Lords Sitting of 11 February 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 Chichester.
The Earl of Stair (Lord Oxenfoord)—Sat first in Parliament after the death of his father.

World Trade Organisation: 50th Anniversary
Lord Thomson of Monifieth Lord Thomson of Monifieth asked Her Majesty's Government:
Whether the United Kingdom delegation to the 50th anniversary celebrations of the World Trade Organisation in Geneva in May will be led by the Prime Minister.
The Minister of State, Department of Trade and Industry (Lord Clinton-Davis): My Lords, the composition of the United Kingdom delegation to the celebrations marking the 50th anniversary of the signing of the General Agreement on Tariffs and Trade has not yet been decided.
Lord Thomson of Monifieth: My Lords, I thank the Minister for that Answer. Does he agree that the WTO is one of the most important of the world's international organisations, and arguably more effective than the UN in both its settlement and its enforcement procedures? Does he therefore agree that as the UK at present holds the presidency of the EU—one of the biggest single trading blocs in the world, with an immense interest in protecting the world from any reversion towards protectionism—it would be highly appropriate for the British delegation to be led by the Prime Minister?
Lord Clinton-Davis: My Lords, the point raised by the noble Lord is right. The WTO, and not least the way in which dispute resolution is achieved, is of the highest importance. It represents an international rule of law relating to trading. The Government are fully committed to the multilateral trading system at whose very heart the WTO stands. The Prime Minister has already entered into a number of important commitments for that week. I am sure that he will take note of what has been said and what has been communicated to him by his colleagues about the importance of the WTO. It is a question of unravelling a difficult situation. He has, for example, no fewer than three summits during that week,
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so it is difficult to organise. However, I am sure that my right honourable friend will read with great interest what the noble Lord has said.
Viscount Waverley: My Lords, when the time comes will the Government carry the clear message that social and development issues be taken into account in multilateral decision-making?
Lord Clinton-Davis: My Lords, I thank the noble Viscount for raising that important issue. I can assure him that we do not lose sight of social and environmental issues, not least in the Multilateral Agreement on Investment, which is being negotiated at present and which has considerable immediacy. I have made it clear that we shall use every possible avenue to raise those matters. However, when it comes to the WTO there is a difficulty. Is it the right venue at which to raise this issue? Due to the almost unanimous decision, which I hope can be broken down, of the developing countries, there is little prospect of agreement there. The right locus at the present time has to be the ILO, where we shall be concentrating our efforts. In the margins of all those conferences, my ministerial colleagues and I take every opportunity to raise these issues.
Lord Lang of Monkton: My Lords, will the Minister confirm that the Government remain committed to the target of global free trade by 2020—a target set by the previous government, and supported by the WTO? Does he agree that it is important to adhere to such targets to avoid the re-emergence of protectionism?
Lord Clinton-Davis: My Lords, the noble Lord is right to emphasise that protectionism, especially at this juncture, with the difficulties in Asia, is the enemy of the prospect of advancement of the countries which are most affected. I share the view that he expressed and endorse every word of what he said.
Lord Marsh: My Lords, would not the existence of global free trade, which I should have thought must be everyone's objective, make it impossible for the EU to exclude any country if it were not a member?
Lord Clinton-Davis: My Lords, the noble Lord poses a question which it is difficult for me to answer in about half a minute. The EU is not engaged in excluding people from trading opportunities. It accepts the ambitions of the WTO, and has played an important part, especially in recent days, when dealing with the liberalisation of financial services. Every member state, and the Commissioner himself, deserves the plaudits of the House for what has been achieved in that direction. The convention against corruption is another significant success in terms of the OECD—again, registered in the past month or so. What the noble Lord said is not altogether right.
Lord Waddington: My Lords, does the Minister's reply mean that, if Britain were to withdraw from the

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European Union, the European Union would be prevented by the World Trade Organisation from putting up any tariffs against British goods?
Lord Clinton-Davis: My Lords, I am not in the business of answering fanciful questions.
Lord Bruce of Donington: My Lords, surely Her Majesty's Government must acknowledge that the express and explicit views of the European Commission on this matter are very much at variance with those of the World Trade Organisation? Does he agree that sooner or later this Government or others will have to choose which they will adhere to?
Lord Clinton-Davis: My Lords, with respect, my noble friend is wrong because in most respects, if not all respects, the WTO has been supported by the European Union. We accept the disputes mechanism resolution procedure and the need for liberalisation of world trade. Where my noble friend gets his idea, without evidence, that the European Union opposes the principles and precepts of the World Trade Organisation, I do not know. At every meeting I have attended as mandating Commissioner of Britain, the European Union has stood firmly behind the principles of the WTO.

Oxtail: Sale Ban
2.45 p.m.
Lord Peyton of Yeovil Lord Peyton of Yeovil asked Her Majesty's Government:
Whether they intend their ban on the sale and consumption of oxtail to be permanent and which other countries have taken similar action.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Lord Donoughue): My Lords, the ban on the sale of oxtail will, like other BSE control measures, be kept under regular review. Any future decision to lift it will be taken in the light of scientific developments and progress with the eradication of BSE. It is a national measure to protect public health and to enhance confidence in British beef. We are not aware of other governments taking similar action.
Lord Peyton of Yeovil: My Lords, I hope that the Minister will be persuaded to open his mind a little further than is permitted within the narrow confines of his department. Will he accept that the risk now attaching to eating beef produced in this country is so minuscule as to be non-existent? Will he also accept that the ban, which is difficult and expensive to enforce, will prove haphazard in its application and is causing unwarrantable damage to the beef industry in this country? Surely there are other greater perils from which a vigilant government would wish to protect us before getting into a mess with this one.
Lord Donoughue: My Lords, I have always enjoyed the noble Lord's interventions, but I have not
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hitherto been on the receiving end. I repeat that the Government are convinced of the reasons for the ban. The reasons relate to public health, restoring the confidence in British beef and assisting us to lift the European ban on the export of British beef. I do not accept that there is no risk. There is a small risk, but there is a real risk.
Lord Hardy of Wath: My Lords, in how many countries is British oxtail already banned? Have not this Government and their predecessor been told to give the highest possible priority to the removal of the international ban on British beef? Would that ban have been more easily removed without the Minister of Agriculture, Fisheries and Food having taken the decision which was entirely justified on medical evidence?
Lord Donoughue: My Lords, I thank my noble friend for his question. We are working hard to try to get the beef ban lifted. It is conceivable that not every member of the European Union is as enthusiastic as we are in that process. It is important that we give them no ammunition to delay the process of lifting the ban. In Brussels, I was assured that had we allowed into our human food chain meat which was technically not safe that would have provided ammunition to delay the lifting of the beef ban.
The Earl of Radnor: My Lords, does the Minister believe that, when we are so frightened of eating our own beef, the right message is going out, and that we are convincing members of the Community to eat our beef and our oxtail? Surely the message going out is we are terrified of eating our own beef, so why should you eat it?
Lord Donoughue: My Lords, I am not sure that that is the case. The reality is that British beef is totally safe because of the controls which have been introduced not only by this Government but by the previous government. The message that we are sending out is that our beef is totally safe. We will continue to take whatever measures are necessary to reinforce that message.
Lord Beloff: My Lords, I congratulate the Minister on his answers to these important questions and contrast his behaviour with the absence from the other place of the Secretary of State when similar issues were raised last night.
Lord Donoughue: My Lords, I thank the noble Lord for his kind remarks which I know were generously meant. I do not believe that it would be appropriate for us in this House to comment on activities in another place. However, I should point out that wherever a junior Minister is operating, it is inappropriate and not conventional for a senior Minister to be present.
Lord Stoddart of Swindon: My Lords, is my noble friend aware that some of us on this side are

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extremely disappointed by his Answer today? Is he not now regretful that he and the Government did not take the opportunity given them by this House on 27th January to reconsider the matter and to have widespread consultation with those affected, including the customers? In spite of what happened last night, would it not be as well if the Government did exactly that? The people of this country simply do not believe that this ban is necessary on health grounds; they believe that it is a sop to the European Community.
Lord Donoughue: My Lords, I am always sorry to disappoint my noble friend. As regards regrets, I do not think that we can afford regrets in this regard or in life generally. I restate what I said. The Government's position has been clear. It was not accepted in this House, and was rejected by quite a large majority; but it was accepted in another place last night by a very large majority.
Lord Hooson: My Lords, will the noble Lord confirm that the European Community never requested a ban on British beef on the bone or oxtail? Will the Government confirm that the estimation by the scientists of the very small risk was accepted by the Community? Will the Minister tell us what has been the cost to this country of the ban on beef on the bone and oxtail, and what has been the greatly increased cost therefore of killing cattle in our abattoirs?
Lord Donoughue: My Lords, I cannot tell the noble Lord the cost. We could speculate on the cost of not having imposed the ban if it prolonged the ban on British beef. It is not a question of whether or not the European Union requested a specific measure, because of course, other than the five conditions of the Florence Agreement, that is not done. But its general position is that it must be totally assured that British beef is safe. Had we not banned the beef on the bone, it would not have had that assurance and some member states might be quite happy not to have it.
Baroness Trumpington: My Lords, is the noble Lord aware that he referred to restoring British confidence in British beef? My understanding is that both in this House and throughout the country, the British have confidence in their beef and wish to go on eating it on the bone. Moreover, if the Minister or any other noble Lord is after a raffle prize, he should rush to his supermarket and buy that thing more precious than pearls—a tin of oxtail soup.
Lord Donoughue: My Lords, oxtail soup is different from oxtail. Assuming that it is properly prepared, which it is, oxtail soup is permitted and is
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on sale. It is the oxtail which contains the bone which contains the marrow which is dangerous and which is banned.
Lord Peyton of Yeovil: My Lords, will the noble Lord accept our congratulations on the skill, charm and courtesy with which he handles questions which he cannot answer?
Lord Donoughue: My Lords, I thank the noble Lord for that. It is of course the case that I have quite a lot of experience in that area.

UK Economic Strategy
2.54 p.m.
Lord Islwyn Lord Islwyn asked Her Majesty's Government:
In deciding their economic strategy, what priority they give to reducing unemployment.
Lord McIntosh of Haringey: My Lords, the Government's central economic objective is high and stable levels of growth and employment. We are developing comprehensive measures to provide new employment opportunities and raise the sustainable rate of employment, including the welfare-to-work programme, tax and benefit reform, investment in education, and policies to promote economic stability.
Lord Islwyn: My Lords, perhaps I may draw to the Minister's attention the remarks of Sir Nigel Wicks, who is the chairman of the European Union monitoring committee and a very senior Treasury official. He was quoted recently in the Observer as telling a European parliamentary committee that the European central bank should not take account of unemployment when setting policy. He said, "That is fundamental". How does the Minister reconcile the statement of that eminent gentleman with the Government's welfare-to-work policy and also, I presume, their policy on eventually restoring full employment?
Lord McIntosh of Haringey: My Lords, in his speech, Sir Nigel Wicks referred properly to the primary objective of the European central bank as that of maintaining price stability. But the European central bank has the further objective that, without prejudice to the objective of price stability, it shall support the general economic policies in the Community with a view to contributing to the objectives as laid down in Article 2. Article 2 refers to sustainable and non-inflationary growth, a high level of employment, the raising of the standard of living and quality of life and economic and social cohesion. Sir Nigel rightly went on to say that price stability translates into high investment and employment.
Lord Peston: My Lords, is my noble friend aware that some of us do not agree with that last statement and that we regard it as economic nonsense? However, that is by the way. In asking the question, my noble

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friend referred to "full employment". Is it the Government's policy to endeavour, in the course of the foreseeable future, to restore this country's economic condition to one of full employment?
Lord McIntosh of Haringey: My Lords, I can do no better than to quote the Chancellor from a speech to the TUC New Deal Conference on Monday. 8th December last, when he said:
"Call it—like Keir Hardie's slogan—'work for all'; call it—like ours since 1945—full employment; call it high and stable levels of growth and employment; call it opportunity for all; call it the right to work—the demand for work has been the constant, indeed the central demand of one hundred years of Labour history".
My Lords, it still is.
Lord Ezra: My Lords, will the noble Lord agree that every time we have a recovery in the economy, there is a developing shortage of skills? Will he tell us whether, in the present situation, in which happily there is a recovery in the economy, the Government's policies are aimed at and will succeed in reducing that shortage?
Lord McIntosh of Haringey: My Lords, I believe that that is implicit in all that I have been saying and all that the Government have been saying. The whole of the welfare-to-work policy and all our policies on education and employability are designed precisely to meet the point which the noble Lord rightly makes.
Lord Barnett: My Lords, we do not yet of course have a European central bank, but we do have our own central bank. Will the Minister recognise that the instructions that the Chancellor gave to the chairman of our central bank were to put inflation first even if the economic policy did not necessarily agree with that and it came second to his first priority?
Lord McIntosh of Haringey: My Lords, I do not accept the accuracy of my noble friend's description of the instructions to the Bank of England. What we said to the Bank of England is that low inflation is essential for high and sustainable growth. However, I know that my noble friend Lord Peston does not agree with that view. The bank's monetary policy is to maintain price stability and, subject to that, to support the Government's economic policy, including their objectives for growth and employment.
Lord Dormand of Easington: My Lords, is my noble friend the Minister aware that, despite the strenuous efforts being made by the Government, the northern region still has the highest rate of unemployment in the UK outside Northern Ireland? In particular, will my noble friend do all he can to expedite the report which is to be issued by the committee set up to consider the special problems facing the former mining areas?
Lord McIntosh of Haringey: My Lords, I will indeed do so. Of course, it is a feature of our
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welfare-to-work programmes that they can and, indeed, have to be targeted regionally if they are to be effective when, as my noble friend rightly says, recovery manifests itself differently in different parts of the country.
Lord Mason of Barnsley: My Lords, is my noble friend the Minister aware that one of the most successful organisations in the country in cutting the dole queues is the Prince's Youth Business Trust? Is he also aware that, last year, the PYBT took 3,500 young persons off the dole and launched them into their new businesses? In the light of that success, can my noble friend assure the House that he will use his best endeavours to get the responsible government departments to work with the PYBT in developing the New Deal?
Lord McIntosh of Haringey: My Lords, I can certainly give my noble friend that assurance. For many people self-employment is the best route from welfare to work. Indeed, it is something that we have recognised by introducing the self-employment strand into the New Deal for 18 to 24 year-olds. Many organisations, including the Prince's Youth Business Trust, have been most helpful in mentoring and supporting young people who start off on the road to self-employment. We want to give every help that we can in that respect.
Lord Mackay of Ardbrecknish: My Lords, has the Minister studied Clause 11 of the Bank of England Bill that we shall be discussing on Friday, which makes it perfectly clear that the primary concern of the Bank of England and the governor will he to control inflation?
Lord McIntosh of Haringey: My Lords, that is what I said to my noble friend Lord Peston and, indeed, to my noble friend Lord Barnett. We are all slightly paraphrasing but, as the noble Lord rightly says, it is the primary objective of the Bank of England to maintain price stability.
Lord Parry: My Lords, will my noble friend the Minister accept from me that, while we rejoice in the success of the various agencies in Wales—for example, the Welsh Development Agency, the Wales tourist board and the Welsh Development Board for Rural Wales—in overcoming some of the problems of unemployment, nevertheless, throughout my lifetime there has been a serious endemic situation in which far too many people have been unemployed for almost all of their working lives? In recognising that fact, does my noble friend realise that many of the questions being put to him this afternoon have come from those sitting on the Benches behind him?
Lord McIntosh of Haringey: My Lords, 1 note that point. I also note that my noble friends do agree that full employment is quintessentially a Labour Party issue. Indeed, my noble friend has powerfully reinforced the valuable points made by my noble friend Lord Dormand when he spoke about the needs of the northern region.

Search Warrant Errors
3.2 p.m.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish asked Her Majesty's Government:
Whether they have any proposals to amend the law in Scotland to allow a search warrant to be accepted in a case where inconsequential errors have been made in the completion of the warrant.
The Lord Advocate (Lord Hardie): No my Lords. The Government have no proposals to amend the law. Inconsequential errors do not render a search warrant invalid.
Lord Mackay of Ardbrecknish: My Lords, I am grateful for, and slightly surprised by, the Answer. Perhaps I may draw the noble and learned Lord's attention to two recent High Court cases in Scotland where the accused walked away without the proceedings actually being heard. In both cases that was due to problems with the warrant. Indeed, does the noble and learned Lord recall that in one case an alleged heroin dealer walked free because the justice of the peace had signed in the margins of the warrant and not in the appropriate place? Is he also aware that in the other case, someone in whose house had been found £150,000 worth of cannabis, a gun and ammunition walked free because of a minor error in the search warrant? Is the noble and learned Lord really happy about such situations? Alternatively, does he agree with me and Mr. David Macauley of Scotland Against Drugs that this is the law being an ass? Indeed, it has nothing to do with the fight against drugs; it is all to do with officiousness.
Lord Hardie: My Lords, I can confirm that the Government are committed to the war against drugs. Indeed, no one is more committed in that fight than I am. I take issue with the noble Lord in what he said. The second case to which he referred was not a minor issue. As the noble Lord will be aware, after the search warrant had been completed, signed and sworn in front of a justice, it was subsequently altered to change the address. That was quite a significant matter and, quite properly, the court decided, after consideration, that it should not be permitted. As regards the first case, again the irregularity was such that the authorisation of the warrant was not properly authenticated. It must be realised that search warrants are there to permit an intrusion into what would otherwise be private matters.
Lord Selkirk of Douglas: My Lords, will the noble and learned Lord consider issuing guidance to the police and also to justices of the peace with a view to avoiding inconsequential errors of this kind?
Lord Hardie: My Lords, I have already taken on board the concerns to which these cases gave rise. I immediately requested information not only from the fiscals concerned but also from fiscals throughout Scotland. I have also issued instructions to regional procurators fiscal to take up the matter. Further, I have expressed my serious concerns about these matters to
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the relevant chief constables. I intend to give further consideration to what guidance is necessary both to the police and to the justices.
Lord Mackay of Ardbrecknish: My Lords, I am at least pleased that the noble and learned Lord has said that he will issue guidance. However, I really cannot allow him off the hook with the idea that the address was completely wrong. In the case where the warrant had already been signed, a change was made from Leperstone Avenue to Leperstone Road. However, because of that small change, someone in whose house £150,000 worth of cannabis had been found, together with ammunition and a gun, presumably illegally held, walked free. I understand the point that the noble and learned Lord is making. But does he understand that those of us who are not lawyers—namely, the great bulk of the British people—think that that makes the law look an ass?
Lord Hardie: My Lords, I understand the noble Lord's point. However, we cannot permit police officers or anyone else to alter properly authenticated search warrants. There was no urgency in this case. The police were aware of the difficulty and they chose to alter the search warrant. What they ought to have done was go back and obtain a proper warrant. The fact is that the warrant identified an address which existed and the justice authorised the search of that address. The police, without authority, altered that address changing the wording from avenue to road.

