Lords Sitting of 6 April 1998

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

Appointments to NHS Boards
Earl Howeasked Her Majesty's Government:
What account was taken by Ministers, when making recent appointments to NHS trust boards, of candidates' declared party political affiliations.
The Minister of State, Department of Health (Baroness Jay of Paddington): My Lords, the Commissioner for Public Appointments, who naturally the Government support, makes clear that merit and not political affiliation should be the basis for public appointments. This Government have been determined from the outset that NHS boards should be more representative of the communities that they serve. To this end last summer we expanded the group from which candidates are drawn and changed selection criteria. That approach was specifically endorsed by the Commissioner for Public Appointments. In the recent round there was a large number of successful candidates who declared support for the Labour Party, as I am sure the noble Earl will point out. There was a substantial increase in the number of women appointed. The number from ethnic minorities has almost doubled. We are confident that these boards will be successful in developing the new NHS based on traditional public service values.
Earl Howe: My Lords, I am grateful to the Minister for that reply. In the light of what she has said, is it not remarkable that of the 264 recent appointees to NHS trusts who declared that they have been politically active, no fewer than 206, or 78 per cent., are Labour and that of the 142 local councillors appointed no less than 82 per cent. are Labour compared to 4 per cent. Conservative? How do the Government explain that imbalance and how do they justify it?
Baroness Jay of Paddington: My Lords, it perhaps reflects more on the appointments made by the previous administration than on anything that is being done now. I also point out to the House that the number of people who declared political activity was 30 per cent. of the total appointed. So even with the rather extravagant numbers, as the noble Earl described them, of previous appointments, that was simply a redress of the balance. Very many of those appointed to NHS trusts were either already appointed or declared no political affiliation.
Lord Hunt of Kings Heath: My Lords, does my noble friend recollect the approach of the party opposite to the appointment of first-wave trust boards in 1991? The boards were packed with Conservative members,
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supporters and sympathisers and independents who nonetheless responded to the call of the Conservative Party. Does she recollect that?
Baroness Jay of Paddington: My Lords, indeed I do. My right honourable friend the Secretary of State said, when introducing the new arrangements for expanding the pool from which members of NHS boards should be drawn, that he had no intention of replacing Tory "deadheads" with Labour "deadheads". That is why all the new appointments are made on the basis of merit. Perhaps I may also point out that we have distinguished members of the Conservative administration, including, notably, the noble Lord, Lord Newton, as a new chairman of an NHS trust.
Lord Elton: My Lords, can the Minister tell us how many appointments to trusts which were due to be made by November last year are still vacant and why that is so in view of the wealth of non-deadhead Labour candidates?
Baroness Jay of Paddington: My Lords, of the 2,500 appointments, approximately 140 are still vacant. But some of those vacancies are owing to personal reasons. People were appointed and then decided that either for business or personal considerations they could not take up the positions. The regional offices have been asked to address in particular the question of ethnic minorities. We are delighted that trust boards draw 9 per cent. of their membership from the ethnic minorities. But there are some places where no ethnic minority candidate was put forward. We have asked the regional bodies to look at the matter again.
Lord Taylor of Blackburn: My Lords, does this not reflect the representation on boards both at local and national government level of those who have been elected in other directions?
Baroness Jay of Paddington: My Lords, that is precisely what it reflects. It is also the case that in trying to extend the pool from which candidates were drawn, my right honourable friend the Secretary of State asked all Members of Parliament of all parties to recommend local people. Local authorities were also asked. Given the political breakdown of the country, it is not surprising that the majority came from Labour backgrounds.
Baroness Cumberlege: My Lords, does the Minister share my view of real disappointment at the growing number of people on waiting lists? Does she agree that the waiting times set and met by the last government have been broken by this Government? Does the Minister also share my view that the necessary grip on these and other issues depends on strong leadership from chairmen and non-executive directors? Does she agree that the inability and incompetence of this Government to make appointments have caused a huge vacuum and unnecessary misery and suffering to those waiting for hospital treatment?
Baroness Jay of Paddington: My Lords, I am extremely pleased to answer the question of the noble Baroness, which is very wide of the original Question on the Order Paper. Clearly, she has not read last week's announcement in which there was a measure to improve the waiting list situation. The commitment to all those who had breached the 18 months' guarantee set by the previous administration has been achieved. The previous government's Patient's Charter required that people should not wait in excess of 18 months. They have now been taken off that waiting list as a result of action by this Government. As regards people giving leadership, if she believes that the 70 per cent. of those on boards who came from business backgrounds is the reason why we inherited a situation where a record number of health authorities and trusts were in debt, then the noble Baroness's view of success is different from mine.
Lord Monkswell: My Lords, is my noble friend aware that one of the matters that greatly concerned the nation about the appointments system of the previous administration was that very many members of trust boards came from outside the area of the particular trust board and had virtually no connection with it? Can my noble friend tell the House what steps have been taken to remedy that situation?
Baroness Jay of Paddington: My Lords, that was a matter that we specifically sought to improve in the recruitment process last summer. It is now a requirement that members of NHS trust boards should live in the area that they serve. That has been achieved, with only a minor number of exceptions in metropolitan areas, where members of trust boards occasionally live just across a borough frontier.
Lord Stoddart of Swindon: My Lords, when my noble friend is making such appointments—and, indeed, in respect of appointments which she has already made—will she remind boards of the desirability of phasing out mixed-sex wards in our hospitals? I thank her for all that she has done since her appointment to phase out mixed-sex wards which, I can assure her, cause great distress, especially among women patients.
Baroness Jay of Paddington: My Lords, I am grateful to my noble friend. I acknowledge the extremely important part that he has played in trying to achieve that change in hospitals. My noble friend is right that mixed-sex wards have caused concern and distress. I hope that he will be pleased to hear that, apart from making improvements in the number of hospitals achieving single-sex wards in the past few months, we are now producing a management analysis of the way in which boards can be kept up to the mark in that respect in the next few years. We shall of course ensure that new trust boards use that management initiative.

Science and Technology: Ministerial Responsibility
2.44 p.m.
Lord Peyton of Yeovilasked Her Majesty's Government:
Whether they will now restore responsibility for science and technology to the Cabinet Office rather than leaving it in the Department of Trade and Industry.
Lord Haskel: My Lords, the Government have no plans to move responsibility for science and technology from its present location within the Department of Trade and Industry where we consider that it successfully fulfils a distinct and most valuable function.
Lord Peyton of Yeovil: My Lords, I cannot even pretend to be grateful for that Answer. Can the noble Lord find any argument against this proposition: if science and technology are to have any influence at all on our affairs, it would be better if that office were placed as near as possible to the centre of government where it can exercise some influence over, and establish helpful relations with, all departments instead of being buried in one single department, the mausoleum of the Department of Trade and Industry?
Lord Haskel: My Lords, the Office of Science and Technology is certainly not buried in a mausoleum. It is working relationships that matter, not physical location. The Office of Science and Technology remains the focal point across government—that is, for transdepartmental business—supporting the Chief Scientific Adviser and the President of the Board of Trade in her role as the Cabinet Minister responsible for science and technology. The Office of Science and Technology discharges its responsibility by taking a central, independent position among all departments, including the DTI.
Lord Jenkin of Roding: My Lords, while accepting that that may well be the objective, is the noble Lord aware of the criticism that because the OST is located within the Department of Trade and Industry, it comes under some pressure to fill its vacancies from among members of that department rather than being free to draw on the best talent across Whitehall?
Lord Haskel: My Lords, we are aware of that observation, but I can assure the noble Lord that what he has said is not true. The best people for the job are selected, irrespective of department.
Lord Sainsbury of Turville: My Lords, can the noble Lord confirm that in this country public expenditure on science as a percentage of GDP has fallen from 2.7 per cent. to 1.8 per cent.? Can he assure the House that the Government have noted that the American and Japanese governments, far from cutting

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the science budget, are proposing substantially to increase it to protect the scientific industries of the future?
Lord Haskel: My Lords, I can confirm that my noble friend's figures are broadly correct. Of course, the Government would like to spend more money on science and science research. The Government are looking urgently at this as part of the comprehensive spending review. We are committed to putting science ahead of other considerations. We are actively working to encourage greater private sector spending on research and development. A consultation document, Innovating for the Future, was published at the time of the Budget, when we announced the £50 million "university challenge" scheme to encourage exploitation of university research. Perhaps I may congratulate my noble friend because I know that his family trust has been active in encouraging the industrial exploitation of scientific research within the universities.
Lord Porter of Luddenham: My Lords, is the Minister aware that Sir Ron Dearing—now, happily, Lord Dearing—in his evidence to your Lordships' Select Committee on Science and Technology said:
"one of our purposes is to lift this"—
that is, science and technology—
"above the interplay of departmental interests and arguments",
while Sir Ron Oxburgh said quite plainly:
"it has to be Cabinet office"?
Can the noble Lord say whether there is now any support, outside the DTI, for the present arrangements?
Lord Haskel: Yes, my Lords. However, I cannot comment fully on the Dearing Report because we have only just received it and are considering its recommendations. There will be an official response. Certainly, the committee put in some hard work.
Lord Fraser of Carmyllie: My Lords, is the noble Lord aware of the unease not just in the world of science and technology but in industry and energy that one Minister is now entrusted with the totality of these responsibilities and of the belief that it is too large a portfolio for one Minister? The noble Lord has indicated that one of the Minister's functions should be to emphasise the importance of science and technology across the whole of Whitehall. Does he really believe that the luckless Mr. John Battle has time to perform that task in addition to the role that he must perform in relation to energy and industry?
Lord Haskel: My Lords, I believe that my right honourable friend Mr. John Battle is doing a very good job in promoting the interests of science and technology. The Chief Scientific Adviser carries a good deal of responsibility, and the Office of Science and Technology is independent within the Department of Trade and Industry. Therefore, the work of my right honourable friend Mr. Battle is separate from the work of the Office of Science and Technology.
Lord Bruce of Donington: My Lords, will my noble friend reiterate that the Government's policy is to entrust
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this important function to a Minister, not a ministry, in order that in due course these matters may be discussed at Cabinet rather than departmental level?
Lord Haskel: My Lords, my right honourable friend the President of the Board of Trade, Mrs. Margaret Beckett, is the Minister responsible for science and technology.
Lord Annan: My Lords, is the Minister aware that some noble Lords recall the days when Lord Zuckerman was Chief Scientific Adviser? Is the reason why scientific advice has been marginalised in this way that very often Lord Zuckerman gave advice which was not very acceptable to many government departments, particularly advice about the independent deterrent?
Lord Haskel: My Lords, I am aware of that criticism, but I can assure noble Lords that the opinion of the Chief Scientific Adviser is not marginalised.
Lord Peyton of Yeovil: My Lords, is the Minister aware that only the very deaf have so far failed to hear the message from scientists that most of them never get anywhere near a senior Minister? They are lucky if they have contact with a parliamentary secretary.
Lord Haskel: My Lords, I am not aware of that problem.

Zambia: Democracy
2.52 p.m.
Lord Ponsonby of Shulbredeasked Her Majesty's Government:
What action they are taking to encourage democracy in Zambia.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, FCO officials have regular contacts with the Zambian Government at all levels and with parliamentarians, the judiciary, the independent commissions, non-governmental organisations and the media. We encourage democratic principles through these contacts and through targeted use of our programme budgets and sponsored visits. During our EU presidency we have made representations to the Zambian Government about good governance and human rights, and will continue to do so. We made representations about the imposition of the state of emergency, and on 18th March the Minister of State for Foreign and Commonwealth Affairs, Mr. Lloyd, welcomed the lifting of that state of emergency on behalf of the EU.
Lord Ponsonby of Shulbrede: My Lords, I thank my noble friend for her response. Does she agree that the plight of Zambia is that of a country spending four times as much on debt as on health? What are the Government doing to encourage greater democratic activity in Zambia, specifically in the context of the local

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government elections due to be held this year? Will the Government be encouraging UNIP to stand in those elections? What will the Government do to ensure the elections are free and fair and that there is free assembly while they take place?
Baroness Symons of Vernham Dean: My Lords, we acknowledge some advances in recent years, in particular the move to multi-party democracy and administrative reforms such as that reducing opportunities for corruption. We encourage the Zambian Government to continue their efforts to further the democratic process and enter into meaningful and inclusive dialogue with other political parties in Zambia by creating an atmosphere that allows such talks to take place. We act in a variety of ways, for example, through the programme budgets, sponsored visits and other means.
Lord Acton: My Lords, is my noble friend aware of the current legal situation in relation to former President Kaunda?
Baroness Symons of Vernham Dean: My Lords, the former president is no longer in prison but is under house arrest. As I understand it, he has been formally charged with concealment of treachery. I believe that it would be wrong for us to discuss the charge against him as the matter is sub judice at the moment.
Lord Hughes of Woodside: My Lords, will my noble friend make representations to the Zambian Government that former President Kaunda and the others who have been charged should be brought to trial speedily and that the trial should be open and transparent so that any evidence that may be led against those charged can be properly tested in open court?
Baroness Symons of Vernham Dean: My Lords, Her Majesty's Government have no special brief for Dr. Kaunda. Our concern is for all the detainees. Of course, former President Kaunda is an elderly man of 73 and probably requires special consideration. We welcomed the intervention of former President Nyerere with President Chiluba which led to the decision to transfer Dr. Kaunda from prison to house arrest. Of the 104 detainees who were held without charge for three months, we understand that 82 have now been charged and the remainder released.
Lord Glenamara: My Lords, my noble friend has not been in this House very long. Will she please learn that at the age of 73 one is not "an elderly man"?
Baroness Symons of Vernham Dean: My Lords, when I first came to your Lordships' House one of its more distinguished Members referred to me as "little girl". I pointed out to him that for a woman in her mid-40s that was an unusual epithet. He responded that when I reached 85 I and other women of that age were
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little girls. I apologise if I have offended noble Lords by describing anyone aged 73 as anything other than distinguished.
Lord Lucas: My Lords, are the Government considering participating in any debt forgiveness in Zambia? If so, why? What would be the purpose of forgiving the debts of a country which last year borrowed an additional 800 million dollars? Is that not like giving Alka Seltzer to an alcoholic to enable him to hit the bottle faster and harder in the future?
Baroness Symons of Vernham Dean: My Lords, as I believe is well known, Her Majesty's Government are considering a wide range of countries for debt forgiveness. In so doing we are looking at a country's record in terms of democracy or its move towards democracy. There are also questions about aid. Aid donors are coming together next month to consider whether there should be a move forward in relation to Zambia following the lifting of the state of emergency in the past month.
Lord Campbell of Alloway: My Lords, is the noble Baroness aware that in Zambia the concept of democracy appears to be one that dispossesses white farmers without compensation?
Baroness Symons of Vernham Dean: My Lords, I am aware that certainly there is a problem in Zimbabwe of dispossession. I hope that if there is any such problem in Zambia, of which I am unaware, those matters will be looked at by the various independent commissions that have been set up.

Electronic Commerce
2.58 p.m.
Lord Randall of St. Budeauxasked Her Majesty's Government:
What steps they are taking to promote the use of electronic commerce in the United Kingdom in order to improve trade.
Lord Haskel: My Lords, the Government take electronic commerce seriously. That is why through the Programme for Business initiative we are making a significant effort to promote the use of the tools of electronic commerce like e-mail and the Internet to encourage firms to work on line. Another important initiative sponsored by the Department of Trade and Industry is TradeUK, which is perhaps the world's first virtual business park on the World Wide Web. To encourage confidence in the electronic environment, later this month my department is to launch an accredited certification scheme which will establish a code of practice to promote good information security management.
Lord Randall of St. Budeaux: My Lords, I thank my noble friend for his response, but is he aware of the enormous benefits—I underline those words—of

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electronic mail both to the economy and in overcoming problems such as social exclusion? Is my noble friend also aware that a good deal of informed opinion strongly indicates that the British/European approach to this issue is being seriously left behind by American competition, as with Microsoft, Bill Gates and all that? What will the Government do about all this?
Lord Haskel: My Lords, the Government are aware of the importance of electronic mail, which is why there are the various initiatives that I have mentioned to encourage companies to use it. I am not aware that people consider that we are falling far behind the US. Indeed, my department has done a survey fairly recently—the result will be published next month—which shows that we are catching up with the US on the use of information technology in commerce.
Lord Avebury: My Lords, is the Minister aware that it has been possible to buy books on the World Wide Web from amazon.com at prices 20 to 30 per cent. lower than one pays in the shops? Is it not likely, with the spread of electronic commerce and the use of the web as a marketing tool, that people will pay much lower prices than they have done hitherto and that the consumer will benefit enormously from being able to buy from anywhere in the world and not just from his own country?
Lord Haskel: My Lords, I am aware of amazon..com. I have used it myself on two or three occasions to send gifts of books to people around the world. The Government are encouraging the use of the World Wide Web in commerce for the reasons mentioned by the noble Lord.
Viscount Chelmsford: My Lords, I should like to declare an interest. I am a member of the Simpler Trade Procedures Board which is a government agency. Does the Minister agree that the use of standardised electronic data messages is an important method of simplifying costs and cross-border trade? Does he further agree that that is an important reason for the promotion of electronic commerce and trade facilitation through the WTO?
Lord Haskel: My Lords, I can confirm that the Government agree with the view expressed by the noble Viscount. The Government are committed to working, through their membership of the European Community, towards achieving global and binding WTO rules on trade facilitation. I agree that that work should take full account of the developments in the field of electronic commerce.
Lord Grenfell: My Lords, does my noble friend agree that there is a certain dichotomy in the fact that those who would benefit most from the lower prices which have been referred to by the noble Lord, Lord Avebury, will be those who are least likely to be able to afford the hardware necessary to be able to get
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into the web site? Would he not be alarmed were some kind of shadowy economy to emerge which would discriminate against the poor?
Lord Haskel: My Lords, I take my noble friend's concerns about discriminating against the poor. However, I do not agree that people who do not have computers will not benefit from electronic commerce. After all, many companies are encouraging the move towards on-line ordering because that cuts costs by enabling them to follow products until they are ordered, which avoids the need for warehousing. With such a use of electronic commerce all of us will benefit from lower prices.
Lord Lucas: My Lords, if the Government are so all-singing and all-dancing when it comes to the World Wide Web, why, a year after I asked, are they still unable to answer my Written Questions by e-mail?
Lord Haskel: My Lords, I am not aware of the answer to that question, because e-mail is certainly in use in the Department of Trade and Industry. I am sure that the noble Lord can communicate with that department by e-mail. Perhaps he should try to put down his Written Questions in the form of e-mail rather than in Hansard.
Baroness O'Cathain: My Lords, with the accredited certification scheme that the Minister mentioned, will he see that every effort is made to ensure that the people who are participating in it are aware of the millennium bug problem? We are told that many of the smaller companies which have been involved in it are likely to come unstuck in 2000.
Lord Haskel: My Lords, I take the point made by the noble Baroness. As she will be aware, the Action 2000 scheme is designed to avoid the problems of the millennium bug. We will tackle the problem in a proper and businesslike way and show that it can be fixed. Action 2000 will raise understanding of the implications of the problems, will point out to people the risk of not doing anything and will motivate them to take action.
Baroness O'Cathain: My Lords, I am sorry, but perhaps I might return to this point. Will part of this accredited—I took the words down—certification scheme for electronic trading be designed to ensure that there is no problem with the millennium hug for those companies?
Lord Haskel: My Lords, I am not sure that the two are connected, but I shall write to the noble Baroness about that.

Criminal Procedure (Intermediate Diets) (Scotland) Bill
3.4 p.m.
Brought from the Commons on Friday last and printed pursuant to Standing Order 48; read a first time.

Business of the House: Criminal Procedure (Intermediate Diets) (Scotland) Bill
The Lord Privy Seal (Lord Richard): My Lords, I beg to move the Motion standing in my name on the Order Paper. Perhaps I may take a few moments of the time of the House to explain why I am moving this Motion today. It has been agreed through the usual channels that the Criminal Procedure (Intermediate Diets) (Scotland) Bill should be taken through all its remaining stages tomorrow after the Second Reading debate on the Schools Standards and Framework Bill.
This emergency Bill is necessary because of recent judgments of the High Court of Justiciary in Scotland in the cases of Mackay and Milligan. The court has determined that, as a result of an irregularity in an earlier statute, a large number of summary prosecutions and previous convictions dating back to 1981 are now in question.
The Crown, indeed, has been forced to abandon over 70 cases, with many more in the pipeline. The reason is that the court's decision raises the possibility that persons convicted and sentenced at trial diets which were fixed in a procedurally invalid way could have their convictions and sentences quashed. Up to 1,000 current cases are likely to be affected and they could include sentences for violence, indecency, house breaking, drugs offences and other serious offences.
My noble and learned friend the Lord Advocate will tomorrow make the case more fully for the Bill. Perhaps I may assure the House that the Government would not seek to bring forward this legislation in this way unless there were serious implications for the criminal justice system in Scotland and for public confidence in that system.
Under those circumstances, I hope that the House will agree this Motion today. Any noble Lord who wishes to take part in the Second Reading debate tomorrow will be able to do so in the normal way, and, as is usual in your Lordships' House, under those circumstances should any noble Lord wish to table amendments to the Bill the Clerks will accept them this afternoon in advance of the Second Reading debate. I beg to move.
Moved, That Standing Order 44 (No two stages of a Bill to be taken on one day) be dispensed with to enable the Criminal Procedure (Intermediate Diets) (Scotland) Bill to be taken through all its remaining stages tomorrow.—(Lord Richard.)
On Question, Motion agreed to.

Business Improvement Districts Bill [H.L.]
3.7 p.m.
Read a third time, and passed, and sent to the Commons.

Electricity Generation Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Social Security Bill
3.9 p.m.
Lord Carter: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Carter.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Earl Russell Earl Russell moved Amendment No. 105A:
After Clause 69, insert the following new clause—
LONE PARENT REGULATIONS: COMMENCEMENT
(" . The Social Security (Lone Parents) (Amendment) Regulations 1997 shall not come into force before 1st October 1999.").
The noble Earl said: In moving Amendment No. 105A, I shall speak also to Amendment No. 115A. The effect of the amendments is to delay the two different cuts in benefits to lone parents—one made by regulations relating to premiums for income support and so forth and the other relating to child benefit made under Clause 70—until October 1999. Without prejudice to anything I may wish to do with the amendment during the progress of the Bill, for the purpose of today's debate I wish to confine it to one simple and, I hope, uncontroversial purpose. I wish to set the stage and establish what we are discussing.
One of the difficulties with debates on single parents is that a great variety of issues constantly overlap. The problem is like the Irishman's pigs; he could not count them because they would never stand still. I hope that it will be for the convenience of the Committee if I use the amendment to set the stage. In the debate on Amendment No. 110, I wish to deal with the rights of single parents who are not working. In the debate on whether Clause 70 shall stand part of the Bill and on Amendment No. 112, which are grouped together, I wish to deal with the case for having a benefit specifically for lone parents. That is a personal suggestion. I hope that that course will be for the convenience of the Committee and worth making clear.
The cuts in benefits for lone parents fall under two principal headings. The first is achieved by regulations which come into force today, unless otherwise corrected. It is the abolition of the single parent premium on income support, housing benefit and council tax benefit. There will be a loss of £4.70 a week in income support and a loss on housing benefit and council tax benefit amounting at its maximum to £9.35 a week but varying according to circumstances. The second cut, introduced under Clause 70 of the Bill, begins on 1st June 1998 and amounts to a maximum of £5.65 a week. That is a hefty collection of cuts.
In order to balance those cuts, the Government are offering, mainly through the Budget, a series of replacements of income. The first is child premium for children under the age of 11 of £2.50 a week. That applies to income support, housing benefit, council tax

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benefit, family credit and disability working allowance and kicks in in November 1998. The second is family premium on income support of £2.50 a week and that kicks in in April 1999. The third, working family tax credit, kicks in in October 1999. In the absence of detail, one cannot quantify what that might be worth. It may be considerable for those in work, but it will be worth nothing to those out of work. There is to be a child care tax credit, but, again, one cannot quantify it without the details. It may be considerable to those in work but worth nothing to those out of work. It kicks in in October 1999, which is some way off.
As regards everyone affected by the cuts, some will be affected from today and the rest from 1st June this year. There will be no gain before November 1998 and no big replacement gain before April 1999. The effect will vary from group to group. Single parents on income support with one child under 11 will, in money terms, recover their existing position in April 1999. However, in real terms—that is, keeping up with an existing protected claimant who normally would be uprated—they will he £2.20 a week short.
A single parent on income support with two children would recover existing income in November 1998, which is a little better, but in real terms is £2.20 below existing claimants. A single parent with two children over the age of 11, and therefore not eligible for the new premium, will not recover the position until April 1999. That is still £2.20 a week short in real terms. A new claimant in work with an income of £85 a week will be a net gainer by the substantial sum of £7.09 a week by October 1999, but there will be a net loss of £5.65 a week in June 1998 and £3.15 a week in November 1998. Therefore, such claimants will be all right in the end, but getting there will take a long time. A new claimant in work with £150 a week will in June this year lose £9.13 a week. In April 1999, he or she will lose £4.13 a week and will not gain £4.82 a week until October 1999. Again, such claimants will be all right in the end if they can hang on until that day arrives.
Some people will not gain at all from the measures in the Budget. I refer to people who are in work but working less than 16 hours a week and therefore still eligible for income support. There are those receiving child maintenance under the CSA who are not eligible for the passported benefits and whose maintenance often arrives extremely irregularly. Therefore, they are sometimes dependent on child benefit for all their basic necessities. There are student single parents whose loan is counted as income whether they take it out or not. There are those who have been disentitled under the actively seeking work rules, some of them in slightly surprising situations. I give as an example the woman who was working an evening shift in a wine bar and was three times sexually assaulted. She asked to be moved to a different shift, was refused, dismissed, found to be voluntarily unemployed, and deprived of all benefit. Child benefit is the only benefit which a single parent in that situation will keep. That is why its universality is absolutely vital; it may be a life saver.
People in those positions gain nothing whatever of the conditions in the Budget—or practically nothing. In any case, the gains are mainly for those in work. When
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we reach Amendment No. 110 we will argue that the right of a parent with a young child not to work is, like the right to work, vital. When the time comes, we on these Benches will be prepared to uphold both rights.
I am sorry to have spoken at length. I hope that I have saved the Committee's time in the long run. I beg to move.
Lord Higgins: The noble Earl has clearly explained the amendment, but it is in the context of a confused sequence of events with regard to lone parents. The situation is further complicated by the fact that some of the changes are implemented by statutory instrument and others by primary legislation. Therefore, we have had a whole series of debates on those issues over recent months.
In the House of Commons there was a substantial Labour Party rebellion on this issue, and the matter then came to us. We have subsequently had the Budget and we are now in Committee. The Budget changes are very closely related to some of these measures.
However, the main point made on the amendment is one which the Committee should consider very carefully and perhaps return to at a later stage; namely, that a large number of lone parents will suffer as a result of the statutory instrument and the primary legislation if the Government's intentions go forward.
As the Minister will know, that was something which was foreshadowed under the previous government and therefore we understand that it may well be something on which there is agreement between the two Front Benches. Be that as it may, the situation which is now likely to occur if the Government succeed with their intentions is that there will be a number of lone parents who lose initially, and then subsequently gain. Of course, they will not gain in relation to the preferred position which they held previously as regards two parent families. That is a point to which we can return on the clause stand part Motion.
Nevertheless, there will be individual lone parents whose incomes will fall; and, after a considerable time—which may be extremely distressing for them—that income will be reinstated, albeit not in the same form in which it was previously being paid. That seems to be an extremely unfortunate situation and I hope that the Minister will let us have her views on how that is to be overcome, perhaps by acceptance of the amendment proposed by the noble Earl.
Lord Ashley of Stoke: I had tabled amendments on this issue before the Budget because there was no doubt in my mind that those on income support and new claimants were getting a raw deal under the provisions of the Bill. The poorest were being hit and that is unacceptable.
But the Budget changed the picture. The provisions in the Budget were very welcome and government figures show that on average no fewer than 1,470,000 lone parents will be £6.30 per week better off. I recognised that the Government acted to effect those cuts and so I withdrew my amendments. But it is now clear, as the noble Earl has indicated, that the working

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families' tax credit will not be introduced until October 1999. It is that which provides the major gain for lone parents.
Until that time, many lone parents will face the cut, which was explained so admirably by the noble Earl. Such a cut is both unjustified and unacceptable. We must ask: why should the impecunious be impoverished (as they will be) by that cut just because the dates of changes are made to suit the Government's convenience? It means that families already deprived of a spouse are to be deprived further.
Lone parents are among the poorest in the country and they simply cannot afford to lose pence let alone pounds. Every penny counts and must be counted and accounted for. That hardship cannot be wished away, rationalised or elbowed aside, and certainly not by the laughable excuse that it does not apply to present lone parents but only to new ones. As an honourable Member said in another place, the new ones are still people. Why should a family which becomes deprived of a parent after June of this year be ordered to live on less money than a current lone parent? It simply does not make sense and the whole concept of a fair deal goes out of the window.
The effective answer is to delay the cut in the lone parent benefit until October next year. That is all we are asking, and that is what the amendment achieves. It is the common-sense, reasonable solution to a major problem for lone parents. I hope that my noble friend will be able to accept the amendment.
Lord Desai: I ask my noble friend to clarify one matter. I start by confessing that rules for social security payments are so complicated that I find it very difficult to understand what is going on. I am extremely grateful to the noble Earl for explaining case by case what is happening.
I was surprised and shocked—as were my other noble friends—by the cuts in lone parent benefit. I understand that the Government wish to encourage lone parents to get back into work. I understand also that that particular cut applies only to lone parents entering benefits as of this year. But there is an anomaly and I should be grateful to my noble friend if she will clarify the matter when she replies.
It is concerned with lone parents who are in jobs but who may lose their jobs. I understand that if that happens, they cannot obtain the benefit to which they were previously entitled. If that is the case, that is a great disincentive to taking work, and I am sure the Government do not want that. Even going along entirely with the Government's logic, I still see an anomaly in relation to cutting benefit for people who lose their jobs because those people must go back to zero and start all over again. That seems to me to be an added injustice and perhaps my noble friend will clarify the position.
3.30 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): There are two principles underlying the Government's strategy for benefit rates for families. First, we do not believe that the current structure, which pays a higher fixed rate of child benefit and family premium to all lone parent families and to no two-parent families, is the best way or the right way to address the extra costs which particular families may face. Therefore, it is right that we should change that structure to align the rates of benefits paid to families in respect of their children irrespective of the family structure. That is why we are going ahead with this measure.
Secondly, the Government are committed to supporting all families with children. We believe that support for families should be based on the needs of children and, as I say, not on the basis of family structure. Therefore, it may help the Committee if I seek to set out the measures which we are implementing to deliver those two principles.
As the noble Lord, Lord Higgins, mentioned, we inherited measures aligning rates of benefit from the previous government. The Social Security (Lone Parents) (Amendment) Regulations 1998 were laid on 8th March. They align the rate of family premium in the following income-related benefits—income support, income-based jobseeker's allowance, housing benefit and council tax benefit. Those measures come into force today and will apply to all new claims from lone parent families. Existing lone parents will not be affected and will continue to receive the higher rates, as Members of the Committee have already identified.
Those regulations replace regulations already debated in this House—the Social Security (Lone Parents) (Amendment) Regulations 1997. Perhaps I may address the point made by my noble friend Lord Desai by saying that the only substantive difference is the introduction of linking rules to protect lone parents who take up work and return to benefit after a short period of work. For the first time, we are introducing a 12-week linking rule which is more generous than the linking rule proposed by the Social Security Advisory Committee. That was only eight weeks. I hope my noble friend will take comfort from that fact. We are seeking to introduce those linking rules to protect lone parents who take up work and return to benefit after only a short period of work and to ensure that lone parents who receive the higher premium, such as the disability premium, but have an underlying entitlement to the lone parent premium, receive the same protection as other existing recipients.
The measure we are debating today is not the regulations associated with family premium and not, with this amendment, the linking rule, although we shall return to that. This measure will align the rate of child benefit because that is required to be changed through primary legislation while other aspects of child support can be dealt with through regulations. It is our intention that this measure should come into force in June 1998, at the same time as improvements to the childcare disregard. Again, it will apply to new claims only, with existing recipients continuing to receive the higher rate.
However, this Government recognise that all families have extra costs as a result of caring for their children. That is why we are committed to retaining and uprating

