effective and environmentally sustainable to encourage, indeed require, the railways to provide adequate freight facilities.
  Finally, I must of course say that I welcome the limited investment programme of £6 million announced last month by Railtrack for upgrading the Felixstowe line. It is of course too little (the Port of Felixstowe has just completed a £45 million Trinity III terminal which will provide for forecast container growth at least until 2001 and Trinity IV (for which Parliament has given authority) is already at an advanced stage of operational evaluation, and it is too late. Only some 5 per cent. of Felixstowe's container traffic is local, some 60 per cent. is to the Midlands and Scotland and 30 per cent. to the south east and Greater London.

  1025
  The Felixstowe/Ipswich passenger services, which are little shunter trains, are given priority over the freight trains. There is a lack of understanding that with a modern, large-scale container operation it is crucial that container trains have priority to minimise the length of time needed for loading and unloading at the ports. That is an important point.
  Ipswich itself is still a bottleneck. Only some 20 trains per day can enter and leave Felixstowe, most of which have to be routed through the North London Line to get onto the West Coast Main Line. Felixstowe knows from its client studies that by the year 2005 there will be a need for at least 500,000 containers to move by rail. That is nearly three times the 1996 total of 176,000. The situation is archaic.
  Finally, I remember the first time I went to the Port of London. It was in 1964. I watched with amazement the dockers loading a ship's cargo hold with cardboard boxes containing 24 tins of Heinz baked beans, and wedging them with motor car tyres. Shipping and port operations have moved a long way since then. So it is crucial that we have a proper rail freight system for Britain.
  My only regret is that I have to temper my tribute to 18 years of Conservative Government for creating the right economic conditions for the success of the Port of Felixstowe with a warning of the gravity of the matter I have raised. I trust my noble friend will accept both the tribute and the warning.
  9.38 p.m.
  Lord Gladwyn: My Lords, I thank the noble Lord, Lord Marlesford, for initiating the debate. In making what I take to be the last of the maiden speeches of this Parliament at this very late hour, I now perceive the truth of the heraldic motto of my noble kinsman the noble Lord, Lord Thomas of Swynnerton, which is, "Late but in time".
  In extending my thanks to all those Members and officials who have treated me with the courtesy for which your Lordships' House is so universally renowned, I pay tribute also to the memory of my father who so regularly attended this Chamber for 35 years—a span which would not in itself be remarkable were it not that he began it only after his retirement from the Foreign Service at the age of 60.
  My peripheral qualifications for speaking in this debate are that for many years I worked in air transport—at one time specifically in the development of air freight—and I have also written extensively about the English countryside, including the County of Suffolk where I live.
  As a historian of Suffolk, I am struck by the similarity of the issues today with the situation 500 years ago. At that time, trade with the continent was also thriving and Ipswich was second only to London as the major English port. And the great industry of Suffolk was the manufacture of woollen clothing, organised by wool brokers known as clothiers, who had broken free from the restrictive practices of the town craft guilds and had set up a sort of cottage industry in which the processing of the wool in separate stages involved constant carriage
  1026
  by pack horse. What we are faced with today is a realignment of trade with Europe, and a diversification of manufacture and distribution away from the old factories and the wharfs, in which Suffolk has come into its own again, having fallen, like the Sleeping Beauty, into a deep slumber in between.
  One of the many unusual features of the Felixstowe container port is that it is so far from our major national conurbations; Ipswich, its home town, is comparatively irrelevant to its trade. So it relies all the more on the quality of the transport infrastructure which links it to the industrial areas of the Midlands and the north. The A.14 serves its purpose, even though it is not a motorway. But the rail link is woefully inadequate. It is good news that Railtrack is about to improve the line from the port to Ipswich. But use of the line that leads on from Ipswich to the Midlands via Peterborough involves an awkward switch of direction at Ipswich, and the whole route anyway needs signalling upgrading. As the noble Lord said, of the 20 trains each working day which now enter or leave the Port of Felixstowe only four go by this route, and the rest have to deviate via the North London Line, which is itself severely constricted. The operators of the port have made it clear that the modest percentage of containers carried by rail could be almost doubled within five years if the rail system were improved, which might be done in the context of a trans-European route across to the Irish Sea ports. Meanwhile, an alarming flow of lorries drives in and out of Felixstowe, like ants scurrying on complex travel patterns. Most of them convey container loads, others are trailers, but together I calculate that on working days there are nearly two of them rushing across the Orwell Bridge in each direction each minute of the day and night, and rising.
  Turning to the second part of the subject of this debate, asking the Government to respond to the growth of container traffic on Britain's trunk roads, the broader questions of transport policy are raised. Everyone agrees that in the carriage of long-distance freight, the trunk roads are used too much, and the railways too little. The decline in the rail share has been dramatic. The Government believe that the newly privatised rail industry will of itself be able at least to reverse this trend, assisted by special grants. But it is hard to see how any significant shift can be achieved within the present rules of the game, other than by ever more severe congestion on the trunk roads, with traffic chronically seized up over long stretches. But no one wishes to see such a catastrophic solution, and so one suspects that a future government may be impelled to introduce further inducements towards the use of rail for containers, such as stiffer vehicle taxes, or journey taxes, or motorway charges, as well as assistance in much improved intermodal transfer facilities.