Business of the House: Debates this Day
The Lord Privy Seal (Lord Richard): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord Marlesford set down for today shall be limited to three hours and that in the name of Baroness O'Cathain to two-and-a-half hours.—(Lord Richard).
On Question, Motion agreed to.

Housing in Town and Country
3.6 p.m.
Lord Marlesford Lord Marlesford rose to call attention to the case for combining the protection of the countryside with positive measures for urban regeneration in meeting Britain's future housing needs; and to move for Papers.
The noble Lord said: My Lords, in moving the Motion, I should declare an interest as the chairman of the Council for the Protection of Rural England. Recent government statements, rumours and targets about the need to sacrifice the countryside for development have sparked a great debate. It echoes that started by Clough Williams-Ellis 70 years ago in his book England and the Octopus. That was a polemic against urban sprawl, ribbon development and the destruction of the countryside. In 1928 that campaign aroused passions

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which led eventually to the post-war planning Acts—one of the two great achievements of the Attlee Government. That heritage has proved safe in the hands of the Conservative government.
Today's debate may make a contribution to dealing with widespread concerns, which certainly cross party boundaries. I hope that today we may be more positive and less divisive than was another place when discussing the same issue recently. I used the neutral word "concerns". In fact many people have reacted with emotional outrage at the prospect of large areas of our countryside disappearing under concrete. The Government should be aware that we are not discussing purely material matters. There is a spiritual dimension to these issues. I am so glad that the right reverend Prelate the Bishop of Hereford is to take part in our debate. People really do care enormously. An opinion poll in 1996 showed that, after freedom, the countryside is what English people value most. That is remarkable given that almost 90 per cent. of the population of England and Wales live in urban areas-21 per cent. of them in the five largest urban areas in the south-east.
A main source of pressure on the countryside derives from the condition of our urban areas, particularly the city centres. When the vicious circle of urban decay and urban deprivation is complete, it is no surprise that people want to leave the cities. That is nothing new. I remember the dramatic way in which Michael Heseltine reported to the Tory Party conference on Liverpool, following the 1981 Toxteth riots. Yet for decades we have either neglected our cities or subjected those who live in them to architectural monstrosities in the form of raw concrete tower blocks during that shameful period of British architecture, which thankfully entered its twilight in the 1970s. I believe that the RIBA is now more enlightened.
At the same time we indulged in a programme of massive new development on greenfield sites. I refer to the new towns. I personally believe for several reasons it is arguable that at the strategic level the whole new towns programme was a mistake. First, the resources used could have been better applied to the revitalisation of urban areas, especially inner cities. That could have reduced many of the social problems which we suffer from today. Secondly, they actually sucked the life out of the cities. Thirdly, they encouraged car dependency, an obvious example being Milton Keynes which is really the Los Angeles of England and which is so low density that to live there without a car is almost impossible. Fourthly, the idea that they would be self-contained developments was usually a myth. There are as many people travelling to and from work in Crawley as there are residents working there. Fifthly, the quality of both design and construction of some new towns is quite simply so grotty that they risk becoming ghettos in which few people would aspire to live and others wish to leave. A visit to Peterlee is a depressing experience. Although new towns are history, they are history from which we should learn.
Perhaps a primary objective of government should be to reduce the rate of migration from our urban areas. However, there has for some years been a most
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pernicious policy known as "predict and provide". It was fed by the calculations of demographers and statisticians in the basement of Marsham Street who produced the official household projections for the now notorious target of providing 4.4 million new households between 1991 and 2016—a target which, when attacked, the civil servants promptly increased to 5.5 million. From this has followed the debate on the percentage which is to go on greenfield sites. We used to have a predict and provide policy for road building. That was blown out of the water in 1964 by Colin Buchanan in his famous report Traffic in Towns. But what a long time it takes to steer away from the iceberg! It was only in November 1996 that the then government reviewed and halved the road building programme, and that was largely for budgetary reasons.
I wish to say at once how pleased I was to read the article in The Times of 26th January in which the Deputy Prime Minister signalled the end of the predict and provide policy on housing and undertook that in future there would be more local flexibility in house building targets. The immediate problem, however, is that there are already in the pipeline important decisions on housing allocations under the county structure plans. Some of these pre-empt and run counter to Mr. Prescott's new policy. I have in mind West Sussex in particular where the Secretary of State actually overruled his inspector who had agreed with the objections of the county council.
I turn now to the need for affordable housing or, as I prefer to call it, social housing. The first point is that it is better to subsidise the person rather than the house. That was an important policy change made some four years ago by the Conservatives. I hope that the present Government will retain it. Secondly, such housing should be for rent in perpetuity. Social housing built for rent but then sold loses its primary function. Thirdly, housing associations are better providers of social housing than were local authorities in the days of council housing. Both the design and the materials are better and there is peer pressure to produce nice houses.
The plight of people working in the countryside is all too often overlooked. In rural areas social housing must take priority over executive housing. Let market forces, that is the price mechanism, allocate such land as can be made available in rural areas for executive housing and new second homes. If scarcity means higher prices, so be it. That is a price well worth paying to protect the countryside.
I come now to the green belt where there are particular threats. First let me stress that the green belt is not just to protect the countryside but to protect town dwellers from urban sprawl. No one would say green belt boundaries can never be moved; but there should be a stronger presumption against it. Green belt policy is a means of ensuring that local authorities, who on their own may be tempted to make unsound decisions on development, comply with the national interest. At present by their recent decisions to allow local authorities to release large areas of land round Stevenage and Newcastle, the Government are sending dangerous signals to both developers and local authorities.
As well as the urban centres much remains to be done to improve the urban fringe. For this the groundwork initiative, launched by the Countryside Commission 20 years ago, has done some inspiring work. We all know that developers prefer to use greenfield sites. They are generally cheaper and thus more profitable to develop. One should not blame the developers but that does not mean the community can afford to accommodate their preference. There are several ways of getting a community dividend from such development. One is by requiring the developer to provide for free something which the community wants, perhaps a new road, perhaps social housing, perhaps a village hall. It is called "planning gain". I am rather suspicious of it for it can all too often lead to planning permission being given where it should not be, especially if the local authority finds itself being offered a pet scheme.
Another method is to tax the development gain. This is again being discussed in government circles, but I remind your Lordships that the previous time a Labour government introduced a development land tax it was a mistake. The right way to tax such profits is through capital gains tax. But to be effective I believe the present rollover provisions on land, which mean that the landowner who re-invests in another asset can delay, and eventually avoid, capital gains tax, should be removed. Rollover has contributed to the rise in price of agricultural land to well above its farming value. For many farmers and rural landowners the temptation to offer their land for development at 100 times its agricultural value is irresistible. There is a particular regional dimension to all this. Much of the demand for development seems to be in the south-east and the home counties. It is on them that the largest housing numbers under structure plans are being proposed and sometimes imposed.
There is another important constraint on what should be allowed in such rural areas; that is, water. So far the new Environment Agency seems to be following its own predict and provide policy. It is abstacting more and more water from the aquifers in the south-east. As a result the water table is falling with catastrophic consequences for our rivers, for the tree population and thus the landscape. The agency should be advising the Government on the sustainability of their housing plans.
As regards modernisation of the planning system, yes we do need to speed it up. But we do not want bold politicians who decide to cut short the normal public inquiry process. We do not want Mussolini type decisions. Nor do we want the arrogance of the French bureaucrat who said, "If you decide to drain the marshes you don't consult the frogs". Nor should big schemes be decided on a three line Whip in the House of Commons. Nor do we want wealthy developers to be able to continue to threaten objectors or local authorities with costs or even damages if an initial planning refusal is overturned on appeal.
We must accept that there is not enough brown land to accommodate all the housing that will be needed. But urban capacity is not static; it is constantly evolving. It is a product of policy, of market demand and public attitudes. There is a great deal which, with imagination,
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could be made available. Much more could be found within the 400,000 acres which comprise the greater London urban area. What about the area of decaying warehouses between King's Cross and the Angel? What about those desolate and under occupied housing estates between Highbury and Camden?
Let us be bold. I have a suggestion. Let us close down RAF Northolt, which extends over 490 acres, costs £26 million a year to run and is used for 14,000 mainly VIP flights. Are those flights all really necessary? A redeveloped North lt, which is already on the London Underground system, could accommodate some 4,000 new households and probably produce about £200 million for the Treasury. That should be attractive for the defence review! I hope that this and other brown land in the military estate will be considered within the strategic defence review.
The MoD should as early as possible indicate to local authorities that it is considering disposing of land. It would be better that, when the time for disposal comes, the Ministry of Defence should hand over that land to the Department of the Environment, Transport and the Regions which is more likely to take into account the environmental dimension for the alternative use of the sites.
In Britain, in comparison with some of our European neighbours, we can be proud of how we have looked after our countryside over the second half of this century. There is no better example than the 570 miles of our best coast land saved by the National Trust's operation Neptune. It is our urban areas which have been neglected and ill-treated. I only wish that the millennium projects had focused more on beautifying our city centres. By that I am afraid I do not mean the Millennium Dome.
The human body needs decent housing with the comforts which modern technology can provide. The human spirit needs inspiration, relaxation and beauty. I believe that the countryside helps to keep body and spirit together. I beg to move for Papers.
3.22 p.m.
Lord Thomas of Macclesfield: My Lords, I am sure that my noble friend the Minister responsible for the environment is only too well aware that the north-west of England, where 200 years ago the original factory cities and boroughs were created, has more polluted land, more brownfield sites, than any other region in England. Happily, we also boast some of the best scenery. I think of the lakes and the plains of Lancashire and Cheshire. So we in the north-west need no lectures on the importance of not using greenfield sites and developing brown sites, in particular from those people whose ancestors recklessly created the pollution problem in the first place.
However, as a banker for a clearing bank who over the years has authorised and funded literally hundreds of millions of pounds of urban development and some rural development in the north-west, I have developed what I think is a practical and realistic approach at the sharp end in as much as I have been anxious also to get my depositors' money back as well.

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As a banker, if I helped my customers obtain planning permission on greenfield sites, the revenue so created would be substantial and funds could be allocated for social investment in terms of helping to build schools, roads, leisure centres, village halls and so forth. Indeed, that was the unwritten rule about getting planning permission on greenfield sites.
Alternatively, if one of my customers gained planning permission to build on a brownfield site, first, as a banker I questioned whether he could afford it. Secondly, was there a market for the inflated prices he would have to charge for whatever he constructed on that site after he had carried the onerous costs of cleaning up the land? Would we as a bank get our money back and would the business like to live with the contingency liability on its balance sheet, probably for ever, in terms of subsequent claims for pollution on that land or adjoining land? And it was unlikely that there would be any social investment as collateral to that development.
I am in favour of the principle of green taxes, but I fear that the developer would deduct the tax from his contribution to social needs and would come out of the transaction with exactly the same take as he would have done before the tax was introduced. Although the Treasury would receive the money in terms of taxes, society would lose out on the social investments which came as part of the planning permission.
To make green taxes work, we need plenty of carrots to develop polluted land. It is not by accident or design that polluted land is not developed. It is because it is so expensive to develop—expensive in terms of creating a bottom line. I do not talk about aspirational hopes or theory. I am talking about the practical day to day running of a business and making a bottom line.
I suggest that we consider waiving capital gains tax on the first sale of the development of what was polluted land; or indeed allow the corporation tax on the profits of the first five years to be waived and be transferable to institutional buyers if need be because the construction company sells as rapidly as possible to institutional buyers after developing the land. In that way, as we have no scarcity of brownfield sites in the north-west there would be no scarcity of developers. That I can promise you. There would be no scarcity of funders; they would be only too willing to fund. And there would be no need for public sector finance. There would be no real loss of revenue since the alternative is not to develop the brown sites. No change, no tax. But if the sites were developed we would have the benefit of more employment.
I have been here only two minutes and I am still learning the trade, as they say. I have already realised that I shall not receive a straight answer today, or perhaps on any day, from the Treasury. But perhaps I may beg all the Ministers concerned to impress on Treasury officials that this is a win-win-win scenario. We can develop brownfield sites rather than greenfield sites. The private sector can take the risk. The private sector can provide the funding and earn the reward. We could create more jobs. There is at least 20 years' work still outstanding in the north-west region alone.
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Consequently, we would collect more taxes and new Labour would reap the political rewards for an imaginative programme on that basis.
A related idea would be for the Department of the Environment to issue on demand scientifically produced pollution certificates so that existing owners who improved their land—by taking out from the land the pollution that might have been there for 200 years—could earn a pro rata reduction in their future capital gains tax as a reward for that improvement to society. I stress that it is for the Ministers to ensure that green taxes are for spending on green developments—I think in particular of brownfield sites—not for adding to any Treasury surplus.
My final point is that urban areas also need green corridors for citizens to enjoy, to allow the city to breathe, and, if planted with trees, to suck in carbon dioxide and belch out oxygen. Would not that be a nice change?
3.27 p.m.
Baroness Maddock: My Lords, I begin by declaring various interests. I am President of the National Housing Forum, Vice-President of the National Housing Federation and a member of a housing association, Western Challenge. Perhaps I may say how pleased I am to be taking part in my second housing debate in your Lordships' House having been introduced only in November.
For far too long the issue of housing has not been high enough on the political agenda. However, the bursting on to the scene of the figure of 4.4 million homes needed before the year 2016 has changed all that. There have been whole day conferences on the issue. There have been papers from many interested bodies, from researchers to interest groups, architects, planners, and so on. The momentum has gathered pace as the Government have made statements, and the Select Committee has taken evidence from a wide variety of organisations. We have been bombarded with evidence which makes it somewhat difficult to get our points across in six minutes.
There are four main points. First, I am concerned that if we are not careful the debate will degenerate into town versus country. We must not allow that to happen. We must develop policies, strategies and action to ensure that we build sustainable communities, whether those communities are in rural areas, towns, cities or conurbations.
Secondly, we have to recognise—as I am sure will be the tenor of today's debate—that planning alone cannot solve this problem. To use jargon, we have to be very much "into joined-up thinking"; the debate has to be wide, and government departments have to work together on this issue if we are to get people to understand what we mean by sustainable communities. We have been successful in convincing people about recycling and drink-driving. There is a big job to be done in this particular area in the same way.

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Thirdly, we must be careful not to repeat past mistakes. Not only can we all recognise problems of design and quality, but there is a problem in predicting how people will live in 25 years' time and what the figures will be.
Fourthly, as a former housing spokesman for the Liberal Democrats in another place who has now taken on that role in this place, I am concerned that we meet housing need, particularly the need for affordable social housing. We have failed miserably over the past 25 years to deal in particular with youth homelessness. I am very pleased that the National Children's Homes are planning the House Our Youth 2000 project. To mention a point made by the noble Lord who introduced the debate, how much more sustainable that will be than the Millennium Dome. It is incredible, looking back to the years following the war, that we managed then to build an enormous number of homes of very good quality when Treasury coffers were almost empty and materials were short. Yet here we are in 1998, supposedly a rich country, and over the past few years we have not reached even half the estimate of affordable homes that are needed each year. Local authority waiting lists are increasing, and we still have people sleeping on our streets.
Others will debate greenfield taxes etc., as the debate continues. I wish to raise just two important issues affecting this debate. At the root of the debate lies the concept of choice and where people go to live. Somehow, we must try to widen that choice, so that not everybody wants to have a nice house on a nice site looking out over another greenfield site. That is not possible. So how do we go about it?
Last summer, the National Housing Forum produced a document entitled Living Places: Sustainable Homes, Sustainable Communities. It came up with many recommendations, but there are two in particular that I wish to draw to your Lordships' attention. One recommendation was that,
"The government and housing industry should launch a long term awareness campaign to develop consumer understanding in making choices based on sustainable housing criteria".
The second was:
"Government should continue to build into the National Curriculum, concepts of social responsibility, community belonging and participation and the central philosophy of sustainability so that it is a theme throughout the entire educational process".
I hope that, in replying, the Minister will comment on these two issues.
The other matter I wish to touch on relates to the growth figures. Last Friday in The Times, Sir Crispin Tickell, convenor of the British Government Panel on Sustainable Development, said that,
"the assumptions on which the [government] forecasts were made were spurious".
We need to take a hard look at this matter.
Let us examine just one area—the growth in single person households. That growth is the result of a breakdown in relationships, or of people perhaps choosing to live singly. We cannot legislate to force people to live together or not to break up. However, we can examine measures to ensure that we encourage
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people not to do those things. That approach formed part of the evidence given by the Chartered Institute of Housing to the Select Committee. In particular, it drew the attention of the committee to the fact that the greatest increase in single person households was in areas of high youth unemployment. Again, I hope that the Minister will address that problem in replying.
What is clear from this debate is that the problem will not be solved by a few high-profile projects in a few selected areas. Never has it been more important for every government department to work together on this very important issue.
3.34 p.m.
The Lord Bishop of Hereford: My Lords, my text this afternoon is taken from the very book to which the noble Lord, Lord Marlesford, referred in his opening speech—England and the Octopus. Generally speaking, we have latterly made such a mess and muddle of our urban civilisation that fewer and fewer people remain willing to put up with its unpleasantness for the sake of its cultural and social advantages. So we are now proceeding, with the same recklessness, to disperse ourselves over the countryside, destroying and dishonouring it with our shoddy but all too permanent encampments. What we must do is try to make town life not only tolerable but attractive, and also show how one may in very truth genuinely escape to live in real country without offence and trampling underfoot and annihilating the very things that are so justly desired and so valiantly sought. That seems to be a remarkably precise definition of where we are 70 years on, and points us to at least one solution; namely, that the effective regeneration of our cities is one of the best ways of protecting our countryside.
I live in a city—a very small city. I can walk from my house to the cathedral, the railway station, the shops and banks, the hospitals, the museum and the arts centre. I can walk if I want to go out for a meal in the evening. I am extremely fortunate. But many others could be equally fortunate; there is much land in the centre of Hereford which is disused or under-used—we have our own brownfield sites. Despite valiant efforts by the city council, many flats over shops and offices remain empty and unused.
And city life is threatened—even in Hereford—by noise and the fear of crime. In other places that latter problem is very much more acute. There is antisocial behaviour and drug-related violence which dominates and ruins people's lives. I have said before in this House that the reclaiming of our towns and cities for civilised and decent living can best be achieved by recreating a true sense of community. I am glad that the noble Baroness, Lady Maddock, mentioned communities, since they are so important. That is a process in which the local Churches are often crucially and valiantly involved.
But I also live in a diocese which includes the Marches, that land in Herefordshire and Shropshire along the Welsh Border which constitutes one of only three remaining truly tranquil areas in England. I am