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universal child benefit which is paid to all families irrespective of income. That is why we announced a £2.50 increase in the standard rate of child benefit for the first child. That was announced in the Budget on 17th March and will be implemented from April 1999. We will introduce an increase of £2.50 a week in the rate of family premium for income-related benefits such as income support, income-based job seeker's allowance, housing benefit and council tax benefit at the same time. We shall do it in that way because, as the Committee knows, child benefit is not paid separately to families in receipt of an income-related benefit; it is subsumed within their benefit. Therefore, to offset or to "equivalise", if I may use that word, the child benefit gain for those families in work who receive child benefit, we are making a parallel move on family premium for those families on income-related benefits to the same extent of £2.50 a week. So families not in work and families in work will be treated in similar ways. Existing lone parents will not receive this increase because they will already be receiving the higher lone-parent rates of child benefit and family premia, but all other families and all new lone parents will receive these new rates.
In addition, we are introducing extra help for families with very young children. The child allowance in all the income-related benefits will be increased by £2.50 a week; in other words, there will be an extra £2.50 per week per child for those under the age of 11 for all families who are on income support or other income-related benefits. Again, that was announced in the Budget and will be implemented from November of this year.
All families in receipt of these benefits with children under the age of 11—not just children under five—will receive this higher allowance, including all existing lone parents, even though they will retain entitlement to the existing higher lone-parent premia. We will follow up these measures by introducing more help for families in work, as has been mentioned, through the working families tax credit and the childcare tax regard in October 1999. So there is an increase in the rate of the family premium for families who are on income-related benefits, an increase in the rate of child benefit for those families who are in work and not on an income-related benefit, an increase of £2.50 per child for those families on income-related benefits whose children are under 11, and additional help through the working families tax credit and the childcare tax credit in October 1999.
I believe that I am right in saying that something like four separate measures will come together and produce, in our view, real help to all families, whether they consist of single parents or two parents and whether they are fractured or intact. They will be concentrated, focused and targeted on the needs of the children, especially those under the age of 11. I trust that the Committee will accept that these four measures together meet the two principles that I outlined at the beginning of my remarks. They align the benefit rate for families with children for all family types but they will also ensure that the financial needs of families, especially those with younger children, are recognised through the benefit system.
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However, those measures do not mean that the tax and benefit system will not take account of the specific difficulties and extra costs that some families face. We are focusing resources specifically on meeting those costs rather than giving higher fixed rates to particular families. Perhaps I may identify them. Our childcare tax credit will provide extra help for all working families who need help with childcare costs. Lone parents will be the main beneficiaries of that tax credit and will receive more help with childcare costs—which is the main obstacle to their being able to spring out of the poverty trap and move into work—than has previously been the case.
But some two-parent families may also need help with childcare. It is right that the childcare tax credit should also help those families. The improvements to the childcare disregard that we will be introducing in the interim will also be open to all families. We believe it is right to give extra help to families who are unable to work or whose opportunity to maximise income from work is limited by parental responsibility. That is why we are introducing those two measures to improve the incomes of those families. I repeat: we are increasing the family premium in income-related benefits by £2.50 a week for all workless couples and we will increase the child personal allowance for the under 11 year-olds by a further £2.50 a week. This means that a family with two young children will be better of by £7.50 a week. I hope that the Committee will agree that that is consistent with our strategy to help all vulnerable families receive an adequate income when out of work.
The third element of our strategy is to help those people move into work. We are already breaking down the barriers between lone parents and work by way of the New Deal and our national childcare strategy; indeed, our working families tax credit will guarantee every working family, including lone-parent working families, an income from full-time work of at least £180 a week. We have also put in place measures to ensure that all four year-olds have an early education placement at the start of the school year.
The Government inherited measures to remove differential benefit levels for the children of lone parents and the children of two-parent families. We believe it is right that benefit rates should be aligned. We have introduced legislation to implement that measure. However, that would have meant, if I can use the cliché, "levelling down" lone parents to where jobless couples find themselves. We have taken the obverse approach: we have sought to increase benefits by targeting them on children and children in need for all families—both lone parents and two-couple families—which is effectively a levelling up of couples to where lone parents, in very broad terms, though not exactly, currently find themselves. That is why we are introducing this package of measures and doing so as early as possible. We believe that it is right to target specific help. That is why we are meeting the needs for childcare through our national childcare strategy and why we are helping lone parents into work.
I hope that the Committee will agree that, with these four measures—the increase in the family premia for all couples; the increase in child benefit for couples in

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work; the increase in the income support rates for couples and lone-parent families who are receiving income support for children under 11; and the proposed improvements through the childcare disregard and the working families tax credit—we have a far-reaching strategy for families. I believe that those measures represent key milestones in implementing the strategy. Where extra help is needed, we have sought, through the Budget and through the changes being announced today under the New Deal and so on, to deliver it. I trust that the Committee will agree that we have in place a broad-brush set of proposals which will help all families, whether lone parent or couples, equitably. On the one hand, we will be increasing the help to those who have young children under the age of 11, and, on the other, we will be helping those who can move into work to do so through childcare credit. We believe that that is the right way forward. Those who cannot work because of parental responsibilities will be given additional help; but, where they are in a position to seek work, we will help them to do that, too, by removing the major obstacle in their way; namely, childcare costs.
Finally, we have the linking rule which I mentioned earlier. Therefore, with all those measures in place, I hope that noble Lords will agree that we genuinely have a new deal for all lone parents, as well as workless couples, as they enter the next few years.
Baroness Turner of Camden: Before my noble friend sits down, perhaps she would be kind enough to comment on the following information. Because the working families tax credit does not begin until October 1999, I understand that some lone parents will be worse off. Indeed, the Child Poverty Action Group estimates that 60,000 lone parents will be worse off to the extent of £2 per week because the working families tax credit does not kick-in until October 1999. Can my noble friend comment on that information?
Baroness Hollis of Heigham: As I understand it, lone parents with children under the age of 11 who will lose the child benefit from June 1998 will, nonetheless, gain in April 1999 by the sum of £1.85. However, those with older children—the group to which I believe my noble friend was particularly referring—will not have the same recompense as we had hoped. I shall be glad to write to my noble friend with the specific details.
Lord Higgins: To anyone who had not followed the history of these events the Minister's remarks would seem eminently plausible. The noble Baroness began by saying that the Government's policy was to align the benefits of lone parents with those of two-parent families. But that is what the previous government were proposing to do. It is also what Mr. Blair promised he would not do before the election. It is also what the Secretary of State for Social Security said she would not do. The Minister who has just spoken described that measure as vindictive, punitive and utterly wrong. Her present position is a total reversal of the Government's previous policy.
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We can return later to a number of the points the noble Baroness made. I refer to the linking problem which I described in previous debates as the "in, out" problem; that is, the problem of the lone parent who takes up work, then loses the job and finds himself or herself on the lower rate of lone parent benefit rather than the higher rate. My Amendments Nos. 116 and 117 address that point. However, we are not clear about the amendment moved by the noble Earl. The Budget has increased the level of benefit for this group, whether they comprise single parents or two parent families. However, it appears that, as a result of the way this measure has been handled, lone parents will eventually be no worse off, generally speaking,—with the exception of certain specific groups, for example lone parents with children under 11—but in the meantime they will be worse off because their lone parent benefits will be cut before the measure in the Budget is put in place. Therefore there will be a hiccup, if I may so describe it. As I understand the position, the noble Earl's amendment seeks to rectify that point. With great respect I do not think the Minister has addressed the matter.
3.45 p.m.
Baroness Hollis of Heigham: I believe the noble Lord referred to the Prime Minister, the Secretary of State and myself in this regard. I believe he said I had described the proposal as utterly vindictive and wrong. If the measure was being proposed today by the noble Lord on behalf of his party in government my response would be the same as it was before the election. At that time the proposal from the then government was vindictive and wrong. It was nothing other than a cutting strategy to reduce lone parents' benefits to the levels of benefit of workless couples. Had the noble Lord proposed that today, my response would have been the same. However, we are not proposing that. It is a bit rich of the noble Lord to accuse me of hypocrisy when I have made it clear that the changes we now propose will produce what the noble Lord's party did not propose; namely, additional child benefit of £2.50 for the first child, a childcare strategy and a linking rule. Had the noble Lord's party offered those three measures before the election, he would have gained the support of my party. However he did not propose that, and therefore he did not gain our support.
Lord Ashley of Stoke: My noble friend speaks so eloquently and so persuasively. However, the Committee has a question. I hope I have explained that there will be a hiatus as a result of the earlier cuts that were imposed and the fact that the working families' tax credit will not be introduced until 1999. In the meantime lone parents suffer a cut in benefit. Can my noble friend disprove that? If she can, I shall be delighted. If she cannot, will she accept the simple proposition that by deferring the cut until October next year she will solve the problem?
Baroness Hollis of Heigham: My noble friend is correct. These proposed changes were introduced in the

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Budget and will therefore take time to be introduced. We cannot get the working families tax credit up and running until 1999, as my noble friend said. That is the situation we are in.
Lord Higgins: I do not wish to pursue at length the point I made earlier. I merely state that what the noble Baroness objected to when in opposition was the principle of equalising payments as between lone parents and two parent families. She has no idea what we might have introduced in the Budget had there been a new Conservative government. Be that as it may. The noble Baroness has still not addressed the crucial point of the noble Earl's amendment; namely, to remove what the noble Lord, Lord Ashley, has just described as a hiatus. It seems to me that it should not be impossible to deal with that matter by means of an amendment of the kind that the noble Earl suggested.
Baroness Hollis of Heigham: I addressed that point in reply to my noble friend. Many of the changes we propose are dependent on the Budget and cannot be put into effect as quickly as we would wish. What we objected to when in opposition was that the then government's measure represented simply a cut. His party believed that lone parents were increasing in number because of a financial incentive and that therefore the best way to cut the number of lone parents was to reduce their benefit. We have approached the matter from an entirely different direction. We wish to tackle family poverty and family need, whatever the family structure. Therefore we seek to ensure that all families, whether they comprise lone parent families or two parent families, will enjoy the extra advantages of higher child benefit—the highest increase in child benefit since 1978 and the administration of my noble friend Lord Callaghan—a major, far-reaching childcare strategy, and a linking rule that will genuinely offer lone parents a new deal. I hope that my noble friends will accept that.
Earl Russell: I think we have taken the matter about as far as we usefully can today. I set out to make an uncontroversial speech. It seems that I have succeeded because in her reply to the noble Lord, Lord Ashley of Stoke, the Minister did not deny my crucial point about the gap. We do not agree on a great many things as regards this subject. However, at least I hope that as a result of this amendment we shall agree on what we disagree about. We disagree about the treatment of lone parents who do not, or cannot, work. We shall address that point when we discuss the next group of amendments. We disagree about whether there should be a specific benefit attributable to lone parenthood. We shall address that matter on the clause stand part debate.
I am glad that the Minister referred to the linking rule, which I should have mentioned. I welcome that, but it is not as generous or as beneficial as the 12 month linking rule for disability. I congratulate the Minister on achieving that in the Green Paper. If the two could have been equally generous, my welcome would have been a great deal warmer. As it is, the gap remains. The purpose of this amendment is to bridge that gap. I hope
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that the Minister may reflect on that aim between now and the next stage of the Bill. I do not require an answer to that now, but in the hope that she may reflect on the matter I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 38 [Reviews of decisions]:
The Lord Advocate (Lord Hardie)moved Amendments Nos. 105B to 105G:
Page 24, line 12, after ("relates") insert—
("(aa) may review such a determination on the ground that the person who applied for the payment to which the determination relates misrepresented, or failed to disclose, any material fact;").
Page 24, line 30, at end insert—
("(5A) In making a determination on a review an appropriate officer or a social fund inspector need not consider—

(a) in the case of a determination on a review under subsection (1)(a) above, any issue that is not raised by the application;

(b) in the case of a determination on a review tinder subsection (1)(aa) above, any issue that is not raised by the material fact;

(c) in the case of a determination on a review under subsection (1)(b) above, any issue that did not cause him to carry out the review").

Page 24, line 31, after ("review") insert ("under subsection (1)(a) or (b) above").
Page 25, line 2, at end insert—
("(6A) In making a determination on a review under subsection (1)(aa) above an appropriate officer or a social fund inspector shall—

(a) act in accordance with any general directions issued by the Secretary of State; and

(b) take account of any general guidance issued by the Secretary of State.

(6B) Any reference in subsection (5A). (6) or (6A) above to a determination on a review under a particular provision of subsection (I) above shall be construed, in relation to a social fund inspector, as a reference to a determination on a further review of a determination which has been reviewed under that provision.").
Page 25, line 7, after ("review") insert ("under subsection (I)(a) or (b) above").
Page 25, line 11. after ("determination") insert ("which has been reviewed under subsection (1)(a) or (b) above").
The noble and learned Lord said: These amendments have already been debated. I beg to move Amendments Nos. 105B to 105G en bloc.
On Question, amendments agreed to.
Clause 38, as amended, agreed to.
Clause 73 [Overpayments out of social fund]:
Lord Hardiemoved Amendments Nos. 105H and 105J:
Page 48, line 27, at end insert—
("( ) This section applies where such a determination as is mentioned in section 71(1) of the Administration Act is made in relation to a social fund payment—

(a) to which section 71 ZA of that Act applies; and

(b) which is made on or after the day on which this section comes into force.").

Page 48, line 28, leave out subsection (2).
On Question, amendments agreed to.
Clause 73, as amended, agreed to.
Clause 74 agreed to.
Clause 70 [Power to reduce child benefit for lone parents]:
[Amendments Nos. 106 to 109 had been withdrawn from the Marshalled List.]
4.00 p.m.
Baroness Maddockmoved Amendment No. 110:
Page 47, line 20, at end insert ("save where the lone parent has one or more dependent children under the age of five").
The noble Baroness said: This amendment stands in my name and those of my noble friend Lord Russell and also my noble friend Lady Williams of Crosby who regrets that she cannot be present today. The purpose of the amendment is to mitigate the effects of cutting lone parent child benefit for lone parents who have children under the age of five. I was fortunate enough not to be a lone parent; nor did I have financial worries when I was a mother. However, I vividly remember the time when I had two young children under the age of five, with 22 months between them, and my husband used to be away from home for perhaps a week or two weeks. The constant worry of care and responsibility on one's own was enormous. I was lucky. My children slept; I had a good mother-in-law; and I knew that it was coming to an end at the end of two weeks. But to live with that situation, day in and day out for 365 days of the years must be tough. Those are the kind of people about whom we are talking today.
I strongly believe that the Government are mistaken in their intention to lower one parent child benefit. As has been said by other noble Lords, the Minister has eloquently provided full details of the Budget changes and how they will improve the financial situation for many lone parents. It is a complicated picture. We have, I think, clarified it fairly well today. However, I wish to add another factor to the debate. I have been advised that there are still several groups of people who will lose out. No fewer than five groups will receive no compensation for the loss of the lone parent child benefit as a result of the Budget changes. Thereby they will no longer receive any acknowledgement of the extra costs that lone parents incur when bringing up their children. The five groups include working lone parents with earnings above family credit or the alternative working family tax credit levels; working lone parents who earn too much for income support but who work fewer than 16 hours a week and cannot claim family credit; lone parent students whose income takes them above income support levels; lone parents whose child maintenance income lifts them above income support levels and for whom child benefit may be their most reliable source of income; and lone parents who live on some other source of income—it may be a widow's pension—or who are ineligible for income support or other means tested benefit because of the capital cut-off limit. For all those people the arguments remain the same for the extra costs that are faced by them as lone parents.
The majority of two parent families have two incomes. That is never an option for a one parent family. And lone parents incur relatively higher costs as
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opposed to two parent families. Heating and lighting costs are exactly the same whether it is a one parent or two parent family. As I believe I illustrated by my own example, at the same time caring on one's own is more difficult than with two caring for a family. One may buy more expensive foods or use more convenience foods. One certainly has less time to shop around for bargains. As I explained from my own point of view, there is no second adult to compensate for any of that.
Lone parents often experience considerable hardship because they are likely to be in receipt of benefits for much longer periods than those in two parent families.
I wish to highlight the plight of lone parents who are students. For a lone parent on benefit, normally child benefit is deducted pound for pound from income support. However, if one is a lone parent student—my noble friend Lord Russell has referred to this—and a student who receives income in the form of a grant and a loan, not benefits, the removal of the lone parent rate of child benefit will mean a net loss of £5.65 per week.
In 1995–96, the Department for Education and Employment commissioned a report about students and their expenditure. It looked in particular at lone parents. It found that lone parent students incur higher childcare costs than other students with children. However, unlike people in low paid work, students receive no additional help specifically earmarked for childcare costs; and the lone parent rate of child benefit is the only non-taxable and non-means tested benefit which recognises the extra needs of lone parent families. Yet the Government are intending to remove this for students.
The report also pointed out—it is something that many of us will acknowledge—that for many lone parents education is a route out of dependence on state benefits and it is undoubtedly a path to secure, well paid work. I believe it is vital that this route is not blocked by a further erosion of the financial support available for lone parent students.
I have other worries. They were touched on by other noble Lords today. It is quite clear that, through a combination of this Bill and the recent Budget proposals, lone parents will find it difficult to understand and claim the amount to which they are entitled. My past experience of sitting on housing benefit and tax benefit review boards leads me to predict fairly accurately that many lone parents may inadvertently get into arrears with their housing benefit and will have other problems in that direction. My worries are further increased as I understand that the Government propose to reduce by 25 per cent. the administration costs of benefits.
I hope that the Government will support the intention of the amendment. It recognises the level of poverty which exists for lone parents and their children. It also recognises the special pressures for lone mothers with very young children. It recognises, too, the extra needs of very young children.
The Government's intention is to encourage lone parents into work. We could argue whether for those with very young children that is a good idea; but that is their stated intention. I believe that cutting lone parent

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benefit will work as a disincentive. It is the only means tested benefit especially tailored to meet the needs of one parent families at present; and the benefit is deducted pound for pound from income support. It is mainly of benefit to lone parents in employment, so the lone parent rate of child benefit provides one-fifth of the increase in income that is available for lone parents who start work. As such, it is essential to help them overcome the work disincentives which they face. Removing that benefit at the same time as trying to encourage lone parents into work is not consistent.
The amendment recognises that lone parents of very young children should not be subjected to the penalty of withdrawn entitlement to benefit. They often face the highest costs, have the least job flexibility and possibly the lowest earning power. In putting the case for the amendment, I am grateful, as I am sure are other noble Lords, for information supplied by the Child Poverty Action Group, the National Council for One Parent Families and the Children's Society. Those groups support the view that this benefit should not be cut.
I feel that the proposal is a rather mean-spirited move by the Government. It has been estimated that in the first three years the total cost of not reducing the lone parent child benefit would be about £45 million. The total social security budget is £100 billion. But in 1998–99, for 75,000 individual lone parents it will be a cost of £5.65 each week. But the amendment does not refer to all parents. It asks for part of that £45 million because we are considering specifically parents with children under five. I beg to move.
Earl Russell: I support the amendment, to which I have put my name, and speak to Amendments Nos. 113 and 114 which are in my name.
I agree with everything that my noble friend said about the amendment. Clause 70 is a peculiarly inappropriate measure for a Government whose ambition is to get lone parents into work. It has blocked the most direct route available for the purpose. It has produced instead a route so roundabout that it is practically going to Birmingham by way of Beachy Head. I speak as one who had to do that journey, and a very laborious process it was.
Amendment No. 114 provides an exemption from the provisions of Clause 70 to a lone parent primarily responsible for a child as a result of the death of the child's other parent or of another person who was primarily responsible for the child's care, or as a result of domestic violence.
The noble Lord, Lord Evans of Parkside, is no longer in his place, but I am sure that noble Lords will remember his moving speech at Second Reading, and I am sure he will forgive me for referring to it. When the noble Lord was six his father went down the pit and did not come back again. The noble Lord said that for a year after that he and his two younger sisters would not let their mother out of their sight. It would have been extremely difficult to get that mother to return to work. The noble Lord's case is exactly the kind of case that the amendment is designed to meet, and there are more of them than one would wish.
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The other part of that amendment deals with domestic violence. It is, sadly, necessary on many occasions for a woman who has been the victim of domestic violence to keep herself out of sight where her former partner cannot find her. That tends to make actively seeking work difficult. I hope that, if the Minister is making no other concessions, she will take that point seriously.
We have to look beyond the amendment, bearing in mind that Amendment No. 105A is still on the books, and to the right of single parents who do not wish to work. This is for us a question of the basic philosophy of the state. It is not the state's business to tell us how to live. It is the state's business to help us live the way we choose to. We on these Benches will bend over backwards to help single parents who want to work, but equally we will bend over backwards to assert the right of those single parents who wish to work at home caring for their children. Both of these are rights and we are prepared to defend them equally. We see the state as capable of being used as a heavy roller to provide a level playing field but not as a new broom to sweep grass off the pitch. There is a very big distinction between those two functions.
The state cannot judge the sufficiency of the many reasons why people may want to stay at home with their children. Indeed, there is no reason why the state should judge; it is a personal matter and a human right.
Changing the benefit system to "encourage people to go to work" (which are the words used by Mr. Alistair Darling and others) is something that would worry us. The Government should think about the maximum rate of success they could achieve in encouraging single parents into work. I know that the Minister is familiar with the Bradshaw 20 Countries Study. The highest rates for single parents in employment in those 20 countries are Japan 87 per cent., France 82 per cent., Luxembourg 73 per cent. and Sweden 70 per cent. No other country is over 70 per cent. The Government would be optimistic in hoping to get more than 70 per cent. of single parents into work, and in fact it would be quite an achievement. That leaves 30 per cent. of single parents. These people have rights. They may have very good reasons as well. I welcome the many ways of financing the measures in relation to childcare, but to raise the money from the other 30 per cent. who do not want to work is the wrong way to go about it. It is getting the money from those least able to provide it.
Single parents who do not want to work are not, I understand, to be compelled, and I welcome what the Minister has said. It is being "encouraged" that worries me, being starved into submission like a besieged town. The Minister does not like that, but she may have seen yesterday's Observer which records that Ministers are looking at proposals to force more than a million lone parents to attend jobcentre interviews to help them find work. If that is not pressure, I do not know what is. A ministerial source is quoted by the Observer as having said that it does not seem too much to ask lone parents to attend just one interview to discuss whether they want help in finding work or training. That may not appear to the lone parents quite as it may appear to the Minister. If I were to guess the source of that remark, if I were to be playing "I spy", I should be tempted to spy someone

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beginning with "F". It worries me. I am happy to support the amendment and the wider implications behind it.
Lord Milverton: I support the amendment. As the noble Baroness, Lady Maddock, said, many of us know what it is like for single parents. Nothing should be done to make their task of bringing up, with loving care, children under five and over five more difficult. It must be remembered that many will have poor financial means.
As a priest, and in other ways, I know what it is like. I agree with the principle of the amendment. I may agree with the Liberals. My father was once a Liberal and at one time I asked myself whether I should be a Liberal or a Conservative. As my wife knows, some years ago I voted Liberal at a general election because I was not happy with the Conservative candidate or the Conservative Party at that time.
Baroness Hats of Heigham: Does the noble Lord mean now?
Lord Milverton: That was some years back, not now. The Conservatives would have to do something terrible.
In principle I agree with the amendment because it is very important. I am surprised at the noble Baroness, Lady Hollis, because her present position runs contrary to her previous statements. We should be very careful about such a proposal, particularly if it is intended to save money. I hope that the Government will give the amendment great thought and take note of it.
Baroness Hollis of Heigham: I can assure noble Lords that I know, even from my limited experience at this Dispatch Box, that we take serious note of what noble Lords say and review the position after each stage of a Bill. Your Lordships' contributions, even if the Government do not act upon them, are taken seriously. I like to think that the previous administration did the same, but I am not entirely sure about that.
The Government are committed to supporting vulnerable families. We recognise that families can face difficulties for many reasons, a number of which have been highlighted by noble Lords.
Families can be vulnerable because their opportunity to maximise income from work is limited by their parenting responsibilities. Let no one doubt how much this Government, and I am sure the previous government, value parental responsibilities. That applies to many lone parents, but it also applies to many couples with young children. Therefore, the Government do not believe that the best way to help the families is through differential rates of benefit for different family types.
I do not wish to repeat all the changes that we are developing and which I outlined in the previous amendment. I wish to avoid taking up the Committee's time. I merely remind the Committee that the total spending on all those initiatives—the working family tax credits, the child benefit and income related benefits
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improvement—will result in about an extra £3 billion, equitably, for lone parents, workless couples and couples with children. They target particularly the needs of the most vulnerable. That £3 billion, expected over the next 18 months, is the result of cumulative changes which were announced in the Budget.
Thus we seek to help lone parents, couples and workless families in an even-handed way. While some lone parents may choose not to work immediately because they have young children or have been through the trauma of domestic violence, as a result of our proposals they will, we hope, have the opportunity to take up the option much sooner, when they are ready to do so. That will reduce the time they spend on benefit, thereby reducing the high levels of hardship they experience.
I turn to individual amendments. Amendments Nos. 110 and 113 are concerned with families with young children. I have outlined the measures the Government are implementing to direct extra help to poorer families with young children, not just children under school age but all families with children up to the age of 11. We recognise, as I am sure all noble Lords do, that there is no magic cut-off age when the difficulties of balancing parenting and work responsibilities disappear. They will certainly continue up to the age of 11.
We believe that our proposed measures are a major step forward in reducing the effects of poverty on families with young children. I point out that the amendment would not only help the most vulnerable. Because it only applies to child benefit, it will not provide additional help, as stated in the amendment, to those families on income support. We have done that, not through this amendment but through our increases in the family premia and the child allowances which I have already outlined.
Amendment No. 114 seeks to help people who are caring for a child when the other parent or carer has died and parents who suffer domestic violence. I recognise that such parents will face particular difficulties and I sympathise with the intent of the amendment. I point out, however, that widows with children—one of the examples given—do not normally receive the lone parent rate of child benefit. That is because they are helped in a different way, through the widowed mothers' allowance, which would not be affected by Clause 70.
The Government's strategy is to ensure that all vulnerable families receive an adequate income when out of work, and to address the barriers they face in moving into work. Although we fully appreciate that some lone parents face particularly difficult circumstances, we do not believe that it is right to pay different levels of benefit to lone parents on the basis of how they came to be a lone parent. That is the thrust of the noble Earl's amendment. It would also be virtually impossible to deliver benefits with those added complexities.
However, we think it is right to give extra financial help where it is specifically needed, such as for childcare costs and where there are young children in

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the family. That is extra help which we know we can deliver and which I am sure has support from all Members of the Committee.
I share the concern about women who have escaped domestic violence and their continuing vulnerability. I have already outlined the extra benefit support that will be available to all vulnerable families. However, the need for support for women in that situation goes far beyond increasing benefit levels, as I am sure the noble Earl, Lord Russell, would be the first to agree.
The Government are committed to tackling domestic violence on every front. We recognise how important it is to increase greater awareness of domestic violence and the issues surrounding it among the public and relevant professionals. The Government are currently considering a new interdepartmental publicity campaign on domestic violence. As well as the services and support provided by Women's Aid and the refuge network, with which I know the noble Earl has long and honourable connections, women experiencing domestic violence may seek help from a variety of sources including the police, local refuges, social services and health professionals.
Tackling domestic violence is one of the Secretary of State's priority issues. She will be driving forward an over-arching strategy to combat violence against women. It is a strategy which I am sure will command the support of all the Committee. Again, because the amendment only applies to child benefit, the noble Earl's amendment would not help the most vulnerable families which are on income support.
The noble Baroness, Lady Maddock, asked about the five groups who will lose. If I have omitted any points, I shall write to the noble Baroness afterwards. All lone parents, including those in the five groups she mentioned will either retain protected rights to the higher rate of child benefit or they will gain from the increases in the standard rate of child benefit we have announced. A total of 60,000 lone parents will lose overall, but 1 million lone parents will gain, but those who gain include those who are most vulnerable.
Perhaps I may give an example of this. One of the five groups the noble Baroness identified as experiencing hardship because they were losers under our proposals were working parents with earnings above the tax credit level. If a working lone parent has earnings above the tax credit level such that she does not even qualify for the family childcare strategy or help, she has to be earning £30,000 a year. I would have thought that was not a group in particular financial hardship.
I hope that I have answered the points made by Members of the Committee. If not, I am sure that they will come back to me.
4.15 p.m.
Baroness Maddock: I thank the Minister for her full reply to the points made when I moved Amendment No. 110 and also when replying to the amendments made by my noble friend Lord Russell. Before discussing Amendment No. 110, perhaps I may say that on domestic violence, I know the Minister shares our
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concern. I hope she will also press for there to be better finances to support refuges for those suffering domestic violence. It is still a problem, trying to find sufficient finance to support enough refuges around the country. I am sure the Minister will agree with me and hope she will push for that.
Perhaps I may thank the noble Lord, Lord Milverton, for his support and for his past support for the Liberal Party. We welcome him at any time.
Lord Milverton: My father was also a member of the Labour Party.
Baroness Maddock: Various people move around the parties but I have been a member of the Liberal Party and the Liberal Democrat Party only.
The Minister talked about the five groups and answered some of the points. The main point is: why should we pick out any group and say, "You will have a cut"? That is what may happen to some people. I realise that some of the groups are not those in the worst situation. We try to recognise that lone parents have more substantial costs than others in bringing up their children. That was part of the reason for moving the amendment.
We on these Benches want the principle of an earmarked benefit that is special to lone parent families to continue. There is no doubt that lone parents, particularly those in work, will stand to lose a substantial amount with the cutting of lone parent rates for child benefit. As I said and others will agree, there is considerable evidence to show that there are higher costs for one parent families than for two parent families.
We oppose the removal of the higher child benefit for lone parents. As we have received some support at this stage, we intend to pursue the matter at a later stage. However, today I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Earl Russellmoved Amendment No. 111:
Page 47, line 20, at end insert ("so however that the rate at which child benefit is paid to a lone parent shall not be lower than the rate at which it is paid in any other case.").
The noble Earl said: Amendment No. 111 was put down to enable the Minister to put into the record an extremely welcome concession which she made at the preliminary briefing meeting in the Moses Room. So, in optimism, I beg to move.
Baroness Hollis of Heigham: The drafting of Clause 70 is clearly causing some concern which we need to lay to rest. I am therefore happy on behalf of the Government to accept Amendment No. 111 in principle. It is not our intention to do anything other than align the rates of child benefit paid to lone parents and couples.
I should like to ask the draftsman to consider the most appropriate form of words to allay the concerns that Clause 70(1)(b) is causing, and I shall come back to the

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matter on Report. With equal optimism, therefore, I hope that the noble Earl will be able to withdraw his amendment.
Earl Russell: The Minister's optimism is abundantly justified. She said everything I hoped and rather more. I thank her warmly and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Earl Russellmoved Amendment No. 112:
Page 47, line 20, at end insert—
("( ) Regulations under this section may not be introduced until there is evidence from a systematic independent study of relative costs, incomes and expenditures of lone parent and two parent families on benefit and in work which conclusively demonstrates that one and two parent families should be treated equally by the tax and benefit system.").
The noble Earl said: I move this amendment with not quite so much optimism. In moving it, I shall speak also to Clause 70 stand part.
Amendment No. 112 is designed to ensure that regulations under Clause 70 should not be introduced,
"until there is evidence from a systematic independent study of relative costs, incomes and expenditures of lone parent and two parent families … which conclusively demonstrates that one and two parent families should be treated equally by the tax and benefit system".
The Minister, as I do, respects research. I hope therefore that she will be prepared to rise to this specific challenge. If not, I have up my sleeve a further amendment that Clause 70 should not stand part. That would take out altogether the attempt to destroy the lone-parent premium in child benefit.
It has already been explained by my noble friend Lady Maddock that stopping the child benefit premium which benefits only those in work is a particularly curious way of encouraging lone parents to go into work. In fact, the long and roundabout scheme which the Government introduced instead to encourage people to go into work by paying money to a much larger number of people is a curious attempt at robbing Peter to pay Paul. As usually happens when we rob Peter to pay Paul, the "fence" ends up getting most of it.
The Government are using an extremely untargeted approach. They are paying money to practically everybody rather than targeting it on the group which is clearly, on a large body of research, in the greatest amount of hardship. In fact, it is an extremely expensive bow to the editor of the Daily Mail.
The key question behind this is whether there should be any specific benefit for single parents. We on these Benches say that there should. We are in this House, among the Front-Benches, alone in saying so. We are not ashamed of that. But if we put it in a slightly wider context than just the parties in this country and this Parliament, the picture comes out rather different. If we put it in the context of centuries, we are far from alone.
The principle that there should be separate payment for lone parents can be traced through other centuries about as far back as one can go. I found it in the Book of Exodus and even in Tudor and Stuart England, when
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the treatment of single parents was about as harsh as it has ever been. Single parenthood at that time was initiated by whipping them until their backs were bloody—the ideal treatment for post-natal depression. Even then there was a separate element of payment specifically for being a single parent.
We can look at the matter in a geographical rather than a chronological context. If we look again at the Bradshaw 20-country study, there is a separate element of benefit for being a single parent—benefit under the benefit or tax system—in Denmark, Finland and Norway. Before noble Lords say, "Just the Scandinavians again", it occurs also in France, Australia, Japan and the USA. That raises a question as to who is in the minority. It suggests that the case that we from these Benches are arguing is a great deal less lonely than it appears in the rather parochial context of the adversarial politics of the Front Benches of this Chamber.
The reasons why there might be separate costs for being a single parent were extremely well outlined by my noble friend Lady Maddock: the cost of heating, because there are the same number of rooms whether there is a single or a double bed in the bedroom; the cost of housing; the cost of time. The National Consumer Council study of the cost of food shows that it may be up to 20 per cent. higher if one cannot travel around and go to the supermarket where goods are cheaper. Single parents incur more paid childcare when there is not another person to share the childcare with. And, as I remember the few days while our second child was being born and I was caring for the first on my own, they incur perpetual travel, in my case between central London, Wimbledon and St. Thomas' Hospital; and perpetual travel comes rather expensive.
I am well aware that that is all disputed and the Minister, I am sure, will dispute it at great length. It seems worth checking whether it is in fact so by looking at the spending measures of poverty; looking at which people are short of which things. The Rowntree study, Small Fortunes, by Sue Middleton and others (I know perfectly well the Minister is familiar with it) tackled the problem of poverty by taking a series of indicators of things which parents were generally agreed children need. They classified those who were short of three indicators as poor and those who were short of five as severely poor.
Though not particularly fancy indicators, the ones that do not involve food are things like one warm coat and one waterproof pair of shoes. I do not think there can be much argument as to whether they are necessary. The study found that single parents who were not working were 7.5 times more likely to count as poor than couples who were also not working. There is therefore a cost attached to singleness. It found that all the children without all three of the food items were children of single parents; that 25 per cent. of children of single parents not working and 8 per cent. of children of couples who were not working were short of one food item. Even where there is a common employment status therefore the children of the single parent were three times as likely to be going short of meals.