  In conclusion, I feel it is appropriate that I should refer to my distinguished ancestors, the engineers Brunel. Marc Isambard Brunel, my great great grandfather, constructed the original Thames Tunnel, the specific purpose of which was to relieve the traffic congestion around the then busy port of London. I suppose that one could call it the Felixstowe of its day. As it so happens, next week I shall be attending a

  1027
  dinner inside that famous tunnel to celebrate its concrete relining by Taylor Woodrow on behalf of London Transport, which I am happy to say reflects sensitively the original architecture.
  His son, Isambard Kingdom Brunel, built the Great Western Railway in order to provide rapid and efficient transport between the metropolis and the Port of Bristol. I regret to say that Brunel was altogether unconcerned about the pollution caused by the filthy emissions of soot which gushed from his steam engines or, indeed, by the fumes of his ostentatious cigar. But I think that he can qualify as an environmentalist due to his experimental "atmospheric railway" in Devon by which the trains were hauled by a fixed line vacuum, anticipating in some ways the as yet undiscovered power of electric currents. Indeed, unforeseen inventions have often proved to be the answer to seemingly intractable problems.
  It is a sobering thought but as a mode of transport, the magnificent roads of the 20th century are in danger of choking to death and we should turn once again for help to that great backbone of the 19th century—the railway.
  9.46 p.m.
  Lord Astor of Hever: My Lords, on behalf of the whole House, I congratulate the noble Lord, Lord Gladwyn, on an excellent maiden speech. I also have very happy memories of his very distinguished father, and if ever there was an example of someone making an immensely worthwhile contribution in his ninth decade, he was one.
  While making inquiries about his son, the present noble Lord, everyone I spoke to gave me the same answer: such a nice man. I feel that that is a great compliment. He is an environmental author of great distinction and clearly is a great lover of the countryside and particularly Suffolk, where he lives. I enjoyed the noble Lord's speech enormously and look forward to his regular contributions in your Lordships' House.
  At this late hour, I fear that I should follow the advice of President Teddy Roosevelt, to his son, on speech making: be sincere; be brief; be seated.
  I congratulate my noble friend Lord Marlesford on giving us an opportunity to discuss this important subject. I enjoyed his speech and agreed with most of what he said. However, I cannot agree that the Government feel that they have no responsibility for ensuring that the railways provide adequate freight links with Felixstowe or, indeed, elsewhere. Certainly the Government should be congratulated on putting in place the framework for a successful privatised railway and particularly in the context of this debate, a successful rail freight business.
  Talking to Railfreight, Freightliner and English, Welsh and Scottish Railway, I have been struck by their enthusiasm and commitment to invest in the future. Their "can do" attitude is a breath of fresh air after the frustrations associated with British Rail and its inflexible bureaucracy.
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  Railtrack has been in existence for less than a year but already there have been enormous improvements to the rail infrastructure. From my discussions with Railtrack, I believe that it is committed to getting freight on to rail. The Government are continuing to encourage that switch through grants and have increased the lorry mileage rate from 5p to 20p per lorry mile avoided on motorways in order to attract further freight on to the railways. In total, the Government have awarded 160 rail freight grants since 1979, securing the transfer of traffic to rail of more than 300 lorry journeys per year. In 1994, about 12 per cent. of all freight moved by rail in the United Kingdom had, at some time, received assistance from the Government freight grant.
  The sale of BR's rail freight business is a major boost to that process since those businesses will be able to develop new ways of encouraging freight to use rail. The decision by EWS Railway to buy 250 new locomotives at £1 million each over the next 10 years demonstrates its belief in the future of rail freight. The company plans to treble its rail freight business in the next 10 years. It has plans in place, using the port of Felixstowe, to develop the onward movement by train of huge amounts of timber from Scandinavia and Russia; at present, that is done by lorries only. It also has plans to move heavy fuel oil and car components by rail.
  The announcement by Railtrack that it is to invest in upgrading the Ipswich to Felixstowe branch is welcomed by the Port of Felixstowe, the largest freight generator in the country, and the local community, particularly bearing in mind speed restrictions on the A.14 as a result of road works to correct wear and tear due to heavy use. The port has been a long-term proponent of increasing the percentage of cargo moving to and from Felixstowe by rail. In tandem with the train operator, Freightliner, it plans to increase rail volumes by 50 per cent. over the next five years, as my noble friend Lord Marlesford, said. It is believed that that could rise to over half a million units annually during the next decade. However, that will only be achieved if the rail option can match the road alternative in terms of speed, price and efficiency.