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very conscious of the urgent need to preserve that tranquillity. It is very precious—and it is under constant threat.
That is not to say that we do not need some development in rural areas. Yes indeed, we need more affordable social housing for rent in perpetuity for local people. I am glad to say that many dioceses have been able to make glebe land available for precisely those projects. We need some economic growth which provides appropriate work near to where people live to prevent unnecessary travel, preferably related to agriculture, which remains a vital industry and which is itself potentially the best guarantee of protecting our landscape.
We do not need the further provision of speculative house building, which creates more unaffordable housing and which, in parts of Herefordshire, has already grossly exceeded even future targets. I believe that rural development needs to be concentrated in our small towns and key villages, in places where the infrastructure is already present and the need is to revitalise existing communities. A good example is in the small town of Tenbury Wells in my diocese, where the rural community council is embarking on a rural challenge project to combine social and economic regeneration following the closure of the one sizeable factory in the town. It will provide community facilities, work with young people and business support. It is interesting that this debate is to be partly about the definition of terms. That is, in most people's eyes, a rural project. For us, it is a bit of urban regeneration.
Our tranquil areas, on the other hand, need very special protection from any significant encroachment of housing. They also need protection from inappropriate agricultural procedures. Farming rightly receives very generous financial support. But, except in environmentally sensitive areas, very little of that money is directed towards environmental protection and the encouragement of biodiversity. In 1995 in Herefordshire, £4.53 per hectare was available for such purposes, compared with £18.49 for socio economic purposes and no less than £90.50 per hectare for direct agricultural support, mostly for activities which have environmentally detrimental consequences.
So we need to discriminate between different kinds of rural areas, between towns and villages, where appropriate, modest development is right and proper. and the truly deep country, so rare and precious, which needs a high degree of protection from insensitive and unnecessary development.
I wish to end with one horror story, not about housing but about roads. There is a place just across the Border into Wales from where I live where two main roads intersect. It was a peaceful junction with hardly any traffic. Two years ago a roundabout was constructed and a battery of street lamps erected in this remote, dark, peaceful place. What preposterous sense of priorities in public expenditure is represented by a decision to build a redundant roundabout and erect unnecessary and unsightly street lamps when we cannot afford to mend
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the leaks in the roofs of primary schools or pay nurses to staff empty wards? This debate is not just about town and country, it is about priorities in public expenditure.
3.40 p.m.
Lord Renton of Mount Harry: My Lords, it gives me great pleasure to participate in a debate initiated by my noble friend Lord Marlesford. He is a friend of long standing and one whose concern about the sensible protection of the countryside I have known for many years. But that personal thought apart, the debate is extremely timely. It seems to me that Ministers at the Department of the Environment, Transport and the Regions, who have now been in office for nine months, cannot continue to try to look two ways at once. They cannot continue to assure us on the one hand of their deep concern about green issues and on the other to issue edicts about more houses in the countryside.
If noble Lords will permit me to waft them from the see or diocese of Hereford 150 miles south to West Sussex, perhaps I may explain to your Lordships how West Sussex is a perfect example of the paradox there seems to be in the minds of Ministers at the Department of the Environment at the moment.
It may surprise your Lordships to know that more than 50 per cent. of West Sussex lies within three areas of outstanding natural beauty: the Sussex Downs, the High Weald and Chichester Harbour. The county council recently produced a draft structure plan under which it provided for an additional 37,900 homes to be built in the county by the year 2011, one quarter on greenfield sites. This plan was the subject of a rigorous examination in public conducted by an independent panel appointed by the Secretary of State. My noble friend Lord Marlesford referred briefly to the problems of West Sussex. The panel recommended no change in the housing figures proposed in the draft plan.
However, the Secretary of State has now issued a direction requiring the plan to be modified and the housing figure increased by 12,800, on top of the 37,900 already provided for in the plan. He described the approach adopted by the council and supported by the independent panel and by the Royal Town Planning Institute as "flawed".
At the same time, the same department and more or less the same Ministers have instructed the Countryside Commission to start two inquiries: one into areas of outstanding natural beauty as a whole—all 31 of them—and the other more specifically into the Sussex Downs Conservation Board. Here I declare an interest as chairman of the board.
Of course, we are delighted to take part in the consultation exercises, but the underlying expectation from the public who have been consulted is that as a result they will not get 12,900 more houses; they expect to get more protection of their loved countryside, more security, more permanence, more security of the funding. In the case of the Sussex Downs there is a real danger. We are a strip of about 80 miles stretching from Winchester to Eastbourne. It may surprise your Lordships to know that 1 million people could walk to and from their homes to the centre of the Sussex Downs

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easily in a day. We have 32 million visits a year already, more people come to the Devil's Dyke than to Stonehenge. So we see a danger of the Sussex Downs being taken over by industrial and housing development.
If we look at old prints and drawings of the south coast and the south-east coast, we will notice that over the years the urban fringe along the south coast has expanded regularly northwards—it cannot go in any other direction—at the rate of one mile every 50 years. As the average depth of the Sussex Downs is four miles above the urban fringe, it is not difficult to calculate that in 200 years, at the present rate the whole of the Sussex Downs will be covered in concrete.
I say to the noble Baroness who will respond to the debate that the time has surely come when the department must cease trying to look both ways at once. The two themes are just not consistent. The Government must either abandon their green ambitions—I very much hope they do not—or they must move away from "predict and provide" to a very much more realistic assessment of the amount of housing in the countryside that is environmentally possible. As my noble friend Lord Marlesford said, that means looking for some massive scale alternatives in the development of brownfield sites and urban regeneration.
It will require a huge step of imaginative planning. It has been done in the States, in Boston and around Grand Central Station in New York. But there has to be affordable and social housing attached to it. If that is not done, I fear that we are now wreaking dangers to the countryside that our successors in 25 or 50 years' time will very much regret. They will think: "Why on earth didn't we see the dangers?".
There are two comforting phrases which are rather like the reform of the CAP, two mantras that we all say: environmental protection on one side, urban regeneration on the other. But I say to your Lordships that those phrases soothe our consciences but the words are not enough. We must now have action. I very much hope that in winding up the debate the noble Baroness will tell us something of the department's plans for action.
3.46 p.m.
Lord Beaumont of Whitley: My Lords, if ever there were a topic for debate which combined both items of the portfolio that I hold—conservation and the countryside—it is this one which, I understand, is about the conservation of the countryside. I join other noble Lords in thanking the noble Lord, Lord Marlesford, for bringing it forward.
I am one of those who believes that it is impossible to have civilisation without our cities being set in a countryside which is in a dynamic relationship to them. The ideal cities of the past, the city states, had that relationship. The countryside and the city both had their separate cultures which were complementary. That is an ideal pattern which has been rendered today more or less impossible, largely, I regret to say, by the enlargement—not least by my party—of the fairly harmless ideal of free trade into an all-consuming monster. So in order to assure a healthy countryside we
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are doomed to invent more and more measures which involve subsidies and regulations that most of us would want to avoid.
We are almost all in agreement, I think, as to what we wish the countryside to be like. I start with one or two of those essentials which need no intellectual defence because they are obvious but which need practical and often legislative defence because in practice they are apt to go by default. The first is the need for biodiversity. Today we have elaborate philosophic arguments to support what any man—except that monster, honio economicus—feels in his bones. Our ancestors, especially the ancestors of many of us in this House, may have massacred animals by the game cart load. I remember in our house that the gong rung for dinner was suspended between elephant tusks. One started on a walk around the lake by passing between two whales' jaws. But it was thoughtless slaughter, exactly that. It never occurred to our ancestors that they might be exterminating species. Today we know better. We realise that we must so run our countryside that we encourage diversity of species.
Another "must" is the preservation of wildernesses and of beauty, touched on by the right reverend Prelate. It is not enough to have generalised goodwill when we are as overpopulated a country as we are and have developed slowly but surely a network of natural parks which we must not only protect but govern well. And here I make a plea to the Government that they do nothing in the interests of departmental tidiness which would lead to insensitive treatment of the national parks. I look forward to the speech of the noble Lord. Lord Norrie, which I imagine will touch on that subject.
A third "must" is not only the preservation of species, but also the welfare of those animals which we have tamed for various purposes. Battery farming, whether of hens, pigs or cows, is not only wrong in itself; it also creates eyesores and, if I may add, nose sores as well in the countryside.
Moving away from the "musts" to the mechanics, the preservation and development of the countryside need a healthily sized rural population. Villages need to be large enough to support pubs and post offices, village shops and parish churches so that those in their turn can support the villages. We are all aware of the problems of villages without a shop or an adequate bus service to the next conurbation up the line, the market town. And, where possible, as much of the population as possible should be involved in the chains which serve the basic tasks of the countryside—agriculture and all its ancillary trades and the preservation of the countryside itself. That is another reason why we should he encouraging family farms and smallholdings.
In that context I draw your Lordships' attention to the fascinating evidence given to Sub-Committee D in the past week by a professor from Munich who, while admitting that there was a net trend away from part-time farming in his part of the world, pointed out that it was the product of a balance between a heavy exodus and a heavy ingress. The same conditions are unlikely to apply here but I believe it is the sign of a really healthy rural community and one which we should try to emulate.

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The population dedicated to the country does not need to be made up of people coming to spend quality time in second homes. Those people can, with time and tact, be valuable additions. But they drive up the prices of houses so that those who really need homes—the younger generation, say—cannot find affordable social housing. Second homes are basically an anti-social luxury and should be discouraged, to put it mildly.
Nor does the country need new housing estates. A great deal can be done by sensible infilling. We on these Benches have a colleague, Professor Pritchard, who is a councillor in Leicestershire. Before he became a councillor he carried out a survey and found a sizeable number of sites which could be used for infilling. He drew the council's attention to them. It was grateful and used them but pointed out that it was a one-off bonus. Five years later he became a councillor—as Liberal Democrats do these days—and conducted another survey. The result, miraculously, was the same number of sites again. There appeared to be a widow's cruise of sites. I am not sure what the moral of that is. It may be that if we act sensitively and take our time, the Lord will provide; whereas if we start being brash and plonking new towns about, the results will be appalling.
The English, and the British, countryside is a great heritage. We must treat it as such. It is not to be handed over to developers or even landlords—good though some of your Lordships are. And it is a great deal more worth spending money on than cheap food—as are its people, who should be guaranteed, by any healthy society, enough work of a worthwhile kind to keep them and us happy.
3.53 p.m.
Lord Wade of Chorlton: My Lords, I should first declare an interest in these matters by saying that I am an ex-farmer and landowner; I am now president of the Federation of Economic Development Authorities and chairman of the Rural Economy Group, which is both cross-parliamentary and cross-party. I believe in the need for economic growth and investment and support the need for a prosperous and diverse rural economy.
The matter being debated today is not the serious countryside issue that it is being made out to be. Ninety per cent. of the population of the UK are urbanised and want all the benefits of an urban life—jobs, schools, shops, transport and leisure. It is a question of how existing urban areas will continue to grow internally and at the edges.
The housing needs suggested by the Department of the Environment and discussed earlier under both governments of some 4.4 million homes are over the 25 years from 1991 to 2016. One million of those houses has already been built in the period 1991 to 1998. Over the next 20 years the demand will probably be in the order of some 20 million homes per decade. It is absolutely right that these matters are discussed now against predictions. Housing cannot be provided on demand but must be planned ahead in local and regional plans.
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In the 1930s we built 3 million homes; in the 1950s, 3 million homes; in the 1960s, 3.5 million homes; in the 1970s, 3 million homes; in the 1980s, 2 million homes, and it will be around 2 million homes in the 1990s and no doubt in the early decade of the next century. The suggestion that that level of growth, which is lot lower now than it was soon after the war, will cover the countryside in concrete is absolute rubbish.
My experience and knowledge are in the north-west of England. There is more designated green belt in the north-west and the Midlands than in the whole of London and the south of England, and that amount doubled during the 1980s. In our towns and cities the effect has been to stifle natural growth; to drive development into valued countryside; to cause increased commuting from rural to urban work areas; and to prevent new, imaginative and innovative planning developments on the urban edge. It has provided solutions to transport, jobs and housing needs, and prevented the development of combined new development opportunities providing housing, jobs and leisure in one sector.
Most importantly, tightly drawn green belts have caused increased density in certain towns and cities which has brought pain in terms of traffic and pollution on the one hand and reduced the wealth to provide the money to find solutions on the other. A recent study by Business Strategy, an economic consultancy, reported in the Financial Times, showed that cities and towns with a well educated workforce and room for growth were best for creating jobs and attracting investment. Its study in the most successful towns in the UK showed that the key factors were low population densities, high rates of land change from rural to urban, low traffic congestion and quality housing.
Green belt policy has not protected beautiful, open English countryside. More usually it protects poor, unattractive land on the urban edge. The policy is causing particular problems where within the green belt there are derelict buildings and sites such as unused farm buildings, ex-airfields, hospitals and other institution buildings that are no longer required. Many local authorities are anxious to make improvements to such sites and see them bringing benefits to the community but are prevented by a blanket green belt policy.
A recent study by the London School of Economics, reported in the Economist, showed that green belt policy is bringing disproportionate benefits to the rich—that is, it affects those who already live in the green belt, rather than the community as a whole. In the eyes of many people it has become an elitist policy. During this century society has grown steadily richer and in the next century it will continue to get richer because it will be driven, as it has always been, by innovative technology and ideas and the desire by the people to become richer. That will continually increase the need for new homes, jobs and all the added luxuries that the future will provide in terms of leisure, health, fitness and, we hope, a more active old age.
The demand for land to provide all that will increase accordingly. It is not acceptable by the majority of people that the existing blanket central policy of the

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green belt should unnecessarily protect the urban edge and hold back those opportunities. In my view, it is time for a review—a proper assessment of what green belt policy has really achieved—which will take a sensible long-term look at how our urban areas will continue to provide the ever-changing needs of the 90 per cent. of British people who live there, and that well into the next century. That should be the benefit that will derive from this debate.
I conclude by saying that I very much agree with the comments of the noble Lord, Lord Thomas, relating to a more innovative taxation system to encourage the better use of urban sites and to thank my noble friend Lord Marlesford for instigating this important debate.
3.59 p.m.
Baroness Young of Old Scone: My Lords, I wish to add my thanks to those expressed previously to the noble Lord, Lord Marlesford, for giving us the opportunity to discuss this important topic today. The issue is how we can achieve sustainable housing development in sustainable communities. In response to the noble Lord, Lord Wade of Chorlton, perhaps I may give a little case study of the impact housing development has had on some of the most important wildlife sites in this country. The case study is that of the Dorset heath land.
Lowland heath land is a priority habitat for nature conservation in this country and is recognised internationally as one of the jewels in our nature conservation crown. The UK Biodiversity Action Plan drawn up by the Government identifies this as a priority for action and also identifies past developments and continued fragmentation, and disturbance from the development of housing particularly, as significant causes of heath land loss. Before 1960, urban development accounted for the loss of nearly 9,000 hectares of heath land in England—that is about 23 per cent. of its total extent—and Dorset in particular has suffered massive historical heath land loss since the 19th century. In the past 75 years three-quarters of the heath land in Dorset has gone. The impact of urban development has increased in recent times rather than diminished, with 37 per cent. of the recorded loss being in the 10 years between 1978 and 1987 and being primarily as a result of built developments. So I do not think we should underestimate what we can do to our biodiversity and our nature conservation treasures if we get the answers wrong on sustainable housing.
It seems to me that there are three issues here for us. The first is how much housing; the second is where it should go; and the third is what kind of housing it should be. We have moved away in many areas from the predict and provide model for a whole variety of issues. For example, we have now discovered that if you build roads you create more traffic. I am not saying that if you build more houses you create more households, but there must be an issue there in moving away from the predict and provide model.
Much of the predicted household growth lies in the increasing number of single elderly people living alone and also—I declare an interest being a single
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middle-aged person—people like me living in solitary households; what my honourable friend the Minister in another place called "refugees from marriage-. We are duty bound to question the shape of the society we see growing before us, with ever-growing numbers of single and sometimes very isolated households. 1 would suggest that innovative solutions to ways of living must be tackled if we are to deal with this issue in a rounded way. I am not suggesting that we all take up communes, though that might be quite fun at my age, but I believe that the idea that the social isolation of many people whom we see in our society today can be remedied by more innovative forms of housing provision is one that deserves attention.
Let us look at the issue of where we put our housing. We have heard some useful propositions today, particularly as to how we go about minimising greenfield developments and maximising Brownfield developments. I commend the sequential test approach which focuses the search for housing sites in urban areas in the first instance. I think also that the physical implications of meeting the projections on the ground through the planning system to avoid damage to important areas for biodiversity has to be looked at closely. Strong, effective and visionary regional planning is essential to identify important habitats and species in a region and ensure their protection and enhancement. Strategic environmental assessment of the likely environmental effects of housing must be an integral part of any system. We need properly to resource regional planning conferences if that is to be done effectively. We should also be brave about the outcome of some of these planning processes. Where there are likely significant environmental implications as a result of rigorous assessments by individual planning authorities, we should permit them to revise their housing allocation downwards.
The noble Lord, Lord Marlesford. touched on the failure of past greenfield development levies. We should learn lessons from the past. Nevertheless, there is a case for investigating the potential for a properly constructed greenfield development levy with clear policy objectives and setting out potential environmental implications so that we can protect greenfield sites from damage. National and regional targets for increasing the use of urban land are worth considering and urban capacity studies are certainly important as part of the appraisal of development plans.
Another point we need to consider in terms of location is the impact on the use of natural resources in general. Many of the housing proposals we are seeing—this applies particularly to rural areas—are in parts of the country where water resources are already under considerable pressure from a whole variety of issues. Transport issues must also be taken into account if we are not to put housing developments in areas that will simply create the problems caused by pollution and congestion in transport systems.
My final point concerns the kind of houses we should be looking for. We have a unique opportunity over the next few years. We now know ways in which we can make our housing stock much more sustainable in terms of its resource use. We must expect that the houses we