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Work did not turn out to be a panacea. One-third of single parents in full-time work were lacking one of the three items; 24 per cent. of the children of parents in part-time work were lacking one food item. Those are the figures for the children. The situation for the mothers is far worse. It is commonly agreed in such situations that the mothers regularly go short of food in order to make sure that the children have enough. Malnutrition is extremely expensive.
I could multiply those indicators; in fact I could go on multiplying them for a long time. But the pattern is consistent. If single parents are not worse off than couple parents on the same income, I should like to know how the Minister explains those findings. I beg to move.
Lord Ashley of Stoke: The noble Earl says that he and my noble friend the Minister respect research. Nobody in his right mind would dispute that proposition. I notice that the noble Earl quoted research in support of his case and it is possible that my noble friend will quote research in support of a different case. However, regardless of conflicting research, I have no doubt whatever that the extra costs follow one-parent families. Academics and Ministers can say anything, but it is nonsense to suggest that a single-parent family does not bear heavier costs than a two-parent family.
I am from a one-parent family because my father died when I was five. I watched my mother bring up three children in the grim 1920s and 1930s. I have taken a special interest in this subject and I have seen single parent families suffering. It does not matter what the century is or the time is—the noble Earl referred back to the Book of Exodus—single parent families really suffer.
I do not propose to add to the many examples quoted by the noble Earl and by the noble Baroness, Lady Maddock, who spoke to a previous amendment on behalf of the noble Baroness, Lady Williams, except to offer two additional points. The first concerns the lack of mobility of single parent families. Because the children are there they cannot shop around. That is a real problem. The second point is this: you can bet your life that unscrupulous shopkeepers will tend to palm off the bad food behind the display to the vulnerable, harassed single parent, who is usually a woman. That adds to the costs of the single parent family.
We all hope that welfare-to-work will be successful and that lone parents will benefit if they want to work. However, if it is not successful, if the jobs are not found, and if the tax credit benefits do not flow, one parent families will need every penny they can get.
I conclude by saying that the case of the Social Security Advisory Committee is that the argument for one parent families being no worse off than two parent families is "not proven." It suggests that the Government should not proceed until the evidence is absolutely clear, forthcoming and concrete. It puts that reasonable proposition which I hope will be taken on board by the Government. I should like an assurance from my noble friend that the Government will ensure that this research does take place.
4.30 p.m.
Lord Higgins: The Question whether Clause 70 shall stand part of the Bill has been grouped appropriately with this amendment. Therefore, I should like to say a few words about it, although there are subsequent amendments in my name to the clause which appear between the debate on it and when it will actually be voted on, if indeed there is a Division.
The noble Earl and the Liberal Democrats have been entirely consistent in the attitude they have taken with regard to lone parents; namely, that there is a case for their having a differential set of benefits to account for the fact that they are lone parents rather than parents in a two parent family. The noble Lord, Lord Ashley, who spoke a moment or two ago, has equally been consistent. And so have we on these Benches. We took the view in government that there ought not to be differentials. The party which has not taken a consistent view on the subject is the party opposite. Instead of arguing, as it did in opposition, that there should be a differential for lone parents, it is arguing now that there should be no such differential.
Will the noble Baroness make it absolutely clear whether there are any groups which she feels deserve preferential treatment, or is it her view now that there is no reason why lone parents should have preferential treatment in any circumstances? Perhaps she will be kind enough to indicate whether that is so.
In our earlier exchanges the noble Baroness sought to justify the Government's position, and the change in her own position, by arguing that there have been measures in the Budget and that the whole thing should he taken as a package. At the risk of being rather partisan, it is perhaps not irrelevant to point out that the change and the arrival of the package happened after the rebellion in the other place. While it is true that this means that lone parents as such, subject to the debate we had earlier about the fall in benefits before they are restored, will not permanently lose, nonetheless they no longer have the differential advantages—I stress the words "differential advantages"—which they previously enjoyed. My understanding is that despite the Budget some 60,000 lone parents will still lose an average of £2 a week and will not benefit sufficiently from the Budget for that to be offset.
Having said all that, I believe that the attitude we previously took in government was right and therefore I do not oppose the view which the Government have now taken. I listened with interest to the points made by the noble Earl and the noble Lord, Lord Ashley of Stoke, about the need for further research. If, indeed, that produces some new evidence, no doubt all of your Lordships will wish to consider it carefully.
Baroness Hollis of Heigham: As we have said several times today, the Government are committed to supporting families. Perhaps I may come straight to the point raised by the noble Lord, Lord Higgins. He asked whether, under any circumstances, the Government would think it right to give preference to lone parents, because of their status as lone parents, or other families.

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I suspect he may think that this is an oblique answer but our concern is not actually with the family structure. We are concerned with the poverty that follows, particularly for children, in vulnerable family structures.
This tends to be associated with fractured families. It could be other families which, though nominally intact, have violence or in which there is disability. There may be all kinds of stresses on the family. Our concern is to deal with those stresses and those problems, including poverty, rather than the actual family structures. That is why, with lone parents, we are seeking to address a three-fold strategy: the benefit changes that we have been talking about today; the welfare-to-work proposals of the New Deal together with the child support proposals; and, of course, over the next few months, reform of the Child Support Agency so that maintenance begins properly to flow.
We believe that support for families should be based on the needs of the children, not on the nature of the family structure. We do not believe that the current structure which pays a higher fixed rate to all lone parent families and to no two parent families is the best way of addressing the extra costs particular families may face.
The noble Earl, Lord Russell, and the noble Baroness, Lady Maddock, when referring to a previous amendment, talked about the extra costs of lone parents. Perhaps I may speak for a moment about costs and then go on to talk about research. It is obvious, as has been said, that lone parents share with couples similar, possibly identical, costs for housing, heating, lighting, cleaning and furniture. It is also the case that lone parents face higher costs than two parent families or couple families—above all, opportunity costs, of which the primary one is child care. I think we all accept that. From my own experience I should have thought that there are lower costs in lone parent families compared with couple families because, for example, a lone parent and a child must spend less on food than two adults and a child, particularly if the second adult is a man. They must also spend less on clothing. They also probably spend less on transport and probably less on such things as drink, cigarettes and so on. So, in terms of costs, I think the jury is genuinely out. Lone parents do have higher costs in some areas; they have identical costs in others; and they must as a family unit spend less absolutely, though not necessarily less relatively, than couple families on such items as food, clothing and so on. That has to be true.
When one adds the point which the noble Earl has made to me on many occasions—he is absolutely right—that there is, in addition, the allocation of money within the household, so even within a workless couple household a greater amount of residual money will go to him rather than to her, reflecting, if you like, the power politics within that household, it is clear that the lone parent is often better off without that partner.
That point has been expressed by other noble Lords on previous occasions. It was expressed by the noble Lord, Lord Northbourne, in a question the other day asking why lone parents chose not to re-partner with a workless man. If couples were better off than
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lone parents, following the logic of that argument, lone parents would be financially wise to re-partner. The fact that they choose not to do so may well be recognition of the fact that they are better off financially without having a workless man in the household. The response to that is not that they should not have a partner in their lives, but wherever possible we should do what we can to encourage him and her, when the children are old enough, to have the choice of work. I am sure that the noble Lord will take that point.
I come now to the research itself. The noble Lord is right: I am very interested in the research. It is very important. The research comes with different baggages of assumptions as they address the problems. There are real difficulties separating what counts as need from what counts as preference. It may relate to cigarettes where we know that proportionately poorer families spend more. That is not a judgment. Far be it from me to judge the noble Earl's private tastes, preferences or habits in that direction.
I suspect that if the noble Earl and I were to carry out a study into what lone parents need we would come up with different assumptions as to whether they did or did not need cigarettes in their expenditure. Therefore, the research would reflect that. There are very different significances in the conclusions reached. Given all the difficulties surrounding such studies, there is research which supports the retention of the premium for lone parents. The work of Middleton, Ashworth and Braithwaite in Small Fortunes, which the noble Earl quoted, concluded that lone parent families are more deprived than couple families. Other research points in the opposite direction. Work by Oldfield and Yu in The Cost of a Child [1993] and by Bradshaw in Household Budgets and Living Standards found that lone parent families were relatively less disadvantaged on income support than couple families.
Research by Dickens et al in 1996 in The Costs of Children and the Welfare State shows that lone parents are under-compensated by the benefit system in relation to some family types and over-compensated in relation to others. What is clear, without in any way impugning research, is that in this area one will find the research answer which is consistent with assumptions which are brought to bear on the research. Having read at least half-a-dozen research reports, all written in the past seven or eight years on this subject, I do not believe, unlike my noble friend Lord Ashley, that further research will give an unambiguous answer and certainly not the clear and concrete answer that my noble friend asks for. As I say, there have been seven or eight highly esteemed pieces of research. But, because they come with different assumptions and seek to test the relativity of lone parent incomes against other family households within the benefit system, they come up with very different answers. They come up with what they first started with.
However, the Government recognise that all families have extra costs as a result of caring for their children. That is why we are committed to retaining child benefit as a universal benefit and why we have announced a £2.50 increase in the standard rate of child benefit for the first child. We also recognise that some families

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have specific extra costs. Lone parents in particular, but also some couples, where both may be students, often have to pay for childcare. We could never meet the costs of childcare, which can easily be £100 a week or more, through a higher rate of child benefit for all lone parents. Instead we are introducing the childcare tax credit which will focus help on those families who have additional costs associated with childcare, thus relating it to specific needs. Lone parents will be the main beneficiaries of that childcare tax credit. Some two parent families will also need help with the cost of childcare. In my view the childcare tax credit will help those families as well. Like the noble Earl, I share concerns about lone parents who are unable to work. But again we need to consider what help is appropriate to all families and what specific help is required to address those particular difficulties facing the family.
Earlier this evening we outlined two measures; namely, the increase in the family premium for those on income-related benefits and the increase in the child personal allowance for the under-11s by a further £2.50 a week. Together those increases mean that a family with two young children will be better off by £7.50 a week.
Lone parents experience high levels of hardship. That is because they find it harder to obtain work and therefore spend longer periods of time on benefit than other groups. Only one workless couple in eight tends to be on an income-related benefit after five years; for loan parent families it is one in three. It is the longevity of time spent on benefit and therefore the difficulty of replacing carpets, the cooker, clothes, bedding and blankets, rather than the relativity of the benefit income to lone parents and other family types, that is the issue to be addressed as well as trying to help lone parents back into work. That is why, as part of the changes to budgeting loans in the Social Fund—this was discussed earlier at Committee stage—we have included the length of time on income support and family size as two of the personal circumstances which we use to determine budgeting loan applications. The longer the lone parent has been on benefit and the greater the hardship she is likely to experience as a result, the better and speedier the access she will have to budgeting loans. Indeed, because lone parents already face a longer period on benefit they already receive over half of the annual budgeting loan expenditure of £140 million.
I hope that I have met the questions raised by the Committee. We shall be treating both lone parents and two parent families in the same way when they face long periods on benefit. We believe that they should be treated equitably. We seek to ensure that all vulnerable families receive an adequate income when out of work; we seek to address the barriers they face when moving into work. We are breaking down those barriers for lone parents and workless couples alike through our new deal for lone parents, our national childcare strategy and our working families tax credit. We shall guarantee an income to every working family of at least £180 a week.
As Members of the Committee will know, we have also put in place measures to ensure that all four year-olds have an early education playschool start at the beginning of the school year. These measures will
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provide lone parents with the opportunities they have asked for to work—opportunities not previously open to them. If lone parents choose not to work in the short term—perhaps because they have very young children—we have sought to meet that need by increasing the income support premia. We hope that we shall be able to reduce the time they spend on benefit but to give them while they are on it priority access to a budgeting loan.
Research is inconclusive about the relative needs of lone parents and two parent families. We know that the specific costs that lone parents face are the length of time that they spend on benefit; the difficulties of getting access into work; and the costs of childcare. Our strategy is to address not just the symptoms of their poverty, which is the differential between their benefit and those of a couple, but the causes of it. There is the fact that they have young children which means that they are not free to go to work; there is the obstacle of moving into work and the difficulties that stand in their way as regards the Social Fund. We are addressing those problems. As a result I believe that in years to come lone parents will enjoy a level of prosperity that they have not experienced so far. I hope that this amendment will not be supported and that in due course Clause 70 shall stand part of the Bill.
4.45 p.m.
Lord Ashley of Stoke: I challenge my noble friend on one point. The noble Earl and my noble friend said that they respect research, but my noble friend has just spent 10 minutes rubbishing research. She said that one cannot really depend on research because people bring all their own assumptions and presumptions to bear. Their own bias is built in. Anyone can rubbish that kind of research.
In saying that, my noble friend is really saying that research is of no value. That is the clear implication of what she said. Everyone brings their own presumption, assumption, predispositions and bias to bear and so the research is clearly of no value. That is a very big statement for my noble friend to make.
It is always a great pleasure to listen to her. As I have said before, she is one of the most persuasive Members of this House. But we cannot really buy her argument. The request does not come from me but from the Social Security Advisory Committee. It has said that we should try to have independent, quality research about whether the single parent family has more costs or not. In my credulous view, there is no argument: of course they have many more costs despite the persuasive points made by my noble friend.
Perhaps I may take one example. I refer to the research of the effect of smoking on cancer. My noble friend Lady Hollis is surely not going to say—and she must say this logically—that proving that smoking causes cancer is ridiculous because there is bias and prejudice built into the research. That invaluable research has saved many lives throughout the world. I hope that my noble friend will not give a definitive no.

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She is not a dogmatic person; she is very reasonable, so I hope that she will think about this matter, sleep on it, and possibly answer at a later stage.
Baroness Hollis of Heigham: I must intervene. Heaven forbid that I should rubbish research. I have spent over 35 years of my life carrying out research and I would hate to think that it had no value, so I am certainly not rubbishing research or saying that it has no value. I am saying that where research points in different directions and continues to do so, we must then ask what assumptions people are bringing to bear on it.
Perhaps I may do something that I do not normally do and emulate—perhaps I should say "copy" because "emulate" might be the wrong word—the noble Earl and give a classic example that I used to cite to my students. There is a long-standing debate about whether the standard of living of working-class people rose or declined during the industrial revolution. It is a classic argument in which one takes students through the cohort of two dozen articles in the English Historical Review and the Economic History Review, and they all come up with different answers. That is because all the arguments start with different assumptions about what constitutes a standard of living.
I choose that example because it is not so far removed from our argument today. One considers the quantitative arguments, the qualitative arguments, the cost of goods, the information you do not know, the information you do know, and the hours people work and then at the end of the exercise one says, "If you judge this as significant, that is the answer", or "If you judge that as significant, this is the answer", but on the whole the jury is out. The jury is out after 30 years of diligent research by many historians. That is what I have found after 30 years of undergraduate teaching.
I am not rubbishing research. Where research on, say, smoking and cancer, is coherent and scholarly, and is consistent with other research, that is the point at which the Government take action. It may be that a single piece of research—the latest research—has additional evidence that was not available to previous researchers, thus causing a hiccup or placing a question mark on our established thinking, whether on BSE or any other matter, in which case one stands back and tries to replicate that research and to gain peer group support. One would then probably commission further research. We know that the contours of research on which one bases action have to be ascertained. Having read all the research, I have to say, in good faith, that the jury is out. Indeed, I suspect that on this matter we will always have a hung jury.
Earl Russell: As one researcher to another, I understand what the Minister is saying about research. In that respect, she is quite right. Her example about the standard of living and the industrial revolution was well chosen. I remember bowling that as a bumper at a candidate at an entrance interview, and the candidate replied, "I can't answer this question. How do you quantify clean air?"—and the candidate was, of course, in straightaway.
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Where the Minister was very interesting—she did her level best with rather thin material—was in her admission that the jury is out. That is genuinely the smoking gun behind the Government's policy because we have had the sentence; it is being enforced; it is to be executed today. To have the sentence while the jury is still out is rather a curious form of proceeding. I cannot help feeling that it is just a little precipitate.
The noble Lord, Lord Ashley of Stoke, spoke with the voice of experience. On this matter, the voice of experience seems to be pretty unanimous. I am inclined—this may be a prejudice, but it is one that I am prepared to defend—to think that, other things being equal, the body of expert and apparently competent research which coincides with the voice of experience is slightly more likely to be right than the body of research which does not.
The Minister made great play of the argument that we want to treat families according to their particular circumstances, not their family structure. I respect the desire not to judge family structures, but our argument from these Benches is that single parenthood is itself a stress. The Minister is clearly right that childcare is the most expensive of those stresses. However, it is not correct to argue that childcare is the only such stress. I should be inclined to argue that transport comes a very close second because the amount of time that one has to spend trying to be in two places at once can be considerable. There is genuinely truth in the proposition that time is money.
I hope that, in the light of what she said about the jury still being out, the Minister will reflect on Amendment No. 112. For the time being, I beg leave to withdraw Amendment No. 112 without prejudice to what I may do in a moment on the Question of Clause 70 stand part.
Amendment, by leave, withdrawn.
[Amendments Nos. 113 and 114 not moved.]
Lord Higginsmoved Amendment No. 115:
Page 47, line 20, at end insert—
("( ) No regulations made under subsection (1) may reduce the rate of child benefit payable to lone parents in receipt of disability benefit; and accordingly such lone parents shall continue to receive child benefit at the higher rate.").
The noble Lord said: This is a simple and straightforward amendment. In an earlier debate, I asked the Minister whether there were any particular circumstances in which her general view that there ought to be no preferential treatment in future for lone parents would apply. I believe that this is such a case.
We have just had an interesting discussion about research. I think that the noble Lord, Lord Desai, would probably agree with me that in economics the assumptions that one makes are often crucial to the results that one ultimately achieves. However, I should not have thought that it would require an enormous amount of research to suggest that those who are both lone parents and disabled are likely to require some form of special treatment. In essence, that is the purpose of the amendment.

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Clearly, the Government's overall policy of seeking to ensure that, whether by stick or by carrot, lone parents move from welfare to work has much to be said for it but, equally clearly, in the case of lone parents who are disabled, it is much less likely that they will be able to achieve that objective—which is an objective shared by both the Government and many lone parents who are disabled. By definition, they clearly have bigger handicaps.
Last week we had an excellent debate on the disabled, and this amendment partly stems from that. I hope that we shall have a sympathetic response from the Minister. She has already made exceptions for those who are already in receipt of lone parent benefit. Their benefit is to continue at the higher rate, as we shall discuss when we reach the next group of amendments. That being so, should not the Minister perpetuate that in relation also to lone parents who are disabled and in receipt of disability benefit? I beg to move.
Lord Ashley of Stoke: Inevitably, a lone parent with a disability will face additional costs. I hope that my noble friend the Minister will be able to accommodate the amendment moved by the noble Lord, Lord Higgins. My noble friend has done more for disabled people than any Member of your Lordships' House. She is not able to articulate what she has done behind the scenes, but it has been a major achievement. I am sure that if she can possibly help, she will do so.
Earl Russell: I should like to express agreement with what the noble Lord, Lord Ashley, has just said about the Minister. I should also like to say that this is a good amendment and that we on these Benches support it for all the reasons given by the noble Lord, Lord Higgins.
Lord McCarthy: Perhaps I may ask the noble Lord, Lord Higgins, a question. He said earlier that he is against government policy for special reasons, but he has not told us exactly what those reasons are. I thought that it was the policy of his party to be against all differentials between single-parent families and two-parent families, but he now wants a single, special exception. I think that it is a sensible exception, but does it represent a change of policy on the part of his party or does it in some way fit with his previous general opposition to all differentials?
5 p.m.
Lord Higgins: The answer is that both factors have a cumulative effect, but it is the disability aspect, to which the noble Lord, Lord Ashley, referred in the debate last week, that makes one question with the Minister whether or not this is an appropriate exception.
Baroness Hollis of Heigham: When I first saw the amendment it appeared highly desirable. I sympathise with the sentiments behind it, but I wonder whether it confuses two matters. I believe that there are two issues here: the parent's, and possibly the child's, disability, and the level of child benefit. We believe that the right way to help a family with a disabled person in it, whether the parent or child, is not to have higher rates
536
of child benefit but to help with the costs of disability. That is why a particular exception was made in their case in the first place. That is the push of our strategy, as my noble friend was generous enough to identify. We are providing additional help for people with disabilities in different ways. The Committee will be aware that disability working allowance is paid to people in work who have an illness or disability that places them at a disadvantage in the job market. But all of our research shows that DWA is not as effective as we would like it to be. It does not move into work the number of disabled people that it should, because only about 14,000 take advantage of it.
It is for that reason that my right honourable friend the Chancellor will replace DWA with a far more generous disabled person's tax credit to ensure that disabled people are better off in work. That will provide them with a guaranteed minimum income above and beyond the minimum wage, and it will include improved help with childcare costs through a childcare credit. Therefore, a disabled person who moves into work will, under the new disabled person's tax credit, have a better standard of living than is currently the case if he is on disability working allowance.
My noble friend has forgotten more than I shall ever know in the field of disability. He will be the first to tell the Committee that the Government pay a range of benefits to vulnerable people who are not able to work due to ill health and disability. The disability living allowance is paid irrespective of other income to severely disabled people in order to help them with the extra costs arising as a result of their disabilities. Incapacity benefit or severe disablement allowance are available to other people who are unable to work due to ill health or disability. In addition, income-related benefits provide help to disabled people to help meet the extra costs they may face. A lone parent who is disabled will receive a disability premium which is of greater value than the higher family premium paid currently to lone parents; in other words, a family with children and a disabled parent in it will already receive a higher level of income by virtue of that disability.
People who are severely disabled and who live alone are most likely to have extra care costs. They will qualify for a severe disability premium which is of greater value still. Therefore, the benefit needs of disabled people are not about family structure. The benefits system provides help specifically for families and, in parallel, specific help for people with disabilities. This amendment would not provide any help to the most vulnerable families in greatest need. It would affect the rate of child benefit available and, as a result, not affect families on income support whom the Government are helping through the measures to which I have already referred.
I suggest to the Committee and to my noble friend Lord Ashley that the right way to help a family where a parent or child suffers from a disability is to offer financial help to meet that disability. The Government are doing that through the measures I have outlined. We shall continue to explore these matters with the

537
disability organisations in the fora that we have set up. I believe that that is the right way to progress rather than to put an extra premium onto child benefit which will fluctuate up and down according to the health of the parent. It is surely right to uncouple those two assumptions and provide parallel help on both fronts, that with disability and that with children. I hope that in the light of that the Committee will feel able not to proceed with the amendment.
Earl Russell: Before the Minister sits down, does she agree that a single parent with a disability is at a disadvantage when it comes to mobility compared with a parent with an equal disability but also with an able-bodied partner?
Baroness Hollis of Heigham: Certainly, someone without any support who suffers from a disability and who has either mobility or care needs is at a disadvantage compared with a person who has support. The purpose of DLA in terms of both care needs and mobility is to enable that person to buy that support.
Lord Higgins: I listened carefully to what the Minister said. One needs to study the matter very carefully given the complex inter-relationships between the whole range of different benefits. At times it is not at all clear whether in any particular case a benefit is superseded by a higher benefit of a different category. I should like to study between now and Report Stage what the Minister said and, if need be, return to the matter. Subject to that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 115A not moved.]
5.6 p.m.
On Question, Whether Clause 70 shall stand part of the Bill?
Their Lordships divided: Contents, 121; Not-Contents, 38.

Division No. 1

CONTENTS

Acton, L.

Cocks of Hartcliffe, L.

Ailsa, M.

Courtown, E.

Anelay of St. Johns, B.

Cranbome, V.

Barnett, L.

David, B.

Bassam of Brighton, L.

Davidson, V.

Biffen, L.

Davies of Coity, L.

Blackstone, B.

Davies of Oldham, L.

Blackwell, L.

Desai, L.

Borrie, L.

Diamond, L.

Brooke of Alverthorpe, L.

Dixon, L.

Brooks of Tremorfa, L.

Dormand of Easington, L.

Bruce of Donington, L.

Dubs, L.

Burlison, L.

Eatwell, L.

Cadman, L.

Erroll, E.

Callaghan of Cardiff, L.

Evans of Parkside, L.

Carmichael of Kelvingrove, L.

Ewing of Kirkford, L.

Carter, L. [Teller.]

Falconer of Thoroton, L.

Cledwyn of Penrhos, L.

Farrington of Ribbleton, B.

538

Gallacher, L.

Nelson, E.

Gilbert, L.

Nicol, B.

Gilmour of Craigmillar, L.

O'Cathain, B.

Glenamara, L.

Onslow of Woking, L.

Gordon of Strathblane, L.

Orme, L.

Graham of Edmonton, L.

Palmer, L.

Gray of Contin, L.

Paul, L.

Grenfell, L.

Peston, L.

Hanworth, V.

Pitkeathley, B.

Hardie, L.

Plumb, L.

Hardy of Wath, L.

Ponsonby of Shulbrede, L.

Haskel, L.

Prys-Davies, L.

Hayman, B.

Ramsay of Cartvale, B.

Henderson of Brompton, L.

Randall of St. Budeaux, L.

Higgins, L.

Rendell of Babergh, B.

Hollis of Heigham, B.

Richard, L. [Lord Privy Seal.]

Hoyle, L.

Rogers of Riverside, L.

Hughes of Woodside, L.

Rowallan, L.

Hunt of Kings Heath, L.

Savile, L.

Irvine of Lairg, L. [Lord Chancellor.]

Sewel, L.

Shepherd, L.

Islwyn, L.

shore or Stepney, L.

Janner of Braunstone, L.

Simon, V.

Jay of Paddington, B.

Simon of Highbury, L.

Jeger, B.

Smith of Gilmorehill, B.

Jenkins of Putney, L.

Strabolgi, L.

Kennet, L

Strange, B.

Leathers, V.

Strathclyde, L.

Lockwood, B.

Symons of Vernham Dean, B.

Taylor of Blackburn, L.

Lofthouse of Pontefract, L.

Taylor of Gryfe, L.

Longford, E.

Taylor of Warwick, L

Lovell-Davis, L.

Tenby, V.

McIntosh of Haringey, L. [Teller.]

Thomas of Macclesfield, L.

Turner of Camden, B.

Mallalieu, B.

Varley, L.

Manton, L.

Waddington, L.

Mason of Bamsley, L.

Walker of Doncaster, L.

Merlyn-Rees, L.

Weatherill, L.

Milner of Leeds, L.

Wedderburn of Charlton, L.

Milverton, L.

Whitty, L.

Molloy, L.

Williams of Elvel, L.

Monkswell, L.

Williams of Mostyn, L.

Montague of Oxford, L.

Young of Old Scone, B.

NOT-CONTENTS

Addington, L.

Mar and Kellie, E.

Avebury, L.

Marsh, L.

Beaumont of Whitley, L.

Meston, L.

Calverley, L.

Nicholson of Winterbourne, B

Carlisle, E.

Razzall, L.

Dholakia, L.

Rochester, L.

Elliott of Morpeth, L.

Rodgers of Quarry Bank, L.

Falkland, V.

Russell, E. [Teller.]

Goodhart, L.

Shaw of Northstead, L.

Grey, E.

Simon of Glaisdale, L.

Hamwee, B.

Soulsby of Swaffham Prior, L.

Hayhoe, L.

Steel of Aikwood, L.

Hooson, L.

Stockton, E.

Lane of Horsell, L.

Taveme, L.

Layton, L.

Thomas of Walliswood, B.

Lester of Heme Hill, L.

Thomson of Monifieth, L.

Ludford, B.

Tope, L.

Lyell, L.

Tordoff, L.

Maddock, B. [Teller.]

Williams of Crosby, B.