  Rail's competitiveness overroad inherently improves with distance and the trains from Felixstowe serve the longer-distance locations, such as the north west, the north east and Scotland. While door-stop improvements by Railtrack are beneficial, it is vital that the rail infrastructure across the network can cope with increasing demand and match road's speed and flexibility. Currently, 80 per cent. of Felixstowe's trains are routed via London to gain access to the West Coast main line and inland depots in the north west, the Midlands and Scotland. That means using the North London line to traverse the capital. I am told that that route is already congested and likely to become more so as Eurostar Channel Tunnel business grows.
  I am delighted to hear from Railtrack that, in the short term, it has plans to eliminate potential bottlenecks on that route to allow the freight business to grow. It is also seriously considering a more direct route from Felixstowe to the Midlands and the north. Although at the feasibility stage only, the head of freight at Railtrack has confirmed to me the importance that is attached to

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  this, especially given the expectations of growth in rail freight. That might entail routing Felixstowe's rail business across country to join the West Coast main line, via Peterborough and Nuneaton. This would not only free up capacity on the North London line, but speed up transit times, given the shorter distances involved, to the new freight terminals being built in the Midlands.
  I understand that Jaguar is looking seriously at Felixstowe for US component imports for the new X200 to be built at Castle Bromwich. It is considering the feasibility of rail linking Felixstowe with Castle Bromwich, to move freight from point of entry by train; volumes would be high—up to 230 containers each week. Grants would be available in principle towards the capital cost of freight facilities and the Government might also assist through the track access grant which, from Felixstowe to the Midlands, would be worth about £28 per container. Even allowing for those grants, the cost will be high and I know that the Government will give Jaguar every encouragement. The alternative is movement by road—an environmental and congestion disaster.
  Interestingly, in the light of what my noble friend Lord Marlesford said about the dock labour scheme, Ford imports components from the USA to Felixstowe and then takes them by train to Halewood. Halewood is near Liverpool. But for the dock labour scheme, these imports might well have been going through Liverpool docks with its excellent rail links. But, sadly, its appalling reputation for labour relations still scares off most businesses.
  Rail's share of the freight market has been in decline since the 1920s. Privatisation has laid the foundation for the future success of the freight market. I am confident the new private sector owners have the incentives and freedom to find out what services customers want, and to provide them at prices which can tempt business away from road haulage.
  9.55 p.m.
  Lord Bridges: My Lords, I should like to begin by picking up a point made in the excellent maiden speech of my noble friend Lord Gladwyn when he referred to the origins of the foreign trade in Ipswich and the surrounding country in the Middle Ages in wool. The underlying factor which makes this subject so difficult is that we have seen in our lifetimes a complete change in the direction of the foreign trade of this country. When I was at school all our exports—or the large majority of them—went from the west coast ports of Liverpool, Glasgow and Bristol, across the oceans of the world to the world markets which took such a large percentage of our production.
  Now, as a result of our membership of the European Community, 60 per cent. of our trade goes to Europe, and much of that goes from east coast ports. Although we have built the A.14 to carry road traffic from the Midlands to our number one container port, we have not made the necessary investment in upgrading the rail connection. I do not think it is the fault of Her Majesty's present Government that this should have happened.
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  However, it was a failure on the part of the country to see that we needed to match the switch in our foreign trade with all the transport facilities which were required to back it. That, I think, is the origin of the difficulty we are facing today.
  Since this matter was last discussed in the House we have read the important announcement by Railtrack of its decision to make a significant investment in the single track railway between Felixstowe and Ipswich by installing modern signalling and by extending an existing passing loop. Together these will undoubtedly increase the capacity of the line and enable it to carry a higher percentage of the containers passing through the port of Felixstowe. It is welcome news. But I am grateful to the noble Lord, Lord Marlesford, for his persistence in asking this Question because the announcement leaves some important questions unanswered. Like him, I, too, am grateful to the noble Viscount for his presence here this evening, given his responsibility for these matters in the Department of Transport.
  The first question is whether the increase in capacity will enable the railway to carry all the traffic on offer in transit to and from the port. We know that the number of containers in transit at Felixstowe is expected to rise considerably over the next few years, and that a growing number of shippers have indicated their preference for carriage to and from the port by rail. The question is whether the rail link as extended—it will be in the next two years—will have the necessary capacity to carry this increase in the number of containers on offer. I believe that the port of Felixstowe has already circulated estimates of the number of containers that it expects will arise. Clearly the railway will be able to carry more, but the question is, will it be able to carry all the containers which the shippers wish to send, and for how long?
  The subsequent question is, can the rail operators transport the containers to the desired destination beyond Ipswich? The investment announced by Railtrack will facilitate the movement along perhaps the first 20 miles of the railway as far as Ipswich goods yard. However, as has been pointed out, at present most of these inward bound containers are destined for the Midlands and the North and they are dispatched from Ipswich to Stratford, and thence on the North London line, before moving onto the northbound trunk routes from the main London termini. As has been pointed out—I have heard the same—the North London line is nearing its capacity. Are there any plans for upgrading the capacity of alternative routes before this difficulty is reached on the North London line?