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see built, wherever they are built and in whichever quantity, perform to the high standards of environmental design principles and, in particular, are low use in terms of water and energy conservation.
4.6 p.m.
Lord Norrie: My Lords, as we have heard this afternoon, the debate is not just about housing, or even about whether we build on greenfield or brownfield sites. It is a debate about how and where we and future generations should live. It is also about how we can use new housing to drive economic growth, which in turn leads to the social and environmental improvement of our towns, while avoiding damage to the countryside. In this complex debate I shall focus my attention on what might be considered to be two of the most important issues—the future of our towns and cities and the problems with the planning system.
The very title of this debate stresses the need to consider town and country together in deciding where we are to live. The exodus from town to country, at something like 300 people a day, underlies many of the tensions over greenfield development and growing urban dereliction. Our towns are decaying while our green fields are being built over. It is disturbing to see that at the end of each year there is more urban derelict land than there was at the beginning; and at the same time, we are still threatening 650 square miles of rural England with urban development.
We should not be despondent or think that we cannot influence these trends. As the Deputy Prime Minister himself has said:
"We don't believe that the patterns of the past should automatically set future housing provision. We believe changes in policy can, and will make a difference".
I should be grateful to the Minister if she would confirm that the Government are committed to stemming this tide and are developing new policies which will help to achieve these ends. I am sure that with the right leadership and support future patterns of migration can be very different. They can work in tandem with both environmental and social policies. This will help regenerate our towns, reduce the need to travel and protect the countryside.
My noble friend Lord Marlesford has rightly referred to the crucial value of the British planning system. It is true that our crowded island is indebted to the planning pioneers, but we cannot rest on our laurels. There have been some who criticise planners for not providing enough land for building homes. Others have criticised the green belt for forcing development to leapfrog into sensitive countryside further away from our towns. My Lords, these are siren voices. We need to strengthen the powers of planning to steer more building to where it can benefit urban communities and relieve pressure on the countryside.
The green belt is a policy of the future, not the past. It is central to any strategy for urban regeneration. We cannot afford to see more green belt releases like those for 2,500 houses north of Newcastle and up to 10,000 houses west of Stevenage. There are fears that these are
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just the tip of the iceberg as evidence is now emerging that other local authorities are doing exactly the same in the West Midlands and Yorkshire. If we are to reduce car use and re-use brownfield sites, we need more effective protection of the countryside beyond the green belt and to introduce stronger tests before allowing changes to green belt boundaries.
Another priority for improving the planning system is to tackle what is paradoxically an oversupply of building land. Too many local authorities allocate land for development often a decade in advance of it being needed for building and permit too much new housing too quickly. The Council for the Protection of Rural England has highlighted one example where the rural parishes of South Herefordshire are expected to receive over 80 per cent. more homes than had been planned. This is all because too much rural land was allocated and too many planning permissions were granted for new houses in the early years of a long-term plan. Inevitably, this means that too many greenfield sites are built on and opportunities to use brownfield sites are lost.
These are difficult issues. Stemming the loss of people from urban areas and changing the way in which we plan for new housing do not have off-the-shelf solutions. But we can be quite clear that the current approach is failing on too many counts. The need for affordable homes from housing associations is not being met. Urban dereliction continues to rise. Home, workplaces, schools and shops are forced further and further apart leaving more people dependent on their cars. Rural landscapes are being lost.
The effects of building are even more insidious. They shatter the tranquillity of rural areas well beyond the edge of the new development. Visual intrusion, noise pollution and the dreaded orange glow of street lights from new housing schemes all reach out into the heart of the countryside. This cannot go on.
As I said at the beginning of my speech, this debate is not just about green or brownfield sites; it is about how and where we live. The priority for both town and country should be to find a more innovative and constructive way of planning new housing and to establish a more positive approach to urban life.
There are growing voices of concern and alarm that the Government are failing to take notice of the countryside. Those anxieties will come to a head on 1st March when well over 100,000 people are expected to rally in London under the banner of the countryside. I do not see that as being divisive, rather as a way of emphasising the need to see town and country together. The countryside is our heritage and the Government must understand the depth of feeling there is about it. They should listen to the voice of rural areas and they must not bulldoze through the opinions of local people or the green belt policy, which has done so much to preserve rural Britain.
4.13 p.m.
Lord Gladwyn: My Lords, more than 20 noble Lords are speaking in this short debate, and in another place recently more than 30 Members spoke. This reflects the

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deep concern, extensively covered in the media, on the subject of housing policy. It is perhaps easier to say from these Benches than from elsewhere that the widespread apprehension at what the Government intend to do is matched by widespread unease at what the previous government did in presiding over the building of houses on so many greenfield sites and opening up permission for so many out-of-town shopping centres, which were measures that promoted urban degeneration. Despite their good work in setting up housing partnerships and development corporations, there is a serious deficit in social housing as against market housing.
The Government inherited a target of 4.4 million new homes between the years 1991 to 2016, of which only a few hundred thousand have been built, and an estimation that only half of them would be built on previously developed, or brownfield, sites. Alarm bells rang with the announcement last month of two major incursions into green belt land and the imposition of a higher target for West Sussex. Then came the Deputy Prime Minister's article in The Times, with its reassuring assertion that the planning system needs modernising and decentralising, and with its welcome emphasis on urban regeneration. It is to be hoped that next month's statement of intent will shorten the targets to, say, five-year tranches, and will permit local authorities to contribute to the methodology, based on their knowledge of local needs and social trends.
As with the remarkable change in public opinion about the road building, so this altered attitude to house building affects a broad spectrum and all political parties. In both instances it stems from a perception of how the countryside, especially in South-East England, has been carved up and reduced. This perception has been masked due to the undoubted success of our strict planning regulations relating to buildings outside urban and village boundaries, and to the protection of listed buildings.
Our countryside is still incredibly beautiful. But unless urgent restraints are imposed quickly on greenfield housing, we may yet live to see the doom envisaged by environmentalists of an earlier generation, such as the left-wing intellectual, C.E.M. Joad, who wrote in 1937:
"Thus the towns are throwing their ever lengthening tentacles of brick and mortar over the country; round every corner pops up a perky new villa, and the green face of England's landscape comes out in an enflamed rash of angry pink. In fifty years' time there will, in Southern England, be neither town nor country, but only a single dispersed suburb, sprawling unendingly from Watford to the coast".
Mention of Joad should remind us that the quid pro quo of popular support for the countryside is greater accessibility to it, a subject which will come to the fore with the Government's promised Bill. Incidentally, I feel that it is important for country dwellers to appreciate that, in order to preserve what they want in matters of housing, as of agriculture and sport, they need to win over the hearts and minds of millions of town dwellers. I do not think their cause is helped by the proposition that they all understand the countryside better simply because they live in it. Few of them are associated with agriculture, and Joad's vision of a universal suburbia already exists in terms of lifestyle.
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The other side of the coin is the question of urban regeneration. Obviously, brownfield sites are limited in number and size, especially in the South East. But one suspects that many more could be winkled out if greenfield sites were unavailable, or made less attractive to builders by fiscal means. Brownfield sites are very unevenly spread, and it may be better to maximise pressure on local authorities to find them, rather than to set arbitrary percentages. There is also a great potential from derelict and unoccupied buildings.
Urban housing is also more likely to appeal to those who are living without children, particularly the young and the ever-increasing numbers of the elderly and old. Thus it can be built at a greater density, which does not imply a return to the brutal architecture of the 1960s, but rather to the terraced houses that had existed previously, with their more congenial opportunities for communal intercourse. It is ironic that, in seeking solutions for the 21st century, we should be reverting to the 19th in terms of urban planning and the use of railways. The most expensive housing anywhere is in the terraced streets and squares of Kensington and Chelsea.
We are an affluent post-industrial society living in a confined space. Nearly all of us would like a house or flat of our own from the age of 18 onwards. If this aspiration can only be met by making unacceptable inroads into our restricted countryside, we should refuse to meet that need, just as it is now accepted that the projected needs for new roads cannot be met. If our present prosperity continues to increase, which cannot, of course, be taken for granted, then the need for more cars and houses is, in truth, insatiable. I congratulate the noble Lord, Lord Marlesford, on raising this important subject for debate.
4.19 p.m.
Lord Howell of Guildford: My Lords, I wish to concentrate on one narrow aspect of this very important issue which my noble friend Lord Marlesford has so excellently raised. I refer to the validity of the Government's housing projections. I begin with the conclusion rather than the argument. I believe the projections to be wrong. I thought they were wrong under the previous government, and I think they are wrong, misguided and dangerous now.
I am not alone in taking that view. As we heard from the noble Baroness, Lady Maddock, Sir Crispin Tickell, the convener of the British Government Panel on Sustainable Development, has said that the assumptions on which the forecasts are made are spurious. That is his statement. That was not said by just anybody, but by the convener of the British Government Panel on Sustainable Development. He went on to say that they should not be used for planning purposes. It is hard to think of a clearer message that something is badly wrong.
Secondly, there is no doubt that the huge figures which then cascade down into county structure plans, borough planning and so on create a panic among planners which leads them to cast a shadow over large swathes of countryside as well as urban areas when we

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all know that the need is for small-scale development and for thinking small and not in terms of gigantic areas newly to be designated for planning and building.
Thirdly, I am as pleased as anyone to hear the Deputy Prime Minister say that it is now the end of "predict and provide" in housing. If that means anything—I hope that it does—it means that we say goodbye to the whole concept of huge housing predictions on which we then try to build a whole set of county plans. Fourthly, as we have heard, the figure of 4.4 million is for households, which is not quite the same as new homes and houses, many of which have already been built.
Fifthly—I should like to concentrate on this point—there are the figures themselves. It is clear that they should never have been bundled together in the way that they were. The figures were, I believe, the invention of officials in the Department of the Environment, some now retired, who looked upon their compilation as an interesting statistical task not really related to real life. First, it is clear, taking the content bit by bit, that the figure of 500,000 extra housing units allocated for immigration is wildly high. Immigration experts who have analysed it say that it is based on unrealistic assumptions. Secondly, there is the social housing content. Obviously, we want to see more affordable housing, but there is no doubt that the estimate of how much social housing needs to be built does not match the Government's expenditure figures or any intentions and plans in any other part of government. The estimate is probably way over the top. However, those are relatively minor over-estimates, probably accounting for between half a million and three-quarters of a million of the extra houses.
The big one is the question of cohabitation. There is absolutely no doubt that the figure of 4.4 million contains an assumption about the desire of people to live alone, in individual households. Many people do not want to live alone but are forced to do so by unhappy circumstances. The idea that living alone is a trendy and politically correct thing to do, which ran in high fashion in the 1960s and 1970s, no longer exists. The figures tell us that. Cohabitation is greatly on the increase again and has been since the early 1980s. The figures are telling the planners something that the planners have so far refused to listen to. The people are speaking to the policy makers, not the other way round. One estimate is that a proper, up-to-date projection of cohabitation trends today would suggest that we need 1.4 million fewer houses than we are forecast to need in the existing 4.4 million figure.
The figure also contains a heavy estimate for the move to the south. Again, that was a trend of the 1960s when people thought that you had to come to the south east. The jobs pattern is now different. Although there are still tremendous disparities in work availability, there is no doubt that the feeling that you have to move to the already overcrowded south east to look for a job has gone. People are now far less ready to rush southwards in search of a home and a job.
For all those reasons, and for several others with statistical weight behind them—these are not just fantasies or subjective arguments—the figure of
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4.4 million, far from being too low as some civil servants have incorrectly suggested, is overdue for unravelling and reassessing. Why should one be worried about that? It is because at this moment, as we speak, county structure plans, county reviews, structure draft plans, new reviews and examinations in public are all rolling ahead. Indeed, they are rolling ahead at considerable cost to taxpayers and community charge payers. Public money is being deployed in large quantities, with a great deal of effort, agony and debate, for purposes which have been invalidated. It is vital that when the Government come to make up their mind on these matters, as I understand that they are to do shortly in the Green Paper, they take the bit between their teeth They should recognise that the structure plans are now based on unsafe, invalidated and discredited figures and ask for all structure plans, all examinations in public and all such procedures to be temporarily frozen so that we can reconsider the matter. We need to re-examine the figures in the light of serious statistical evidence instead of spurious evidence and on a basis of which Sir Crispin Tickell and others will approve, and then go ahead in a much more safe, secure and sound way.
4.25 p.m.
Viscount Hampden: My Lords, I thank the noble Lord, Lord Marlesford, for introducing this important debate. I hope that he will not be offended if I tell him that whenever I have the misfortune to drive along the coast road from Newhaven to Brighton and pass through that terrible area of countryside despoilation, Peacehaven, I always think of the noble Lord—not because he is responsible for it but because he told us in a debate on the South Downs in your Lordships' House in July that it was when he was lost in Peacehaven that he saw the light and became such a distinguished member of the Council for the Protection of Rural England.
I shall approach the debate in a slightly different way because I find myself in the rare position of trying to be helpful to the Government at the same time as being able to blow my own trumpet, something which has virtually never happened before in my life. If the noble Baroness, Lady Hayman, can persuade her department to spend 25p on last Friday's edition of the Sussex Express, she will find a newspaper with a huge headline,
"Village Blueprint for a Rural Jobs Revival",
with the sub-line,
"How Lord Hampden's business plan helped restore community life"—
so, my spin doctors have been hard at work.
It is an important case history in that the village mentioned in that article, Glynde, is situated in an area of outstanding natural beauty. It is also surrounded by farms which are all in an environmentally sensitive area. The hill just above the village is a site of special scientific interest and a nature reserve. The village is a conservation area and virtually every house is listed. In some ways, it is totally hemmed around by every planning constriction imaginable. Notwithstanding that, during the past 10 years, we have converted the 19th century granary into a small business area for

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making weighing machines, employing nine people. The dairy, built in 1887 by my great-great-grandfather, is now a warehouse and mail order business for pumps and valves, employing 30 people. The old mill now makes spiral staircases and employs 20 people. The old smithy has been restored and is now occupied by a skilled metalworker who makes all sorts of things on the forge. The next objective is to infill and develop the chalkpit at the bottom of the village. That is a fairly formidable blueprint.
In the context of this debate, it is important to note that one of the reasons for that success is that there is a railway station in the middle of the village. It is served hourly by trains from both Brighton and Eastbourne. That allows people working in the village to come in by train. The whole question of transport is vital to whatever development is planned for the 21st century.
I felt very strongly for the right reverend Prelate and his roundabout in deepest Herefordshire. We have exactly the same problem in Sussex. The more traffic that comes along, the more the highways authority has to take various actions to make the road safer. Instead of seeing a lovely conserved village, one sees nothing but road signs saying not to turn right or not to do this or that. The highways authorities do not seem to need any planning consents.
I should like to make two other points. The first relates to communities, about which the right reverend Prelate also spoke. Community is terribly important. As a child during the war and just after, I was brought up in south-west Wales and because my grandmother became tremendously involved in anything going on, I was well aware of the strong community feeling in both the rural communities of Carmarthenshire and in the mining communities of the Swansea Valley. It is important that such communities are maintained.
Finally, I should like to deal with the subject of green belt land. I believe that some years ago the Minister was the Member of Parliament for Welwyn and Hatfield. My grandfather's family came from an area just outside her former constituency. We no longer have an interest there. However, as members of my family drop off their perch we must make a solemn march to the churchyard there and bury them. It is a beautiful experience to leave the A.1 just 18 miles north of London and suddenly enter a most wonderful area of green belt just north of Welwyn where my grandparents lived. I very much hope that when the Minister replies she will realise just how important to us are these green belt areas.
4.30 p.m.
Lord Vinson: My Lords, I too am indebted to the noble Lord, Lord Marlesford, for introducing this timely debate. He and I had the good fortune to work together on the Rural Development Commission throughout the 1980s when I was chairman and he combined membership of that organisation with that of the Countryside Commission. Having a leg in both camps is not an easy role but he filled it with distinction. I raise this point because where you stand on the subject of land use depends on where you sit or, perhaps more
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accurately, where you live. I hope that he will forgive me if on this occasion 1 take a somewhat contrary view to the CPRE.
Those who, like me, live in deep rural areas understandably want to prevent further encroachment but we should also respect the views of those who are much less well represented on the national scene and have no spokesman: those yet to own a home and those who want to trade up. We often sneer at the works of speculative builders but the demand for homes remains insatiable. Others possibly have the same aspirations that we fulfilled many years ago. In this country houses are very expensive, and the prime reason for this is the high cost of land. I should like to develop that point in one moment.
It is often overlooked that there is a cost to the green belt and a cost to land rationing. If you ration any commodity you force up the price. The astronomic price paid for farm land by developers reflects both demand for and the shortage of land, principally caused by rationing through the planning system. In this country the land value of a house—in other words, the value of the plot on which it is built—often represents up to 50 per cent. of the total price of the property, particularly in the south of England. By contrast, in mainland Europe and America, where land is far less severely rationed and more available, the land value of a house in the same kinds of areas is about 25 per cent. or often less. Thus, the overall cost of building homes in this country is about one quarter higher than it otherwise would be if building land was not so severely restricted.
This in itself is bad enough but the economic management of the United Kingdom is conducted principally through the use of the interest rate mechanism. Because we use monetary rather than fiscal controls our interest rates are often much higher than they need to be relative to inflation. We may successfully or unsuccessfully control the economy in this way, but the overall effect is that mortgages are higher than in many other countries and thus the cost of buying a home is higher and less affordable to those on marginal incomes.
Taking these two factors together, it is not surprising that many people cannot afford a home and that such a high percentage of the population are on housing benefit—something that has not been mentioned today—with all the tax and welfare distortions that come with it. But the primary factor remains the price of land due to the shortage of land induced by the planning system. In a nutshell, the price of the green belt is increased homelessness and millions on housing benefit. Greenery has a cost.
I do not for a moment advocate that we do without planning, but we need to recognise its consequence. Many of the speeches today have advocated the development of brown land, but there are snags. The reason speculative builders do not build on brown land is that it is difficult both to accumulate and to build homes cheap enough relative to demand. Like many, I hope that it may be possible for the Government to introduce legislation so that local authorities can accumulate brown land more easily and sell it on.