Resolved in the affirmative, and Clause 70 agreed to accordingly.
5.14 p.m.
[Amendments Nos. 116 and 117 not moved.]
Clause 71 agreed to.
Lord Evans of Parkside Lord Evans of Parkside moved Amendment No. 117A:
After Clause 71, insert the following new clause—
INDUSTRIAL. INJURIES BENEFITS: BACKDATING
(" .—(1) The Secretary of State may by regulation provide that a claim in respect of a disease prescribed under section 108 of the Contributions and Benefits Act may he backdated for a period of up to 12 months from the date of the claim, or to the date of disablement (whichever is the later).
(2) Before making regulations under subsection (I) above, the Secretary of State shall invite advice from the Industrial Injuries Advisory Council.").
The noble Lord said: I shall speak also to Amendment No. 117B. During Second Reading on 15th January, I was severely critical of Clause 72. I said:>
"I turn now to Clause 72 which deals with the restriction on the back-dating of benefit. I have great difficulty with this clause. To be frank I am rather ashamed of it"".—[Official Report, 15/1/98; col. 1197.]
Until 1st April 1997, claims for most benefits would have been backdated for up to 12 months. There are good reasons for late claims which can be proved. It was a fair, sensible and humane provision. There are many reasons why people find themselves having to make a late claim.
The previous Conservative government reduced that claims period from 12 months to three months. I thought that their attitude and actions were disgraceful and strongly opposed them. The purpose of the change was just to save money. I understand that its purpose was to save about £365 million over a three-year period, but of course those savings would come from some of the most impoverished people in this country—people who often had great difficulty in even understanding the forms that they were being asked to complete.
I expected that the new Labour Government would have conducted a major review of the impact on impoverished people who were affected by the new three-month backdating rule. I thought that they would seek to see how much hardship had been created by that new provision. But it is self-evident that the Government did not have any form of investigation into the impact of the new regulations.
The new backdating regime commenced on 1st April 1997. The new Labour Government were elected on 1st May 1997—some two months later. The original backdating came into force during the course of the general election. No one debated the impact of that new regulation in any great depth.
The Bill received its Second Reading in the other place on 22nd July. We all know that Bills are not produced out of thin air. They have to have a fairly lengthy period of gestation. The more complex a Bill, self-evidently the longer the period of gestation. So it is obvious that there was no inquiry or review of the impact of the new regulations. It was a savage cut from three-months' back-dating to one month, apparently to save a further £58 million.
On Second Reading I referred particularly to workers who have had their health damaged, in many cases critically, by the industrial substances and processes
540
with which they worked. I am critical of any proposition to cut their backdating rights. Amendment No. 117A attempts to deal with that situation.
The main problems with industrial injuries disablement benefit relate to diseases which are often difficult to diagnose, and are generally not even noticed or felt until some time after the condition has started to cause the disablement.
Industrial injuries benefit is a form of compensation which society has recognised should be paid without regard to whether there is a need for money. Most people would recognise the complete fairness of back payments in such cases. That is particularly true in the case of asbestos-related diseases. A mesothelioma tumour does not usually manifest itself until between 20 and 50 years after exposure to asbestos. Many sufferers of asbestosis, including the non-working wives of industrial workers who have contracted the disease from the dust and fibres carried home by their husbands on overalls and boiler suits, have no idea when they were in contact with asbestos. Many individuals have long forgotten the employer who exposed them to the asbestos in the first place. People contract the disease late in life, forgetting what has happened to them.
Perhaps I may cite my own case and the difficulties involved in such situations. My knowledge of the subject is not based on academic studies or cases relating to my work as a Member of Parliament for 23 years, but on my employment in the shipbuilding and ship repairing industry on Tyneside. I began when I was 15 years old and continued to work in the industry until I was elected to Parliament in March 1974. During those years, I worked in ships' engine and boiler rooms during building and repairing. Every steam pipe and boiler in those vessels was lagged with asbestos. When we were asked to erect the pipelines and boilers or, even worse, to remove and repair them, we removed the asbestos lagging by hacking if off with an axe, hammer and chisel or a hacksaw. The ships' boiler and engine rooms were covered in asbestos dust and none of us had the faintest idea of the difficulties we were creating for ourselves in later life. No one told us of the dangers involved with asbestos.
When the repairs had been finished by people such as myself, workmen were asked to renew the asbestos lagging. Workmen known as "laggers" mixed the new asbestos cement in the boiler or engine rooms without taking any precautions whatever. Again, the atmosphere was filled with asbestos dust. As we gained more knowledge and watched our colleagues die from asbestos-related diseases, it is hardly surprising that I and people like me often wonder whether we have contracted the disease. People who would have been the same age as me died 10 or 15 years ago from asbestos-related diseases.
Many other industries have crippled their workers. In St. Helens, the town which I had the privilege of representing for many years, was mentioned in the Guardian on Friday, 27th March. It reported that:
"Two men who developed asthma, memory loss and mood swings after working for more than two decades with noxious chemicals at a plant making Cellophane were yesterday celebrating a £75,000 compensation victory. 'I was effectively sniffing glue for 22 years,

541
said James Fallon, aged 65 … Mr. Fallon and Robert Burrows, aged 70, both worked as titters at British Sidac at St. Helens, Merseyside, which closed in 1982. They came into contact with carbon disulphide, toluene, formaldehyde and phosgene … Mr. Fallon, who claims he wore no masks or protective clothing during his employment from 1958 to 1980, was attracted by high pay levels and often worked seven days a week to boost his income. 'The company told us nothing', he said. 'They concentrated on the fire risks because the chemicals were so volatile. The smell was evil and there were times when I was high on a cocktail of different things'."
Interestingly, the solicitor for the company, which has closed, said that the two originally made substantial claims, including compensation for loss of earnings. The insurers decided to offer a modest proportion of the potential claim to avoid an expensive trial. Perhaps I may point out that that factory was surrounded by terraced housing. Therefore, not only were the men and women in the workforce affected by the substances, but so were people living around the plant. One wonders how much damage has been caused to many people in St. Helens and to those living around similar plants in the rest of the country.
Amendment No. 117A could mean a great deal to many workers suffering from crippling diseases. If passed, it will enable the Secretary of State to introduce regulations restoring the one-month backdating rule. The amendment also calls upon the Secretary of State to invite advice from the Industrial Injuries Advisory Council before introducing such regulations. Members of the advisory council are the experts in the field and I am sure that they have the confidence of industrial workers everywhere. Amendment No. 117B writes into the Bill similar safeguards as regards reduced earnings allowance.
Many men, and on occasions women, who have been crippled as a result of prolonged contact with the industrial substances with which they worked without realising what was happening, have been able to continue in some form of employment but at a lower rate of pay. Often they have had to give up the original job which earned them the high wages, probably paid, because of the conditions in which they were working. The benefit made up those lower earnings.
I trust that my noble friend the Minister, who I have pestered about the issue during the past few weeks, will listen sympathetically to what I have said and agree with me. I beg to move.
Earl Russell: The noble Lord, Lord Evans of Parkside, has made an extremely powerful case. We on these Benches were prepared to support the amendments but will now support them with even more emphasis.
I do not usually recommend the Minister's own speeches to her. However, if she reads her speeches on mesothelioma during the course of the recovery of compensation Bill she will find that she put the case as powerfully as did the noble Lord.
Baroness Hollis of Heigham: The amendment puts on the face of the Bill an exemption to the backdating limit of a maximum of 12 months for industrial injuries disablement benefit claimants who have suffered disablement as the result of a prescribed disease
542
associated with certain employments. I shall ask my noble friend to withdraw his amendment because I wish to speak on Clause 72, to which the amendment relates.
Clause 72 provides the powers for us to set out new rules for the backdating of benefits. It puts a responsibility on individuals to claim benefit promptly to ensure that they receive the benefits to which they are entitled. Our intention, as explained on Second Reading in another place, has been to provide automatic backdating for up to one month for non-income related benefits such as retirement pension and to allow one month backdating of income related benefits where there were exceptional circumstances which prevented an individual from claiming on time.
As he so elegantly put it, my noble friend Lord Evans has been pestering me over the past couple of weeks as regards the particular issue of latent and industrial diseases. This Government see the development of a modern service as one of their key objectives for the future of the welfare state. We have published our Green Paper, New Ambitions for our Country—A New Contract for Welfare. In that paper we have set out our principles. A key principle is that we should develop a modern service. By that we mean that the system of delivering modern welfare should be flexible, efficient and easy for people to use.
We have made it clear in the Green Paper that we shall put the claimant at the centre of service delivery. We shall set success measures to achieve that. We are making a start on developing a modern service in this very Bill with our proposals for new arrangements for decision-making and appeals. Those are intended to produce a more streamlined, efficient and responsive service. For example, it means piloting kiosk technology in Cambridge. We are looking at the possibility of electronic access points, internet services and so on in the longer term.
We do not wish to see people miss out on benefits to which they are entitled. Indeed, we are keen to encourage people to claim what they are due. The Benefits Agency wants its claim forms and leaflets to be as clear as possible. It has recently set up a consultation exercise to see whether its material can be improved.
As the other side of the issue of backdating, we know that there are real difficulties about the take-up of benefits. We are committed to taking real practical steps to ensure that people receive the benefits to which they are entitled. Indeed, from today, we are starting a series of pilot projects to identify why pensioners do not always claim the income support to which they are entitled. Those projects, costing about £15 million are based in York, East Renfrewshire, Lambeth, South Staffordshire, Stroud, Preston, Glasgow, Torbay and Torfaen. They will run until the end of this year and we shall then evaluate them. As I say, the other side to backdating and entitlement is take-up. We are seeking to test the best ways of getting income support to those who are currently entitled to it but who do not claim the entitlement and to see how we can improve that in future.
At the same time we are aware that some people are receiving benefits to which they are not entitled. The gateway to the benefit system needs reform. We are a

543
responsible government and we must make the best possible use of taxpayers' money. We must ensure that people take their responsibilities seriously. But our priority is to begin the improvements in the welfare state as we have set out in our Green Paper. Therefore, to that end, we are also conducting major reviews of housing benefit, pensions and, in full consultation with the disability organisations, incapacity benefit.
We want to look at all those issues together. We want to improve service delivery in the active modern service which I have talked about in terms of new information technology. Also, we wish to address the gateways to benefit, including incapacity benefit and income support. Generally, we want to reform the welfare state to produce a modern service. Therefore, at this stage it is not sensible to make changes to the backdating rules in isolation. We prefer to look at all aspects of the problem in the light of the information which we draw from the pilot projects and then take strategic decisions.
There will no doubt be changes to the process of claiming which draw on the outcome of our reviews, the pilots under way, and the experience of the modern service approach. We shall wish to consider how best to deal with changes which may be required in the context of any future legislation. In that regard we have decided to withdraw Clause 72 from the Bill. We shall therefore oppose the Motion that the clause shall stand part of the Bill. In that context I should like to include consideration of the points raised by my noble friend Lord Evans about the difficulties facing those who suffer disablement as a result of a prescribed disease with a long latency period as part of our wider consideration. Therefore, I hope that my noble friend will be prepared to withdraw the amendment.
5.30 p.m.
Lord Evans of Parkside: I say a heartfelt thank you to my noble friend. I am absolutely delighted that my honourable and right honourable friends in another place and my noble friend the Minister have given serious consideration to representations I know they have received from many quarters about the impact of Clause 72.
I believe that the signal which has been sent out will demonstrate that this Government are a listening government. They listen and come back with better answers to the question after consultation. I thank the Minister wholeheartedly and, I am sure, on behalf of many hundreds of thousands of people who will have had a burden lifted from them in a whole variety of areas I shall not bother to elucidate now. It is with great pleasure that I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 117B to 126 not moved.]
On Question, Whether Clause 72 shall stand part of the Bill?
Lord Higgins: As can be seen from the Marshalled List, I was proposing that this clause should not stand part of the Bill and I am very glad indeed that the Minister is prepared to agree with that proposition.
544
There can be no doubt that the case presented by all the pressure groups concerned—the Law Society, Age Concern, the National Association of Citizens Advice Bureaux, the Child Poverty Action Group and so on—was overwhelming. It seems clear that the measure was entirely Treasury-driven and that the sums involved were such that the Treasury felt that it was something which should be pushed through. I suspect that it reflects very much the relationship between the Secretary of State for Social Security and the Chancellor of the Exchequer. The system always breaks down where Secretaries of State are not fighting their corner.
One has only to look at the Question for Written Answer tabled by my noble friend Lord Newton of Braintree to realise that the clause would have had a serious effect on a great many people; indeed, every conceivable group one would have thought the Government would wish to help and, I am very glad to say, they are now prepared to help.
I said on an earlier amendment that a dictum of the late lain Macleod, when securing a concession from the Government, was that you do not shoot Santa Claus. On this occasion, I am not proposing to delay the Committee for a great length of time for that very reason. Having said that, the Government say that they will take back the matter and look at it again. I really do not believe that that is necessary. It seems to me absolutely clear that this case is overwhelming. The number of individual cases cited by outside groups who deal with the problems of the disabled, the bereaved, those suffering industrial injuries and housing problems—I refer in particular to the point made by my noble friend Lord Blackwell who was concerned about the impact on housing benefit—all make an overwhelming case.
Although what the Minister said today is extremely welcome, by the time this Bill reaches its final stages I hope that the Government will make it clear that they have absolutely no intention of going ahead with this measure. The limits are so tight that inevitably people who are entitled to benefit—and who, Parliament has decided, should have benefit—should be able to claim that benefit, even though, for very well understood reasons, it takes them a while to make their claim.
Lord Ashley of Stoke: My noble friend the Minister and the Government emerge with great credit regarding this decision. I had a very harsh speech prepared because I was taken aback by the proposition in the Bill. The fact that my noble friend has been able not only to listen but also to respond to comments made is to her great credit. There should be no cheap party political points made in that respect. Indeed, it has come about as a result of consultation and discussion. As I said, both my noble friend and the Government should be thanked most sincerely for taking that decision.
Baroness Ludford: I, too, warmly welcome the announcement by the Minister and have nothing but warm words to say about the decision. I certainly have no intention of making any party political point. Like the noble Lord, Lord Higgins, I am grateful to the considerable range of organisations which have

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provided such expert and comprehensive briefing. Like the noble Lord, Lord Ashley, I have had to undergo a complete change of mind and scrap what was a very angry speech. Members from all parts of the Committee felt that Clause 72 was a measure which went too far and that it really would deprive some of the poorest people. I am absolutely delighted that the Government have recognised that fact. There is no need for me to speak at length because I am absolutely overjoyed.
However, perhaps the Minister could provide me with some clarification. I understood her to say that Clause 72 is being withdrawn entirely and that there is no intention to return with an alternative provision; in other words, the backdating provisions will remain as they are at present. I believe that to be particularly sensible because I understand that the Government's comprehensive spending reviews will be announced in the autumn. One of the points that I had intended to make was that this provision was a false economy because the costs would merely be incurred elsewhere—for example, by local authorities. As I said, I believe that it is entirely sensible for the Government to take such an approach.
Baroness Turner of Camden: I should also like to thank my noble friend the Minister. With some heart searching I attached my name to the list of those wishing to oppose the Question that Clause 72 should stand part of the Bill. My noble friend was well aware of my feelings about the clause because I had made them known to her. I am deeply grateful for the fact that the Government have been prepared to think again on the matter.
Although I fully agree that there ought to be a strategy in place to ensure that people claim their entitlement when it is due, I felt that it was not right to put in place such a clause before the strategy had been developed to ensure that benefits were claimed on time. Nevertheless, I am most grateful for what has been said. I look forward to hearing further from my noble friend the Minister as to the method that the Government have for carrying forward their plans on welfare reform, which I believe are badly needed. However, I hope that we shall not have a clause such as Clause 72 before those plans are in place. Indeed, if that clause had been put into practice, it would have damaged a great many vulnerable people.
Lord Newton of Braintree: When I spoke on Second Reading it was, as some Members of the Committee will recall, my first speech in this Chamber. I indicated then, in what was intended, quite properly, to be a non-controversial speech, that I had a number of reservations about aspects of the Bill regardless of their provenance. The one upon which I made clear I felt most strongly was this backdating clause which, quite frankly, I flatly opposed. Therefore, like others on all sides of the Committee, I am most grateful for what the Minister announced this afternoon.
There has been some reference to a Parliamentary Question that I tabled—indeed, my noble friend Lord Higgins, referred to it—about the breakdown of such
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savings. I should like to place it firmly on record that the Answer to that Question revealed that, of an estimated £58 million of savings in about a year's time and thereafter, no less than £42 million would come from the elderly, the long-term sick and disabled, carers and lone parents. I do not wish to labour the point further.
While I entirely appreciate that the Minister's speech focused a good deal on reviewing the matter in the light of a variety of other considerations, which is probably what I would have said if I got into the same mess—which, happily, I do not recall doing, but it can happen to any of us in social security matters—I should tell her that I quite understand why there was this camouflage. However, whatever the Minister does about take-up and all the other matters that she mentioned, I very much doubt that she will arrive at a situation in which she can re-introduce a variant of this proposal without similarly hitting those same groups of people on a large scale. I hope that it is indeed camouflage and that the noble Baroness will now stay firmly underneath it.
5.45 p.m.
Baroness Pitkeathley: I have had many happy moments since I came into this Chamber, but I believe that this ranks as one of the happiest. I should like to add my thanks to those already expressed and also those of millions of disabled people and their carers for this proof that the Government do listen. I hope that I may also add my personal thanks to my noble friend the Minister, who has put such time, effort and commitment into the matter.
Earl Russell: As I was very briefly out of the Chamber at the moment when the announcement was made, I hope that I may, nevertheless, be allowed to join in with the general welcome. Indeed, it seems to me to be a model of this place acting as it should as a revising Chamber. Perhaps I may also be forgiven for making one suggestion. Whatever backdating limits are ultimately arrived at, I presume that there will be some provision for exceptions as has been the case in the past. Will the Minister consider the possibility of allowing exception for "good cause" as used to be done, rather than attempting a total enumeration by regulation? The noble Baroness knows my arguments in that respect, so I will not dwell upon them.
Baroness Hollis of Heigham: I shall be very brief. I am pleased that Members of the Committee are satisfied that the response to my noble friend's amendment was to withdraw the entire clause, rather than accept the amendment. We believe that the backdating situation is confusing. We also believe that in the longer term it needs to be reviewed and sorted out. We wish to do so within the context of a more streamlined service and the kind of considerations that I have mentioned. Despite what the noble Lord said, it is not camouflage. As the noble Baroness, Lady Ludford, said, we have two measures simultaneously in progress at present. First, there is the development within the DSS of efforts to produce an active and modern service—for example, our initiatives to use

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information technology for data matching so that we can achieve the automaticity of benefits; and, secondly, we want to encourage take-up and review gateways. Real and important discussions are taking place in that respect.
The second point made by the noble Baroness, was, again, absolutely right. We are part, perhaps most, of the way through main reviews of major benefit areas. It seems sensible that any review of backdating should take place after the shape and contours of those benefits—especially housing benefits, incapacity benefit, and the rest—have been reviewed. Indeed, if
I may put it this way, it is a second order question and should, therefore, come in second place. We should not anticipate where we may seek to go and what we may need to change.
The issue of backdating remains a real one and one which, I suspect, will have to be addressed by the Government in due course. There is no intention to return to it in this Bill. Therefore, like Members of the Committee, I shall be saying "Not content" when the Question is put.
On Question, clause negatived.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 126A:
Before Clause 75, insert the following new clause—
PILOT SCHEMES
(".—(1) Any regulations to which this subsection applies may be made so as to have effect for a specified period not exceeding 12 months.
(2) Any regulations which, by virtue of subsection (1) above, are to have effect for a limited period are referred to in this section as "a pilot scheme".
(3) A pilot scheme may provide that its provisions are to apply only in relation to—

(a) one or more specified areas or localities;

(b) one or more specified classes of person;

(c) persons selected—

(i) by reference to prescribed criteria; or

(ii) on a sampling basis.

(4) A pilot scheme may make consequential or transitional provision with respect to the cessation of the scheme on the expiry of the specified period.
(5) A pilot scheme ("the previous scheme") may be replaced by a further pilot scheme making the same, or similar, provision (apart from the specified period) to that made by the previous scheme.
(6) In so far as a pilot scheme would, apart from this subsection, have the effect of—

(a) treating as capable of work any person who would not otherwise be so treated; or

(b) reducing the total amount of benefit that would otherwise be payable to any person,

it shall not apply in relation to that person.
(7) Subsection (1) above applies to—

(a) regulations made under section 171D of the Contributions and Benefits Act (incapacity for work: persons treated as incapable of work); and

(b) in so far as they are consequential on or supplementary to any such regulations, regulations made under any of the provisions mentioned in subsection (8) below.

(8) The provisions are—
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(a)subsection (5)(a) of section 22 of the Contributions and Benefits Act (earnings factors);

(b) section 30C of that Act (incapacity benefit);

(c) sections 68 and 69 of that Act (severe disablement allowance);

(d) subsection (1)(e) of section 124 of that Act (income support) and, so far as relating to income support, subsection (1) of section 135 of that Act (the applicable amount);

(e) Part XIIA of that Act (incapacity for work);

(f) section 61A of the Administration Act and section 31 above (incapacity for work).

(9) A statutory instrument containing (whether alone or with other provisions) a pilot scheme shall not be made unless a draft of the instrument has been laid before Parliament and approved by a resolution of each House of Parliament.").
The noble Baroness said: The welfare reform Green Paper, published just over a week ago, outlined eight key principles which guide our welfare reform programme. The first of these principles is that the new welfare state should help and encourage people of working age to work where they are capable of doing so. Thus, work is at the centre of our reform programme. For those able to undertake it, paid work is the surest route out of poverty and out of social exclusion.
A key element of our work-focused strategy is to tackle work disincentives. One group faces particular difficulties in a competitive job market, difficulties which include employer prejudice and physical access. I am, of course, talking about those with disabilities or who suffer from long-term illness. What is more, the benefit system often works in such a way that it discourages them from taking up work.
If we are to extend employment opportunities to disabled people we need to reduce the risk associated with taking a job; to reduce financial disincentives to make the move into work; and to offer practical help to those who want to take the first steps towards moving off benefit.
These are not just the views of the Government. We have consulted widely with disabled people and their representatives. Their aspirations are the same as ours. Many disabled people, given the right amount of encouragement and support, have the capacity to work. They have no wish to be consigned to a life of benefit dependency. Those who are capable of work want that option and they want a benefit system which supports them in that aim.
In his ground-breaking Budget earlier this month my right honourable friend the Chancellor of the Exchequer announced the Government's plans to bring forward a whole range of innovative measures to help people move from welfare into work and to make sure that work pays. This new clause supports that strategy and is one of the first steps towards our vision of a welfare state which extends opportunities to all. The clause deals with the circumstances in which a person is to be treated as capable or incapable of work. It introduces a new regulation-making power to allow for pilot schemes to be set up. These schemes will allow us to test the effect of less restrictive definitions of incapacity in order to improve opportunities for disabled people.
At present if sick or disabled people do even a small amount of work or undertake work trials, they will normally lose entitlement to the incapacity benefits, making it more difficult for them to take the steps they want towards independence. This power will give us the ability to test different measures to determine which are the most effective in helping those sick and disabled people who wish to move towards the world of work to do so.
This is an entirely benevolent power which will enable pilots to extend benefits to those who might otherwise be excluded. It will not, however, allow trials which would have the effect of removing or reducing the benefit of those currently entitled. This important safeguard will ensure that the power can be used only in a beneficial manner.
It is our intention to use this pilot power to test out two work incentive measures from April of next year. The first will allow a disabled person to do a small amount of work and still retain entitlement to the incapacity benefits. We shall seek the views of disabled people as to what that level of benefit disregard will be. Our pilots will show us the effects of the limits we have set. However, it will be a modest figure. As I have said, we shall consult disabled people as regards how best to proceed.
The second pilot will allow for those participating in work trial schemes run by the Employment Service to continue to be treated as incapable of work. They would be able to work for a trial period of up to three weeks without leaving benefit.
These pilots will run alongside two further pilots to be set up under powers in the Employment and Training Act 1973. These will extend the jobmatch payments of £50 a week—which are payable for six months to those undertaking part-time work—and the jobfinder's grant of £200 to those on incapacity benefits. These initiatives—I believe they are important ones—are designed to encourage disabled people to do what work they can, even if that might be very little. They will also allow people to try a small amount of work as a stepping stone back into employment.
It is important to recognise that there is no question of compulsion in any of this. Every disabled person will continue to have a free choice as to whether he or she takes up part-time work or training to determine whether they can return to work without risk. What this clause will do is to ensure that, where a person decides to take advantage of these opportunities, the choice will be risk free. He or she can return to their previous benefit.
This measure is a modest but important part of the overall package of reforms to modernise the welfare state. It will enable us to test the effects of allowing people to undertake training or to try a small amount of work as preparation for a return to the labour market. It will allow us to assess the value of enabling those who will never be able to sustain regular full-time employment nevertheless to participate in the world of work.
Disabled people want the opportunity to work but the benefit system sometimes puts barriers in their way and puts the whole risk of moving into work onto their
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shoulders. This measure is part of our plans to break down those barriers and to remove those risks. I commend it wholeheartedly to the Committee. I beg to move.
Lord Higgins: After the experience of the previous Sitting of the Committee when the noble Baroness proposed a measure which was said to be entirely benevolent but we discovered it contained all kinds of snags, when she uses that expression I immediately start to read the small print. However, having done so, I note that the proposed new subsection (9) states,
"A statutory instrument … shall not be made unless a draft … has been laid before Parliament and approved by a resolution of each House of Parliament".
At least we have a clawback position if there turns out to be something which is less agreeable than was thought to be the case. Having said that, I believe we can accept the noble Baroness's assurance that this amendment is intended to do good rather than to be restrictive.
Earl Russell: It seems that peace has broken out in this Chamber in a big way. This amendment embodies another considerable victory. Both the Minister and I have argued that the all-work test has considerable limits on the grounds—as the Minister outlined—that most people with disabilities are capable of some work but not other work. Pilots will obviously be necessary to test the effect of this measure. The proposed new subsection (6) is particularly important; namely, that the effects of the pilots will be entirely benevolent. I particularly warmly welcome it. I am delighted to see this measure. I add one small note of caution. We do not know exactly what we shall find when we try to discover what work people can do and what they cannot do. For one thing, we do not know how much of that kind of work will be available. If we get a new incapacity test which is genuinely medically sound, I do not think we shall know until we put it into effect whether we shall save money.
Lord Ashley of Stoke: I add my congratulations to the Minister. It is quite a change to offer congratulations rather than some of the harsh words that have been exchanged as regards some aspects of the Bill. This is a helpful and progressive measure which will be warmly welcomed by disabled people. It ends the old, rigid demarcation between those who can and those who cannot work. That is extremely valuable because of the continuum of ability to do different kinds of jobs. It breaks that terrible log-jam that has bedevilled disabled people for so long. This may well lead to the provision of a partial incapacity benefit, which has been a requirement of disabled people for many years. My noble friend has shown the value and the benefits of constructive consultation with disabled people. They will be encouraged by the proposition of my noble friend, and also by its potential if the pilots are successful. I have no doubt that they will be successful. I again thank my noble friend for a helpful and constructive suggestion.
Baroness Hollis of Heigham: I am delighted at the warm reception that the amendment has engendered. It

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is indeed dear to my heart. As my noble friend Lord Ashley said, the current incapacity benefit test is based on the assumption that disabled people are either capable of work or are not capable of work. As was pointed out in the debate on disability last week, disability is a continuum. People's conditions improve or deteriorate; they fluctuate by the week or month. Therefore we want a more tailored and sensitive system of benefit support to disabled people, taking the risk from them of moving into work.
My noble friend mentioned the question of a possible partial capacity benefit. If one puts together the piloting of the jobmatch scheme of £50 a week, which the person takes into work with him, the proposals for the disabled person's working tax credit and the linking rules of 12 months, one begins to see the proposals, changes, flexibilities and support mechanisms in place for disabled people so that they can assess the possibility, as they tell us they want to do, of returning to the mainstream of society through the world of work. I am delighted that the proposals have received the Committee's support. I commend them.
On Question, amendment agreed to.
6 p.m.
Earl Russell Earl Russell moved Amendment No. 127:
Before Clause 75, insert the following new clause—
SECRETARY OF STATE TO PUBLISH BENEFIT INFORMATION
(" .—(1) The Secretary of State shall take such steps as appear to him appropriate, including the publication of advertisements and leaflets, for the purpose of informing persons of their possible entitlement to a relevant benefit.
(2) The Secretary of State shall report annually in writing on the steps he has taken under subsection (1) above.
(3) In this section "relevant benefit" has the same meaning as in section 9.").
The noble Earl said: It would be pleasing if we could achieve a hat trick. The amendment deals with the encouragement of take-up. I know that that, too, is a cause dear to the Minister's heart. I have heard her dwell on it many times. Some of the information I have to present, such as the percentage of pensioners who do not take the income support to which they are entitled, is information I have heard the noble Baroness recount many times, including a number of occasions since she came into office.
We wish to encourage take-up of benefits for exactly the same reason that we want to discourage fraud. We want to ensure that money goes to the right people and not to the wrong people. It seems to me that a genuinely even-handed policy will attempt to do both things at once.
The need to encourage take-up is particularly intense for those who are old and who do not always feel that it is worth reading all the paper that comes their way. That may be a valuable conclusion from experience. But every now and then it is one which leads people astray. For example, a citizens advice bureau reports a case of a woman of 84 who visited the bureau to ask about hospital taxi fares and was quite unaware that she could claim income support to supplement her pension. There must be many more such cases.
I know that the Government review benefit leaflets to see what they can do about that. They might manage to do a little more. In so doing they might find that they can do a great deal to encourage good health, and therefore save in one place what they spend in another. However, the essential case for the amendment is that of justice and the efficient working of the system. Any savings that resulted—I believe that there could be some—would be an uncovenanted bonus. I beg to move.
Lord Ashley of Stoke: I add my warm support. The Government have a clear responsibility to inform and to ensure awareness among people of the benefits available; otherwise the most vulnerable lose out. What is truly amazing is the lack of awareness of means tested benefits revealed by the citizens advice bureaux in their splendid briefs. It seems there are still people who are oblivious of the disability living allowance, the ICA and housing benefit. The lack of knowledge is quite remarkable. If the Government can help people to understand these matters, it would improve the take-up.
I make a plea to the Minister that special care be taken to ensure that the information is accessible to disabled people such as the blind and the deaf. The blind can often miss out on notices unless the information is in braille. Deaf people can miss out unless the information is clearly visible. Mentally handicapped people can also miss out. If those categories can be borne in mind by my noble friend, it will help many millions of disabled people.
Viscount Mountgarret: Perhaps I may add my support, for the reasons given by the noble Lord. Not only are the deaf and blind important. I have some small experience at home, with a number of elderly people living in almshouses. Before we know to what extent weekly maintenance contributions may be made, it is necessary to establish their income. When one asks them their entitlement to any benefit, they invariably do not know. In the end we find ourselves advising them. Without doubt they would not be able to get to offices which may well have the information in leaflets. The noble Earl suggests that the information should be made available. It is a small request and could easily be achieved to the benefit of those who have difficulty knowing the various rules and regulations. I hope that the Minister will take note of what has been said and consider whether it is possible to incorporate an amendment on these lines in the Bill.
Baroness Pitkeathley: I support the amendment, and speak also to Amendment No. 128. The bottom line is that people do not know the benefits to which they are entitled. The Green Paper on welfare reform, A New Contract for Welfare, recognises that take-up, for example of the disabled living allowance may be as low as 40 per cent. to 60 per cent. I know from experience that even though 375,000 carers claim care allowance, there is still much underclaiming. For example, in the first three months of this year when Carers National Association ran a take-up campaign on invalid care allowance, in the first eight weeks we had over 3,000 inquiries to our CarersLine about the benefit. It is also well documented that 1 million pensioners do not claim the income support to which they

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are entitled. The Government's moves to encourage take-up of income support, with the projects announced today, are most welcome.
At Second Reading I pointed out that many people take years to realise that they are carers. Most describe themselves as wives, fathers, daughters and sons. The name of the main carers' benefit, invalid care allowance, is also misleading since it appears as though it is intended for the disabled person, not the carer. Since carers' benefits are dependent on those of the disabled person for whom they care, it would be a logical step to include a leaflet about ICA in the DLA and AA claim packs, alerting carers to their possible entitlement.
Carers National Association was delighted to note that in correspondence the Secretary of State for Social Security told a carer in Southwark:
"I believe the inclusion of information on DLA/AA claim packs will significantly increase awareness of ICA and help prompt claims from carers".
Last week I spoke to a carer called John who has been caring for his wife since she suffered a stroke eight years ago. He called our north of England office to ask about invalid care allowance. He had read something in the paper which was part of our campaign. John found that because he was 66 years old he was not eligible to claim ICA. Had someone told him about invalid care allowance when his wife first became ill, or had a form been included in the claim packs, he could have been receiving vital income of around £30 a week and had his basic state pension protected.
I hope that the Minister will remember John and the thousands like him and will acknowledge in her reply that the amendment proves an ideal opportunity for the Government to show their commitment to a continuing programme of improving take-up.
Baroness Anelay of St. Johns: It seems that peace has broken out. I. too, lend my support to the amendments. I hope that the Minister is able to support them as well.
I am aware that whenever one talks about take-up, one faces two battles. The first concerns statistics. Whatever statistics one quotes about people who do not take up benefits, there are always those who say, "Ah, but there are those who do not claim the benefits simply because the result will be such a minimal change that they feel it is not worth while. They may know about the benefits but they do not claim them." There are others who say that one can never do enough because, however much information one gives, there are those who simply choose not to claim benefits.
I have been active in spreading the word about take-up of benefits over the last 20 years, during which time I have worked happily as a volunteer for the CAB in various capacities. I declare my interest as I am currently president of my local CAB. I would like to bring to the attention of noble Lords some projects which I hope the Minister can say will continue in the foreseeable future.
The amendments refer to the issuing of advertisements and leaflets giving information about benefits. One can be more active than just issuing paper
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and deforesting the planet, particularly through assistance given to non-governmental organisations, of which the CAB is just one.
One can give assistance by way of direct grants, by seconding personnel and by use of technology. Through making grants one can issue more and more leaflets; one can translate them into more and more languages; one can issue them in Braille and use other means of making them accessible to people with disabilities. All of those measures are welcome. One can have benefits buses travelling the countryside giving information at various points to facilitate easy access for people with mobility problems.
Here I enter a special plea in another guise, as spokesmen on agriculture, that one should never forget the needs of those who live in rural areas, not just those who live in the Highlands and Islands and in Wales, who experience special difficulties. In the rural areas of England, travelling, even if you are able bodied, may be difficult, particularly if you have two or three children in tow under the age of five. Life can be extremely difficult even if you are making every effort to keep yourself well informed.
The DSS and the Benefits Agency have already made great strides and I hope that they will continue to do so. On a visit to the Aberdeen Benefits Agency office two years ago, I was delighted to learn that one member of staff was being seconded to the local citizens advice bureau and vice versa; somebody from the CAB was going to the Benefits Agency. It was the intention that they should break down the barriers of misunderstanding between the two organisations by learning how each other operated, what their objectives were and how better to serve the claimants in the area.
I have seen the work done in the district offices of the Benefits Agency; they act as customer service officers—people who often feel that they are at the end of the line when the Benefits Agency hands out funds within the district. I make a special plea that we should continue the fight, as we did when we were in government, to make sure that the Benefits Agency properly recognises the work that these customer services officers do. I have seen them, for example, in Portsmouth working closely with representatives of local charities to bring information from them to individuals to make sure that they claim the benefits to which they are fully entitled.
There is then the issue of technology. Last week I moved an amendment in regard to computers. I said then, and I say again, that I welcome the use of information technology whenever possible when it is to the benefit of the claimant. I welcome the development of touch screens. Where we are able to work in partnership with the Benefits Agency, local charities and local authority organisations to produce touch screens, we should welcome that opportunity. Some local offices have worked closely with CABs and other organisations to provide basic facilities such as direct fax lines so that they can easily exchange information.