  One plan to deal with that difficulty has been identified by the European Community in its proposal to improve selected European key rail routes through the scheme known as Trans European Rail Networks (TENs). The TENs include a proposal for a through freight route from Felixstowe to ports on the Irish Sea—Holyhead and Stranraer. Last year as a representative of your Lordships' Select Committee on the EC I attended a meeting of the Transport Committee of the European Parliament in Brussels where the matter was discussed. It was obvious that there was widespread support in the Parliament and its Transport Committee for the TENs

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  and I believe that the proposal has now been adopted by the European Community. It would provide financial support for the railways covered from Community funds provided that matching funding is contributed by member states. Our own Government have said that the available funds are already fully committed to building the Channel Tunnel link and improving the West Coast Main Line. Perhaps the noble Viscount could tell us how the matter stands after the creation of Railtrack and the transfer of many departmental responsibilities to it.
  This raises the broad question which puzzles me. Who is now responsible for policy decisions in this area? From what the Minister has told us in the past, it appears that Railtrack will have the prime responsibility—perhaps the sole responsibility—in deciding how to invest the resources now available to it. But I would hope that there is some mechanism between Railtrack and the department to address policy decisions of that kind. I should be reluctant to believe that the Government have simply transferred the whole responsibility to Railtrack since they will doubtless wish to ensure that the policy statements which the Government have made—they have been referred to in the text of the Question—about transferring freight movement from road to rail are rendered possible by appropriate and timely investment.
  It is a matter on which we shall await the Minister's response with much interest and some apprehension.
  10.2 p.m.
  Lord Cochrane of Cults: My Lords, I am deeply grateful to my noble friend for raising this interesting point and for giving a most authoritative survey of the problem in Felixstowe and further afield based on personal experience over many years. There is little more that needs to be said on that front. I must also congratulate the noble Lord, Lord Gladwyn, on his speech. Due to the lateness of the hour, I shall confine my remarks to one word: "illuminating", and well spoken.
  It used to be said that East Anglia was surrounded on three sides by the North Sea and cut off from the rest of England by the Great Eastern Railway. Noble Lords may recall that that was built by that famous crook, George Hudson, who invented the branch line trick for swindling shareholders. He subsequently went to prison and, I understand, committed suicide. There is nothing new in that. It was perpetrated 20 years ago in Fife by the Royal Victoria Sausage Company—but that is by the way.
  As we have heard, Felixstowe is the largest container port in the UK because, as my noble friend said, it is not a scheme port. Its rail infrastructure is purely that which was originally intended in George Hudson's day to provide for holiday traffic. The branch is single track. The distance has been mentioned, but I thought it might be useful to attempt to describe its length. Thirteen miles, or thereabouts, is a difficult distance to visualise even if one walks it. If one sets out from King's Cross on a stopping train, one has travelled about 13 miles when one reaches Potters Bar. I am unable to illustrate
  1032
  what happens in Potters Bar; the Library was defeated. However, I understand that there was a battle nearby in 1472.
  If one imagines 13 miles of single track, with a single passing loop which is not long enough to take a full size freightliner train, one can imagine the difficulties. Couple that with archaic signalling. The token system, with respect to my noble friend, is extremely safe but it is not quick. One can understand the difficulties which face the importers and exporters of goods who wish to use the rail link to Felixstowe. It is high time that it was modernised, and modernised thoroughly. The noble Lord, Lord Bridges, asked whether the single track plus modernised signalling will be sufficient. My guess is that it probably will not be, but that may well give rise to considerable difficulties in the shorter and medium term over land acquisition. However, that must be faced.
  The point that really needs to be explored is: how on earth did we get into this mess? I suppose one has to blame that well-known whipping boy, which I have assailed in this House before your Lordships from time to time—the Treasury—for mismanagement inflicted on British Rail over a period of some 48 years since it was nationalised until mercifully, by privatisation we released it from such bondage. The Treasury did not see the need to take opportunities. It is perhaps worth recalling that when the late Lord Wilson of Rievaulx was at the Board of Trade it was considered that the entire container traffic in Great Britain could be handled by four container cranes. Perhaps someone will tell me at some point how many there are at Felixstowe: I should think it is a great many more than that.
  That shows the essential failure of imagination when need is not driven by the opportunity of profit. I use that word deliberately. "Gain" is inadequate in that context. Railtrack will, I believe, seek to maximise its profits, though it must have a remit which balances that essential driving force—tempers it perhaps—with social responsibilities which have long been recognised as part of the transport system in this country, and a very necessary part too.
  I am very glad that Railtrack, Freightliner and the Felixstowe Dock and Railway Company are now co-operating to improve matters. It is perhaps a pity that it has taken about 24 months. That is slower than one would otherwise have wished. Certainly problems on the North London Railway are extremely severe and it, in turn, may need to be made into four-track—a very considerable operation—if it is to carry the Eurostar routes; otherwise there is nothing for it but to modernise the cross-country routes towards Peterborough and avoid that notorious bottleneck.