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However, whatever the price, demand will remain limited unless the social conditions that are found on or near many brownfield sites can be improved. Few people, including members of the CPRE, will want to live there if they remain areas of insecurity, with muggings, theft, graffiti and all the other factors. Houses on brownfield sites simply will not sell unless the social conditions are made amenable. It is not surprising that the demand for greenfield sites remains and is likely to remain unmet.
I believe that a limited subsidy is necessary if brownfield houses are to be affordable, not I hope by taxing greenfield sites, as has been suggested, which would merely raise the price even higher, but I suggest by letting society share in the huge windfall benefits that often fall to landowners of newly-designated greenfield sites. I am attracted to the idea—I wish it were mine—that planning permissions should be auctioned and that the landowner, along with anybody else, should bid the local authority for the right to develop that land. In this way much of the planning gain would flow back to the local authority and these funds could be, and I hope would be, earmarked for the development of brownfield sites in inner cities. I shall be interested to hear what the Minister thinks of that concept when she comes to reply.
Meanwhile, I believe that on balance the Government are probably right, as the late Nicholas Ridley was right, to allow limited greenfield developments in the proportions they have advocated. Any government must recognise the legitimate demand for new housing and balance the concern over further encroachment onto rural areas against the needs of those who do not have a home of their own—those who will not be able to afford a home unless the price of land is kept down by keeping the supply up. This is the inescapable dilemma of an overcrowded island.
4.37 p.m.
Lord Monkswell: My Lords, I too wish to thank the noble Lord, Lord Marlesford, for introducing this fascinating debate. In thinking of what to say I recalled the response of Gandhi who, when visiting this country in the 1930s, was asked what he thought of British civilisation. His response was, "Yes, it would be a very good thing." I shall concentrate my remarks on what I believe to be the social fragmentation over the past 20 years and the problem that I hope the new Government will be able to tackle; that is, the creation of a society in which people want to live together not only as families but as communities in a mutually supportive way.
I believe that it is worth looking at the ability of the planning system to work. Twenty years ago I worked in a factory on the edge of Trafford Park, the largest industrial estate in the whole of Europe. Next to the factory was a greenfield site devoted to agriculture. Today that site has been completely built upon following the development of a massive out-of-town shopping centre. The project is reaching completion. The developers obtained planning permission and all the relevant regulatory approvals from the previous government. I pay tribute to the previous government
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that, having given Dumplington planning approval, they changed the rules and said that massive out-of-town shopping developments should not in future go ahead because they were deemed to be antisocial. It is a pity that they did not stop Dumplington. Changing the planning rules can effectively change the way in which development takes place. I am very glad that the Government have signalled their intention to carry out a radical review of the planning system to ensure that it meets not only today's needs but the future needs of society.
I was amazed when the noble Lord, Lord Howell of Guildford, said that the assumptions underlying the grand total of 4.25 million extra households over the next 15 to 20 years were completely wrong. One of the difficulties we face is that the assumptions made by the statisticians on the basis of the experience of the previous 20 years are probably right.
The projections talk of 4.25 million new households. One can see a large number of households of elderly people, single persons, and those caused by the fragmentation of married relationships, with the consequent splitting up of families. Very few noble Lords have spoken about the desperate plight of people at the bottom of our society who live in dismal housing conditions. We must recognise the need for improved housing for them. We need to improve standards in our new housing.
I hope that over the next 10 years of this Government's existence we shall see a change in the way society is organised and structured. Two things are needed. First, we must reduce the imbalance in income and wealth between the top and bottom of our society; and, secondly, we must deal with the horrendous social problem of mass unemployment. I was pleased to hear my noble friend Lord McIntosh of Haringey reiterate at the Dispatch Box today the Labour Party's and Government's commitment to full employment, however that may be described, as he said.
Many of the previous government's policy actions led to social fragmentation. I shall give just one example. It is the crazy social security system which puts more money into the pockets of an unemployed couple with children if they split up than if they stay together. The Government have started to tackle that problem by getting rid of the single-parent premium. There is some concern about how they did that, but we must tackle the elements in society that cause fragmentation. I wish the Government well in their future policies to build social inclusion rather than fragmentation.
4.43 p.m.
The Earl of Radnor: My Lords, I, too, thank my noble friend Lord Marlesford for introducing the subject of greenfield building and—this is a new term for mebrownfield non-development in the centres of our cities. That is very much in the news at present. I put my name down for the debate, probably unwisely, because I panicked when I saw that 4.4 million houses were going to be spread over the English countryside. I had not realised that that forecast was made in 1992, and as the noble Viscount, Lord Hampden, said, has probably

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been overtaken by events and is not as accurate as it might be. I must declare an interest in that on my land I have developed and am developing in various places. I do not believe it involves greenfield sites in the accepted sense of the word. I am also involved in farming in a large way and with forestry. So I sit on all sides of the fence.
As a farmer I was disappointed that I heard nothing about food in the countryside but a great deal about biodiversity. No one mentioned that gobbling up the land detracts from agriculture, which adds a great deal to our GNP. I was fascinated, and I always will be, to hear about sustainable housing. I long to know what an unsustainable house is. Does it fall down, or what? No one seems to be able to tell me that.
Greenfield sites are more attractive than brownfield sites. They are the darling of the builder and the developer so far as concerns money making. The brownfield sites remain in the cities because they are unattractive to develop. Money does not come from them. It has been said, but not emphasised, that they have all sorts of disadvantages. One is that people do not want to live there. Soil pollution—a relatively new worry for builders—often exists and causes a great deal of trouble. There is the expense involved in dealing with light agreements, parking and so on.
At some stage the problem must be tackled. We cannot go on creeping across our country. Sussex has been mentioned. I was tempted to suggest to the noble Lord who was worried about Sussex, although he is not in his seat, that he might send some of his houses to the north-west, where apparently the noble Lord, Lord Wade, has plenty of room for them.
Something positive must be done. The noble Lord, Lord Vinson, said that there must be some element of subsidy, or, as has been mentioned, an agency to buy up these brownfield sites so as to resell them. There must be some incentive to develop the brownfield sites, or they will continue to proliferate while we go on taking a little more of the green land.
I have no objection, although I cannot see the best form in which to do it, to the greenfield site owner or developer paying in some way or another for the enhancement of the brownfield sites so that the city centres will pull their weight. The figure of 28—households or people—has been mentioned. Such development would swallow up a fair number of households. So much for that. I shall not branch out into the social habits that have caused the need for so many more homes.
We should not forget that there are also brownfield sites in villages. Our villages are straggling affairs, of tremendous charm, built up over the ages, with houses of all descriptions and periods. There is tremendous resistance to filling in the gaps which exist. When I was a member of Sub-committee D we dealt with such matters. The great catchphrase then was the "NIMBY" factor—not in my back yard. If anyone wanted to build anything they were told that it was not possible. I have been told by a noble Lord that the latest in-word is "BANANA"—build absolutely nothing anywhere near anything. That is very much the attitude towards life in the countryside.
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Finally, I shall take a glance into the future. There has been a tremendous move towards shopping in supermarkets. It has happened quickly. It has been immensely efficient. It started in the towns and it is now out-of-town. Mr. Gummer wanted the shopping centres to be in the towns. That has now been reversed. Four or five of these super or hyper-markets within a provincial town of about 45,000 people will kill the shopping centre. They will probably satisfy all the needs of a large catchment area. There is another brownfield site coming up which might be useful for housing: shops will have gobbled up the greenfield sites, and they will eventually become brownfield sites which could again be used for housing.
4.50 p.m.
Lord Moran: My Lords, we must all be grateful to the noble Lord, Lord Marlesford, for arranging this debate and for the admirable speech he made in introducing it. I pay tribute, too, to the CPRE, over which he presides, for its tireless campaigning to alert people to what is going on. I warmly agree with him on the value and fragility of the countryside, which is as precious to town dwellers as it is to those who live in the country. The greatest threat to the vanishing countryside is the spread of housing, which steadily converts country to town. An area the size of Bristol is urbanised every year.
We are seven years into the 1991-2016 period of the now notorious predictions in the November 1996 Green Paper. Central government pressure on local authorities to build more and more houses has transformed many towns and villages for the worse. An attractive old town such as Ledbury in Hereford is now surrounded by new housing estates of identical, tightly packed, box-like houses. The same is true of many other towns, small and large.
I would like to stress the neglected problem of water supply. The water companies told the Government last November that they could not supply all the planned new houses because too many of them were projected in areas with water shortages; 2.3 million in the most drought hit regions of the east and south-east. Water suppliers have no right of veto on developments and are often not even consulted about them. We must pay much more attention to this aspect of the problem, otherwise we shall be building houses without water or ruining our already threatened rivers. I should welcome reassurance from the Minister on that point.
The new Government have already had a change of heart. Although at a meeting the other night I was able to remind Mr. Meacher that he had said that the last thing we could ever wish to see would be the "Los Angelisation" of the UK countryside, initially deep concerns were aroused last year by remarks by junior Ministers. For example, Mr. Raynsford said that restrictions on building up to 2 million homes in the countryside must be relaxed since it was simply not acceptable to make people live in urban environments in unacceptable ways just to protect the countryside. Some of those remarks encouraged the unworthy thought that perhaps the House Builders Federation had given £1 million to Labour Party funds.

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There was a very strong reaction, spearheaded by the CPRE's notable full page advertisement on 28th November. The outcry seems to have rung alarm bells in the higher echelons of the Government and resulted in an entirely new and very welcome line propounded by the Deputy Prime Minister, notably in his article in The Times on 26th January. But my experience as a diplomatist has taught me that what usually matters is not what people say but what they do. And what Mr. Prescott has done—or failed to do—in West Sussex, Stevenage and Newcastle has not so far been reassuring.
Furthermore, 2.2 million new houses in the countryside would mean six new cities the size of Bristol. This is a grim prospect. There seems no reason why we should not build most of them in cities and towns, which might well suit many of the single people or couples who like to be near shops, restaurants, pubs and cinemas. All the evidence is that there is plenty of capacity for this without what is called "urban cramming" or building on parks or playing fields. The RIBA has suggested a brownfield agency and has launched a brownfield initiative. We need to convert spaces above shops and make more use of redundant industrial buildings.
It is vital to make life in cities more attractive, safer and less polluted and to halt and reverse the haemorrhage of 300 people a day. But transforming our cities will take time. The problem is, however, immediate and urgent. It is at present much cheaper and easier for house builders to build on greenfield sites. What the Government must do is to introduce in next month's Budget economic instruments to discourage building on greenfield sites and encourage building on brownfield sites. I was glad to see that Mr. Prescott seemed to favour that.
Twenty-five years ago, Philip Larkin wrote in a poem called "Going, going":
"For the first time I feel somehow
That it isn't going to last,
That before I snuff it, the whole
Boiling will be bricked in …
And that will be England gone".
Our new Government now have a chance to prove him wrong. I profoundly hope that they will take it.
4.54 p.m.
The Earl of Clanwilliam: My Lords, I, too, thank my noble friend Lord Marlesford for his excellent introduction to this important debate. There is, indeed, a need to protect the countryside and I speak as an incomer of some 10 years' standing in a village with a complete and sustainable life of its own. We are fortunate in being almost entirely self-sufficient, but I am sorry to say that there are a number of renegades who go off to shop in the maze of supermarkets which have been fertilised locally by shoppers' greed, the car culture and the planners.
The out-of-town supermarket and its vast carparks are conveniences which the public greatly desire—I use the word advisedly—and they fulfil a need that is unhealthy
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and damaging to the stability of society. They attract people away from placing their daily business in the country towns, which are consequently decaying. They are setting themselves up as all things to all people, competing with the hardware and chemist shops in the small villages. By their very nature, they increase the social menace of the culture of car dependency. Perhaps I speak with the approval of the noble Earl, Lord Radnor.
There is, I believe, a case to limit the planning consent for supermarkets according to the number of people in the catchment area; it might be 25,000 or 50,000 people per supermarket. However, something needs to be done, otherwise all the available building space will soon be absorbed by those monoliths with their Dallas-type architecture and carparks.
Having got that off my chest, an opportunity would present itself to deal with the decaying inner city. Pedestrian-only areas and the concentration of small businesses and workshops would provide a community with an integral lifestyle, allowing work and leisure to be applied in the immediate vicinity of each other. And shopping locally would be simple and comfortable. There would be no car to start, but perhaps a local bus or a short walk. Inner-city decay is a challenge to our society. Regeneration is possible with a transformation of the lifestyle of whole communities. There are enormous areas of unoccupied, run-down, inner-city housing which needs to be rebuilt.
One of the great improvements of the Thatcher era was the promotion of home ownership. However, there are several sides to that equation. Home owners do not provide a mobile labour force. They also have considerable debts to the building societies, sometimes up to 100 per cent. of equity. That makes for a vulnerable lifestyle and an impediment to other long-term saving activities which would benefit society.
Let us suppose, for instance, that the Government found a method of limiting mortgages to 60 per cent. There might be a remarkable transformation. Savings would increase; more flats would be needed for the young to rent; they would be in the inner city near the cinemas and the pubs; and there would be a very mobile labour force. As I said they would not need a car to get to work.
Another limitation would be reduction of CGT on the sale of agricultural land for building sites. A £20,000 site goes for £200,000, which doubles the cost of the property for sale. That has already been mentioned by several noble Lords. I venture a suggestion in the light of a remark made by Mr. Richard Caborn in another place:
"We shall also be looking at options for introducing new economic instruments and financial incentives to bring more brown-field sites into play".—[Official Report, Commons, 27/1/98; co1.165.1
I am indebted to the CPRE and to the noble Lord, Lord Marlesford, for research for that quotation. The CPRE rightly claims that we are not building anywhere near the number of affordable homes required. We are all agreed on that point. This debate is providing a remarkable range of answers.

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It seems that the Government are foreswearing the principle of predict and provide which has proved to be inaccurate in the prediction and unable to provide the type of housing that is actually required. To that extent, we must welcome the New Labour approach to the problem.
We need to regenerate village life and provide local shopping facilities. Shopping in the village will reduce the weekly trip to the supermarket and regenerate the village post office. Again, that would reduce the use of the polluting motor car. Above all, it would generate local jobs in local industry. There is a scarcity of cheap rented accommodation for the young in all areas and that needs to be on brownfield sites which are available in the interstices of local areas. We need small plots for small housing. I have two plots immediately behind my own house which are not being developed merely because the builder is waiting to sell them for £300,000 rather than building cheap flats on them, much to my advantage.
I cannot emphasise enough the importance of small companies and rural industry to the maintenance of a sustainable countryside. They are the target of larger organisations and need protection. Some local councils have been persuaded by supermarket chains to sell off, for example, the newly redundant cattle market in return for creating more parking facilities in the town. That is a waste of brownfield sites. Moreover, the supermarket car park is occupying ever more valuable brownfield sites needed for housing. Planning rules need to be overhauled and priorities reviewed unchanged.
There is another factor which may change the countryside scene; that is, the replacement of CAP support for the farmer. Extensive farming will call for more labour to manage alternative systems of farming and expanding the new schemes for entertaining the public and providing access to less intensively used farm land. Therefore, there will be a continuing call from local communities in any event. That will be beneficial in that it will halt the decay of village life.
However, I add one caveat to that. We need to ensure the maintenance of some land within the city boundaries. We need to protect allotments and school playing fields at all costs. It is good that this subject is under a much-needed review and I wish the Government success in their endeavours.
5.1 p.m.
Lord Dixon-Smith: My Lords, I join other noble Lords in expressing my appreciation to my noble friend Lord Marlesford for bringing this matter before us this afternoon. I begin by declaring an interest as a farmer and landowner in the county of Essex.
During a 28-year career in local government, I watched the evolution of housing policy over a long period. It is housing policy which lies at the root of our debate this afternoon and not a debate about town versus country. I have seen local planning authorities constrain developments until the Government have found irresistible the pressure for additional development and have called for large areas of land to be released.
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It is a regrettable fact that in shire areas most people wish that housing development would go somewhere else. Meanwhile, professional planners have the task of trying to resolve the conflict between the constantly rising economic and social aspirations of the community at large and the natural wish to preserve the countryside. Too often, the community says that it wishes for one result but by its actions it lives by a different ethic. We must preserve town centres but at the same time we flock in ever increasing numbers to out-of-town shopping centres that make the economic viability of town centres less and less sustainable.
We must restore and develop brownfield sites in metropolitan areas. Yet vast numbers of people, given the opportunity, would move into the countryside if they could. We do not live in a dirigiste society. Even if the planning Acts go some way towards that. we should not wish to go further than they already do. Therefore, we must be careful what we are about.
The development of brownfield sites is not easy. I well remember going to study the Docklands area of London when I was on the South East Economic Council under the chairmanship of the noble Earl, Lord Carnarvon, who I am pleased to see in his place. He will remember it well. It was an area of dereliction and deprivation on both sides of the river from the Tower of London downstream to beyond Greenwich and Beckton.
The relevant local authorities would not agree and much of the land was owned by public bodies which made redevelopment difficult by assuming very high land values because of the proximity of the City of London. I shall not bother the House with our recommendations, except to say that eventually they were largely implemented and the obstacles were removed. Today, 25 years later, regeneration continues apace. However, there is still a great deal to be done.
I use the example of the Docklands simply to illustrate that the issue is not straightforward and wishing for something to be done does not make it happen. I hope that the Minister will look back at that exercise to see what can be learned in relation to her plight today.
By and large, there are no overwhelming planning constraints on brownfield site development but we must face the fact that there may be other difficulties. The most obvious is regional disparity. Professor Peter Hall, who is a leading authority, said:
"What we already know is that prospects vary across the country: the Greater Manchester conurbation is full of brown-field holes and here a 60 per cent. target"—
that is, for brownfield development—
"may be realistic. In London this appears to be a pipe-dream".
It is in London and the south-east that the housing problem is at its greatest. Brownfield sites in other regions cannot help us here in this region.
On a different subject, much more might be done by renovation and improvement of the existing housing stock where it is estimated that there area million houses unoccupied, ¼ million of those in long-term non-occupation. However, if one wishes to make a simplistic comparison, repairs and renovation carry