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I should like to add a caveat. When the Government increasingly refer in the area of social security and other policy areas to increasing use of the Internet on which to post information, will they please bear in mind that there are those in this country who will never have access to the Internet? Even if they have access to a local charity, that charity may not have access to the Internet. Therefore I hope that we do not produce a situation in this country where we have the information rich and the information poor. I made that plea last year in a debate on information technology. That argument will continue to be relevant in future years.
The noble Earl, Lord Russell, raised the issue of fraud. When one encourages take-up, one also faces the problem that some people will not claim because they think that, if they claim, they will be put alongside all those who are targeted as being fraudsters, and they do not wish to be considered in that way. It is a problem that we have all faced. In a debate on 12th November 1996 the noble Earl, Lord Russell, and I pointed out that there is a danger for government in stressing how important it is to combat fraud. This Government have continued our battle against fraud. The noble Earl said that combating fraud leads to under-claiming. We should look with equal intensity for people who ought to be receiving benefit and who are not doing so.
I support the amendments. I hope that when the Government continue the fight against fraud they will bear in mind those who need to claim and who should not in any way feel discouraged because they might be associated with those who claim wrongfully.
6.15 p.m.
Baroness Hollis of Heigham: The aim of Amendments Nos. 127 and 128 is to require action to be taken to inform people of their possible entitlement to benefit. I suspect that this may be one occasion on which I also speak for the noble Earl, Lord Russell, when I say that I am delighted that the noble Baroness, Lady Anelay, is on our side on the issue of take-up. Her colleagues in a previous incarnation resisted a great many proposals in regard to social security. I am delighted to see a meeting of minds.
Baroness Anelay of St. Johns: The Minister has been here longer than I, but I have read Hansard and I am aware that my noble friends in the past have always wished to encourage those who are entitled to benefits to claim them. But, as I recognised in my comments, I know the problems of government in encouraging benefit take-up. My noble friends who occupied ministerial office, I am sure, have made the point at the Dispatch Box that the Minister now occupies that one would always wish to encourage benefit take-up where there is entitlement but not in cases of fraud. If the Minister can point in Hansard to where my noble friends have stated that people who are entitled to benefit should not be allowed to claim it, then I would be delighted to read that.
Baroness Hollis of Heigham: It would be an absurdity for a Minister to say that anybody entitled to something was not entitled to it. But it is the case that
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on a series of occasions when on the Opposition Benches we pressed amendments on take-up in various ways, the government of the day were over-impressed by the difficulties associated with that, as the noble Baroness, Lady Anelay, so euphemistically put it. I hope that, on the basis of my response, she, and other Members of the Committee, will agree that this Government are not over-impressed by the difficulties and are taking an active role.
As a result, while I entirely support the sentiment behind the new clauses, I hope to persuade the Committee that, given the action the Government are taking, it is not necessary to include them in the Bill. I hope the Committee will listen to what I shall say about take-up, which was never addressed, even in warm words, let alone practical terms, by the previous administration. Even the noble Baroness will accept the distance that has been travelled by the Government and the department. The Government are already starting work to find out what it is possible to achieve in terms of identifying people entitled to benefit using data-matching techniques. When I moved an amendment to that effect in opposition, it was rejected by your Lordships and the Government.
Our priority in this work is the situation which arose under the previous administration, namely, the fact that 1 million pensioners are not claiming their income support entitlement was ignored. That is possibly the biggest single group experiencing disentitlement—in other words, failure to take up benefits—of any of the client groups. That will not be allowed to continue under the Government. We believe that all pensioners should share fairly in the increasing prosperity of the nation. We have a manifesto commitment to examine means of delivering help automatically to the poorest pensioners. We are already delivering on that commitment.
Within a few months of taking office we commissioned research to find out why those pensioners do not claim their entitlement to income support. As I am sure the Committee will agree, it is important to gain an informed view of a problem if one is serious about tackling it. The research will help us to ensure that the help available is targeted efficiently and effectively at those who need it.
But we are doing more than that research project. Starting today, as I said earlier, we are running pilot projects in nine areas of Britain to find the best ways of identifying and getting help to the pensioners who are not taking up their income support entitlement. That work is testing the effectiveness of data-matching between computer systems in practice. We are spending some £15 million on the pilot projects. The noble Baroness made a point about rural areas: two of those projects are in rural areas—Stroud and East Renfrewshire. We are serious about getting help to those pensioners quickly and want to see whether rural areas have additional, more difficult or different problems in comparison with their urban counterparts.
While we are taking immediate direct and new action to help the poorest pensioners get their income support entitlement, we would encourage anyone who thinks they may be entitled to a benefit to make a claim. We have already taken steps to put across that message.

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For example, one of the first jobs, to my delight, on coming into this post, was when last May and June we informed all MPs, GPs, welfare rights organisations and relevant trade unions of the new, more generous rules governing industrial injuries disablement benefit which will make it easier for coal miners suffering certain diseases to receive the benefit.
We have taken specific measures—again, a new step—to increase awareness of family credit. As part of the New Deal service, lone parents are given advice about in-work benefits which may be available to them. That, of course, includes family credit. The intervention, the New Deal, also ensures higher take-up.
I turn now to Amendment No. 128 in the name of my noble friend Lady Pitkeathley. The noble Baroness's concerns arise, I know, from her outstanding achievements on behalf of carers via the Carers National Association. I am sure she would welcome the tributes that the Committee would wish to pay to her organisation and the valuable contribution that carers make. It is especially important that they should be aware of potential benefit entitlement.
Carers may be entitled to invalid care allowance if they are looking after a severely disabled person for a substantial period each week. "Severely disabled" means being in receipt of attendance allowance or disability living allowance care component at the middle or highest rate. They are complex benefits which can take some time to determine, largely because of a need to obtain further evidence. If carers delay making their claim until one of those qualifying benefits is in payment, they may not be able to have it backdated as far as they would wish. The ideal time for them to claim is when the disabled person puts in a claim for one of the benefits I have mentioned. I understand that the noble Baroness seeks to ensure that carers are alerted to the possibility of claiming invalid care allowance at the earliest possible moment. That is absolutely right and I wholeheartedly agree that we must do everything we can to achieve it.
What we cannot do is to make the two benefits run simultaneously, because caring responsibilities may well follow, in terms of rules of entitlement to ICA, several months later than the person moving on to DLA, which triggered that entitlement, would wish. If the Committee wishes, I could enlarge on the point, but I am sure that my noble friend will understand the point very well.
I hope the Committee will be reassured to know that officials are looking at ways of alerting carers in just this way by giving them the information in the relevant claim packs. In addition, as we have just discussed, the Benefits Agency is committed to improving the service by improving information available about benefits, providing better access to help and advice about benefits, and streamlining the claims procedure.
We have already discussed other measures taken by the Benefits Agency to make sure that people have access to clear, helpful information about benefits. The amendments require the Benefits Agency to do something it already has a responsibility to do and is
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already doing. I do not believe that anything would be gained by enshrining that responsibility in primary legislation.
Amendment No. 127 also seeks to require a formal report to Parliament every year of the steps taken to improve the take-up of benefits. The Department of Social Security already produces an annual publication giving estimated take-up levels for the income-related benefits. I have here the publication, which I am sure many Members of the Committee will recognise and already use. In addition. Ministers have kept and will keep Parliament fully informed of the initiatives taken to promote take-up by the various needy and vulnerable groups being targeted. The Committee would think poorly of me, in view of my concern over the years on the issue and that of many Members of the Committee, if I were not to bring such information to the House at the earliest possible opportunity, as we progress. I hope that in my reply I have met the substance of the noble Earl's amendment and that in the light of those commitments the noble Lords and the noble Baroness, Lady Pitkeathley, will feel able to withdraw their amendments.
Earl Russell: That is not quite a hat trick, but it took the varnish off the stumps. It is not often that one and the same amendment attracts the support of the noble Lord, Lord Ashley of Stoke, and the noble Viscount. Lord Mountgarret. We also had two expert speeches from the noble Baronesses, Lady Pitkeathley and Lady Anelay of St. Johns.
Thinking about the problem, it strikes me that one of the difficulties we face in the last part of the century is information overload, especially when the information is on paper. When I try to get information over to pupils, I find that they may have seen the information on umpteen pieces of paper but they do not have that knowledge when they need it. They have it if they can pick up the information by word of mouth at the moment they need it. That is why the work done by the citizens advice bureaux is of such importance. I thought that the noble Baroness, Lady Anelay, spoke with great expertise on that subject.
The noble Lord, Lord Ashley of Stoke, talked of people who were not aware of the disability living allowance. That reminds me of a neighbour when I was a boy who constantly referred to Marylebone station as the Grand Central station. She was by that time at least two stages out of date.
The noble Baroness, Lady Pitkeathley, with the powerfully argued case of John, reminded me of another incident. A dangerous criminal—and perhaps the noble Baroness will forgive the parallel which is not relevant in that respect—was kept in prison for 18 years until he tried the handle of the door, opened it and walked out. One wants to show that the door is open a little sooner.
I entirely understand that the Minister's heart is in the same place as ours on this. I am not in any way wedded to the wording of the amendment. What she says about data-matching is a serious point. What she says about pensioners and the level of take-up, I take very seriously. But when she says that it will not be allowed to continue, I hope she would agree that it is a right not to claim benefit if it is done wittingly and with full knowledge.

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I welcome the pilot schemes warmly. I hope to hear more of them when the results are reported. In that hope, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.30 p.m.
Baroness Pitkeathley Baroness Pitkeathley had given notice of her intention to move Amendment No. 128:
Before Clause 75, insert the following new clause—
INFORMATION ABOUT ENTITLEMENT TO BENEFITS
(".—(1) The Secretary of State shall take such steps as seem to him appropriate to inform persons of their possible entitlement to a relevant benefit, including distributing leaflets to persons claiming benefits on which the entitlement to benefits of other persons is dependent.
(2) In this section "relevant benefit" has the same meaning as in section 9.").
The noble Baroness said: I welcome the Minister's assurances that her officials are looking into the issue of providing carers with information as and when they need it. I am happy, therefore, not to move the amendment.
[Amendment No. 128 not moved.]
Clause 75 [Regulations and orders]:
Lord Hardie Lord Hardie moved Amendment No. 129:
Page 49, line 20, leave out subsection (3).
The noble and learned Lord said: Amendment No. 129 has already been debated. I beg to move.
On Question, amendment agreed to.
Clause 75, as amended, agreed to.
Lord Hardie Lord Hardie moved Amendment No. 130:
After Clause 75, insert the following new clause—
PARLIAMENTARY CONTROL OF REGULATIONS
(".—(I) Subject to the provisions of this section, a statutory instrument containing (whether alone or with other provisions) regulations under—

(a) section 13(2), 8 or 70 above; or

(b) paragraph 11 of Schedule 1, paragraph 8 of Schedule 2 or paragraph 3 of Schedule 5 to this Act,

shall not he made unless a draft of the instrument has been laid before Parliament and been approved by a resolution of each House of Parliament.
(2) A statutory instrument—

(a) which contains (whether alone or with other provisions) regulations made under this Act by the Secretary of State; and

(b) which is not subject to any requirement that a draft of the instrument be laid before and approved by a resolution of each House of Parliament,

shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(3) A statutory instrument—

(a) which contains (whether alone or with other provisions) regulations made under this Act by the Lord Chancellor; and

(b) which is not subject to any requirement that a draft of the instrument be laid before and approved by a resolution of each House of Parliament,

shall be subject to annulment in pursuance of a resolution of either House of Parliament.").
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On Question, amendment agreed to.
Clause 76 agreed to.
Lord Hardie Lord Hardie moved Amendment No. 130A:
After Clause 76, insert the following new clause—
TRANSITORY PROVISIONS
(". Schedule (Transitory provisions) to this Act (which contains transitory provisions) shall have effect.").
The noble and learned Lord said: In moving Amendment No. 130A, I shall speak also to.
Clause 77 stand part and Amendments Nos. 132A, 150A and 161A.
Clause 77 is already a lengthy clause which deals with transitory provisions. We are making a number of consequential government amendments to the clause which extend those provisions. However, the cumulative effect is to create a very long and unwieldy clause. As a result we propose that Clause 77 should not stand part of the Bill and that all transitory provisions should be included in a new schedule.
The schedule is designed to make several important transitional provisions which will come into force upon Royal Assent. It deals with the following matters: it puts beyond doubt that once a claim is determined the claim ceases to exist. An efficient, modern benefit system must have clarity about the responsibility of both claimants and the department. A claimant cannot establish entitlement to benefit without making a fresh claim if the original claim fails and the decision is not reversed by the Secretary of State or upon appeal.
The schedule ensures that appeal tribunals do not have regard to changes in claimants' circumstances which occur after the date of the decision which is under appeal, where the appeal has been brought after Royal Assent. It gives commissioners the discretion to return cases to the Social Security Appeal Tribunal (or, as appropriate, the Disability Appeal Tribunal or Medical Appeal Tribunal) where each of the principal parties to the appeal agree that the decision appealed against was wrong in law. It ensures that the power to suspend payments in look-alike cases will have immediate effect from Royal Assent until the parallel provision in Clause 22(2)(d) comes into force. It ensures that the power to restrict arrears to the date of the relevant determination includes claimants who applied for a review of the Secretary of State's decision before or after the relevant determination. This amendment was debated on 2nd April as Amendment No. 132 when the provisions in Clause 27 were discussed.
The schedule also ensures that new discretionary social fund review procedures can be operated by social fund officers, prior to the introduction of the new decision-making arrangements under Part I of the Bill, when social fund officers will be replaced by appropriate officers. The new procedures will support the introduction of the budgeting loan scheme and the power to recover social fund overpayments. They will not become operational until Clauses 68, 69 and 73 are commenced through commencement orders.
Amendment No. 150A is a technical amendment. It removes from Schedule 6 the transitory provisions for the new budgeting loan review procedures, as these have now been included in the new schedule before Schedule 6.

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Amendment No. 161 A to Clause 81 provides for the new schedule of transitory provisions and the new clause on pilot powers to commence on Royal Assent.
The transitional provisions in the new schedule give effect to the policy behind certain provisions in the Bill for the purposes of the current adjudication and appeals system. It will have effect for the period between Royal Assent and the date when the corresponding provisions in Part I of the Bill take effect. The provisions in the schedule will provide clarity about the responsibility of both claimants and the department; they will help to prevent the development of further backlogs in the Independent Tribunal Service; they will have a beneficial effect for the administration of commissioners' appeals; and ensure that the department is able to exercise proper control over the integrity of benefit expenditure.
I commend the amendments and the schedule to the Committee. I beg to move.
Lord Meston: Perhaps I may ask the noble and learned Lord an entirely pedantic question. Why has the word "transitory" been used in this Bill rather than "transitional", which is more normally used in legislation and is well understood? Indeed, that is how the noble and learned Lord described the provisions in the course of his short speech. A transitional provision can be transitory and vice versa, but not necessarily so.
Lord Hardie: I wondered that myself. I suspect that the parliamentary draftsman favoured "transitory" rather than "transitional". If Members of the Committee prefer the word "transitional" instead of "transitory", I am sure that we will have no difficulty with that.
On Question, amendment agreed to.
Clause 77 [Transitory provisions]:
[Amendments Nos. 131 and 132 had been withdrawn from the Marshalled List.]
Clause 77 negatived.
Clauses 78 to 80 agreed to.
Lord Hardie Lord Hardie moved Amendment No. 132A:
Before Schedule 6, insert the following new schedule—
("SCHEDULE
TRANSITORY PROVISIONS
Claims no longer subsisting after decisions made
1. In relation to any time before the commencement of section 9(2) of this Act, section 21 of the Administration Act (decision of adjudication officer) shall have effect as if after subsection (6) there were inserted the following subsection—
"(7) Where at any time a claim for a benefit to which section 20 above applies is decided by an adjudication officer or by a social security appeal tribunal on a reference by such an officer—

(a) the claim shall not be regarded as subsisting after that time; and

(b) accordingly, the claimant shall not (without making a further claim) be entitled to the benefit on the basis of circumstances not obtaining at that time."

Appeals to tribunals
2.—(1) In relation to appeals brought after the passing of this Act and any time before the commencement of section 13(7)(b) of this Act, section 22 of the Administration Act (appeal to social security appeal tribunal) shall have effect as if after subsection (7) there were inserted the following subsection—
"(8) In deciding an appeal under this section, a social security appeal tribunal shall not take into account any circumstances not obtaining at the time when the decision appealed against was made."
(2) In relation to such appeals and any such time, section 33 of that Act (appeals following reviews) shall have effect as if after subsection (6) there were inserted the following subsection—
"(7) The tribunal shall not take into account any circumstances not obtaining at the time when the decision appealed against was made."
Appeals to Commissioners
3.—(1) In relation to any time before the commencement of section 15(7) of this Act, section 23 of the Administration Act (appeal from social security appeal tribunal to Commissioner) shall have effect as if—
(a) after subsection (6) there were inserted the following subsection—
"(6A) If each of the principal parties to the appeal expresses the view that the decision appealed against was erroneous in point of law, the Commissioner may set aside the decision and refer the case to a tribunal with directions for its determination.
In this subsection "principal parties" means—

(a) in a case relating to statutory sick pay or statutory maternity pay, the persons mentioned in subsection (2)(a), (b) and (c) above;

(b) in any other case—

(i) the persons mentioned in subsection (3)(a) and (b) above; and

(ii) where applicable, the person mentioned in subsection (3)(d) and such a person as is first mentioned in subsection (4) of that section."; and.

(b) in subsection (8), for the words "subsection (7)(b) above" there were substituted the words "subsection (6A) or (7)(b) above".
(2) In relation to any such time, section 34 of that Act (appeal from social security appeal tribunals or disability appeal tribunals to Commissioners etc.), shall have effect as if, in subsection (4), for the words "(7) to I 0 of section 23" there were substituted the words "(6A) to (10) of section 23".
(3) In relation to any such time, section 48 of that Act (appeal etc. on question of law to Commissioner) shall have effect as if—
(a) after subsection (4) there were inserted the following subsection—
"(4A) If each of the principal parties to the appeal expresses the view that the decision appealed against was erroneous in point of law, the Commissioner may set aside the decision and refer the case to a medical appeal tribunal with directions for its determination.
In this subsection "principal parties" has the persons mentioned in subsection (1)(a), (b) and (d) above."; and.
(b) in subsection (6), for the words "subsection (5) above" there were substituted the words "subsection (4A) or (5) above".
Suspension of benefit in prescribed circumstances
4.—(1) In relation to any time before the commencement of section 22(2)(d) of this Act, section 5(1) of the Administration Act (regulations about claims for and payments of benefits) shall have effect as if after paragraph (n) there were inserted the following paragraph—
"(nn) for suspending payment, in whole or in part, where an appeal is pending against the decision given in a different case by a social security appeal tribunal, a Commissioner or a court, and it appears to the Secretary of State that if the appeal were to he

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determined in a particular way an issue would arise whether the award in the case itself ought to be revised;".
(2) In relation to any such time, paragraph 10(2) of Schedule Ito the Jobseekers Act (supplementary provisions) shall have effect as if for the words "section 5(1)(n)" there were substituted the words "section 5(1)(n) or (nn)".
Restrictions on entitlement in certain cases of error
5. In relation to any time before the commencement of section 27 above, section 69 of the Administration Act shall have effect as if after subsection (1) there were inserted the following subsection—
"(1A ) Where the review under section 25(2) or 30 above was carried out on an application under section 26(1) or (as the case may be) section 30, it is immaterial for the purposes of subsection (1) above whether the application was made before or after the date of the relevant determination."
Reviews of social find determinations
6. In relation to any time before the commencement of section 38 of this Act, section 66 of the Administration Act (reviews) shall have effect as if—
(a) after paragraph (a) of subsection ( I ) there were inserted the following paragraph—
"(aa) may review such a determination on the ground that the person who applied for the payment to which the determination relates misrepresented, or failed to disclose, any material fact; and";
(b) after subsection (5) there were inserted the following subsection—
"(5A) In making a determination on a review an appropriate officer or a social fund inspector need not consider—

(a) in the case of a determination on a review under subsection (1)(a) above, any issue that is not raised by the application;

(b) in the case of a determination on a review under subsection (1)(aa) above, any issue that is not raised by the material fact;

(c) in the case of a determination on a review under subsection (1)(b) above, any issue that did not cause him to carry out the review.";

(c) for subsection (6) there were substituted the following subsection—

"(6) In determining a question on a review under subsection (1)(a) or (b) above a social fund officer or social fund inspector shall, subject to subsection (7) below, have regard to whichever of the following are applicable, namely—

(a) all the circumstances of the case and, in particular, the criteria specified in paragraphs (a) to (e) of subsection (1) of section 140 of the Contributions and Benefits Act;

(b) the criteria mentioned in paragraphs (a) and (b) of subsection (1A) of that section; and

(c) the criterion specified in directions issued by the Secretary of State under that subsection and the criteria mentioned in paragraph (b) of that subsection.";

(d) in subsection (7) of that section, after the word "review" there were inserted the words "under subsection (1)(a) or (b) above";

(e) after that subsection there were inserted the following subsections—

"(7A) In making a determination on a review under subsection (1)(aa) above an appropriate officer or a social fund inspector shall—

(a) act in accordance with any general directions issued by the Secretary of State; and

(b) take account of any general guidance issued by the Secretary of State.

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(7B) Any reference in subsection (5A), (6), (7) or (7A) above to a determination on a review under a particular provision of subsection (1) above shall be construed, in relation to a social fund inspector, as a reference to a determination on a further review of a determination which has been reviewed under that provision.";
(f) in subsection (9), for the words "this section- there were substituted the words "subsection (1)(a) or (b) above"; and
(g) in subsection (10), after the word "determination" there were inserted the words "which has been reviewed under subsection (1)(a) or (b) above".
Overpayments out of social fund
7. In relation to any time before the commencement of sections 10, 11 and 38 of this Act, section 71ZA of the Administration Act (overpayments out of social fund) shall have effect as if for subsection (2) there were substituted the following subsection—
"(2) Section 71 above as it so applies shall have effect as if the following provisions were omitted, namely—

(a) in paragraph (a) of subsection (5) and subsection (5A), the words "reversed or varied on an appeal or";

(b) in paragraph (b) of subsection (5), the words "appeal or"; and

(c) subsections (7), (10A) and (10B)."

Child support: appeals to tribunals
8. In relation to appeals brought after the passing of this Act and any time before the commencement of section 42 of this Act, section 20 of the Child Support Act (appeals) shall have effect as if after subsection (4) there were inserted the following subsection—
"(5) In deciding an appeal under this section, the tribunal shall not take into account any circumstances not obtaining at the time when the decision appealed against was made." ").
On Question, amendment agreed to.
[Amendment No. 133 not moved.]
Schedule 6 [Minor and consequential amendments]:
Lord Hardie Lord Hardie moved Amendment No. 134:
Page 61, line 33, at beginning insert ("In").
The noble and learned Lord said: Amendments Nos. 134 and 135 clarify that only the tribunals abolished by the Bill should be removed from Schedule 4 to the Parliamentary Commissioner Act 1967. Amendment No. 135 lists the relevant tribunals whose entries will cease to have effect. I beg to move.
Lord Renton: Perhaps I may refer to just one word. It appears at the top of page 16 of the Marshalled List and is a word I do not recollect seeing before in our statutory provisions. Line 1 states,
"the following entries shall cease to have effect".
We then read a list of statutory tribunals. Is that the right way to describe them?
The Deputy Chairman (Baroness Lockwood): We are presently debating Amendment No. 134.
Lord Renton: Amendments Nos. 134 and 135 are being taken together. As I see it, Amendment No. 134 is to insert the word "in" and Amendment No. 135 is the amendment of substance.
I know that this is a small matter, but we should try to get the drafting right and to be consistent, so far as it is wise to be so, with what has gone before. I do not ask for

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an answer now, but, when the Bill is considered on Report, the Government may find a better way of describing the removal of those tribunals.
Lord Hardie: As the noble Lord will be aware, the schedule as it stands is a list of various tribunals. The amendment seeks to remove certain tribunals from the list. However, I take the noble Lord's point. We can look to see whether there could be more appropriate wording to deal with the matter, but I think the noble Lord understands the sense of what is being proposed.
On Question, amendment agreed to.
Lord Hardie Lord Hardie moved Amendment No. 135:
Page 61, leave out line 34 and insert ("the following entries shall cease to have effect, namely—
"Tribunals constituted in Great Britain under regulations made under section 4 of the Vaccine Damage Payments Act 1979";
"Child support appeal tribunals constituted under section 21 of the Child Support Act 1991";
"Social security appeal tribunals constituted under section 41 of the Social Security Administration Act 1992";
"Disability appeal tribunals constituted under section 43 of that Act"; and
"Medical appeal tribunals constituted under section 50 of that Act".").
On Question, amendment agreed to.
Lord Hardie Lord Hardie moved Amendment No. 136:
Page 61, line 38, after ("qualified") insert ("adjudicating").
The noble and learned Lord said: In moving Amendment No. 136, I wish to speak also to Amendments Nos. 140, 146 and 147. These amendments are purely technical. Amendment No. 136 is required to amend the incorrect reference to "specially qualified medical practitioner" in paragraph 4(1) of Schedule 6. The correct title is "specially qualified adjudicating medical practitioner" which is contained in Part III of Schedule 1 to the House of Commons Disqualification Act 1975. Adjudicating medical practitioners and specially qualified adjudicating medical practitioners are among the officers disqualified from membership of the House of Commons.
Amendments Nos. 140, 146 and 147 all relate to provisions in the Child Support Act 1991. Subject to the Committee's agreement, I do not think it is necessary to discuss them in detail. They simply clarify and make minor amendments to terms used in that Act. I commend the amendments to the Committee. I beg to move.
On Question, amendment agreed to.
Lord Hardie Lord Hardie moved Amendments Nos. 137 and 138:
Page 62. line 18, leave out ("or 7").
Page 62, line 35, at end insert—
(". After section 7A of that Act there shall be inserted the following section—
"Finality of decisions.
7B.—(1) Subject to the provisions of this Act, any decision made in accordance with the foregoing provisions of this Act shall be final.
566
(2) If and to the extent that regulations so provide, any finding of fact or other determination embodied in or necessary to a decision, or on which a decision is based, shall be conclusive for the purposes of further decisions." ").
The noble and learned Lord said: These amendments have already been spoken to. I beg to move.
On Question, amendments agreed to.
Lord Hardie Lord Hardie moved Amendment No. 139:
Page 63, line 12, at end insert—
("Abolition of Domestic Rates Etc. (Scotland) Act 1987 (c.47)
. In paragraph 7A of Schedule 2 to the Abolition of Domestic Rates Etc. (Scotland) Act 1987 (recovery of outstanding community charge by deductions from income support or jobseeker's allowance), for the words "appeals and reviews" in sub-paragraph (2)(a) there shall be substituted the words "appeals to appeal tribunals constituted under Chapter I of Part I of the Social Security Act 1998 and decisions under section 10 or 11 of that Act".
Local Government Finance Act 1988 (c.41)
. In sub-paragraph (2)(a) of paragraph 6 of Schedule 4 to the Local Government Finance Act 1988 (recovery of outstanding community charge by deductions from income support or jobseeker's allowance), for the words "appeals and reviews" there shall be substituted the words "appeals to appeal tribunals constituted under Chapter I of Part I of the Social Security Act 1998 and decisions under section 10 or 11 of that Act".").
The noble and learned Lord said: In moving this amendment, I wish to speak also to Amendments Nos. 148 and 154. These amendments are wholly technical and consequential amendments to other primary legislation as a direct consequence of the provisions in this Bill. The amendments replace references in other legislation to reviews and appeals with reference to the new provisions for appeals, appeal tribunals and decisions under Clauses 10 and 11 of this Bill. I beg to move.
Earl Russell: I have one query about Amendment No. 139. This deals with the collection of arrears of the community charge. It is no doubt a matter of my own ignorance but I did not realise that we were still collecting those arrears. How much longer are we to go on collecting them? Is it not really about time that we stopped?
Lord Renton: I share the ignorance so modestly expressed by the noble Earl. I, too, was puzzled. Each of the three amendments grouped together has the same purpose; namely, to get rid of the words "appeals and reviews" and to substitute the words "appeals to appeal tribunals." This is a little mysterious. I think we are entitled to an explanation.
Lord Hardie: Perhaps I may deal, first, with the point raised by the noble Earl, Lord Russell. The answer is yes, we are still collecting arrears of community charge. Cases are still outstanding. The answer as to when we will stop is presumably when the arrears have been paid. I cannot give a date because it depends on the arrears being paid.
I turn to the point raised by the noble Lord, Lord Renton. I shall deal with the amendments in each provision. In Amendment No. 139 there is reference to two statutory provisions: the Abolition of Domestic Rates Etc. (Scotland) Act 1987 and the Local Government Finance Act 1988, which is the English equivalent of the earlier Scottish provision relating to the recovery of

567
outstanding community charge by deductions from income support or jobseeker's allowance. In these provisions, as I explained in general terms in my earlier comments, the reference to "reviews and appeals" should be replaced by reference to provisions for appeals to appeal tribunals constituted under Chapter 1 of Part I of this Act. We are amending the earlier legislation to reflect the situation which is brought in by this Bill. I hope that that explains the position.
Lord Renton: It means that there will be no more reviews. There will only be appeals to the appeal tribunals. That is perfectly clear.
6.45 p.m.
Earl Russell: It is my recollection—I may be mistaken and I have not had time to check—that there was a limitation of actions on the collection of community charge arrears. My recollection is that shortly before the community charge was abolished this limitation of actions was lengthened to six years. It is, I believe, now more than six years since we last collected any community charge. I thought therefore that the period of actions had now come to an end. I may be in error—I am perfectly willing to admit the error: it is only a recollection—but since the collection of arrears, some of them obviously uncollectable, has caused a good deal of hardship, a good deal of trouble, a good deal of labour and a good deal of administrative cost to those responsible for collection, I wonder whether we should look at the case for saying that this has gone on long enough.
Lord Hardie: That would appear to be outwith the scope of the Bill and it would also be a matter for the local authorities charged with collecting arrears. The effect of not collecting arrears would have financial consequences for local authorities. No doubt they will weigh up the advantages and disadvantages of recovering or not recovering, as the case may be.
In relation to the limitation point, perhaps I may write to the noble Earl. I shall check the position and give a definitive response.
On Question, amendment agreed to.
Lord Hardiemoved Amendment No. 140:
Page 64. line 2, leave out from ("State)") to end of line 5 and insert—

("(a) subsections (2) and (2A) shall cease to have effect; and

(b) in subsection (3), the words "or by child support officers" shall cease to have effect and for the word "them" there shall be substituted the word "him".").