  The noble Lord, Lord Gladwyn, interested me greatly by referring to the Brunels, father and son, who were the most famous and ingenious of engineers. Perhaps it may interest him to know that my grandmother, who was born in 1850, described to me in graphic detail how Brunel's atmospheric railway did not work terribly well because the rats ate all the sealing leather and so it leaked and, no matter how much they huffed and puffed, it did not actually go. Curiously, the only one that ever worked properly was in Ireland, but I do not know why that was.

  1033
  We have passed on from the awful situation of stagnation—"the time is not right" and all that kind of thing—with which the Treasury for 48 years maladministered our railways. I always thought that the one conversation stopper for the Minister of Transport, when he complained about the inefficiency of the railways, was to say, "Well, who has been running them for the last so many years?"—to which there is no convincing answer which does not leave one standing perhaps a little on one leg. I am sure that things are now set up so that they can get better. They need to get better, and 1 look forward to seeing things get better.
  10.9 p.m.
  Viscount Bridgeman: My Lords, I crave your Lordships' indulgence for this very short intervention. I worked in the shipping industry in the 1960s and had first-hand experience of the Dock Labour Scheme ports of London, Liverpool and elsewhere. Even in those days the port of Felixstowe stood out as a beacon of efficient working practices and flexible labour relations.
  This problem of success is not new, as it would appear that the British Rail staff told my noble friend Lord Marlesford. Over the past 30 years the problem has been ducked by successive governments, I fear. I very much hope that this Government in the next Parliament will take a very close interest, especially in the post-privatisation era so eloquently referred to by the noble Lord, Lord Bridges.
  May I now just turn to the maiden speech of the noble Lord, Lord Gladwyn. It was informative, lucid and, if I may say so, polished. He has brought his knowledge of transportation together with a deep affection and knowledge of East Anglia, and Suffolk in particular. I hope that we shall hear many more of his contributions in your Lordships' House.
  10.10 p.m.
  Lord Carmichael of Kelvingrove: My Lords, I am now in a quandary. I was told that there was very little time for this debate but fortunately many noble Lords spoke well within the time that was allowed. Noble Lords will notice that my name is not on the list of speakers. That was entirely an internal mistake. These things will happen.
  The Minister and other noble Lords will remember that on 4th February a Question was asked on this very subject. As has been said, the main problem at Felixstowe is that the route is bad. Railtrack wants passenger trains on it rather than goods trains—whether they pay better, I do not know. I was given advice and made a modest suggestion that at least for a period it would alleviate congestion to put in loops and a new signalling system. That would have allowed for higher use of the line. That suggestion was pooh-poohed by Railtrack. However, at the time, it did not put up any better scheme. Things were just allowed to drag on.
  I become concerned about people who make too many criticisms of the old system. Of course the old system was bad and there were a lot of faults. But I should not dare to suggest that I know more about the Dock Labour Scheme than the noble Viscount, Lord
  1034
  Bridgeman, who knows all about it. But I knew the Glasgow Docks and the conditions there were appalling. Men had to fight to get a card for a ship which would give them the chance to earn two or three days' wages a week. Such bitterness cannot be wiped out overnight. People are suspicious. I know that the noble Viscount has experienced such problems himself and knows all about the things of which I am speaking. Perhaps he would like to come in at this point. I was thinking of the Govan Docks and the Anderson, the Prince's and the Queen's Dock. The corruption among the stevedores was also extremely high. But we are talking as though things were going so much better because of privatisation. Certainly, I shall not say that everything on the railways was good before that; indeed, a great many things were not.
  But the Government's record of getting more freight onto rail is quite shameful. Rail accounts for only 6 per cent of freight traffic in the United Kingdom. That is down from 11 per cent. less than 20 years ago. All the people to whom I have spoken who are involved in trying to get better conditions for running the railways—the rail companies themselves, such as the English, Welsh and Scottish Railway—say that Railtrack charges notoriously high track access charges for freight and do nothing to encourage more freight to go by rail. Railtrack charges 30 per cent. of English, Welsh and Scottish's revenues in track access charges. I understand that that is twice as much as many of the American companies are paying for access to their railtrack. Therefore, one cannot just say that it is the operators who are having difficulties. In some cases, track access charges are up to 60 per cent. of the revenues of some of the companies who are running the freight. Those are figures that I have been given. English, Welsh and Scottish pays Railtrack £120 million a year in track access charges.
  The National Audit Office report on the Freight Facilities Grant showed that the Department of Transport had only given £32 million of the budgeted £70 million of grant between April 1985 and March 1996. Last year freight operators were allotted only £4 million out of a total £14 million budget for that grant. Private freight operators have slammed Railtrack's excessive track access charges and the bureaucratic hurdles which stand in the way of getting more freight on to the railways.
  The chairman of English, Welsh and Scottish—Mr. Ed Burkhardt—which transports more than 80 per cent. of UK freight, complained of,
  "delays and excessive pricing levels",
  for allowing freight trains access to railway lines. He said,
  "We have lost customers since we bought the freight business here. The major thing that has stood in the way has been Railtrack being very slow to give a quote and then wanting to charge a new high".