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VAT while new construction does not. Therefore, in many cases the renovation of an existing building will cost virtually the same as new build. There is a price penalty to be paid. Again, I wonder whether the Minister will bring that anomaly to the attention of her right honourable friends in another place, perhaps with a view to removing the anomaly without increasing the cost, if I may put it that way.
Finally, I return to the figures for housing demand. Much publicity is made of the 4.5 million new homes needed but little is made of the fact that 1 million of those have already been built. That is the good news. The bad news is that the Joseph Rowntree Foundation, speaking to the Environment, Transport and Regional Affairs Select Committee housing inquiry in another place, stated last week, with explanations, that that is an underestimate by about 0.5 million. I can only say to my noble friend Lord Howell of Guildford that expert opinions differ on those matters.
I pity the poor planners who must try to make sense of all that. I am glad that it is no longer my responsibility.
5.8 p.m.
Lord Cocks of Hartcliffe: My Lords, my noble friend Lord Thomas of Macclesfield mentioned the ravages of the industrial revolution. Those were manifest, particularly in the north of England, as he mentioned. Both Manchester and Liverpool, simply in order to clear their slums, had to export more than million people into areas outside the city. We know that ever since the war, under successive governments, through the subsidy system, massive deck-access flats were built which were wholly unsatisfactory, havens for crime and all sorts of social problems. They have had to be demolished and, of course, are still being paid for by the tenants.
Urban areas have been talked about today, but they are not homogeneous. If we look at election results in big cities over a period of time, we find that the western constituencies—that is, the constituencies on the west side of big cities—tend to be Conservative and on the east side they tend to be Labour. Why is that so? It is because the prevailing winds in this country blow from west to east and all the rubbish, the pollution, and so on, goes to the east side. Therefore, those who are rather well breeched. or more comfortably off, tend to migrate to the west, leaving the working class to put up with the rest.
That fact was demonstrated recently. The House of Commons statistical section recently published a brief about a report entitled Mortality by Constituency. It reports the results of a survey carried out by researchers at the Department of Geography at the University of Bristol. I should declare an interest here in that I am a graduate of Bristol University. However, it will not surprise your Lordships to know that I only got a lower second. The figures in that report show that mortality varies from one constituency to another. In fact, in the constituency of Bristol West, you are less likely to die before the age of 65 than you are in my old constituency of Bristol South.
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Bristol West has had a massive green lung called the Durdham Downs for many years. Development there is absolutely forbidden under an Act of 1861. Indeed, that downs Act of over a century and a third ago protects that green lung. The equivalent area in Bristol South is filled with playing fields and is being steadily nibbled away by development. Given the health record which I mentioned, what is the latest proposal for development on this green lung which is being chipped away in Bristol South? It is a bus depot. Only yesterday the British Lung Foundation issued a report about the cost of air pollution. It says that the most dangerous air pollution identified is,
"PM10—the microscopic particles mainly emitted by diesel engines".
The latter cause all sorts of things; indeed, the diseases which follow from that situation are a hypochondriac's dream. That is the latest suggestion for the people of Bristol South, who are already handicapped in that respect.
If we are to consider the whole question of planning, we need to think about the machinery involved. It is a highly unsatisfactory state of affairs. In the particular instance to which I referred, the posting of a letter about the proposal, which did not go out until Friday by second class post, meant that the recipients had already lost one quarter of their complaining time by the time the letter was delivered to their homes. I should also mention the way in which the proposal was advertised. Notices were placed seven feet above the ground, mainly on a dual carriageway where the speed limit was 50 mph and where there were no residential properties. It simply is not fair to expect people to co-operate with such a system.
We wonder why people are not interested in local government, but the way in which some planning matters are conducted by local authorities is one answer. We ought to consider that aspect because there has been a recent development in Bristol; namely, those concerned flogged off the airport so that they could have a bit of money at their disposal. Moreover, in an article in the Western Daily Press of 23rd January, Councillor George Micklewright (the leader of the city council) said:
"It's very important in circumstances such as this to get a feel of the views of the Bristol public".
One of the suggestions was to build a new swimming pool on the Filwood site. However, a little later on in that same text, we find, tucked away, reference to the fact that the move could mean the closure of several other pools. The article then goes on to list the names of four separate local pools. People can walk to those pools in their lunchtime. They can also walk there from their homes and have a swim. If such a swimming pool were to be built in Hengrove Park, that would not only take money off the middle class from North Somerset, but also everyone else would have to get in a car or use some form of transport to get there. It does not make sense. When my noble friend the Minister replies, I hope that she will deal with some of these more local points.
A few weeks later, on 31st January, there was a report in the Evening Post about the response to that consultation, which asked for people's views. It said:

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"Scores of readers phoned or wrote in … with their views … The flood of letters followed a call by [the local] council leader".
Any Chief Whip worth his salt could organise that sort of response at the drop of a hat. We really must take consultation much more seriously. As I said, I hope that my noble friend will deal with such matters in her response. In particular, there is the recent publication on 14th January from the Department for Culture, Media and Sport saying that all local authorities must look seriously at the selling off of this sort of playing-field land, even before the Government bring in legislation.
5.15 p.m.
Baroness Byford: My Lords, I should like to congratulate my noble friend Lord Marlesford on bringing forward this debate today. I should also declare an interest. I am a former poultry farmer, now retired, but we still have a family interest in a farm in Suffolk.
I should like to begin with the challenge of urban regeneration. My home town of Leicester is currently in the middle of such a programme. A 30-acre site in the middle of the city was compulsorily purchased at a cost of some £9 million and the ground cleared at a further cost of £7 million to £8 million; the money coming from City Challenge and English Partnership respectively. The site will comprise an office block, a business park, 71 units of social housing, 131 dwellings for private rent and a 240-bedspace hall of residence for De Montfort University. None of this would have been possible without a huge injection of public funds. Because of the complexity of the site, a former scrap metal yard, and of the many organisations involved, the lead time before development can take place is considerable.
The project began in 1993 and should be completed by the end of this year. It is an exciting project and a good example of what can be achieved. In addition to this project, three others are going forward, thanks to money from City Challenge. Perhaps I may just mention one of them; namely, the complete refurbishment of a former hosiery mill into one and two-bedroom accommodation.
Those projects would not have been possible but for the commitment of many people; for example, government agencies, local authorities and the developers. We need to make our cities safe and secure places to which people will wish to return and live. While recognising the success of those projects, one has to acknowledge that urban regeneration will not provide for all our housing needs. Villages, too, need to grow, thus enabling them to be vibrant places in which to live and work.
Statistics have already been quoted today and I, too, should like to highlight one particular sector. In 1961, the population of one-person households under pensionable age was only 4 per cent.; by 1994 that figure had risen to 12 per cent. In the same way, one-person households of over pensionable age rose from 7 per cent. in 1961 to 15 per cent. in 1994. Clearly the growing need has been for smaller units of housing as both starter homes and for the older population.
Many older people wish to remain independent. Throughout our area we have seen a growth in complexes of bungalow accommodation. Indeed, 30 or
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more have been built. They provide secure accommodation, supported by a resident warden/manager and are often developed with the support of local housing associations. It is important that these are easily accessible to local shops and that they have access to bus routes, so as to ensure that residents do not feel remote.
We have seen great changes in country life. Nearly 40 years ago I attended Moulton Agricultural College near Northampton. At that time some 65 students took the one-year general farming diploma course. Today only 12 students are on the equivalent course. Others cover specialised subjects such as animal welfare, countryside management, equine courses, horticulture and farm mechanisation, to name but a few. These changes are reflected on many of our farms today. Fewer people are employed. Diversity, contracting out and specialisms have taken over. Two of our neighbouring farmers in Leicestershire have diversified. One converted a former pig unit into stabling where people keep their own horses and a thriving centre has been established. The second has developed a farm centre to which the public come to see at first hand the animals in their natural environment and to learn about the countryside. Visits from schools are a regular feature. Rural businesses like these must be encouraged to develop, particularly at a time when the rural sector is under such financial pressure.
In a recent address to the Farmers' Club on 27th October the Minister's right honourable friend, Jack Cunningham, said,
"Our first objective will be in relation to the health and well being of people and the environment and that is our long term objective".
I am sure we all welcome that statement. We must make sure that before large-scale development takes place existing houses, whether in town or country, are fully used. Shops and offices should be taken into consideration too. We look to see a balance between the protection of our countryside and provision for future needs.
Flexible approaches must be key in our future policies, with a balance between town and country. It is not a question of town versus country. There must be the opportunity to create new jobs and to encourage businesses to thrive while at the same time conserving our countryside for future generations. I thank the noble Lord for introducing this important debate today. I look forward to hearing the Minister's reply.
5.21 p.m.
Baroness Hamwee: My Lords, I declare an interest as president of the Town and Country Planning Association, although I realise that most of what I have to say derives more from my experience of chairing a London borough planning committee and a London-wide planning committee. Like the noble Baroness, Lady Byford, and my noble friend Lady Maddock, I welcome the balance intrinsic in the Motion of the noble Lord, Lord Marlesford, whom I also thank for introducing this important subject.
Like many speakers, I think it is quite essential that we avoid polarisation. I believe that it is possible to be pro-town and pro-country. This was a subject which

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could well have been debated heatedly before the general election. I suspect that there was something of a tacit agreement between the political parties that we—I include my own party in this—shied away from the issue. Perhaps it is one that is liable to create so much heat that it needs to be debated as far from political imperatives as possible. However, I have been interested to note that since the general election in May there have been many expressions of doubt about the housing projection figures and about structure plans on the part of those who supported them before the general election.
Before this debate I wondered whether we would be lobbied by those who support urban interests. I believe that many of your Lordships will have received briefs from those who lobby on behalf of the countryside. I do not mean to indicate that I reject their help; that is not the case at all. My noble friend Lord Beaumont said that perhaps there was more lobbying for the countryside because, historically, the countryside needed that. I believe that there are inner-city interests which need to be better represented than has been the case, although the passion shown by the noble Lord, Lord Wade of Chorlton, on behalf of urban interests is probably equivalent to half-a-dozen pieces of briefing information.
The Minister's department of course covers both town and country. Is it correct that national parks may move from the responsibility of that department to MAFF? I have heard a rumour about that and I would not welcome that move. It is important that decisions about the location of housing, about development and about the protection of different parts of our land must command general support. There is concern about the information that underlies the projections and about the statistics. There is a lack of confidence in the projections. Despite my brutal comments about the previous government, I understand the points made by the noble Lord. Lord Howell.
I wonder whether it is possible to use information systems—which have developed so rapidly over the past few years—to give us something nearer to rolling projections and to give us much more up-to-date information. I understand that the most recent government land use statistics, which were published last autumn, covered the period from 1985 to 1992. That is not helpful. My noble friend Lord Beaumont of Whitley referred to land available for infilling in Leicester. In London the 1992 capacity study appears to have underestimated the amount of windfall land which would be available by a factor of four. In other words, there have been four times as many windfall sites available—that is, sites which were not anticipated as being available—as were expected. The planning system has failed to keep track and it is not serving us well. I hope that when we have a new authority in place in London it will be able to replicate some of the work undertaken by the GLC, because not everything that the GLC did was bad.
As has been said, trends change. The noble Baroness, Lady Young of Old Scone, referred to those of us who may be refugees from marriage. I have seen suggestions that those of my generation who left college and shared
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flats for a number of years will again share flats with our contemporaries when we are feisty old ladies. I remember having a conversation with a school friend about the commune we would create when we were elderly.
There is a lack of confidence not just in the figures but also in the planning system, which seems to run behind itself. I support a plan-led system, although I have great doubts about the presumption that implies in favour of development. However, the plan-led system needs to be more responsive than it has proved to be over the past few years. I have recently seen a planning brief about a site in Cambridgeshire which is currently a US airfield. The planning brief noted that such a site was likely to create employment opportunities. But the need now is for housing. This is in an area where unemployment is extremely low. The work that we are doing in local government and at a regional level is not moving sufficiently fast. We need targets and we need mechanisms. We need targets not just in terms of numbers but in terms of the kind of housing that is to be provided. A number of speakers have mentioned that.
I do not believe that the planning system can be a panacea. It cannot be a substitute for public investment, but it has an important role to play. We also need targets as regards the change of use of buildings. I wonder whether we yet have sufficient information about whether offices that are being converted into accommodation fulfil a housing need. Perhaps this is just a London matter, but I wonder whether the large office blocks in central London that are being converted into flats are simply providing second homes and are not meeting a real housing need. It is right that we have to look at maintenance. Otherwise we are storing up problems for the future. The noble Lord, Lord Dixon-Smith, mentioned VAT. He suggested equalisation.
In referring to sustainability and what we mean by it, I congratulate the Minister on being the first Minister I have heard talk about the integration of land use and transport, a factor that many of us may have taken for granted but which has not been articulated by government. As regards the integration of land use, housing targets and social sustainability, I share concerns about town planning and the quality of towns. There are some horrible examples in the United States from which we might learn. Urban sprawl there has turned more or less into a series of concentric rings of electronically gated wealth and deprivation. In London we have been unable to balance the interests of the east, which suffers because of the muck blown by the winds across central London, with the economically overheated west.
Points about fiscal mechanisms—incentives for development on brownfield sites—balanced with taxes on greenfield sites are well made. The Treasury should contain itself long enough to look seriously at hypothecation. The imaginative ideas put forward today by the noble Lord, Lord Thomas of Macclesfield, and others should be pursued. The Treasury might well say to the noble Lord, Lord Marlesford, that if Northolt is to be developed, it will have to go for the highest price,

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and that might not be to a housing developer. Let us send messages to the Treasury as well as to the Minister's department.
Before today's debate, it was said to me that one might welcome the day when there is a march for urban regeneration as well as a march for the countryside. I share part of that thought, but I go back to where I began. Let us seek as far as possible not to be confrontational. Let us work both for the countryside and the town. I am glad that that thought has underlain so much of what noble Lords have said today.
5.32 p.m.
Lord Inglewood: My Lords, like many other speakers I begin by congratulating my noble friend Lord Marlesford for introducing the debate. It is timely to debate housing and the countryside. The topic, and particularly the countryside, has been in the forefront of many Englishmen's minds for many years. Talking to my noble friend before today's debate, I was interested to hear him say, "I want to refer to a book. You have probably never heard of it. It is England and the Octopus by Clough Williams-Ellis." The right reverend Prelate referred to it too. I replied, "I have heard of it." I bought a copy in a second-hand bookshop which the author had presented to Lewis Silkin whom he described as his mentor and,
"who answered many of the prayers of an Edwardian 'Angry Young Man' a generation ahead of Conservation Year 1970".
Not only has there been concern in the past. There is legitimate anxiety about what the future holds for the countryside and in particular the green belt. It is right to bracket town and country together. Since classical times it has been recognised as an ideal that there is an essential harmony between town and country and that they should be complementary and not antagonistic. I see myself as a countryman who likes the town. I must, however, declare an interest. I am a farmer and landowner in Cumbria. Some of my land is within the Lake District. I have from time to time made land available for housing and may well do so again in the future. I have also been a member of the Lake District Planning Board and I am ex-president of the Friends of the Lake District.
The issue at the heart of the debate today—it has not been specifically articulated—is this. Is the development of brownfield sites a way of squaring the circle? Can we both promote the interests of the town and of the country through implementing the same policy? If we can, it is a prize worth gaining.
I wish to talk about the town. I agree with the noble Lord, Lord Rogers of Riverside. The noble Lord, who is not here today, has made one of the themes of his life's work that towns should be exciting, rewarding and fulfilling places in which to live and work. That is not possible if towns are rundown and derelict, if upper floors of buildings are unused and left to decay, and if there is derelict land surrounding whatever activities are going on. Towns must have amenities. They must have the appropriate mix of uses and activities. That inevitably involves the development of brownfield land.
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Equally, I believe that urban areas cannot simply be allowed to spread. One of the most important characteristics of the green belt is to act as a kind of corset about the built-up part of our country. Without some such constraint the pressures to develop the town will be reduced or even disappear.
The green belt was originally established to protect the countryside, not, I suspect, against large-scale development of the kind we have discussed today—much of that is a modern phenomenon—but to stop ribbon development, urban sprawl and the sporadic disfiguration of parts of Britain which were much loved by many people of different classes and conditions.
While we believe strongly in the green belt, it is wrong to say that one must never build on it. My noble kinsman Lord Hampden mentioned developments in a village which clearly contributed physically and economically to the community in an entirely beneficial way. We should also not muddle the green belt with greenfield sites. They are different. We must remember that on occasions green belt policies may lead to over-development in suburban areas, and possibly even to the leap-frogging of the wrong type of development out into the countryside, but I believe that the green belt policy has served the country and towns well.
Against that background, I return to the subject of brownfield sites. We must encourage the development of brownfield sites. When Members on this side of the House were in government we had targets which increased with regularity to ensure that more brownfield rather than greenfield sites were developed. In addition—I take up the point made by the noble Lord, Lord Thomas of Macclesfield, and the noble Earl, Lord Radnor—we must make it attractive in real terms for people to develop the land. It is not a matter of terms relative to other forms of development. It must be made as attractive and cheap as possible.
Perhaps I may digress for a moment. One of the reasons that the Millennium Dome project looks so enormously expensive is that some 200 acres of completely poisoned land are having to be decontaminated. Most of it will not be used for the purposes of the dome. It is an important piece of inner city regeneration. As the noble Baroness, Lady Hamwee, said, we must make sure that the Treasury realises one simple home truth: it cannot have the money and the development. It has to be one or the other. Where do its priorities lie?
My noble friend Lord Howell and the noble Baroness, Lady Maddock, referred to the statistics on which our government's policy was based, and threw doubts on their validity. I shall be interested to hear the views of the Minister about the statistical basis of the current projections.
On another occasion in a different debate in this House, I said that one of the points of a general election was to get a new government. And when you get a new government you get new policies. The party opposite skilfully conducted its affairs to gain an emphatic success in the last election. I wish to give credit where credit is due. One of its successes was to make very considerable inroads into traditional Conservative areas.