The noble and learned Lord said: This amendment has already been spoken to. I beg to move.
On Question, amendment agreed to.
Lord Hardie Lord Hardie moved Amendment No. 141:
Page 64, line 7, at end insert—
(. In subsection (4)(a) of section 22 of that Act (Child Support Commissioners). for the words "section 21(3)" there shall be substituted the words "Schedule 5 to the Social Security Act 1998".").
The noble and learned Lord said: This amendment has already been debated. I beg to move.
On Question, amendment agreed to.
[Amendment No. 141A had been withdrawn from the Marshalled List.]
Lord Hardie Lord Hardie moved Amendment No. 142:
Page 65, line 47, leave out second ("section") and insert ("sections—
"Finality of decisions.
46.4.—(1) Subject to the provisions of this Act, any decision of the Secretary of State or an appeal tribunal made in accordance with the foregoing provisions of this Act shall he final.
(2) If and to the extent that regulations so provide, any finding of fact or other determination embodied in or necessary to a decision, or on which a decision is based, shall be conclusive for the purposes of any further decision.").
The noble and learned Lord said: In moving this amendment I shall speak to Amendment No. 145A. These amendments both refer to the finality of child support decisions. Amendment No. 142 amends the Child Support Act 1991 to ensure that, subject to provisions for revision, supersession and appeal, any child support decision taken by the Secretary of State or an appeal tribunal shall be considered final. Such provision has already been made in this respect for commissioners' decisions in the Child Support Act 1991.
Amendments Nos. 142 and 145A allow for regulations to provide that determinations which are part of a decision may be considered conclusive and can be used in other decisions. This means that, for example, questions of fact will only need to be decided once. These amendments cover decisions made by the Secretary of State, appeal tribunals and commissioners.
These amendments enable the Child Support Agency to use its resources in the most efficient manner. Matters which have been investigated in detail will not need to be considered again when they are found to be relevant to another decision. This is also in the interests of the claimant. Decisions can be made quickly, and without the claimant needing to resubmit evidence that he or she provided previously.
These amendments are a step towards our vision for an active, modern social security system, where decisions taken for one benefit can be applied across the whole system to ensure an efficient and consistent service. I beg to move.
On Question, amendment agreed to.
[Amendment No. 142A had been withdrawn from the Marshalled List.]
[Amendments Nos. 143 to 145 not moved.]
Lord Hardie Lord Hardie moved Amendment No. 145A:
Page 67, line 13, at end insert—
("(2) For paragraph 6(2) of that Schedule there shall be substituted the following sub-paragraph—
"(2) If and to the extent that regulations so provide, any finding of fact or other determination which is embodied in or necessary to a decision, or on which a decision is based, shall be conclusive for the purposes of any further decision." ").
The noble and learned Lord said: This amendment has already been spoken to. I beg to move.
Lord Renton: Here we are dealing with people's rights and the desire to help those suffering from misfortune. It is rather sad that the law governing the consideration of these matters should be so very complex. In this amendment we find that a decision, once made,
"shall be conclusive for the purposes of any further decision".
That could give rise to a problem because in further consideration of the matter relating to the same child or other person it might be discovered that the original decision was faulty. Yet under this amendment it shall be conclusive even though it was faulty. I know that the law gets into these situations. One of the reasons why people at large are sometimes puzzled by the way that government and parliament do things is that in what should be simple matters affecting the lives of simple people, we manage to have such terrible technicality which does not always make sense.
Earl Russell: It takes a little time to sort these things out. I imagine that the crucial point that the noble Lord, Lord Renton, has raised is the meaning of the word "decision". Presumably what was intended was a narrow and limited meaning of that word and in particular a meaning not ruling out any further decision on appeal. I hope that this is something on which the Minister may be able to enlighten us.
Lord Higgins: This amendment appears to be oddly worded. I am not clear in what way regulations may provide a finding of fact.
Lord Hardie: I can understand the concern of noble Lords about the way the amendment is worded. Perhaps I might explain the meaning behind it and also look at ways of improving the wording at a later stage. I deal first with the point raised by the noble Lord, Lord Higgins. The intention is that regulations will specify the extent to which any finding in fact or determination is conclusive for the purposes of any other decision in respect of other benefits. When I first spoke I said that the intention was to streamline the system so that once one had a finding of fact which affected a particular claimant, that finding would be conclusive for any other benefit that that claimant would be entitled to.
Lord Higgins: So why do regulations have to provide it?
Lord Hardie: The regulations have to provide the extent to which it would apply and to which benefits. I anticipate that is what is intended. Perhaps I may deal with the point raised by the noble Earl, Lord Russell, and the noble Lord, Lord Renton. If there is an error, it will not be entrenched. If the claimant is dissatisfied with the finding of fact he or she may seek a review of that finding or appeal it. But if the claimant is satisfied about the
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finding, then rather than go through the same process of establishing the same fact for a related benefit, he or she would simply have the benefit of this provision.
Lord Renton: The noble and learned Lord said that there could be a review. But we know that as regards three sets of circumstances mentioned in Amendment No. 139 and two others reviews have been replaced by appeals to the tribunal. So there we have to stick to the prospect of an appeal to the tribunal being conclusive of the matter.
Lord Hardie: I believe that the noble Lord is referring to two different sets of circumstances. As we discussed on the first day of Committee, as regards some benefit claims there is provision for a review. The claimant may ask for a review of the decision within a month. Thereafter there will be a further month in which the claimant can appeal. That is one situation. The concept in the Local Government Finance Act 1988 and the earlier Scottish provision is a different one. If the Committee would prefer a fuller explanation of how this provision will be used, I shall be pleased to write to all noble Lords and also put a copy of the letter in the Library. That may be of assistance.
Lord Goodhart: This provision seems acceptable. I think it is simply the application into this Bill of a principle well known in the law technically as "issue estoppel", which is the principle that if something in litigation between parties is decided as a question of fact, the same issue cannot be relitigated. As far as I can see, this is not a matter to cause problems.
On Question, amendment agreed to.
7 p.m.
Lord Hardie Lord Hardie moved Amendment No. 146:
Page 67, line 17, at beginning insert ("in sub-paragraph (b),").
On Question, amendment agreed to.
[Amendments Nos. 146A and 146B had been withdrawn from the Marshalled List.]
Lord Hardie Lord Hardie moved Amendment No. 147:
Page 68, line 6. leave out ("subsection") and insert ("sub-paragraph").
On Question, amendment agreed to.
[Amendment No. 147A not moved.]
[Amendment No. 147B had been withdrawn from the Marshalled List.]
[Amendment No. 147C not moved.]
[Amendment No. 147D had been withdrawn from the Marshalled List.]
Lord Hardie Lord Hardie moved Amendments Nos. 147E to 147H:
Page 69, line 14, at beginning insert ("Subject to sub-paragraph (1A) below,").
Page 69, line 21, at end insert ("by the Secretary of State").
Page 69, line 22, leave out from beginning to ("in") in line 23.
Page 69, line 25, leave out ("by the Secretary of State").
On Question, amendments agreed to.
[Amendment No. 147J had been withdrawn from the Marshalled List.]
Lord Hardie Lord Hardie moved Amendment No. 147K:
Page 69. line 29, leave out ("by the Secretary of State").
On Question, amendment agreed to.
[Amendment No. 147L had been withdrawn from the Marshalled List.]
Lord Hardiemoved Amendment No. 147M:
Page 69, line 33, at end insert—
("(1A) Section 28ZC shall not apply where the decision of the Secretary of State mentioned in sub-paragraph (1)(b) above—

(a) is one which, but for section 28ZA(2)(a) as it applies by virtue of paragraph 4(1), would have been made before the date of the relevant determination; or

(b) is one made in pursuance of section 28ZB(3) or (5) as it applies by virtue of paragraph 5(1).").

On Question, amendment agreed to.
Lord Hardie Lord Hardie moved Amendment No. 148:
Page 69, line 39, at end insert—
("Criminal Justice Act 1991 (c.53)
. In subsection (2)(b) of section 24 of the Criminal Justice Act 1991 (recovery of fines etc. by deductions from income support or jobseeker's allowance), for the words "appeals and reviews" there shall he substituted the words "appeals to appeal tribunals constituted under Chapter 1 of Part I of the Social Security Act 1998 and decisions under section 10 or 11 of that Act".").
On Question, amendment agreed to.
Lord Hardie Lord Hardie moved Amendment No. 149:
Page 73, line 30. after ("In") insert ("subsection (1) of').
The noble and learned Lord said: In moving Amendment No. 149, I should like to speak also to Amendment No. 150. Again, these are technical amendments. They change the wording of an existing regulation-making power in the Social Security Administration Act 1992, which relates to the review of decisions, so that it accurately reflects the new provisions in the Bill for disputing a decision—that is, a reference to "review" is replaced by references to "revision" and "supersession". I beg to move.
On Question, amendment agreed to.
Lord Hardie Lord Hardie moved Amendment No. 150:
Page 73, line 31, leave out ("paragraphs (n) and (o) of subsection (1) and subsection (4)") and insert—
("(a) for paragraph (e) there shall be substituted the following paragraph—
"(e) for any such award to be revised under section 10 of the Social Security Act 1998, or superseded under section II of that Act, if any of those requirements are found not to have been satisfied;"; and.
(b) paragraphs (n) and (o) shall cease to have effect.
( ) Subsection (4) of that section").
On Question, amendment agreed to.
Lord Hardie Lord Hardie moved Amendment No. 150A:
Page 73, leave out lines 35 to 47.
On Question, amendment agreed to.
Lord Hardie Lord Hardie moved Amendment No. 151:
Page 73, line 48, leave out ("(5)") and insert ("(2)").
The noble and learned Lord said: In moving Amendment No. 151, I should like to speak also to Amendments Nos. 152 and 153. The intention of Amendment No. 152 is to clarify the position relating to the redetermination of overpayments of benefits by the Secretary of State, tribunals, commissioners and the higher courts.
The amendment to Section 71 of the Administration Act clarifies that, in considering an overpayment determination on review or appeal, the Secretary of State or a tribunal is required to consider the question of the amount of overpayment which is recoverable under Section 71(1) of the Administration Act. However, when considering the same question on appeal, a commissioner or a court is not specifically required to make findings of fact in that respect, but may do so if it wishes.
As noble Lords will know, the role of the commissioners and the higher courts is to consider whether there has been an error of law in social security decisions. The intention—namely; to relieve some of the burden on the commissioners and the courts—will therefore be achieved, as they will not be required to make detailed findings of fact. The amendment clarifies the position on these matters, and I commend it to the Committee. Amendment No. 151 amends an incorrect reference to subsection (5) of Section 71 of the Administration Act to subsection (2), to take account of Amendment No. 152.
Amendment No. 153 clarifies that the words inserted into the Administration Act by paragraph 84(2) of Schedule 6 are to be inserted after the first reference to "paragraph 6", and not subsequent references. The amendments are technical. I beg to move.
On Question, amendment agreed to.
Lord Hardie Lord Hardie moved Amendments Nos. 152 and 153:
Page 73, line 48, at end insert (", after the word "shall" there shall be inserted the words "in the case of the Secretary of State or a tribunal, and may in the case of a Commissioner or a court".
( ) In subsection (5) of that section").
Page 76, line 14, after ("6"";) insert (", in the first place where they occur,").
On Question, amendments agreed to.
Lord Hardie Lord Hardie moved Amendment No. 154:
Page 78, line 30, at end insert—
("Local Government Finance Act 1992 (c.14)
. In sub-paragraph (2)(a) of paragraph 6 of Schedule 4 to the Local Government Finance Act 1992 (recovery of council tax etc. by deductions from income support or jobseeker's allowance), for the words "appeals and reviews" there shall be substituted the words "appeals to appeal tribunals constituted under Chapter I of Part I of the Social Security Act 1998 and decisions under section It) or II of that Act".").
On Question, amendment agreed to.
Lord Hardie Lord Hardie moved Amendment No. 155:
Page 83, line 8, at end insert—
("Industrial Tribunals Act 1996 (c.17)
. In subsection (5) of section 16 of the Industrial Tribunals Act 1996 (power to provide for recoupment of benefits) —
(a) in paragraph (a), the words "adjudication officers or" shall cease to have effect; and
(b) for paragraph (d) there shall be substituted the following paragraphs—
"(cc) provide for the determination by the Secretary of State of any issue arising as to the total or partial recoupment in pursuance of the regulations of a jobseeker's allowance, unemployment benefit or income support,
(d) confer on an employee a right of appeal to an appeal tribunal constituted under Chapter 1 of Part I of the Social Security Act 1998 against any decision of the Secretary of State on any such issue, and".").
On Question, amendment agreed to.
Lord Hardie Lord Hardie moved Amendment No. 156:
Page 83, line 8, at end insert—
(" . In paragraph 10(2) of Schedule I to that Act (supplementary provisions), for the words "section 5(1)(n) of the Administration Act" there shall be substituted the words "section 22(2) of the Social Security Act 1998".").
The noble and learned Lord said: This is a consequential amendment to the Jobseekers Act 1995. Paragraph 10 of Schedule 1 to that Act refers to Section 5(1)(n) of the Administration Act, which is repealed in the Bill and replaced by the provisions of Clause 22. The effect of the amendment is to substitute for the reference to "Section 5(1)(n)" a reference to "Section 22(2)" of this Act. I beg to move.
On Question, amendment agreed to.
Schedule 6, as amended, agreed to.
Schedule 7 [Repeals]:
[Amendment No. 156A had been withdrawn from the Marshalled List.]
Lord Hardie Lord Hardie moved Amendment No. 157:
Page 89, line 39, column 3, after ("paragraphs") insert ("20(3),").
The noble and learned Lord said: In moving Amendment No. 157, I should like to speak also to Amendments Nos. 158 and 158A. Schedule 7 details the current provisions which will be repealed as a consequence of the provisions in this Bill. The amendments to this schedule simply clarify the extent of the appeals that are necessary. Subject to the agreement of the Committee, I do not propose to discuss each of the amendments to the schedule, as they are consequential on clauses and schedules which have already been debated. I beg to move.
On Question, amendment agreed to.
Lord Hardie Lord Hardie moved Amendments Nos. 158 and 158A:
Page 89, line 48, column 3, at beginning insert—
("In section I 6(5)(a), the words "adjudication officers or.")
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Page 90, column 3, leave out lines 9 and 10 and insert—
("Section (Transitory Provisions).
Schedule (Transitory Provisions).")
On Question, amendments agreed to.
[Amendment No. 159 had been withdrawn from the Marshalled List.]
Schedule 7, as amended, agreed to.
Clause 81 [Short title, commencement and extent]:
Lord Higgins Lord Higgins moved Amendment No. 160:
Page 52, line 32, at beginning insert ("Subject to subsection (2A)").
The noble Lord said: In moving Amendment No. 160, I believe that it would be convenient to speak also to Amendments Nos. 162 and 163. These amendments appear in the name of my noble friend Lady Anelay of St. Johns and the noble and learned Lord, Lord Archer of Sandwell, who is, I understand, unable to be present this evening. Had he been here I am sure that as the chairman of the Council on Tribunals he would have expounded their virtues with greater authority than I can.
The amendments seek to delay implementation of the major changes proposed to the structure of social security appeals under the Bill. It is felt that the best approach to take is to allow the changes that are to be made to the first stage of the proceedings to settle down before further far reaching reforms are implemented. Effectively, it is a proposal that we should proceed by stages and not reform the entire hierarchy at a particular moment in time. We have done a considerable amount to improve the first tier and there is a case for seeing how that works out. Clearly, a good deal of the pressure on appeals depends on whether or not mistakes are made at the first stage. We believe that to be a fairly convincing argument. We also understand that practical arguments have been put forward by his Honour Judge Bassingthwaighte as to whether it would be possible to recruit the necessary people for these tribunals in the timescale envisaged in the Bill. That being so, we shall listen with interest to the Government's response to this amendment which is designed to ensure that the changed system gets off to a smoother start than would be the case if the whole process were rushed at once. I beg to move.
Lord Goodhart: I have put my name to Amendment No. 162 which is also in the names of the noble and learned Lord, Lord Archer of Sandwell, and the noble Lord, Lord Higgins. I support this group of three amendments. It is possible that under the Bill—it may not happen because the commencement orders may be made at different dates—there will be a big bang. I believe that that is unsatisfactory. The Bill makes very substantial changes both to the first tier system of decision-making in the department and to the system of appeal tribunals. As a practical matter, I believe that it is a good idea that changes to the first tier of decision making should be introduced first, tested out and allowed to settle before we go on to the next stage and change the system of appeal tribunals. Although

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I understand the Government's wish to bring about these changes, I suggest that it is not appropriate to do both at the same time. It may not be the intention of the Government to do so; if so, I should like to see that spelt out.
Lord Renton: I hope that in considering these amendments, which I believe have a good deal to commend them, the noble and learned Lord the Lord Advocate will bear in mind what is said in the first sentence on the first page of the Explanatory Memorandum:
"The Bill makes provision for the simplification of decision-making and appeals in social security, child support and vaccine damage payments".
If simplification is the main purpose of the Bill—although the Long Title is silent on that point—and we are to go fully into all of the complicated changes that are proposed, the Government have a duty to make sure that those changes work. I assume that that is the purpose of those who have put their names to these amendments. It is impressive that the name of a former Law Officer, the noble and learned Lord, Lord Archer of Sandwell, on the Government Benches appears at the top of one of the amendments.
7.15 p.m.
Lord Hardie: I am grateful to noble Lords for speaking to these amendments because it gives me an opportunity to explain why the Government feel that the changes to the appeal system should coincide with changes to the decision making process. To deal with the date of implementation raised by the noble Lord, Lord Goodhart, all I can say at this stage is that this issue is currently being addressed but the planning assumption is that the changes will all come in together, probably in October 1999.
I believe that there is general agreement in the Committee that the changes that we seek to make to improve the standards of decision making are necessary and probably overdue. I respectfully agree with the view expressed that the changes that we are introducing to first-tier decision making in the agencies will have a beneficial impact on the appeal system. If one gets the first decision right, there should be fewer appeals. Another change that we are introducing is that the agencies will be able to correct errors in their own decisions without the necessity of the claimant having to appeal. Clearly, that is to the benefit of the claimant and all concerned. A further benefit is the requirement to give better explanations to claimants so that if they understand more clearly why decisions have been made it is to be hoped that some will realise that there is no point in appealing and will accept the reasons, assuming that those reasons are properly and coherently set out.
I understand the concerns of noble Lords who seek to delay the changes in the appeal system in order to see the effect of the improvement in the first-tier decision making. The Government are convinced that the changes that they propose to make to the appeals system are worthwhile in their own right. Our aim is to improve standards from one end of the system to the other. The benefits to claimants and others in their dealings with
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the department's agencies will be greater if the changes in decision making and appeals are brought in together. Although a relatively small proportion of claimants appeal against decisions made in their cases, the appeals process is an integral part of a fair and impartial system; it is not simply an add-on. Even under the new system there will be those who justifiably wish to appeal and will have a right of appeal. It is important that that should be an integral part of the system.
At Second Reading tributes were paid to His Honour Judge Bassingthwaighte to whom reference was made by the noble Lord, Lord Higgins. I echo the tributes and acknowledge the hard work of the tribunals and the administrative staff within the Independent Tribunal Service. However, there are some key structural changes that are necessary to remove obstacles to further service improvements.
We believe that the time is right to modernise an appeals system which has grown up piecemeal over many years. New aspects of social security and child support have simply been incorporated into the existing appeals system without a fundamental review of whether original appeals models are still appropriate.
Different powers and rules in the separate jurisdictions make the current appeals system complex and confusing for claimants. As an example, the leaflet explaining the rules on appeals and reviews is over 100 pages long, almost half of which are taken up with explaining the differences between social security appeal tribunals, medical appeal tribunals and disability appeal tribunals. I am sure that the Committee will accept that that is unsatisfactory. Furthermore, and what is more unsatisfactory, those who appeal have to wait on average six months for their appeal to be heard. Being an average, some people wait much longer, but the good news is that some people wait less long. That is unsatisfactory. This sort of delay and frustration for claimants is unacceptable and we would be acting irresponsibly if we did not take sensible measures to tackle the problems in this area.
The Committee will recall that the measures we have taken replace the five separate appeals jurisdictions with one unified appeal jurisdiction which will make the system simpler and clearer for staff and claimants alike. Our improvements will enable tribunals to focus their attention on the issue or issues actually in dispute and ensure that they concentrate upon the decision which has been appealed. That will clarify the proper function of the tribunal and improve service to claimants. Our improvements will also enable tribunals to correct errors in their own decisions. That will have the effect of removing a great number of cases which currently go to the commissioners to be corrected.
The Committee may recall that it is not unusual for cases which go to the commissioners to take something in the order of a year. In many cases the matters are merely referred back to a tribunal because inadequate reasons were given. Our system will transfer responsibility for the administration of appeals to the Secretary of State, and will enable her to set targets to reduce unacceptable delays in hearing appeals.

577
Our system will also remove the requirement for every appeal to be heard by a three-person tribunal. We hope that it will result in an effective and responsive appeals service, where the expertise of members is focused upon the cases which need it. Those are just some of the examples of why we believe the changes to the appeals system are justified in their own right.
There is a further problem with the amendment. I shall point out some of the difficulties which would occur if the amendments were agreed to. The Bill is structured to deliver integrated changes to decision-making and appeals arrangements. If changes to the appeals system were to be delayed, as proposed in the amendments, there would be a number of unwelcome effects for claimants. It may help if I give some examples. I do not propose to give them all, because there is about a page and a half of them. One of the consequences is that there would be no right of appeal against any decision under Clauses 9, 10 or 11 because Clause 13 would not be in force. Schedules 2 and 3, which set out decisions on which there is a right of appeal and decisions on which there is no right of appeal, would have no effect. That is because they depend on Clause 13 which would not be in force. There would be no appeal tribunals to deal with child support appeals under Clause 42, vaccine damage appeals under Clause 46 and recovery of benefits appeals under Schedule 6. Clause 14, which is a new provision for redetermination of appeals by tribunals, would have no effect because there would be no decisions to correct. One of the provisions in Clause 11 is a re-enactment of an existing provision for revising decisions on, for example, a later change in circumstances. The provision would be lost. Similarly, the power to revise an appeal tribunal decision under Clause 41 (child support) and under Clause 45 (vaccine damage) would also be lost. Those consequences cannot be to the benefit of the claimants.
As I said, there are many other examples, but I shall not delay the Committee. I am sure that noble Lords who tabled the amendments would not wish or intend those consequences. For the reasons I have outlined, I would invite the noble Lord to withdraw the amendment.
Lord Renton: Before my noble friend replies, we should all bear in mind that there is one important matter to which the noble and learned Lord referred; that is, the delays that take place under the present system. I thought that some of the delays were rather frightening, especially bearing in mind that the tribunals and the decisions to be made relate to people's daily needs and:
"Justice delayed is justice denied".
We should bear that in mind.
Lord Higgins: A number of noble Lords have far greater experience in the practical operation of the appeal procedure than I have. The Minister's reply sounded convincing. That being so, in a moment I shall beg leave to withdraw the amendment. As this is the last
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debate in Committee in which I intend to speak, perhaps I may echo the remark of the noble Earl, Lord Russell, who said on an earlier amendment what a tremendous advantage it is to have a revising Chamber which can deal with these matters.
The Bill is a substantially better Bill than it was when it started. To what extent the threat of being defeated on these controversial matters when they are returned to the other place may have been an incentive to a co-operative attitude I know not, but at all events we have made a great deal of progress. I should like to express my thanks to the three Ministers for the way in which they have responded to our amendments. There is a long way to go yet. We are faced with Phoenix directors, Budget proposals and a number of other amendments, but I should like to express my thanks. We have done a great deal of good and the Bill is much better than it was. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hardiemoved Amendments Nos. 161 and 161A:
Page 52, line 33, after (" 65,") insert ("(Validation of certain housing benefit determinations),").
Page 52, line 33, leave out (" 75 to 79 and this section") and insert ("(Pilot schemes) to 79, this section and Schedule (Transitory provisions) to this Act").
On Question, amendments agreed to.
[Amendments Nos. 162 and 163 not moved.]
Lord Hardiemoved Amendment No. 164:
Page 53, line 4, at end insert—
("( ) section 2 so far as relating to war pensions;").
The noble and learned Lord said: I shall speak also to Amendment No. 165. These are minor and consequential amendments.
Clause 81(4) sets out the clauses of the Bill which do not extend to Northern Ireland. Amendment No. 164 adds Clause 2 to the list of exceptions to this provision. The amendment ensures that the provisions of Clause 2 relating to the use of computers applies to the administration of war pensions in Northern Ireland. This amendment is necessary since the war pensions scheme is administered on a UK basis, whereas for other benefits Northern Ireland has its own separate legislation.
Amendment No. 165 is simply an amendment to the drafting of Clause 81(4) in which the draftsman has thought it appropriate to make the wording clearer. These are minor and consequential amendments. I beg to move.
On Question, amendment agreed to.
Lord Hardie Lord Hardie moved Amendment No. 165:
Page 53, line 6, leave out ("they relate") and insert ("relating").
On Question, amendment agreed to.
Clause 81, as amended, agreed to.
House resumed: Bill reported with amendments.