  David Mann is the property manager of Powergen, which tried to build freight terminals but was almost prevented by Railtrack's "intransigent" treatment, demanding large sums just to bridge a line. As a good and responsible industrialist, he considered the delays

  1035
  and the type of treatment they received to be quite ridiculous. Mr. Mann said that such treatment from Railtrack would,
  "stop future rail terminals being constructed [and make] it more and more difficult [for projects to get under way]. People will revert to road".
  We have had many problems on the railways, but we shall have many more on the roads with the up to 44-tonne vehicles that are planned. They will cause chaos on the roads. Nevertheless, this has been an interesting debate, not least because of the informative speech of the noble Lord, Lord Gladwyn. The speech was not only well constructed, it was also extremely elegant—of which I am most envious. I was also impressed by the great knowledge that people had of the transport industry.
  It must be remembered that we are still paying big subsidies to Railtrack. Some of the suggestions being put forward for new improvements were always tied up with the amount of subsidy to be given for the new improvements. We were always told that when an entity went into the private sector, that is when the money would flow. It would go into the market and be able to do all kinds of fancy things. We learnt a great deal from the difficulties experienced with the big nationalised industries. It is not just a matter of saying what the privatised industries can do. We must stop looking at the bottom line and seriously take into consideration the environment. The environment has only one chance of improvement. An example of the chaos is when I tried to drive through London the other day. There was an accident at Westminster and a burst water main, and it took about one hour to get from Waterloo Bridge to Hammersmith Bridge and to the House of Commons, chugging along. That situation can only get worse.
  I am keen to use the railways much more. We have a unique railway network, if only we could get it into the right shape. That can only be done by a combination of private enterprise and a great deal of government help. Private enterprise is not all that keen on taking too many risks and the situation will need a combination of both public and private money. If that is done, within the next 10 or 20 years we may begin to see a railway system that is a lot better than it is at present. And perhaps we shall obtain a bit more peace on the roads as well.
  10.19 p.m.
  The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen): My Lords, I wish to thank all noble Lords who have contributed to this interesting debate at this late stage in the Parliament. I thank my noble friend Lord Marlesford for giving us the opportunity to discuss rail freight issues. My noble friend has been a persistent questioner on this important subject. Since he originally asked some of his Unstarred Questions with regard to rail freight issues and Felixstowe in particular, the situation has changed considerably.
  I wish to start my remarks by warmly welcoming the maiden speech of the noble Lord, Lord Gladwyn. I thoroughly enjoyed it. I was not aware of his descent from the great engineering family. That was one of the
  1036
  important facts I learnt this evening. I also learnt that the grandmother of my noble friend Lord Cochrane of Cults was born in 1850. That fact was not included in my brief and so I shall be chastising my officials accordingly for not including that information. I was also not aware that my noble friend Lord Marlesford had been so closely associated with British Rail Anglia. I scoured his entry in Dod and I failed to discover that. I was very interested to hear from him about that experience of his career. I understood very well the frustration he felt with the old-style British Rail, with the old-style management and with the inflexibility of the funding arrangements. I am sure that has contributed to his interest in this important subject.
  The wide-ranging nature of the debate has led to a variety of issues being raised. We have moved from just the freight issues into a number of other areas. The Question relates to two specific points: first, the position at Felixstowe, the line that takes us to Felixstowe and the capacity of that line to take additional traffic. The second point concerns a more wide-ranging analysis of the effect of government policy on the railways in terms of our ability to get more freight on to the railways. That is an aim which all parties share. I believe that the bold initiative of privatising the railways and of liberating more investment has already proved to be successful—we have seen the bold investment plans of Railtrack—and will continue to be so. We must recall that Railtrack as a private enterprise has been in existence for less than a year. Already it has contributed to addressing one of the problems mentioned by my noble friend—the line to Felixstowe.
  I certainly welcome my noble friend's recognition of the importance of the port of Felixstowe not only to the ports and shipping industry but to the economy of the United Kingdom as a whole. It has been a considerable success. Our policies for the commercial ports have reflected our policy of pursuing efficiency by encouraging choice and competition. As far as possible, we have allowed ports to operate in an unrestricted market with intervention limited to issues of safety and the environment. We have encouraged privatisation and abolished the restrictive practices of the former dock labour scheme, leading to increased productivity and investment.
  I listened with great care to the remarks of the noble Lord, Lord Carmichael of Kelvingrove, in his recollections of the port industry as it used to be, with the inefficiencies and difficulties which restrictive labour practices caused. When I travel in Europe now and talk to fellow shipping Ministers across the Community I find that the efficiencies of our industry have been recognised. The achievements of ports like Felixstowe in competing on a very efficient basis in comparison with sometimes heavily subsidised ports on the Continent are impressive indeed. I had the opportunity to visit Felixstowe and to climb to the top of one of its immensely tall cranes. It was certainly an edifying and indeed terrifying experience to be up there in a high wind. One certainly got an impression of the scale of the operation, of the number of boxes that are being moved around at the port and of the efficiency with which that is done.