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The traditional antipathy and distrust often displayed towards the party opposite was set aside. I have to confess that there were many instances of some of my own party being its best allies in bringing about that situation but that is another matter. However, the confidence that existed in May last year has now evaporated. People are concerned and anxious about what the new Government are doing.
We have heard talk of the big new planning consents granted around Newcastle, in West Sussex and in Stevenage. One that has not been mentioned is Sutton Coldfield. What does that mean for the protection of the countryside? Does it mean that the green belt policy is dead? I am sure that the noble Baroness will explain. I do not doubt that the policies are still in place. But the reality is that when planning consents of this kind are granted the public cease to believe in the Government's commitment to preserving the countryside and to redeveloping brownfield sites in the inner cities.
We hear from the Government—I refer in particular to the article by the Deputy Prime Minister—that the planning system is to be modernised so that it becomes "less rigid", which I am sure is a good thing. It is also to become "more democratic". Who would wish to argue against that? And "more sustainable". Everyone must be entirely supportive of that, too. We are all in favour of such concepts.
But what do those terms actually mean? Can the noble Baroness tell the House precisely what a "less rigid, more democratic, more sustainable" planning system will look like? It throws doubt on the integrity of the arrangements that are in place now. I am not sure whether we are to see regional development agencies as part of that process, or whether they are part of a separate process that will run in parallel. However, when one looks to the Bill to see how and where they will operate, I confess that I am none the wiser. Are they to be big bodies with sharp teeth? Or will they be mere ciphers? What does it mean for people when they are considering these types of issues in their localities the length and breadth of the country?
We have had a very good debate. However, we want clear answers to three serious questions. The first is: are the Government serious about promoting development on brownfield sites? Secondly, are the Government seriously committed to the green belt? And thirdly, are the Government committed to a future planning system which is less rigid, more democratic and more sustainable? Will it be a planning system that can deliver to the people of this country?
Against that background it is not merely a question of fine words from the department. What we all want to see are the actions on the ground representing the physical manifestation of the policies that the Government ostensibly espouse.
5.43 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman): My Lords, I, too, congratulate the noble Lord, Lord Marlesford, on
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securing this debate, and on provoking a debate that has been better-tempered than its recent parallel in another place. In many ways our discussion has been more considered. It has recognised some of the complexities and issues with which we are dealing, and which, as the noble Lord, Lord Dixon-Smith, pointed out, are not straightforward. There has been recognition that it is unrealistic and does none of us any service to pretend that these are simple matters of town against country, or simple matters in which party political point scoring or creating false conflicts will be the way forward.
I say to the noble Lord, Lord Inglewood, that in that spirit I shall resist going into the record of the previous government in relation to brownfield development. However, I cannot refrain from pointing out the effects of their policies in regard to out-of-town shopping developments in particular, which have had a profound impact on many of the areas of concern that were highlighted in today's debate.
The noble Lord is absolutely right to say that the Government should be judged on their actions and policies. All I ask is for a longer period than nine months to be taken into consideration, and for us to be able to answer some of the questions at slightly greater length and when the House and the country have had more opportunity to see the results of policies in action.
In that sense, my only quarrel with the noble Lord, Lord Marlesford, relates to the timing of this debate. We have made clear that we shall be making a statement very soon, particularly on the issue of household growth. I cannot anticipate that statement: therefore it would be difficult to answer some of the specific points raised during the debate, though I will do my best to do so. I hope that I shall be able to persuade noble Lords that we are moving forward with positive measures to promote urban regeneration, to meet future housing needs and to protect the countryside—and to take those three strands forward together and balance them against each other rather than to see them as "either/or" matters; if we do that, we will not serve the needs of the whole community. I welcome the emphasis on community and communities in the remarks of many noble Lords who contributed to the debate.
I was interested to hear the right reverend Prelate the Bishop of Hereford point out that in many ways the most effective measure to protect our countryside is the regeneration of our urban areas. There is an inter-relationship. I was disappointed that the noble Lord, Lord Marlesford, was slightly dismissive in his aside about the Millennium Dome. The noble Lord, Lord Inglewood, made a very relevant point. The noble Lord took up the difficulties referred to by my noble friend Lord Thomas of dealing with contaminated land and the cost of reclaiming such land. I was disappointed because the millennium project is not merely about the dome. On the site of the Millennium Village there was once a gasworks which left behind a legacy of seriously contaminated land. That land has been cleaned up and is to be developed as a model of exactly the type of sustainable community development on a brownfield site that many speakers have said is needed. They mentioned the need for the integration of housing, employment and transport and the need to produce

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sustainable answers. Good design and mixed use—the sort of urban renaissance that will be of value not only to those who dwell in cities and towns but also to those who value the countryside—is tremendously important.
But when we talk of regenerating towns and cities it is not simply a matter of making physical improvements. Fundamentally, it is a question of making them better places to live and of taking action on a whole range of policies to improve the quality of life of local people and break into the vicious circle of urban deprivation to which the noble Lord, Lord Marlesford, referred.
In that context, I hardly need remind the House of the emphasis that the Government are giving to education. We are providing the environment and incentives for the creation of more jobs. We are taking measures to tackle crime—not least the proposals currently being debated in this House in relation to the Crime and Disorder Bill. That approach will produce the quality of environment in our cities that will make them attractive places in which to live. We have to offer people choice—real choice—in these areas.
Any strategy for improving these areas must tackle the issue of poor housing. Our capital receipts initiative will release nearly £800 million of additional resources over two years to support housing and housing-related regeneration schemes, the majority being devoted to social housing. The issue of affordable social housing has come up again and again in today's debate.
There has also been mention of transport. Safe, efficient and affordable public transport, with measures to reduce reliance on the private car, is vital to improving the functioning and environmental quality of our urban areas particularly. Improving our transport systems by making them more sustainable and better integrated will also help make our towns and cities more attractive places to live. Transport is a key factor influencing the location of any new development, particularly housing. I shall fulfil the expectations of the noble Baroness, Lady Hamwee, and say that that is why it is important to have greater integration of land-use planning with transport policy. I hope that the House will see in our Integrated Transport White Paper, to be published in the spring, policies for bringing that forward.
The need for regeneration is not confined to our urban areas. That point was made during the course of the debate. Many rural communities have been affected by the great changes that have occurred in agriculture and by the rundown of traditional industries.
The Government, like everyone in this House, want to see a living countryside, not a rustic museum. We want to protect the countryside, especially the outstanding landscapes and wildlife sites. But people matter too in the countryside and need homes and jobs as well as beautiful surroundings. A healthy rural economy will, in turn, help to support exactly the conservation that we all wish to see and to combat social exclusion and poverty. Those are issues to which the noble Lord, Lord Wade, referred.
The regional development agencies will have an important role to play in this, addressing local needs and priorities, bringing a regional dimension to the support
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for local business, the small businesses that, as was pointed out, are so important in the rural economy and help to increase employment opportunities.
Much of the debate has inevitably focused on the question of how much new housing is needed, and where it should or should not be placed. As I said when I started my contribution, the Deputy Prime Minister will be making a statement in the next few weeks setting out the Government's proposals for addressing household growth in the light of responses to the previous administration's Green Paper on the subject. I am afraid that we shall all have to be patient for a little longer on some of the key questions that have been raised in today's debate.
It has been fascinating to hear the different contributions involving figures. The noble Lord, Lord Dixon-Smith, understated the position beautifully when he said that there was a difference of view. The noble Lord, Lord Howell, rubbished the figures completely. It is not as easy as saying that the issue of household growth and the projections for household growth are simply the figment of some fevered imagination of a civil servant in Marsham Street. Household growth projections in the past have turned out to be underestimates rather than overestimates. The population is still growing. Young people want to set up homes on their own. The elderly want to go on living independently in their homes. The commune proposed by the noble Baroness, Lady Hamwee, may look an attractive proposition but some of the huge institutions for the elderly were not attractive and independent living is not something we should turn our backs on. It means that there will still be a demand for new housing which a responsible government cannot simply ignore. However, I recognise the complex social factors pointed out by my noble friends which affect household formation. We must obviously take that into account.
While in no way underestimating the importance of protecting the countryside, we must not allow ourselves to fall into the trap of letting the debate become one-sided. We know that damage to the countryside can be caused by new housing, particularly where it is not sensitive to locally generated needs in places with already established housing and communities.
We must not neglect to consider the effects of building insufficient homes or of local authorities not providing for the housing allocations that are needed. The effect could be to drive up house prices, making housing less affordable, and to force many households to share or to give up their aspirations to the kind of housing that many of us take for granted. The less well off may not always have had so loud a voice in these debates, a point made by the noble Baroness, Lady Hamwee. But a government like ours, committed to combating social exclusion, cannot and will not ignore their interests. That is why I come back to what I think has been the theme of the debate, that we must have a balance.
On the general question of how to accommodate household growth nationally, I was fascinated by the contribution of the noble Lord, Lord Wade of Chorlton. He pointed out that it is possible to exaggerate the scale

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of the challenge. The annual rate of house building over the next two decades that would be needed to meet the current projections of household growth in full would be some 175,000 a year. That is much lower than the average rates in the four decades from 1950 to 1990, which peaked at 300,000 a year in the 1960s. I remember Harold Macmillan promising half a million homes a year and it being seen as a great social policy. Perhaps it was 300,000; I did not think he managed the half million, but we could go back to the archives.
It is important that we should look carefully at the predictions but that we do not write them off completely. The investigation that the environment committee in another place is currently carrying out into household growth projections will be useful.
We need to remember that 89.6 per cent. of England is rural. Urban areas—and that does not just mean cities but includes our larger villages and both small and large towns—cover only 10.4 per cent. of England. Even if the household growth projections were met in full, on current patterns of development that would reduce the area of England that is rural by only 1.3 per cent. But the key point on which much of the debate tonight has focused is that if local authorities could improve their use of brownfield sites the reduction would be much smaller.
It is important to recognise that some of the pressure for household growth is in rural areas. People want to find homes and jobs locally, rather than having to move to towns and cities. A crude bar on development in the countryside would do more harm than good to the interests of those who live there.
We have also heard a great deal of concern today about the green belt. As has been pointed out, the countryside beyond the green belt—which is the majority—is also vulnerable to development pressures. Development in the open countryside is already strictly controlled, especially in statutorily designated areas. The problem of leap-frogging is not so much about protecting the countryside as finding the most sustainable location for new developments. The reality which has been recognised by some of the contributions today is that in some cases a green belt location may offer the most sustainable solution. That, I believe, is the case with the county council's plans in Hertfordshire.
I was asked about the Government's policy on the green belt. We believe that it is a valuable and long-standing tool of planning policy to which we are committed. Like any tool, green belts are designed with particular purposes in mind, chief of which is to prevent urban sprawl. As the Deputy Prime Minister said, we are concerned to protect the countryside as a whole. We do not intend to become obsessed merely with the narrow issue of the present boundaries of existing green belt. We must look at the objectives behind it.
It has always been open to local authorities exceptionally to adjust green belt boundaries. Any proposals for change must be the subject of full public consultation. My own department would need to be satisfied that all alternatives within the urban areas contained by or beyond the green belt had been fully
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considered. That is how we have approached all cases which have arisen since we came to office, and that is how we propose to continue.
The noble Baroness, Lady Hamwee, asked about responsibility for national parks. At the moment, that rests with the Department of the Environment, Transport and the Regions. The comprehensive spending review of countryside and rural policy is examining all aspects of the objectives and delivery mechanisms of the policies on the countryside, including institutional arrangements. The review is ongoing and I cannot say anything more definite before it is concluded in the spring. However, I note what the noble Baroness said. and some of the reactions to her remarks in the House.
Perhaps I can deal also with the issue raised by the noble Earls, Lord Clanwilliam and Lord Radnor, concerning the development of supermarkets, which have played a key role in some areas. We made clear our commitment to the policies in Planning Policy Guidance Note 6 of focusing retail development in existing town centres wherever possible and to applying the sequential test so as to explore neighbourhood centres and edge-of-centre locations before considering out-of-town locations. The number of approvals for out-of-town shopping centres dropped dramatically since PPG 6 was introduced. But, as in all planning matters, the effects take a long time to filter through.
In today's debate there has been a broad consensus that we should make the best possible use of brownfield—or previously developed—sites. There are certain things which we, as a government, can do to help councils and builders in that respect. In reply to the noble Lord, Lord Marlesford, former MoD sites clearly offer good opportunities for redevelopment, including housing. However, planning authorities must take into account other uses, such as employment, as well as the issues of sustainability and accessibility—points raised by the noble Baroness on the Liberal Democrat Benches. I can assure the noble Lord that the MoD and DETR co-operate closely on policies of disposal of redundant MoD sites. However, I do not believe Northolt has been declared a redundant site.
We must encourage local authorities to be more imaginative in using brownfield sites. But I do not believe that putting new housing on every urban site is the answer. There may be occasions when that is not the most sustainable solution, and I return again and again to the central issue of sustainability—the links with public transport, for example, are particularly important.
We should not be looking to put housing or other building developments on every urban brownfield site. The quality of urban areas may be improved by "urban greening"—making use of spaces between buildings as well as open spaces in towns and cities. That point was picked up by my noble friend Lord Thomas of Macclesfield. That should be an integral part of any development or regeneration project in order to avoid the dangers of urban cramming.
The noble Baroness. Lady Hamwee, raised the issue of what we know about brownfield sites and how up-to-date our information is. We are proposing to put in hand studies and research which will, within the next

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year or so, give us a much better picture of the opportunities for brownfield development. We also want to look at and open up discussion on whether economic instruments can play a part in that. I was interested in the comments of my noble friend Lord Thomas of Macclesfield and many other noble Lords who referred to economic instruments, some of them more imaginative than others. And I would disappoint the House if I did not say the usual mantra that we listen carefully, but at the end of the day taxation policy is a matter for the Chancellor. However, I took on board the issues concerning recycling the money as well as the land that were included in the question of hypothecation.
I know that I am overrunning my time and perhaps I can write to one or two noble Lords who raised specific questions—my noble friend Lord Cocks. for instance.
It has been a most interesting and constructive debate. I am pleased that discussion moved away from the frankly empty posturing we have witnessed in recent months, and the trading of figures and targets without regard for actual achievement against such targets. I have tried to give a flavour of the positive measures this Government are taking to regenerate our towns and cities and to improve the quality of life for those living in urban and rural areas alike. The challenge we face in dealing with household growth is considerable: it will call for good judgment and hard decisions and this Government will not shy away from those decisions. There is an enormous opportunity before us to reshape our towns and cities by encouraging new development which is sustainable while protecting the countryside.
6.6 p.m.
Lord Marlesford: My Lords, I thank all noble Lords who took part in the debate for their many and diverse views. Like all good debates, many of the views conflicted. I particularly thank the Minister for such a helpful wind-up. In answer to the question as to timing, I hope that the debate may be an input for the Government in producing their policies in a few weeks' time. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Personal Savings
6.7 p.m.
Baroness O'Cathain Baroness O'Cathain rose to call attention to the implications for personal savings of the proposed replacement of PEPs and TESSAs with individual savings accounts; and to move for Papers.
The noble Baroness said: My Lords, my first duty this evening is to thank all noble Lords who will be taking part in this debate. I am aware that the subject has been done to death in the financial pages of the press, but still feel that to debate the issue in your Lordships' House may bring it into sharper focus and, as I am for ever hopeful, may encourage Her Majesty's Government to reconsider some of the less attractive aspects of the proposals.
I am fully aware that we are in the throes of the consultation period and there has been consultation. A great deal of material has been submitted to the Inland Revenue. As an aside, and speaking as the daughter of that most unloved breed of people, a senior civil servant in the Inland Revenue, an inspector of taxes, I cannot but express sympathy for the current plight of that arm of the Civil Service. It has been up to its eyes in the introduction of self-assessment. A great deal of effort has been expended in sending out reminders to recalcitrant taxpayers (and even to those whose forms were sent in long before the September deadline—but I blame the computer for that, not the unloved tax inspectors). And now they have to deal with consulting widely on the new individual savings account—and getting even more unloved in the process. Perhaps I should encourage the Government to be more considerate towards them. Change for the sake of change is never a good thing.
I believe that this is a timely debate. In just over four weeks we shall know what the Government will decide about the future of a significant part of the savings sector. The financial services industry has had the chance to make its views known and we now have the chance to make our views known. I am sure that in the normal mode of the noble Lord the Minister he will listen carefully to all the contributions with an open mind, consider them and add them to the mountain of views already expressed on the consultation document.
I wish this debate to be constructive, to help in the consultation process, to give credit where credit is due and to be critical only in a constructive way. The first grant of credit where credit is due relates to the actual consultative document of December 1997. The content may not be to the general liking of those who are both current holders of PEPs and TESSAs but at least it is readable, and beautifully produced.
We read in the document that the Government,
"wishes to build on the experience of TESSAs and PEPs to encourage people, through tax reliefs to raise the level of their long-term savings"—
an admirable objective and one with which I concur wholeheartedly. Through such encouragement personal reliance is encouraged and this, in turn, will alleviate the burden on the state of an ever-increasing ageing population. Surveys have shown that over half the current holders of PEPs and TESSAs have invested in the instrument as a saving for their retirement and that one in three of those with TESSAs are aged 60 or over. Actually, it seems rather strange that, although these instruments are so linked with provision for retirement, they are being dealt with outside the pensions' review, when presumably such a review will include examination of pension tax relief.
Saving for retirement is acknowledged as being essential. Indeed, the necessity for it was underlined only this week when the Chancellor of the Exchequer was reported as saying, "The welfare state isn't working". All of us have to take more responsibility for our old age, and saving is the best way. Perhaps the new slogan should be, "Those who can, should save: those who cannot, should be supported". The two major criteria for people who are saving for their retirement