Hovercraft (Application of Enactments)(Amendment) Order 1998
7.30 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman)rose to move, That the order and draft orders laid before the House on 10th and 17th March be approved [27th Report from the Joint Committee].
The noble Baroness said: My Lords, the Merchant Shipping (Convention on Limitation of Liability for Maritime Claims)(Amendment) Order would enable the UK to ratify the 1996 protocol to amend the 1976 Convention on Limitation of Liability for Maritime Claims. The enabling power for the order is provided by the Merchant Shipping and Maritime Security Act 1997, which was passed by the previous Parliament with cross-party support.
The aim of the protocol is to increase the limits of liability set by the 1976 Convention on Limitation of Liability for Maritime Claims. Such an increase is necessary to reverse the effect of more than 20 years of inflation.
The UK was the first state to sign the protocol. The making of this order should ensure that we are also the first to ratify it. This would be fitting. It was at the UK's instigation that the IMO began work on the revision of the 1976 convention. The UK also played a leading role in the negotiations leading to the successful adoption of the protocol in 1996.
The 1976 convention entitles shipowners to limit their liability for certain general maritime claims. The applicable limit depends upon the type of claim and the gross tonnage of the ship. The Government believe that the long-standing principle of limited liability for general maritime claims remains valid, but on two conditions. First, the limits must be set at a level which ensures that most claimants should receive full compensation when they successfully sue a shipowner in respect of a general maritime claim. This order would ensure that this is the case when claims are brought in a UK court. Secondly, the right to limited liability must be balanced by a duty for the shipowner to take out effective insurance cover. We are pressing within the IMO for the adoption of measures to ensure that all shipowners meet this duty.
The order would provide increased protection for claimants without placing any undue burden on the UK shipping industry. The increased limits would apply to all claims considered by courts in the UK irrespective
580
of the flag of the ship involved. They should not in themselves increase insurance premiums paid by owners whose ships are engaged in international trade. They may, however, result in a small increase in the insurance premiums paid by ships engaged solely in voyages within the UK. The precise amount of any increase is impossible to estimate, since the insurer should also have regard to the quality and track record of the ship when setting the premium. We take the view that this cost is justified by the need to update limits set in 1976 to provide proper protection to potential claimants.
Overall, the order will limit the limit of a shipowner's liability for general maritime claims by about two-and-a-half times. These limits are set in terms of the International Monetary Fund's special drawing right. For example, the 1976 convention sets a limit for claims other than those in respect of death and injury arising in respect of a ship of 50,000 gross tons of about 7.6 million SDR, or roughly £6 million. The 1996 protocol will increase this limit to about 18.2 million SDR, or some £14.5 million. Higher increases will be made for small ships. For instance, the corresponding increase for a ship of 500 tons will be from 167,000 to 1 million SDR.
These increases, like most of the provisions of the order, are determined by the terms of the 1996 protocol. There are three areas, however, where the 1976 convention and the 1996 protocol give states discretion. The order would enable the UK to take advantage of these three freedoms.
The first freedom relates to the Hazardous and Noxious Substances Convention 1996. This convention would establish a liability and compensation regime for damage caused by dangerous and polluting cargoes carried by ship. The regime is modelled on the existing international regime for oil pollution from tankers.
The 1996 protocol enables states to reserve the right not to apply the general limits of the 1976 convention to claims under the Hazardous and Noxious Substances Convention in order that claimants might obtain the higher compensation amounts available under that convention. The order will enable the UK to do this. The opt-out will come into effect automatically when the Hazardous and Noxious Substances Convention enters into force for the UK.
The limits set by the 1976 convention already do not apply to claims for loss or damage caused by oil pollution from tankers. There is a specific international regime for such claims.
The second freedom relates to small ships. States may set specific national limits for very small ships with a gross tonnage of less than 300 tons. At present the limit set for such ships under UK legislation is half that for ships of 300 tons. Consultation with interested parties demonstrated that while some favoured lower limits and others higher limits most agreed that we should retain the differential. This is therefore what the order would do.
The third freedom, perhaps of most interest to the House, relates to passenger claims. The protocol provides an opt-out clause allowing states to set higher limits, or unlimited liability, in respect of claims arising

581
from the death of, or injury to, passengers. The order would give effect to this opt-out. This would not in itself have any effect on the amount of compensation available to meet passenger claims. The 1976 convention sets a global limit on all passenger claims arising from any particular incident. A separate convention—the 1974 Athens Convention relating to the carriage of passengers and their luggage by sea—sets a per capita limit; that is, a separate limit for each passenger.
At present the global limit set by the 1976 convention can further restrict the amount of compensation available under the Athens Convention. The protocol will prevent this. Moreover, as implemented by this order, the protocol would mean that the rules of the 1976 convention would cease to affect the method of calculating compensation payments for passengers. This would ensure that we have flexibility to make appropriate changes to the legislation implementing the Athens Convention. These changes could result from the work on the revision of the Athens Convention which is currently a top priority within the IMO.
However, as it might be some time before this work is translated into concrete measures, my department is also about to go out to consultation to seek views on what measures the Government might take in the interim.
I turn to the other two orders. The Hovercraft (Convention on Limitation of Liability for Maritime Claims (Amendment)) Order makes changes to the general limits of liability set for the owners of hovercraft under UK legislation corresponding to the changes made for ships by the merchant shipping order.
The purpose of the Hovercraft (Application of Enactments)(Amendment) Order is to complete the transfer from the Civil Aviation Authority of regulatory responsibility for hovercraft. The process of transferring such responsibility to the Maritime and Coastguard Agency began in 1997. This order completes the process. It is therefore part of a tidying-up exercise. It does not impose any burdens, financial or otherwise, on industry.
Moved, That the order and draft orders laid before the House on 10th and 17th March be approved [27th Report from the Joint Committee].—(Baroness Hayman.)
Lord Brabazon of Tara: My Lords, I am grateful to the Minister for her explanation of these complicated orders which we on this side of the House welcome. I congratulate the department on the clarity of the explanatory notes which accompany the orders. The Minister will be aware that I was critical of some notes in the past, but in this case I praise them.
As regards the hovercraft orders, I am glad that the final transfer from the Civil Aviation Authority to the Maritime Safety Agency is now complete. With these hovercraft orders we find ourselves in a somewhat peculiar position. In fact, there was an Act to deal with hovercraft back in 1968, but so far as I am aware there are only two services in the United Kingdom—one
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between Dover and Calais and the other one, of which I am an occasional user, between Portsmouth and the Isle of Wight. Therefore, we have a whole raft of legislation dealing with hovercraft which applies at most to four hovercraft in the whole of the United Kingdom.
Incidentally, should the noble Baroness choose to use a hovercraft on either of the services that I have mentioned, she will find that they have one thing in common: at neither of the destinations to which they go will she find any of her trunk roads. That is an issue which may or may not have been raised by the Isle of Wight in the past.
Having said that, the main purpose of these orders is to increase the liability, and we certainly support that move. I was slightly puzzled by the terms of the limits of the liability. While I appreciate that they do not refer to passengers of ships, I am slightly puzzled as to why and to whom the limits of liability under paragraph 4 of the merchant shipping order apply if it is not to the passengers. I should like to know also why the limits on my ability should be different according to the different size of the ship involved. Loss of life is loss of life whether in relation to a ship not exceeding 2,000 tons or a ship of up to 75,000 tons or more. That is rather puzzling and perhaps the noble Baroness will say something about that. The same applies to Article 6(1) of the hovercraft order.
Nevertheless, we support these orders. As I said on a previous occasion, should the Minister have an opportunity in future legislation to move these orders from the affirmative to the negative procedure, on this side of the House we would support that.
Baroness Thomas of Walliswood: My Lords, equally we have no particular points to raise on the orders. I am delighted that we are implementing them as speedily as we are because it is important to keep compensation to a rational level rather than relying on very old monetary values.
It is obviously desirable that we are able to deal with all merchant vessels of whatever origin in our own ports. There is an obvious advantage in having international agreements on this and I look forward to agreements also on insurance.
Viscount Simon: My Lords, I have just one query. Under the limitation of liability order in relation to hovercraft, in paragraph 1 of Article 6 various amounts of money are indicated for limited liability covering different circumstances. However, notwithstanding the words "any distinct occasion" I am unclear as to whether those amounts refer to the total liability or to a per capita liability. Perhaps my noble friend will clarify that.
Baroness Hayman: My Lords, I am grateful to noble Lords who have spoken in general support of the orders before the House this evening. As the noble Lord, Lord Brabazon of Tara, said, the main purpose of these orders is to increase liability. Noble Lords listening carefully may have noticed that I stumbled slightly and

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said "the order will limit the limit". In fact, I should have said that it will increase the limit of the shipowner's liability, which makes more sense.
The noble Lord, Lord Brabazon of Tara, is right to point out that currently there are only three hovercraft in service which carry passengers commercially but, nevertheless, we have a separate legislative regime for dealing with them. Therefore, in order to increase the compensation, that must be done through separate orders. I am glad that we did slightly better in the explanatory memorandum in this respect.
On the specific points which have been raised, I should say to my noble friend Lord Simon that, as I understand it, the limit of liability is global in that it sets a sum for liability with respect to all claims except those relating to passengers. Where there is death and injury to passengers, there is no limit set by the overall global figure except in so far as global figures in the orders are related to the number of passengers. But it is not the case that the amount available to individual passengers will be diminished by the number of passengers involved in an incident, if I can put it in that way.
The noble Lord, Lord Brabazon of Tara, raised a similar issue in relation to the differential between small and larger ships. The limits in respect of passenger claims are the same for all sea-going ships regardless of size. The limits set by the 1976 convention do not apply to claims arising from the death of seafarers employed under a contract governed by UK law. Therefore, the only claims arising from fatalities where the limits vary with the size of the ship are those involving seafarers employed under contract governed by foreign law and those involving persons outside the ship.
I note that the noble Lord, Lord Brabazon of Tara, may well say to me that they are still equal persons. In adopting the 1996 protocol, the international community recognised that the size of claims was not always directly proportional to the size of the ship. That is why the protocol will make significantly greater increases to the limits for small ships than it does overall. The minimum limits which apply to all small ships between 300 and 2,000 gross tons will be increased six-fold. That will at least provide a minimum safety net for claimants. I hope that that covers some of the points raised.
On Question, Motion agreed to.

Trade with the Former Soviet Union
7.46 p.m.
Lord Ponsonby of Shulbrederose to ask Her Majesty's Government what steps they are taking to improve trade relationships between the United Kingdom and the countries of the former Soviet Union.
The noble Lord said: My Lords, I should like to begin by thanking all noble Lords who have decided to speak in this debate. I believe that it is an important debate and I am glad that, on such a specialised subject, so many noble Lord have thought fit to take part in the debate.
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My purpose in tabling this Unstarred Question is to remind the Government of Britain's relative failure to take advantage of the commercial opportunities in the countries of the former Soviet Union and in particular, in Russia and to ask the Government what they are going to do about it.
On 18th February, thanks to the efforts of my noble friend Lady Smith of Gilmorehill, a parliamentary link seminar was held in the FCO to discuss our trade relationships with Russia. The figures with which we were presented were not very encouraging and, for the benefit of noble Lords who were not present, I shall repeat some of the main conclusions of the briefing which we received.
The UK is only the sixth largest OECD supplier to Russia behind Germany, France, the USA, Italy and Japan. The UK has a market share of only 5.2 per cent. Exports in 1996 exceeded £1 billion, which was an increase of 16 per cent. over 1995. The figures for 1997 show a 22 per cent. increase over 1996 and an improved trade deficit over 1996.
Therefore, the picture is improving, in that the Russian market is expanding and British trade is part of that general expansion process. But Britain is still dramatically under-performing in comparison with its main competitor countries within the OECD. I hope that that provides a framework for the figures which we are talking about.
Anyone who has had any involvement with Russia, or with the former Soviet Union, will know three fundamental truths about working there. The first truth is that there is enormous potential to Russia. It has massive and unrivalled mineral wealth, especially in oil and gas, and it has a highly educated workforce. That is a formidable combination of assets and it sustains many foreign companies which operate in Russia and which constantly come across the second fundamental truth; namely, the huge problems involved in operating in the former Soviet Union.
There are still breathtaking bureaucratic procedures: there is a legal framework which is in its infancy and there are constant changes to the fiscal regime, which all adds up to a constant undermining of companies trying to operate on any sort of long-term basis. Many of the bureaucratic procedures arise out of a different perception of the role of a company itself. Under the old Communist model, companies accepted huge social responsibilities—such as housing, medical provision and schooling—and often managers spent all their working day dealing with these social responsibilities rather than addressing the problems of the company. Western managers, by contrast, believe that they pay taxes to address those issues and that, if the taxes are inadequate or uncollected, it is the government's problem.
When I was a manager in a Western joint venture operating in Russia, we found that our Russian managers were very reluctant to accept our instructions. Our instructions were always the same; namely, to reduce costs and increase production. However, our Russian managers believed that we were out of touch with the wider social consequences of our advice. It is

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ironic that it is this heightened sense of social responsibility which has led to many of the massive inefficiencies in Russian industry today. The situation is changing, but it seems to be the companies which are starting from scratch, rather than those which are trying to change from within, which are most effective at operating in anything approaching a commercial manner in the former Soviet Union.
The third fundamental truth that I wish to outline is one that I should like to dwell upon a little further. I have in mind long-term relationships at every level—that is governmental, institutional, corporate and personal—which are the keys to building success in the former Soviet Union. That is true in every country that I ever worked in, but it seems to be particularly true in Russia.
The point that I wish to make in tonight's debate is that some governments, particularly those of Germany and the United States, seem to understand that it is necessary to build multifaceted long-term relationships if they are to reap the benefits in the long term. They are building those relationships now and in a systematic manner which far exceeds anything which the previous government even aspired to achieving.
I shall give your Lordships some examples. In Germany, which of course is the most successful exporter to Russia, they have a large number of institutional relationships from government level to Lander (or regional level) to town level. They take on this multifaceted approach which is on a different scale to anything we have done. All that is underpinned by a huge amount of bilateral aid—100 billion US dollars between 1996 and 1998, which represents 25 per cent. of all bilateral aid payments by OECD countries. By contrast, Britain gives 1.5 per cent. of the total bilateral aid. Last week I spoke to an official at the German embassy who was at pains to point out that Germany's large-scale investment in Russia, both institutionally and corporately, was a calculated risk promoted by the German Government a number of years ago and that they do not expect to see the true benefits of that investment for a number of years to come.
My other example is the United States, which, too, has taken a long-term strategic view at a number of different levels. I shall now mention some of the US Government agency programmes which support trade with Russia. The US Ex-Im Bank is an independent agency of the US Government created to support US exports in foreign markets. In 1993, a framework agreement was signed with the Russian Ministry of Fuel and Energy and the Ministry of Finance which amounted to 2 billion dollars. That is a lending programme to refurbish existing Russian oil and gas facilities using American equipment. Another example is OPIC, the Overseas Private Investment Corporation, which gave 4 billion dollars in 1997 in loan guarantees to attract further American investment into the Russian economy. Indeed, the list goes on; for example, there is the US Trade and Development Agency; the US Agency for International Development; the US Department of Agriculture; the Foreign Assistance Program, and so on.
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All those agencies have mature links with their Russian counterparts and they are all working to enhance US trade links with Russia and the former Soviet Union.
I should particularly like to mention the Gore-Chernomyrdin Commission—which may, although I am not sure, have now been renamed—where American business leaders work at the heart of Russian government in an attempt to shape the commercial climate, especially in the field of energy policy. No other government even approaches that level of influence. The large US oil corporations will expect to benefit through this American initiative.
It is no accident that the American oil corporations are in pole position for gaining access to some of the largest oilfields in the world and it is no accident that they will do this with some form of state guarantee. It is the US Government's systematic approach to building links with Russia which the US corporations will take advantage of.
I wish to close by telling your Lordships a story about when I was a student at Imperial College, London in the early 1980s. We asked a senior BP executive to address us as we all hoped to work in the oil industry; and, I suppose, we all hoped that he would give us a job. One of the questions he was asked was, "What is the most significant development you have seen in the 40 years you have worked in the oil industry?" His answer was: "The move to the offshore oil industry". He said that in the early 1980s. I believe that the opening of the former Soviet Union is a development of similar magnitude for the international oil industry today. I know that some British oil companies have recognised this opportunity, but I do question whether the Government have quite understood its full impact.
I have not attempted to be fair in this speech. I have not attempted to compare Britain's performance with that of France or Italy, where there would still be an unfavourable comparison but where the differences would be less extreme. However, what I have tried to do is to demonstrate that some governments—namely, those of Germany and the United States—are taking a strategic and long-term view which is on a completely different scale to anything which, certainly, the previous government even aspired to. I ask my noble friend the Minister whether he accepts that, unless we significantly raise our game, more and more business will go to the countries which are currently taking this strategic and long-term view. Does my noble friend recognise that point and what does he propose to do about it?
7.58 p.m.
Viscount Torrington: My Lords, I am sure that other noble Lords will echo my thanks to the noble Lord, Lord Ponsonby, for introducing tonight's debate. For those of us who follow events in Russia, we live, like those subject to the famous Chinese curse, in interesting times. I spent three days in Moscow in the week when President Yeltsin fired his entire government. The most interesting aspect of the whole affair to me was that hardly anyone seemed very fussed about it. Indeed, 10 years ago such an apparent earthquake in the governance of Russia—then, I believe, still the Soviet

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Union—would have been an earth-shattering affair. Today the good burghers of Moscow are too busy getting on with living and sampling the delights and interests of imported capitalism.
Of course not everyone shares those benefits. Moscow, Nishny Novgorod, perhaps St. Petersburg and one or two other small centres, such as some of the oil towns with +particular resources or industrial raison d'être, are reaping such benefits, mainly as a result of good, enlightened or at least efficient local government. One thinks of Mayor Lushkov of Moscow in this context. It is nevertheless hard to judge whether the beggars have disappeared from the streets of Moscow because they no longer need to beg or because the efficient Mayor Lushkov has had them quietly pushed out of sight.
I do not want to detain your Lordships long tonight, and probably I shall detain you for less time than I am permitted. I have just a simple message which the noble Lord, Lord Ponsonby, has already touched on. Russia has made enormous progress since the fall of the Soviet Union, but it still has a long way to go before international business will feel entirely happy within its borders. Its business law is still underdeveloped, capricious, often illogical, confusing and restrictive. For example, the formation of a simple closed company requires automatic registration with a myriad of different authorities, from the federal tax offices, through VAT, pension administrators, local authorities and so on. Even before it starts to do any real business it is necessary that the company has at least one full-time employee just to cope with the filing required by the bureaucracy.
When it comes to setting yourself up to do business, beware, for example, of lending money to your Russian affiliate. At present, any loan repayments made directly to a foreign entity are subject to VAT, which makes lending prohibitive. In any case do not think of investing directly. You must first assist the economy of Cyprus by forming a Cypriot company through which to route your investment in order to take account of the Russian Cypriot double taxation agreement.
When it comes to oil or minerals—here, I suspect like the noble Lord, Lord Ponsonby, I plead a small interest in the subject of this debate—the Government have passed legislation permitting Russian and foreign companies to share the ownership of oil and mineral rights (the so-called production sharing law); but the Duma has insisted on the right to approve each individual transaction in this sphere, thus making the law almost impossible to operate. Without it—and as there is a legal debate as to whether subsurface rights can be conveyed to a third party at all by an original licensee—many projects either have a somewhat shaky legal foundation or are on hold.
I was told on a recent visit that the purpose of the dramatic dismissal of the former government was to put in place an entirely fresh team, who would restart the somewhat stalled process of reform and who would formulate a package of measures to be promulgated some time between June and the end of the year which would do away with the kind of restrictions on the
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efficient workings of trade and industry which I have just described. Indeed I am assured that full freehold ownership and many other established western concepts and practices will be ushered in some time in the second half of this year. I do not know the present basis of Russian business and commercial law, whether it is a simple adaptation from Soviet law to allow for the formation of companies and so on, or whether it is a return to pre-1917 practice, or what. However, the little I have seen of it seems horrifically burdensome.
This country has given to the rest of the world a simple and clear system of business law and practice and commercial law, so may I hope and pray that Her Majesty's Government will do all in their power—especially given their new reforming zeal and less than wholehearted adherence to outdated socialist principles—to encourage the Russian Government first to bring down the barriers to open trade, commerce and investment. Secondly, I hope they will persuade the Russian Government that where their law is deficient they should perhaps look to British rather than certain continental models, perhaps with the help of the know-how fund. Thirdly, I hope they will help British companies which have—albeit with a disproportionate investment in Russia—played a pioneering role. I hope that our Government will encourage them to become settlers in the new Russia.
8.3 p.m.
The Earl of Carlisle: My Lords, it is a pleasure to follow the noble Viscount, Lord Torrington, who has vast experience of business life and who has given great service in your Lordships' House on the European Communities Committee. He says that Russia must, of course, lower its barriers to enable us to engage in more trade with it. However, we have erected certain barriers as regards trade with the Baltic states. I shall return to that point later.
I thank the noble Lord, Lord Ponsonby, for this Unstarred Question. He asks what steps have been taken by Her Majesty's Government as regards these trade relationships we are discussing. I can tell him that since 1991 there have been far too few steps taken in that regard. However, the noble Lord also asked what steps Her Majesty's Government will take. He refers in his Question to the countries of the former Soviet Union. I remind your Lordships that the 10 nations, the independent, sovereign states of central and eastern Europe, do not like being referred to as former Soviet Union countries. As we know, they were annexed in 1940, and subsequently re-occupied in 1944. I do not think that the Republic of Ireland would like to be addressed—at the moment or at any time since 1922—as a former part of the United Kingdom. The former countries of the Soviet Union are naturally sensitive on this point. They prefer to be called central European independent states.
I am not a businessman but, as I have told your Lordships before, I have lived in the northern Baltic state of Estonia for the past three years. I have travelled extensively around central Europe. I have often met businessmen and have occasionally met a representative of the Foreign Office. I have asked the businessmen I

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have met, whether they have visited the British Embassy and whether they know the Ambassador. They have told me that they have not done so because the embassy staff are overworked and understaffed. They tell me that they do most of the work themselves as the embassy staff are not much use to them. That has saddened me. I know that since the present Government have come into office the situation has changed and that we are bolstering our embassies in central and eastern Europe with the addition of economic counsellors. But that is too little and too late. As a result, our business adversaries in western Europe and the United States are several steps ahead of us.
I shall give a few statistics. In 1992 our exports to Estonia were £8 million; five years later they are £63 million. In 1992 exports to Latvia were £15 million; in 1997 they were £86 million. In 1992 exports to Lithuania were £13 million; in 1997 they were £106 million. I resist making comparisons but we lag far behind our competitors in this regard. What steps should we take? First, businessmen do not invest unless there is security of investment. I understand that we have good relations—thanks to the Secretary of State for Foreign Affairs—with the Russian Federation. Let us use them to enhance the security of the Baltic states and the central European nations. Let us hasten to bring those "five plus one" into the European Union before the year 2004. Let us reform the CAP and accept dairy products, especially from the Baltic states, and break down the barriers that exist. They cannot buy goods from us unless they can sell goods to us. Let us also help their border guards to confront the mafia.
Let us try to target countries with whom we have excellent relations, for example, Poland, the Czech Republic and the Baltic states. I have asked what steps we should take, but what steps must we take? Between Warsaw and Tallinn is the Via Baltica. I have travelled up and down it in a car, a bus and in a bumpy old Landrover. It needs extending and widening if we are to trade overland. Let us initiate that during our presidency of the European Union. A third bridge needs to be built over the River Narva, as the Foreign Secretary of Estonia, Mr. Toomas Hendrik lives, told the European Union in Brussels when he arrived to sign the accession treaty in February.
Let us consider widening the railway between Tallinn and St. Petersburg where most goods travel overland between the Russian Federation and the Baltic Sea. Let us consider establishing a trade mission in Warsaw, Tallinn or Riga. We have similar trade missions in Milan and Düsseldorf. Let us have one in central and eastern Europe. I conclude on the following point. During our European Union presidency we have done one thing in Estonia—we have painted a tram with the colours of the flags of the European Union, of the United Kingdom and of Estonia. One tram painted, my Lords! I do not know how many man-hours that has taken the Foreign Office and the British Embassy. I do not know how many files have passed to and fro. But it is a little sad. Trade or aid; trade and aid; we need to do both. I look forward to hearing the Minister's answers to some of these proposals.
8.9 p.m.
Lord St. John of Bletso: My Lords, as is customary in your Lordships' House, I start by thanking the noble Lord, Lord Ponsonby, for having introduced this timely and topical debate. I note from the list of speakers that many noble Lords are speaking either from experience of having lived in several of the countries of the former Soviet Union, or having undertaken regular business there, as has the noble Viscount, Lord Torrington. I speak from the experience of being a consultant to Merrill Lynch, which has been setting up offices in several of the countries of the former Soviet Union. I have paid several visits to Russia over the past four years and have received in London several delegations from Azerbaijan, Kazakhstan, Russia and the Ukraine.
It is clear from the statistics which several noble Lords have received—they were sourced from the Library, and come from the MM 20 Business Monitor—that while there has been a substantial increase over the past two years in imports into the United Kingdom from the countries of the former Soviet Union, those figures are not matched by UK exports to those countries. The point has already been made by the noble Lord, Lord Ponsonby.
There are a number of well-publicised reasons for the poor performance. A recent article in the Independent headed "Russia holds pot of gold for those who risk assault course" reported that more than 400 British companies have now decided that the benefits of investing in the new Russia outweigh the risks. Balanced against the concerns of endemic corruption, the generally poor and rundown infrastructure, bureaucracy, the complexity of the different state taxes—a point made by the noble Viscount, Lord Torrington—and legislative chaos, there are in Russia almost 150 million new consumers, added to which are also low labour costs, a highly educated population, and a large economy founded on vast natural resources. By way of example, in the past three years since SmithKline Beecham has been in Russia, its sales have risen by 800 per cent.
Following the Prime Minister's visit to Moscow last year, it was encouraging to note his announcement that a further £500 million would be made available in export credits to Russia, and that the Export Credits Guarantee Department would be expanded to insure Russian investments by United Kingdom companies. Despite this boost, our share of exports into Russia does not match that of the United States, Germany, Italy, Turkey and Scandinavia which have all been capitalising on the huge increases in imports into Russia over the past six months following the move in that country to upgrade its industrial capacity. There is no doubt that, for many British companies, political uncertainties in the region have been a great deterrent.
Following his visit to Russia last year, with a delegation of British businesses, Sir Colin Marshall, the President of the CBI, expressed his three major concerns regarding investment into Russia as being the complexity of Russian taxes, bureaucracy, and crime and corruption. From the experiences of many businesses which have not succeeded in this region, one

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of the lessons that I believe has been learned is that the most efficient and reliable model for doing business in the countries of the former Soviet Union is through joint ventures and production sharing agreements.
As my allotted six minutes are almost up, I should like to make just one final observation. I believe that if we are to improve trade relations with several countries of the former Soviet Union, we should encourage all efforts towards EU enlargement. There is no doubt that the process of EU expansion has acted as a significant stimulus to economic reform. EU enlargement should stimulate trade between western and central Europe and reduce investment risk. I hope that the Government will play their full part in promoting that process.
8.15 p.m.
Baroness Smith of Gilmorehill: My Lords, first, I congratulate the noble Lord, Lord Ponsonby of Shulbrede, on initiating the debate. I am particularly grateful to my noble friend because it gives me the opportunity to speak about a country which has been a lifelong interest of mine. I first visited the Soviet Union as a student before the Berlin Wall went up and at a time when Stalin still lay beside Lenin in the mausoleum on Red Square.
My first job was with the Great Britain-USSR Association in London, where I worked with Sir Fitzroy Maclean, who was the inspiration behind the work of the association. In those days it was not easy to be a friend of the Russians in the West. One was regarded with suspicion and often labelled a "red under the bed". But the work was exciting and Sir Fitzroy gave us great leadership.
I have learnt one lesson above all. To work successfully with the Russians, one must establish trust and friendship on a personal level and, having earned it, one must never betray it. The friendships gained are like no other, but there is a price. One must take the time to understand Russia's history, culture and traditions.
This is relevant to tonight's debate. There are no short cuts to getting to know one's business colleagues. It takes time and money. But I suggest that it is a necessary part of doing business in Russia, and companies which put resources into this process will be well rewarded.
I believe that now is the time to put fresh energy into our relations with Russia. There was great enthusiasm in the early 1990s when new possibilities opened up under Gorbachev. The noble Baroness, Lady Thatcher, and John Major attached great importance to the relationship. I personally was honoured to be invited by John Major to meet President Yeltsin at Chequers in 1994. I believe that the British Know-how Fund has played a crucial role in helping the integration of Russia into the economic and financial institutions of the West.
The problem now is to sustain relations with a country which is going through a difficult period. The uncertain political situation, an incomplete and sometimes contradictory legal framework continue to cause major problems, and the tax system represents a major disincentive to long-term investment.
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For those reasons, Russian and foreign investment in the Russian economy remain worryingly low. In those circumstances, the support of the UK Government is crucial. I was delighted to see in the Export Forum's report Towards an Export Initiative that Russia has been designated a suitable market for a targeted export initiative over the next three years. These are markets which UK exporters are currently under-exploiting but which offer outstanding opportunities. That is the kind of government support we welcome.
Several UK companies are already making major investments, including British Home Stores, Cadbury, Shell, BP and British Gas. I would like to declare an interest as a member of BP's Scottish advisory board and to speak about the company's commitment to the Russian market. In November last year BP made a major strategic commitment to the Russian economy with the acquisition of a 10 per cent. equity in Russia's fourth largest oil company, SIDANCO. In acquiring this stake, BP has signalled its interest in working closely with Russian partners in the development of an internationally competitive Russian oil and gas business. I believe that its example should encourage others to follow.
As a member of the Executive Council of the Russo-British Chamber of Commerce, I should like to mention the excellent work that body does, with the support of the DTI, to promote trade and business contacts between the two countries. Last year I attended a highly successful "Britain in Russia" exhibition in Nizhny Novgorod, in which over 100 British companies took part. This year the chamber will stage two major exhibitions, the first in London in May, "Russia Expo 98", and "Britain in Russia" in Ekaterinburg in October. British companies can derive great benefits from participating in these events. I hope that the Government will continue to support the work of the chamber.
I will return to the theme with which I began. I believe that we must work to enrich the dialogue between our countries. I propose that we establish a regular conference between politicians, business people, journalists and others, an annual gathering on the model of the Konigswinter Conference or the Franco-British Colloque. A Russian equivalent would do a great deal to break down the barriers of ignorance and suspicion. These events allow frank and relaxed discussion on wide-ranging issues and create lasting friendships over a number of years.
When I read last week about the Yeltsin-Kohl-Chirac summit which is being called the Great European Troika, I was struck by President Chirac's words,
"This is an event the importance of which should not be underestimated. We want to confirm the common vision by our three countries on the future of Europe after Yalta".
I asked myself why Britain was not included. Should we not be participating in an event of such importance?
This is a time of uncertainty in Russia but President Yeltsin has promised that there will be no change of direction. A new team in the Kremlin will be anxious to find new friends and I believe now is the time for the UK Government to give a lead and make a renewed effort to give our friendship extra depth. It will be good for business and good for all our citizens.
8.22 p.m.
Lord Cromwell: My Lords, I would like to start by thanking the noble Lord, Lord Ponsonby, for opening this debate with such a stimulating speech. I hope that the Government will take note of what he said.
I regularly do business in the former Soviet Union particularly Russia, and I therefore declare an interest. My generation grew up with a popular image of the then USSR as an undifferentiated and secretive land mass east of Germany waiting to overwhelm us all. How very different the perspective of the next generation will be. The former Soviet Union is now not only a market in its own right for everything, from basic infrastructure to sophisticated consumer goods, but also a rich ground for the development of joint ventures in order to access other markets.
As a regular visitor to the former Soviet Union I have been struck by the respect and even fondness with which Britain is viewed by many, often based on their reading of Conan Doyle rather than direct contact with Britain. Indeed, Britain is still sometimes referred to as "Foggy Albion", which is so much better than "perfidious Albion". While those images may seem quaint to us, they include a belief that British people are basically fair and trustworthy. However, I have too often found that the people that my friends in the former Soviet Union are doing business with are German, French or American but not British. It is usually explained to me that, although the British go over sometimes, they can usually only afford to send one representative for a couple of days and only send him once. He does not appear to have any government backing and will not commit to anything that does not have immediate profit. My hosts contrast this situation with a German or French company which sends up to a dozen people, briefed and supported by external political and financial resources, who stay for weeks and even months, building local relationships and are ready to sign long-term contracts on the spot. I regret that many British businesses are still put off by the prospect of venturing, as they perceive it, alone into unknown territory, even though Moscow is less than a four-hour flight away.
Later in the debate I am sure that we shall hear of the many things that Her Majesty's Government are doing to promote trade with the former Soviet Union countries. I wonder, however, how these activities, although worth while, compare with the support available to some of our competitors.
Former Soviet Union governments are anxious about generic issues of their domestic industries, trade barriers, EU dumping regimes, EU membership and, in addition, gaining membership of multilateral trade organisations. These are clearly important areas in which a responsible but positive British stance will help future trade relations. However, it is also in the active promotion of specific trade opportunities that our Government have a role to play.
The British Foreign Secretary has rightly warned against turning Britain into some kind of nostalgic theme park rather than a 21st century enterprise-based economy. Part of the development of such an economy
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in Britain must be recognition of the degree of local involvement, the long-term perspective and the political investment needed to succeed in new markets.
In Britain we have a greater separation of private business and state support than some of our competitors, but this can be a severe handicap when faced with competitors whose access to direct state promotional support gives them both confidence and prestige in their dealings with former Soviet Union trading partners.
I would like to mention another area in which I think Britain could do better through more effective linking up of British and Russian and small and medium-size enterprises. In former Soviet Union countries I am constantly approached, no matter how low-key or remote the area of my visit, by representatives of local businesses seeking external partners for their enterprises, which range from steel plants to textiles, from tourist locations to medicines made from reindeer antlers. Some of your Lordships may smile at the last of these, but I have included it exactly because it has since become the basis of a Korean-Russian joint venture.
Hundreds if not thousands of such opportunities exist in the former Soviet Union. If Britain does not find them and take them up, then others will. In Russia alone, the Dutch invested more than double the amount invested by the UK in the first half of 1997. In 1996 the Germans exported more than four and a half times the UK level. Each such opportunity lost is also a loss of ability to develop partnerships and to shape the future trade traditions of the region. The problem for smaller companies is that location and following up such opportunities from scratch and on their own are dauntingly expensive.
Would Her Majesty's Government consider a specific project to benefit Britain and the Former Soviet Union by making such opportunity more accessible to British companies? A user-friendly and accessible computer-based information network linked to full-time local specialist researchers across the region would be one step in this direction. However, I stress again that this initiative would have to be part of a wider strategy of trade promotion and support.
In conclusion I note that the DTI publication, Doing Business in Russia,states that there is "strong competition from other exporting countries" and that "a sustained sales effort" is required. One important way to improve Britain's trading and business capacity in the region must therefore be to promote and foster more than just one-off contacts. What is needed is solid follow up and practical support to establish long-term commercial links between British and former Soviet Union businesses. Government involvement in such activities may go against the grain in this country but without it we will achieve well below our potential commercial capacity in the former Soviet Union.
8.29 p.m.
Lord Brooke of Alverthorpe: My Lords, I too am grateful to my noble friend Lord Ponsonby for this debate. I wish to speak particularly about Russia which is an important new market of 150 million consumers for us. Regrettably, as so many people have said, we are