  1037
  I should like to address the fundamental point that has been raised in the debate by underlining at the outset that, while the development of the railway network is in the first instance a commercial matter for Railtrack, the Government retain a clear strategic responsibility for ensuring that the rail network meets Britain's transport needs. For example, the Government continue to provide grant to OPRAF in support of socially necessary passenger services and we operate a freight grant scheme which helps to secure freight to rail, which would otherwise go by road. We have seen the new operators of what were formerly publicly-owned utilities, particularly in the transport sector, doing very well indeed, building on the efficiencies that they have managed to produce. The Government do not seek to tell them how best to invest their money; nor do we do that within the rail network. We attempt to put a partnership in place using such devices as the freight facilities grant to bridge the gap where there might not be a commercial case for a particular level of investment. We firmly believe that that is the correct approach.
  Perhaps I may go on to address the specific situation with regard to this railway line. As my noble friend Lord Cochrane of Cults said, the Felixstowe branch line currently suffers from out-dated signalling equipment which is prone to failure and is time-consuming to maintain. Moreover, the branch line is predominantly single-track with restricted passing facilities which do not allow two freight trains to pass each other. Consequently, at present Railtrack believes that there is capacity on the route for 11 container freight trains a day in each direction via the port.
  The capacity of the branch line has not so far been the principal factor determining the use of rail for freight traffic via the port. I understand that Freightliners, the rail freight company which operates services to the port, moved 176,000 containers through Felixstowe in 1996 compared with 133,000 in 1991. That equates to a growth in rail freight traffic on this branch of around one-third in just five years. I am sure that we would all be happy if such a trend could be repeated on the rest of the rail network.
  Nevertheless, I certainly acknowledge the point made by a number of noble Lords around the Chamber this evening that rail has just a 17 per cent. market share of containers moved by land via Felixstowe. Therefore, the port, freight operators and Railtrack believe that there is scope for a further increase in rail's share of Felixstowe container traffic. To move the current volumes, Freightliners currently operates nine trains a day in each direction on the branch line and is looking to operate more trains in order to move yet more traffic through the port.
  My noble friend Lord Cochrane of Cults, asked me whether I could visualise a distance of 13 miles. He wanted to put that into the context of Potters Bar. I am not able to do that, but I was going to tell him that 13 miles was about half a marathon. As a responsible Minister of the Crown standing at the Dispatch Box, I thought that I should take advice from the Table on
  1038
  that point. I am very pleased that I did because I was advised that I was incorrect and that in fact a marathon consists of 26 miles 385 yards.
  Lord Graham of Edmonton: My Lords, everybody knows that!
  Viscount Goschen: My Lords, I also understand that it was 26 miles until the London Olympics in 1908 when the 385 yards were added so that the finish could be in front of the Royal Box. That illustrates the importance of taking accurate advice; otherwise personal statements are required to correct any misleading of the House, which would be quite inappropriate.
  In Railtrack's view, the existing network could accommodate an extra two trains a day in each direction, and there is almost certainly scope, if necessary, to operate more trains at weekends. Indeed, my eye was caught by a recent article in Lloyd's List, the shipping paper, which reported that, in the first two months of 1997, rail traffic via the port has increased by 30 per cent. compared to the same period last year. This clearly shows that there is capacity in the railway network for growth, and that the port, Railtrack and Freightliners are co-operating effectively to maximise the potential of rail freight. Nonetheless, to answer the point made by the noble Lord, Lord Bridges, Freightliners would clearly have difficulty in the longer term if the port of Felixstowe's forecasts for ever-increasing numbers of containers are accurate.
  Freightliners, Railtrack, the port and the local authority have been discussing this issue for some time, and when my noble friend Lord Marlesford first asked a Starred Question with regard to this issue, discussions had been underway for some time. Towards the end of February, Railtrack decided that a commercial case existed for a programme of improvements to the Felixstowe branch line. The company announced towards the end of February that it is to upgrade the line, investing around £6 million in a modern signalling system and a track extension. I welcome the sentiments expressed by my noble friend Lord Astor of Hever in a very concise speech about the rail freight industry when he said that that investment will be of considerable importance and will produce considerable benefits for the track and for the amount of container traffic that will be able to utilise it.
  Lord Carmichael of Kelvingrove: My Lords, the Minister may not come to this, but I referred to a number of complaints from Railtrack's users about high prices, inefficiency and delays due to "improvements". I wonder whether the Minister had heard any such complaints; or have I been misinformed?
  Viscount Goschen: My Lords, it is of great importance to get the balance of the charging structure right. We want to ensure that we have a framework whereby Railtrack makes a return. Track access charges are clearly a major part of that. The independent regulator has a strong role to play in this and I firmly believe that in a privatised monopoly, such as Railtrack,

  1039
  the importance of independent regulation cannot be over-estimated, particularly with regard to the important issue of track access charges.