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failing, in taking such a small share of the market. We are slow to move. Germany and the US are moving particularly quickly. However, I welcome the Government's decision to focus more attention on trying to develop our exports to Russia.
I believe that Britain has much to offer and to sell, not only in the export of manufactured goods but also in the service industries. Governance and accounting were mentioned earlier. They are major areas in which we can make a contribution. Our public services too have a great reputation, and there is much that in one form or another can be exported, particularly in the education and training fields.
Thousands come to this country to learn English. It is a big earner in the UK, but there are millions abroad who want to learn English or improve it. There is a great demand in Russia too to learn English. I wonder whether we are missing out on major opportunities to develop new markets for exports.
The British Council and the BBC World Service do admirable work. They are respected and have fine reputations. But they are constantly subject to reviews and cuts. What they achieve is done on the basis of a shoestring. For example, the British Council spends only around £4 million per annum in Russia when it is a huge market. It is insufficient to make a serious impact. The Government need to review their approach.
If we are really serious about penetrating markets and building the networks which have been discussed and are badly needed, then more will have to be spent. While in the short term it may not immediately produce returns, in the longer term the investment will be well worthwhile. Equally we must look for new opportunities for raising investment funds for public services. That needs to be explored.
The British Council says that it wants new partnerships. It wants to be innovative, and I believe that it is. However, I have been making inquiries about the kind of partnerships being developed and they are not as innovative as I might have hoped. While there is support from the EU in funding and in creating links with certain UK public educational establishments, there do not appear to be any links built, or in prospect, with the private sector which has major providers of education and training, particularly in English. There are chances there for us to be innovative and to adopt new approaches, using both the British Council and the BBC.
We have a product, our home language, which is in demand worldwide and especially in Russia. Throughout the rest of the world I do not believe we have yet realised the potential that is available to this country to build on that and to make great strides forward.
There is a case to be made—and I shall be interested to hear the Minister's response—for the British Council, the BBC World Service and the private sector which has an interest in education and training in English to come together and perhaps ascertain whether we can mount a seminar of some kind. We could see what possibilities may be open to us and whether we can find new joint
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ventures for the future, with more money being invested in the area, not solely from the public services but from the private sector too.
Initiatives along those lines would not only be beneficial to us but would also help the Russians foster their integration into world and market economies, to stay out rather than turning in. We must do everything we can to help their economy to recover and to underpin the fragile democracy that we see there. I compliment the work being done through the Know How fund and by the forces. It was good to hear of our forces helping with the retraining of redundant Russian military officers, of whom there are thousands, as we know.
More could be done. With my Inland Revenue background, I believe that there are great possibilities. Some of the redundant officers who are being retrained could perhaps be directed into the public service where their skills, their management experience, their strength and willingness to stand up to difficulties, could be well used, particularly in Russia's equivalent of the Inland Revenue.
The fiscal regime is in a mess. Unless it is helped there are significant dangers for the country and possibly, taking a broader view, for other countries of Europe also if by some chance Russia started to see the collapse of its economy and democratic structures.
We should be concerned at the continuing inflow of foreign money to finance Russian budget deficits while internally there are large shortfalls in revenues. There are inadequate yields coming through in the form of taxation—sufficiently so in 1997 for the IMF temporarily to suspend support. We should be concerned that so many employees in Russia are either not being paid or have substantial wage and salary arrears owing to them. The latest estimate is that 55 billion roubles are owed—the equivalent of 10 billion dollars. Nearly 20 million workers are affected. While the problem is limited in Moscow, it is pressing and growing in other parts of the country. It is a source for concern. President Yeltsin promised in the summer of 1997 that by 1st January 1998 the arrears would have been cleared. But the reality is that the position is even worse than it was last year. There is a 4 per cent. increase in wage debts at present.
I could give examples of the problems that exist in this area. I conclude by saying that we should not disregard the possibility of difficulties among the labour force in Russia. I hear that major demonstrations are being organised this coming Thursday, with strikes, protests and demonstrations throughout the whole of the country. We should take note of that and do everything in our power to help the democracy to make sure that the country moves forward and not backward.
8.36 p.m.
Viscount Waverley: My Lords, I am going to buck the trend and concentrate my remarks on central Asia—a region of great economic, political and strategic significance to the United Kingdom. We ignore it at our cost. It comprises 52 million consumers, with opportunities not only for modernising the infrastructure and communications networks but also for the

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development of the region's abundant natural and industrial resources. There is a growing respect for free market principles and the confidence to gain foreign investment, with increasing opportunities for small and medium-sized companies.
The underlying message is that there is a natural desire throughout the region to work with British companies, but while the way is open to enter this market, like all good markets, competition is strong. British success stories abound, however, including the two trade missions last month by the oil and gas sector to Turkmenistan and the British Invisibles mission to Kazakhstan and Uzbekistan. Private sector achievements include Monument Oils' operation in Turkmenistan, BG's Karachaganak operator activities and participation in the Caspi-shelf consortium in Kazakhstan, together with the large investment by BAT in Uzbekistan, all representing the best of British.
That said, I believe that on balance the UK is being slow to react on both the business front and in the political arena. There is a clear need for better understanding of the circumstances and opportunities. We had the opportunity, for example, in this House recently to ratify the Peace and Co-operation Treaty between certain states and the European Union.
I have to say that remarks in relation to Uzbekistan were wide of the mark, made I suspect, without understanding the advances that have been made since having independence in effect forced upon it just six short years ago. Care needs to be exercised when apparently advocating pressure groups' complex agendas without first-hand and up-to-date knowledge of the global picture. Suggesting that other governments conduct their internal affairs in a slim-fit replication of our system, even frankly including the principle of Anglo-Saxon democracy, is not the answer.
On a regional issue, we must stand ready to extol and assist such virtues as the trade-off between short-term costs with long-term benefits in such areas as market reforms, creating a commercial environment with realistic arbitration procedures.
On occasions, the speed of privatisation comes under the spotlight. Economies in central Asia are still dominated by the public sector, with the relatively high political risks that are perceived to go with it. Yet it must be said that privatisation is the often stated central Asian governmental goal.
I can tell the House about the opportunity that the Meredith Jones Group—a company with which I have an association—has created as a first company to privatise part of the Uzbekistan cotton-growing industry. I led a parliamentary delegation to Uzbekistan last year and saw the cotton fields of the Fergana Valley being dramatically improved through new technology. The social and economic benefits of the project to around 70,000 people who are currently at subsistence level are significant, together with major environmental benefits.
President Karimov personally supported Meredith Jones in making this improvement in a key area of the economy, with agriculture in Uzbekistan, as elsewhere,
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desperately needing this sort of investment. I am pleased to note that Her Majesty's Government have been supportive in helping this UK company achieve its ends.
So, back to the question in hand: how, specifically, can this Government impact developing trade relationships in the region? I think, in one sense, more laterally than in other ways; for example, by being seen to care about real development problems which would give us a comparative advantage in the marketplace. Specific projects could be to assist on the ecological disaster of the Aral Sea or the Semypalatinsk nuclear testing facility, where over a 40-year period 475 nuclear devices, equating to approximately one explosion a month, were tested leaving a radiation catastrophy affecting 200,000 people. We have in this country the expertise to help.
The international fight against drugs, with its impact on regional security, is another area where much more can be done. The civil war in Tajikstan, exacerbated by a steady flow of ethnic refugees combining religious fervour from Afghanistan, and the huge quantities of hard drugs awash in the region with the large oil and gas deposits all around central Asia waiting to be exploited, all add to a possible destabilisation of the wider region.
I certainly noted with great interest a discussion with Prime Minister Sultanov and his team about the contribution that a pipeline routed through Afghanistan could make to bringing peace between the Taliban and opposition factions.
More practical assistance by HMG would be to match countries such as Germany with their considerable government programmes in guarantee schemes, supported credit schemes, feasibility support and assistance. Regrettably, both this Government and previous administrations have not taken an active role in funding or assisting UK foreign investment abroad, taking a much more free market attitude than many of our continental and other competitor countries.
Other key areas where we can impact with low cost would be to ensure that both Downing Street and Secretaries of State free their diaries to greet incoming counterparts.
The good will generated does a great deal to establish opportunities for British business. And we must change the erroneous system so as to calculate British export figures on the basis of final destination, as opposed to credits being given to the country of first shipment outside the UK. That would show a true and different reflection with benefits all round. Moscow, for example, inadvertently gets the credits for trade instead of Almaty and so on.
Finally, the low level of our diplomatic representation in the region is bordering practically on the absurd, yet that said, all posts are being valiantly manned, which will come as no surprise. However, as more British business and other interests venture to central Asia, there must be an incremental increase in officers.
I conclude where I started; thee is much to play for. We as a country must work more actively on all fronts as a friend of the region, which will surely produce benefits.

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We must encourage trade and investment, develop cultural, scientific and technical co-operation, encourage environmental protection, do what we can to assist in the essential combat of drugs, and, yes, certainly help to develop democratic institutions and additional respect for human rights, with a strengthening of peace, stability and security for central Asia.
8.43 p.m.
Lord Grenfell: My Lords, I join with other noble Lords in thanking my noble friend Lord Ponsonby of Shulbrede for introducing this important Question. At this late hour there is not a great deal that I could or should add. But I should like to tread briefly on a rather different path—that is, the macro-economic path—and touch on some of the problems that need to be solved if the countries of the former Soviet Union are to be integrated further into the global trading system which will be decisive in determining the degree of this country's commercial penetration of that region.
The newly independent republics' experience has been, and is, very different from that of their old COMECON partners—the countries of central and eastern Europe. Those latter are now exploiting a long, untapped potential for trade with market economies. The European agreements which they signed with the European Union have helped to lock those countries into open trade policies; they provided free access to European Union markets for most of their manufacturers, and, although there are still some restrictions to be removed on imports of sensitive products (particularly in agriculture), the European Union countries have already become the main trading partners of the central and eastern European states, replacing the COMECON members.
European Union and central and eastern European trade has more than doubled since 1989. But, while the central and eastern European states were by the mid-1980s beginning to shift their trade away from COMECON and towards OECD markets, producing a pattern of trade more attuned to market forces, the Soviet Union was stuck in its old ways.
In its very closed economy, Soviet planners fostered specialisation rather than diversification within each republic. The result was very little trade with the rest of the world and very large amounts of trade between republics. For example, in 1989, 90 per cent. of Belarus's trade was with other Soviet republics. That share would have been around 32 per cent. had all the Soviet republics been market economies. Nearly 70 per cent. of Russia's exports went to other Soviet republics—it would have been about 16 per cent. in a market economy framework. The legacy left by that strait-jacket trading pattern is what those countries now have to overcome to break into the global market.
But there is every reason to believe that that pattern will be reversed as the market economy takes hold in those countries. It has been predicted that the countries of the former Soviet Union, as market economies, will send three-quarters of their exports to non-former Soviet Union partners, mostly in western Europe.
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As the noble Earl, Lord Carlisle, reminded us, the Baltic states have made substantial progress in reorienting their trade towards market economies. Estonia in particular proved that rapid trade liberalisation pays off. By the end of 1992 it had removed virtually all export barriers, eliminated all quantitative import restrictions, kept only a few low import tariffs and made the new currency fully convertible for current account transactions. The result of that rapid trade liberalisation has been that half of Estonia's exports now go to western Europe and two-thirds of its imports come from there.
We can compare that to the Ukraine which, until the end of 1994, still maintained many price and trade controls and an extensive network of rather ineffectual bilateral trade agreements with other former Soviet Union republics and old COMECON partners. As a result of those counterproductive policies, western Europe accounted for less than 20 per cent. of Ukraine's total trade in 1994. Then the reforms belatedly started. But isolation from world markets delayed enterprise adjustment and perpetuated inefficiencies. As a result of considerable price liberalisation in late 1994 and the elimination of most direct export controls, exports have grown. But the high costs of slow trade liberalisation are still being paid for by the Ukraine.
That has been true of many others among the republics of the former Soviet Union. And it is not just trade policy that has slowed progress in reorienting trade. Many still lack the institutional and physical infrastructure and the expertise to support new patterns of trade and face a steep uphill task in exploiting their new trade potential in market economies. That is especially true for the central Asian republics referred to by the noble Viscount, Lord Waverley, most of whose transport and communication routes run through Russia.
But the reorientation is under way. The integration of transition countries will bring substantive benefits to the world economy. And yet, ironically, there is a recurring concern, even as lip service is paid to the desirability of further integration, that it will come directly at other countries' expense. Certainly integration holds risks as well as opportunities for both sides. Many countries may indeed face adjustment costs. But the evidence suggests that those will be far outweighed by the benefits for all countries of being part of a larger and more competitive marketplace.
Long-term trade integration with Russia and the other republics could involve vastly greater trade flows as countries send energy, particularly oil and natural gas, to western Europe in exchange for capital and technology-intensive goods and high quality consumer durables. But there are some big "ifs". For example, Russia's crude oil and gas export volumes rose by 4 per cent. in 1996 and export revenues were further boosted by higher oil and metals prices. But prospects for long-term export performance are somewhat less encouraging, as oil output dropped to its lowest level in 30 years, sapped by delays in development and infrastructure maintenance projects—something with which the United Kingdom could help. And if that is coupled with declines in world crude oil prices over the longer term, Russia's export revenues will not be rising

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fast enough to sustain a major import programme unless new investment and efficiency improvements are achieved. My noble friend Lord Ponsonby spoke forcefully of the assistance needed to help them deliver that, in which the UK lags far behind other countries, in particular the United States and Germany.
Let me sum up as follows. International integration is vital for successful reform in the now independent states of the former Soviet Union, especially considering their history of autarky. Imports help make their markets competitive. Exports provide a source of growth and learning. In some areas, foreign direct investment is the only way of acquiring vital skills, markets and finance. Institutional integration is also vital.
The OECD countries especially have a strong interest in encouraging integration by keeping their doors open. Limiting the inflow of goods and raw materials from the 15 republics must not continue indefinitely. In particular, the European Union anti-dumping committee should rethink its policy of restricting the import of cheaply priced extracted minerals from Russia. One can understand Russia seeing this as a double standard since Russia has not adopted comparable policies to protect its producers from the importing of European manufactures and consumer goods.
The adjustment costs to the OECD countries of absorbing the former Soviet Union countries into world trade are manageable. If these countries are prepared to liberalise their trade regimes—an often painful exercise—then their intended trading partners, already integrated into the global economy, must be prepared to shoulder the necessary but manageable costs of adjustment to new trading patterns and increased trade flows. The United Kingdom, traditionally a great trading nation, should be, like France and Germany, as pointed out by my noble friend Lady Smith of Gilmorehill, among the front runners in ensuring that this further integration is not beset with obstacles that can only in the long run deny all countries the benefits of a liberalised global economy.
8.51 p.m.
Lord Newby: My Lords, I join other noble Lords in congratulating the noble Lord, Lord Ponsonby, on initiating this debate. If one takes a long-term view, Russia is bound to be far more significant in terms of UK interests than the vast majority of its trading partners. This is partly simply because of its size and its potential for UK trade. An area of agreement has been reached this evening in that the UK is under-performing in its trade relations with Russia. Indeed, in our debate last week on the importance of exports, the Minister singled out the former Soviet Union as one of the areas where the UK has been under-performing.
Russia's importance to us lies in its position as a guarantor, or not, of the security of Europe. That area has not been much debated this evening but it is clearly of relevance to the overall debate. Although we have inevitably concentrated on Russia, given its scale, if we are to see political stability in the region it is also of crucial importance that the other former Soviet republics
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succeed economically. A stark example of the scope for instability was found only recently when in the Ukrainian elections a quarter voted for a party which wants "brotherly reunion" with Russia. A major component in the thinking of the people who voted for that party was a sense of frustration at the failing Ukrainian economy and an envious glance at Russia's relative economic success.
As many noble Lords have described, anyone who tries to trade with Russia faces a series of major hurdles. There is a raft of security problems to be overcome. There is a tremendous arbitrariness, to put it no higher, in the decision-making process. The tax code in Russia, as elsewhere, is vastly complex and ever-changing. There are a series of competing bureaucracies to deal with and there is the ever-present political instability, which, while not posing huge day-to-day problems for the Russian on the street, can be hugely disconcerting to those who are seeking to do business with the Russian state. Finally, there is the problem, referred to by the noble Lord, Lord Ponsonby, of the requirement for companies undertaking investment not only to make the investment in the plant, machinery or buildings but also to take on a big social responsibility in, as it were, managing the town as well as the plant in which they might be wishing to have an investment. In Russia over recent months there has been progress on a raft of these difficult issues but the best that can be said is that progress has been patchy.
On the key issue of having clear rules implemented without fear or favour, legal underpinning is being strengthened. Recent movement on the bankruptcy law and simplification of the tax code are two examples of that. There is also a real commitment in some of the regions to accept a market economy and a democratic system of operation. As I was being briefed by my noble friend Lady Williams of Crosby this evening, the region of Perm is also grasping both the scope and the requirements of undertaking the transition to a market economy.
We have heard this evening about the wealth of opportunities within the former Soviet Union for the UK. While I accept all that have been mentioned, I think that, as the noble Lord, Lord Brooke, stressed, the service sector offers peculiar opportunities for the UK, to a greater extent possibly even than the more basic sectors of raw materials and manufacturing.
By common consent our performance to date has been less than satisfactory. Although there have been a number of cases of conspicuous success, we have to accept that trade flows between the UK and the region lag behind our principal trading partners in Europe and elsewhere—Germany, France and Italy, in Europe, and the United States, Japan and even South Korea outside Europe.
Government support to date for trade with Russia and the former Soviet Union, like the reform process in Russia, has been patchy. There have been some good points. The Know-how Fund has made a major contribution in a number of respects. The commercial sections in the embassies have been beefed up, although everything is relative and they are still very small. Trade

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fairs have been supported and at European level the British Government have supported the TACIS programme and the EBRD. As other noble Lords have mentioned, other British institutions—the Russo-British Chamber of Commerce, the CBI, the British Council and the World Service—have all played a part in helping to provide a climate in which the transformation of the Russian economy can take place.
These are all positives but clearly they are not enough. What then is to be done, as Lenin might have put it? At the European level, I think the point made by the noble Lord, Lord Grenfell, about the position relating to anti-dumping duties, the classification of Russia as a non-market economy and the vexed question of potential WTO membership is an area that must be grappled with. I would welcome any assurance from the Minister that during the UK presidency this area will be looked at afresh. Secondly, with regard to the European level, there is a relatively minor but important point. The TACIS programme is way behind in making payments—sometimes years behind—and this is undermining the credibility of the programme. This is not so much a problem for big enterprises as for smaller enterprises and NGOs. A rocket needs to be put up the administration of the TACIS programme which I hope the Minister might light.
The UK could take a number of practical steps. There has been an increase in ECGD capacity for Russia but it is never enough. We are always running to stand still. We are losing contracts to Germany and elsewhere because we are unable to give British traders the kind of support that they need and that their competitors are getting. Official aid from the UK has fallen dramatically in recent years. Following a relatively high level in the first years of the transition within Russia, in 1996, the last year for which I have seen figures, we stood behind Denmark, France, Germany, Norway, Sweden and Switzerland in terms of official aid. That looks rather poor and I would welcome any assurance from the Minister that that position might be reversed.
Finally, I should like to support the proposal from the noble Baroness, Lady Smith, for the establishment of a Russian Königswinter. When one looks at the history of the original Königswinter over a number of decades, it has been very substantial indeed. It is something which is long overdue for Russia. From the Government's point of view it has the tremendous advantage in that it could almost certainly be done without breaching expenditure limits.
9 p.m.
Lord Fraser of Carmyllie: My Lords, I should immediately declare something of an interest for the avoidance of any misunderstanding. I am the chairman of a company that trades within the Ukraine. I wish that I could boast that it trades with the United Kingdom, but that is for the morrow.
I usually do not waste too much time reading books by those who edit, or have edited, the New Statesman, but anyone who has read Mr. John Lloyd's book Rebirth of a Nation will appreciate what an extraordinarily lucid and at times chilling narrative it is of the painful moves
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which have been under way in Russia and the former Soviet Union and which continue to move towards something approximating a market economy. Without giving it an unnecessary plug, it is a compulsive read.
My reflection on it all, following from what has been said in your Lordships' debate, is that we should not only be judging the success or desirability of our participation in the countries of the former Soviet Union by the volume of our investment but we should be looking at it in a broader way. The noble Lord, Lord Ponsonby, in opening the debate, emphasised the amount of investment by Germany and the United States. My understanding is that the Germans have had some quite mind-blowing losses in Russia. One might want to ask, "Why should one be too concerned when a competitor nation makes such investment losses?". My response would be that there is a real difficulty for us all in the tumble towards less than careful and studied investment in Russia and other countries of the former Soviet Union which has had the effect of inflating the bureaucracy, complicating the tax structure and, possibly most seriously, bloating the corruption within those countries.
From my time as a Minister at the DTI and thereafter, I confess to a certain hardening of my legal arteries. I hope that the response by Her Majesty's Government to the question of what they are doing to improve trade relations with the FSU will be not only to tell us what they are doing through ECGD and other initiatives, but also to indicate in the most clear and unequivocal terms that they are working to see that a legal framework is secure, that contracts are being honoured, that bureaucracy is being reduced and that taxation demands are both fair and predictable. That would be the ethical foreign policy to which this Government are so keenly trying to aspire.
Like the noble Lord, Lord Newby, I was attracted by what the noble Lord, Lord Brooke, had to say. I have had no doubt that emphasis on the improvement of standards in the fashion that he identified would probably be the greatest improvement and contribution that we could make and would ultimately allow us to make a much better and secure character of investment.
I have no doubt that the noble Baroness, Lady Smith of Gilmorehill, is absolutely right in saying that there is no short cut and that it is a matter of building up trust and friendship. I hope that my noble friend Lord Torrington will agree that hard work is necessary if we are to build up a proper relationship with the FSU rather than rushing, without too much skill and understanding, towards ill-advised investment.
There are two questions that I wish to ask the Minister. If he cannot respond this evening perhaps he will write to me about them. My noble friend Lord Lang, who I regret is no longer in the Chamber, was here for part of the debate. He spent some of his time as President of the Board of Trade in Moscow with the joint trade committee. I trust that that arrangement is continuing. It would be helpful if the noble Lord could tell us the degree of emphasis that the Government give to it, notwithstanding the Prime Minister's visit to Moscow. I shall also be grateful for what he can tell us

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about the ECGD. As the noble Lord, Lord St. John of Bletso, indicated, I believe that £500 million has been extended in ECGD cover to Russia. I suppose that is broadly desirable. I can imagine the upset that there was in the ECGD when that Prime Ministerial requirement was made.
The question I want to be clear about is this. Can the Minister clarify and confirm to me that the £500 million of extended cover which has been given to Russia in no way has been at the expense of any of the other countries in Central Asia or along the Baltic Sea? That is very important. These countries need to have clear opportunities to develop their economies. We can only offer sensible participation if ECGD cover is available in those countries. I conclude by thanking the noble Lord, Lord Ponsonby, for raising what is for many of us a very interesting debate.
9.5 p.m.
Lord Haskel: My Lords, I thank noble Lords for giving me this opportunity to describe the many different approaches which the Government are taking to encourage the improvement and development of trade relationships with the countries which made up the former Soviet Union. I thank my noble friend Lord Ponsonby for opening the debate.
Perhaps I may at the start assure all noble Lords that we take this matter very seriously. How do we deal with it? Our approach is along a number of lines. I shall deal with them under various headings. They are funding, training, ministerial contacts to provide the personal relationships which many noble Lords thought were so important, and last, but by no means least, encouraging integration into the world trading order to try to deal with some of the difficulties about which many noble Lords spoke.
With the break-up of the Soviet Union it was necessary to set about establishing channels of communication with some 15 countries instead of one. Whereas one joint commission on trade and investment had served the purposes of bilateral trade relations, we now have a growing and diverse group of committees where Ministers and officials meet and encourage companies to do the same.
In some of the smaller countries of the former Soviet Union, trade and industry councils have been set up which operate with the direct participation of the companies giving them direct access to Ministers and officials. There are such trade councils for Azerbaijan, Uzbekistan, Kazakhstan and Belarus. Indeed, they are some of the countries mentioned by the noble Viscount, Lord Waverley. It is relationships with these organisations that are so important that they have to be developed on a personal basis. I can assure noble Lords that our ambassadors will continue to open up channels of communication between our companies and the most influential players in government and business in these markets.
We also work with other organisations and try to benefit from personal relationships with them. My noble friend Lady Smith reminded us of the East European
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Trade Council and the Russo-British Chamber of Commerce. There is also the British-Ukrainian Chamber of Commerce and the British-Latvian Chamber of Commerce as well as the British Council and the BBC World Service, to which other noble Lords referred.
My noble friend Lord Ponsonby told us that the oil and gas sectors are arguably the most important for the development of many former Soviet Union economies. He is right. Her Majesty's Government have been actively assisting UK exploration and production companies and equipment suppliers to take advantage of the opportunities.
Our Ministers are also active in improving trade relations by supporting our companies in meetings with their counterparts. As noble Lords know, the President of the Board of Trade visited Russia last week and the Minister for Trade will do so in September in support of a trade fair initiated by the Department of Trade and Industry and sponsored by the East European Trade Council specifically to promote British companies. It will take place in St. Petersburg. A similar all-British event was held in Tashkent, Uzbekistan, from 5th to 12th October 1997. This comprised a trade fair supported by cultural and heritage displays. The noble Viscount, Lord Waverley, reminded us of other occasions.
To complement that, Her Majesty's Government encourage government delegations from the former Soviet Union to visit the United Kingdom. The then first Deputy Prime Minister of the Russian Federation, Mr Chubais, visited the United Kingdom last October. There have been a series of other visits.
The noble Lord, Lord Cromwell, and others asked what support the Government are providing. The Department of Trade and Industry is increasing its efforts to help companies into these difficult markets by the provision of support for trade fairs and trade missions, both inward and outward, as well as seminars.
Under the new support for exhibitions and seminars abroad scheme, the DTI will be providing additional support to encourage experienced exporters to take part in Russian events taking place after 31st March 1999. Support will also be available under this scheme for exporters taking part in niche events in the other former Soviet Union countries.
As many noble Lords said, a very important element in increasing exports to the countries of the former Soviet Union is the availability of ECGD cover. The noble Lord, Lord St. John of Bletso, mentioned the increase in cover and the noble and learned Lord, Lord Fraser of Carmyllie, asked me whether the £500 million was drawn from other budgets. I am not able to establish that point at present, but I shall certainly supply written replies. The position is not quite clear. The ECGD provides insurance for UK investors against political risk. A number of projects and investments in the countries of the former Soviet Union have been supported by the ECGD. That also happens in the form of loan guarantees, as my noble friend Lord Ponsonby mentioned.

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Trading relationships mean more than imports and exports. For the long-term development of the trading relationship, it is important that they should lead to investment. I am pleased to say that, despite the impression given by some noble Lords, British companies have made significant investments in the former Soviet Union. I am grateful to my noble friend Lady Smith for mentioning some of them. In Russia, for example, according to Russian figures, we were the fourth largest investor in 1997, behind the United States but ahead of Germany. Those investments span a wide range of sectors from manufacturing to consumer goods, through to retail and energy.
An important plank of the Government's policy of encouraging long-term relationships with the former Soviet Union, especially with regard to investment, is funding for trading. The Know-How Fund's training for investment personnel scheme is available for all countries of the former Soviet Union, with the exception of Estonia. Fifty grants have been awarded since the scheme was launched in 1990. Similarly, the joint industrial and commercial attachments programme has been in operation since 1990. It seeks to bring senior and middle managers to the UK for short-term attachments with British companies. That is all part of building personal relationships about which many noble Lords spoke. The scheme has two clear objectives: to introduce former Soviet Union managers to the market economy and help them and the UK companies hosting them to enter into commercial agreements as a result of the attachment. Since the start of the programme, some 150 managers have been brought to the United Kingdom under the scheme.
There are other ways in which the Government encourage companies that look to invest in these countries. Financial support is available to help companies test the ground before embarking upon investments. The Know-how Fund's pre-investment feasibility study scheme offers grants to United Kingdom companies which propose to undertake investment in the region. The noble Lord, Lord St. John, spoke of the importance of the European Union. Yes, the European Union's partnership and co-operation agreements with many of the countries of the former Soviet Union are now the basis for overall trade relations between the United Kingdom and those countries. These partnership and co-operation agreements are also the European Union's vehicle for practical measures to support the integration of the countries of the former Soviet Union into the international economy, especially through accession to the World Trade Organisation.
I agree with my noble friend Lord Grenfell and other noble Lords that the international trading community would like to see these countries fully integrated into the multilateral trading system in order to escape from what my noble friend termed their straitjackets. Membership of the World Trade Organisation is in their interests because it is the best way to secure lasting and substantial trade liberalisation. The World Trade Organisation accession process will favour the introduction of world-class rules and disciplines covering intellectual property, public procurement, standards, and so on. This should raise the confidence of exporters and increase their trade
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something for which all noble Lords have called. We are keen that the process of negotiation should move along positively, but it will be lengthy.
My noble friend Lord Ponsonby reminded noble Lords that the difficulties of doing business with countries of the former Soviet Union should not be underestimated. I have in mind not only the lack of predictability and transparency in the framework for business. The noble Viscount, Lord Torrington, reminded us of the bureaucracy. Most people who have not visited these countries think of them as lawless places. I agree with the noble Lord, Lord St. John, that, while corruption exists in these countries, it should not and does not deter those companies who know how to learn from the experience of others. In the markets our embassies take the opportunities to bring together British companies so that they can exchange experiences. The Department of Trade and Industry in this country organises events where those involved in doing business share their experience with companies who are contemplating doing business in the same area.
The noble and learned Lord, Lord Fraser, drew my attention to difficulties with the legal framework for business. Usually this concerns the complexity and interpretation of tax and legal provisions or the introduction of unforeseen changes. There are now more ways than ever to discuss and resolve many types of actual or proposed restrictive measures in good time before trade is significantly affected. Bilateral meetings, the new PCAs and the process of World Trade Organisation accession are mechanisms that will highlight and resolve possible barriers to trade in both directions.
The noble Lord, Lord Newby, asked about the TACIS programme. We recognise that TACIS has some faults, particularly in the time taken between initial proposal and project implementation. We are working with other member states to improve the effectiveness of TACIS, but we are very much aware of the criticism.
The noble Lord, Lord Cromwell, asked about a computer network. I suggest that he dials up www.tradeuk.com. In particular, after June, he will discover that there is a database which provides opportunities to do business in many countries, including countries of the former Soviet Union.
I have exceeded my time. I am grateful for all the contributions that have been made this evening. My noble friend Lady Smith suggested that there should be a regular conference with host speakers. Most speakers were enthusiastic about promoting trade. I am sure that the department will take into consideration that suggestion. There has been a marked increase in the trade that has been carried on with the countries of the former Soviet Union as the overwhelming majority of the region's economies introduce market reforms. The whole purpose of our promotion of trade is to introduce the efficiencies of the market economy about which many noble Lords have spoken. It is also our mission to see that that promotes the further opening of EU markets to goods from former Soviet Union countries. We are working for their integration into the world trading system via the EU. I thank all noble Lords for their contributions.
House adjourned at twenty minutes past nine o'clock.