  The new signalling system will use the latest fibre-optic technology and will be designed greatly to improve service reliability. This work will be carried out in conjunction with an extension to a passing loop on the route which will enable freight trains to pass each other on the branch.
  Lord Marlesford: My Lords, before my noble friend, in his most helpful and encouraging speech, leaves the point, I mentioned one matter with which he has not yet dealt, although perhaps he was about to come to it. I refer to the question of the 44-tonne lorries. There is a danger that, if the Government gave permission for 44-tonne lorries, that would totally unbalance the equation between rail freight and road freight.
  Frankly, I cannot envisage that any government, whether this Government—this Government having been re-elected as obviously I hope will happen—or another government (should there be a change) will find it possible to provide the expenditure on roads that will be necessary to accommodate 44-tonne lorries. I know that the Government still have the matter under consideration, so it may well be premature and unreasonable to ask my noble friend to reveal the Government's thinking on this, but I believe that this is a serious point which is very relevant to the equation between road freight and rail freight.
  Viscount Goschen: My Lords, my noble friend was quite right to raise the issue of 44-tonne lorries, to which I will turn. There has been a consultation exercise but no decision has yet been reached. I understand the point that he makes. My noble friend will be aware that in the consultation document the various arguments for and against any such move are carefully weighed. We have no doubt that his comments are relevant to this important issue, particularly when we have an interest in getting the balance right.
  Earl Attlee: My Lords, it appears that the argument for the adoption of 44-tonne lorries is unsurmountable in environmental terms. If it is assumed that eventually 44-tonners will be adopted, is it not a good idea to maintain the differential in aid of intermodal operation so that there is always an advantage to rail freight in having an even higher gross train weight for such operations?
  Viscount Goschen: My Lords, I certainly recognise my noble friend's experience in the field of heavy transport. I believe that his words carry considerable weight in your Lordships' House. I recognise that there are environmental arguments both for and against such a move. I do not believe that it is appropriate for me to comment further on that issue.
  Perhaps I may detail the design work that will begin imminently. Railtrack expects to begin work in the spring of 1998, with the work taking about 12 months
  1040
  to complete. Having said that, Railtrack believes that there may be scope for accelerating the works if Freightliners wish, although this will be a matter for discussion between the two companies.
  On the wider question of investment in rail infrastructure, Railtrack has recently published its network management statement outlining its spending plans over the next 10 years. Railtrack plans to spend some £10 billion on the maintenance, renewal and development of the rail network between 1995 and 2001, which I understand represents a very considerable investment.
  Looking forward, Railtrack's spending on the rail network, excluding day-to-day maintenance, is expected to average some £1 billion a year over the next 10 years. This includes more than £1.5 billion on renewing and upgrading the West Coast Main Line, allowing the introduction of high speed tilting trains and £600 million on Thameslink 2000.
  The Government have consistently provided carefully targeted support for the rail freight industry through the freight grants regime. The scheme was introduced in 1974. Since then the Government have continually renewed its effectiveness and have introduced enhancements to the regime on several occasions since 1979, as my noble friend Lord Astor of Hever correctly noted. In particular, recent changes have made the scheme more accessible for intermodal freight, culminating in a track access grant to Freightliners that may be worth up to £75 million over five years.
  Since 1979 over 150 grants have helped to secure the movement of freight by rail which would otherwise have moved by road. It is estimated that freight carried using facilities funded by grants amounts to about 12 per cent. by volume of all rail freight in Britain. All told, we believe that the freight grants scheme is responsible for removing about three million lorry movements from our roads every year.
  It is important to provide the necessary conditions to allow the rail freight business to flourish. However, in the case of Felixstowe rail links, it is particularly pleasing to see that Railtrack is taking appropriate steps to improve the infrastructure.
  A particular point was raised in relation to EWS and Railtrack. I understand that they are talking about negotiating a new track access charging deal which may attract freight to rail. However, any new deal would have to be approved by the rail regulator, as I said in response to a question from the noble Lord, Lord Carmichael of Kelvingrove. So I cannot comment in definitive detail in advance about such an arrangement, save to say that any such arrangement would have to be agreed by the independent regulator.
  During the course of this Parliament we have had the most vigorous political debate on the issue of rail privatisation. The noble Lord, Lord Carmichael of Kelvingrove, and his noble friend Lord Clinton-Davis and I have clashed swords on a number of occasions since the introduction of the Railways Bill in 1993. Those debates engendered considerable heat, but I believe that we have seen considerable progress. That

  1041
  bold policy which represents the biggest structural change in the railways for decades has already been shown to work, and will prove to be the saviour of that vital transport mode. I leave the last word to the editorial in The Times of 12th February last, which was headed, "The Right Track". It was subtitled simply:
  1042
  "Privatisation has made the trains run on time".

  Imperial College Bill
  Brought from the Commons, read a first time, and referred to the Examiners.
  House adjourned at nineteen minutes before eleven o'clock.