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are that such savings must be both simple and secure. I fear that the Government's proposals can be viewed as meeting neither of those criteria.
When PEPs were introduced there was a slow take-up of the product. The concept was new; it was different; and as such was viewed with a certain amount of scepticism by many. Because of the stringency, quite rightly, of the regulations regarding the selling of financial and saving products. the advertisements and other marketing tools used for the promotion of PEPs and TESSAs were pretty dull. One has only to look at the back pages of the weekend papers to see that one has to read an awful lot of turgid words before getting to the basic facts about these products. A "switch on" they are not. Just assess the attractiveness of the advertisements compared with those for new cars, coffee or cosmetics. However, looking around the Chamber, I realise that there are probably not too many of your Lordships who are familiar with advertisements for cosmetics.
It has taken a long time for PEPs and TESSAs to be accepted as more than alphabet soup. But they have been very successful. As we see from the Government's own figures, some 6.5 million people currently have either PEPs or TESSAs—some 3 million in the case of the former and 4.5 million in the case of the latter, with some people of course having both. My first question to the Minister is: why abandon what is a successful concept, one that has become both understandable and attractive to those whom the Government wish to encourage to save?
I am aware that that is probably a fairly stupid question as we have been told that the objective of replacing PEPs and TESSAs with ISAs is to encourage, and I quote once more from the consultation document,
"investors on more modest incomes",
to save. However, investors on "more modest incomes" are already saving through PEPs. Work done by the financial services industry shows that over half the current investors in PEPs are basic rate or lower rate taxpayers. Surely what one does not want to do is to discourage saving by these people by, first, breaking faith with them and, secondly, replacing a comprehensible and attractive product with a complex one, which will entail getting to grips with yet more small print and convoluted regulations.
I have no evidence to support the view that Members of your Lordships' House are probably reasonably financially literate. I am sure that you are. However, do we really need to have to go through more rigmarole when we consider that we are happy with the current situation?
Before I proceed, I feel I must state why I think the Government's proposals are breaking faith. Rightly or wrongly, there is a general acceptance of an unwritten contract between savers and the Government which says that savings schemes launched and entered into in good faith today will not be undone tomorrow. It is a contract that exists for good reason. Without it, financial planning would become a game of chance and few
1190
would bother saving. Age Concern expresses this anxiety in another way:
"the Government should consider whether it is reasonable for people who have based their plans on current policy to lose tax relief".
I am sure I am not alone in having saved for many years in Post Office savings accounts, National Savings and even Premium Bonds, always secure in the knowledge that my money was "as safe as the Bank of England", as we used to say. The Government had set the rules and the Government would not change those rules or break faith. When PEPs and TESSAs were introduced I felt that, although the risk was different and, to use those words at the end of every commercial for savings products, "the value of the investment could go up or down", as the Government had set the rules the rules would not change. But the rules will be changed if the proposals in the consultation document are implemented.
If the Government do not like PEPs and TESSAs, they should simply stop issuing new ones and cap the total amount that can be accumulated within them. But the Government are not proposing to take that step. They are considering forcing people to shut down PEPs and TESSAs and breaking the deal. The result will threaten the nation's's saving habit by disturbing it. It will also cause administrative chaos, a point I shall return to later.
The Government are proposing to replace PEPs and TESSAs with the ISA, the new Individual Savings Account. Before I deal with the merits of the ISA—and there are some—I think it would be worth while to ask the Minister a second question. In the event of ISAs being introduced in April 1999, will the "unwritten contract", to which I have already referred, be replaced by a written contract to the effect that ISA reliefs will not be withdrawn at a later date, in contrast to the proposed changed treatment of PEPs and TESSAs?
In the spirit of giving credit where credit is due, I believe that the ISA has some good points. The ISA is proposed to have an annual investment limit of £5,000 and can involve investment in cash, stocks and shares (including unit trusts), life insurance and National Savings. The good point is that cash is now included in the option of saving through an ISA. I think that this is an admirable proposal. I am not so enthusiastic about the proposal that life insurance should be included as an option. Life insurance is a highly specialised subject. It is something one does not lightly take on without good advice. That advice does not come cheap. In fact, it is generally recognised that the insurance companies often take up the first two years' premiums in fees. How would this affect the investor in an ISA?
The whole subject of fee structure cannot be glossed over. Financial advisers have to earn their salaries like everyone else. We rely on them to give us the best advice for our particular circumstances. In order to be able to supply that advice, they have had to do an immense amount of analysis, carry out investigations into competing products and tailor-make products to the needs of individual customers. All of this takes time and dedication, for which they have to be paid. They are paid out of the commission structure which in the case of life insurance is often covered by the first two years' premiums. I find it hard to believe that the adviser will be willing to spend a great deal of time and effort on

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the insurance portion of an ISA, particularly when the maximum investment in the life insurance element is £1,000.
The ISA proposals allow withdrawals from the account at any time, but savers must be made aware of the risks of early encashment of life insurance or equity-based products. I look for assurance from the Minister that this would be highlighted in all the literature published and in all the discussions held with potential savers. Perhaps I have missed something, and in the spirit of being constructive I should like some assurance from the Minister that my conclusions are not justified.
The proposed ISA is more flexible than the current PEPs or TESSAs—and that is good. My suggestion is that the current PEPs and/or TESSAs could be modified to incorporate more flexibility. This would obviate the need for the introduction of a totally new savings instrument and would not jeopardise the established savings pattern of 6.5 million people.
Throughout my business career I have always looked for opportunities and not focused on problems. I frequently irritated colleagues by stating, "There are no such things as problems—only opportunities" and "A problem is an opportunity waiting to happen". The development of the proposal to introduce the ISA could well be in the category of a problem being an opportunity waiting to happen if the Government decided to adjust the current savings instruments to encompass the widening of these instruments and included the better parts of the ISA concept.
If, however, the Government persist in introducing the ISA they could be on the horns of a dilemma. Due to the differing statutory requirements for the selling of each type of savings product the ISA could become an administrative nightmare. The cooling off period, whereby the investor has time to change his or her mind, is different in the case of equities and insurance policies. I do not need to take up time explaining what could happen to the hapless investor if he or she decided to split the investments in the ISA in all four categories proposed. A problem—but an opportunity; the job creation possibilities would increase for postmen, envelope manufacturers and forestry workers, with all that paper, to mention but three. Somehow I do not think that that is what the Government have in mind.
I would like to turn to the proposals concerning the current holders of PEPs and TESSAs. Having already mentioned the "breaking faith" issue I do not need to dwell on it again—doubtless other contributors in this debate will do so, and probably in a more comprehensive way.
The Government seem to be opposed to PEPs and TESSAs, despite the statement from the now Prime Minister before the election when he said on ITN on 3rd April,
"We want to extend the scope of PEPs and TESSAs, so the idea that the Labour Party is going to take action against those is completely absurd".
I would like to ask the Minister to confirm whether the opinion of the Government has changed since they took office.
If the opinion has changed, I would like to make a proposal which has a precedent in the previous change of heart in matters financial; namely, when the rules of insurance companies were changed in 1984. To remind your Lordships, any policy taken out before the rules were changed continued to be governed by the old rules; any policy taken out after the rules changed was subject to the new rules. In this way, the current holders of PEPs and TESSAs would be able to freeze their accounts and start their new savings in April 1999 with an ISA. This would avoid the horrendous administrative tangle, which is inevitable in the transfer of existing PEPs and TESSAs to the new savings instrument.
I believe that the Government's proposals have engendered more concern about this administration point than about any other. Of course, anger has been expressed about the lifetime limit, but I am sure that sense will prevail and that the submissions on this point will be heeded. Of course, anger has been expressed about the Treasury take, and I would like to believe that there is no hidden agenda by the Treasury to the effect that it felt too much tax relief was being given. But the genuine concern about the size of the administrative task which would be generated if the current proposals went through without modification—on a pretty massive scale, too—is significant.
It is several years since I first mentioned the millennium bug problem in your Lordships' House. I was told that the problem was under control. 1 hope; I hope. The widespread realisation of the problem has resulted in a huge demand for IT staff. Cobol writers are being paid more per hour than the daily subsistence allowance in this House! Most large organisations in the financial services industry aim to be millennium compliant by the end of September 1998. At that stage, and only at that stage, will the systems people be able to turn their attention to the production of new systems to facilitate the transfer of PEPs and TESSAs to ISAs.
The complexity of such systems work should not be underestimated. In order to ensure that the systems are foolproof in April 1999, they must be ready for final testing in December 1998. This allows just three months to devise completely new systems for a completely new savings product, with the additional complexity of being able to effect the transfer of some millions of accounts currently held in PEPs and TESSAs.
I ask the Minister whether he is confident that such a mammoth task can be accomplished in such a short timescale. I know that he is fully aware of the ramifications of the IT problems I describe and I would be greatly heartened if he could give me that assurance. Perhaps I should brush up on my 30-plus years old knowledge of Cobol and offer him my assistance. But where would I save the earnings I could command for such work?
I am greatly looking forward to all the contributions in this debate this evening and I am sure that we will learn a great deal. I hope that my contribution will be accepted by the Minister as a well-meaning contribution to the consultative process on what is an important subject. My Lords, I beg to move for Papers.
6.23 p.m.
Lord Barnett: My Lords, it is my pleasure to congratulate the noble Baroness on an excellent speech. That is not surprising. I know the noble Baroness very well and I knew that she would make an excellent speech. I even found myself agreeing with some of it, as will be clear in a moment.
The main objective, to which the noble Baroness rightly referred—and it is the Government's objective—is to increase real, long-term savings. There are two real questions. First, what will ISAs do to the savings of middle income earners; and, secondly, what will they do to the savings of low income earners?
Critics have argued that ISAs will discourage middle income earners from saving. The National Institute is a body for which I have great respect. Its January review contains an article by James Sefton and Martin Weale. They talk about the replacement of PEPs and TESSAs by ISAs. They say that it,
"is likely to result in a reduction in the overall level of national wealth by about 4% of GDP".
They base that on a model survey they did. The model will take a long time to be put into effect and, frankly, like most models, it arouses scepticism. I am glad to see my noble friend Lord Currie nodding. I may not be Euro-sceptical, but I am sceptical about such models. They go on to say that the,
"extra taxation on the incomes of the wealthy discourages savings and this change is unlikely to be compensated by increased savings of poorer people".
I shall come back to that in a moment. I take first the point about the effect on middle income earners. The critics argue that they would be discouraged from saving. That is the projection of the National Institute in its review. Frankly, I am bound to tell the institute and your Lordships that that is not true, for one simple reason. I declare an interest. I have PEPs. And who would not? One might as well take advantage of the tax savings. I am happy to avoid taxation in that legitimate way.
I say that it is not true because it does not discourage my saving or that, I imagine, of many middle and higher income groups. The reason is that we are not talking about savings. It is tax relief on investments. In my case, if PEPs were abolished altogether and ISAs were not introduced, that would not affect my investments at all. I would pay more tax and so would most middle and higher income groups. One could live with that, as, I am sure, could my noble friend, even on his modest salary.
Much more important than the lack of effect on middle income earners is whether ISAs will increase real savings of the less well off, namely, the poor. My honourable friend the Paymaster General made a speech on 27th January. I even agree with him occasionally as well as the noble Baroness. My honourable friend said:
"The stakeholder pension involves a commitment to lock money away in retirement"—
I shall come back to that in a moment—
"while the ISA gives greater access to their money".
That is the point. And that is why ISAs, or PEPs for that matter—unlike TESSAs, which have to be held for five years—will not substantially increase real net savings
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because access will be available and it will be used. So the net savings will be minimal and the marginal improvement from ISAs, even if they are sold in supermarkets like Tesco or others—I do not know whether the noble Baroness knows of them—such as Sainsbury's, will be very little.
I declare an interest as a tiny shareholder in the Prudential. I have not done too well of late. Its criticism has been the other way around. It believes that ISAs will be hugely successful, but for low income groups. The Prudential believes that that will be at the expense of pension savings. Not unnaturally the Prudential wants ISAs to be moved into pensions without penalty.
I have great regard for the Institute of Fiscal Studies. It also wants reform explicitly linked to pensions. Keeping in mind the main objective with which I started, I agree with the Pm, the IFS and, indeed, with the Government that what they have in mind with regard to the stakeholder pension scheme—at least, what I think they have in mind or, as I see my noble friend Lord Haskel shaking his head, what I hope they have in mind—is that it is possible to kill two birds with one reform. One could have more real savings if one linked them with pensions. I should emphasise that I am not suggesting that everyone should invest in the Pru with their pensions. I do not. I am happy to tell it so.
I accept entirely the point made by the noble Baroness about the inevitable costs of insurance schemes. I hope that the Government will take account of that. If they are trying to encourage more long-term savings through pensions and annuities, I hope that they will look at those costs. However, as the noble Baroness rightly said, the costs represent something which cannot and does not come cheaply. If subsidies are to go anywhere, it might be sensible for the Government to look in that direction, although perhaps not at the firm of the noble Lord, Lord St. John of Bletso—I am referring to Merrill Lynch—because it can do that cheaply.
The plain fact is that the best way to increase long-term savings would be by linking ISAs into annuities or pensions with some tax relief for low-income earners. In that way the Government would meet their objectives while achieving the crucial increase in retirement income through a second pension. I hope that my noble friend the Deputy Chief Whip, who should be a Minister, can assure us that that is the way in which the Government's plan is intended to move.
6.31 p.m.
Viscount Runciman of Doxford: My Lords, this is the first time that I have addressed your Lordships in my capacity as deputy chairman of the Financial Services Authority. In that capacity, I should like to say, first, that whatever reservations any of us may have about the present Government's ability to turn the rhetoric of effective opposition into the practice of efficient administration, the decision to introduce an immediate and wide-ranging reform of the whole system of financial regulation was to us on the board of the SIB, as we then were, as welcome as it was unexpected. I have sometimes been asked what it felt like, to which I have answered that it was a bit like being a small boy who

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has been unsuccessfully begging the neighbouring farmer for a hag of apples and is then overnight presented by the farmer's successor with a whole blooming orchard.
The difficulties of combining the protection of investors—or should we say "savers"—with the maintenance of flexible and competitive markets for investment products will inevitably remain, even after the now manifest deficiencies of the 1986 Act have been remedied, as I trust that they will be, by the new legislation which is beginning to go through Parliament.
Whoever the innovator may be, innovations will always need to be carefully scrutinised for their potential hazards no less than for their potential benefits to the prospective investor, particularly when the investor or saver may have little or no personal experience of such matters.
It is therefore a little troubling that ISAs should appear to have been so proudly laid out before the investing public with so little thought having been given, as far as I at least can see, to regulatory matters. It is not even clear whether ISAs were first conceived of simply in terms of tax relief, in which case there would be no need for regulatory wrapping at all, or whether, as now seems apparent, they should have been seen from the start as a product of the kind for which an advice requirement is not only appropriate but necessary. That would be so even if the constituents of ISAs were to be deposit products only. Once there is a life assurance element—I have considerable sympathy with those who argue that there ought not to be, or not unless we are talking about single premiums only—a quite considerable advice requirement (and quite a burdensome one) will be inescapable.
Here, I should like to echo some of the points on which the noble Baroness touched in her opening speech. We shall then be into suitability, actuarial projections, polarisation between tied and independent advisers, exit charges, illiquidity and, above all, surrender penalties for early encashment of the kind which, as I am sure I do not need to remind any of your Lordships, can be seriously damaging to investors' financial health.
There are also issues which do not yet seem to have been addressed, although I trust that we shall be assured that they soon will be. I refer to matters such as administration, custody, client money rules on interest, the handling of consumer complaints, marketing costs, possible investment in overseas jurisdictions and the need for proper authorisation of retail outlets.
All in all, the changes likely to be required in the existing regulatory framework will be far from straightforward—and that is even without regard to the obligations which may be imposed by European directives. Paragraph 14 of the Government's proposals for ISAs states that the Government will consider the appropriate regulatory environment and, if necessary, propose changes. I very much hope that that does not mean that the design of this new and potentially controversial product will be settled before the regulatory issues have been properly addressed. I hope to hear an assurance to that effect before the end of the debate.
6.35 p.m.
The Earl of Buckinghamshire: My Lords, before I launch into my speech, perhaps I should bring to your Lordships' attention once again that fact that I am a partner in Watson Wyatt Partners, which gives financial advice to individuals. I hasten to add that that is not something that I do because I refuse to take any more exams!
Although this debate has been called to discuss the replacement of TESSAs and PEPs with Individual Savings Accounts, I intend widening the debate to consider some of the broader issues of savings and taxation in this country. There has, I believe, been a growing realisation that "savings" should be looked at in the round and not in isolated pockets. Unfortunately, the Government have not yet grasped the importance of that.
I turn first to Individual Savings Accounts. The noble Lord, Lord Barnett, mentioned that ISAs are intended primarily for long-term savings. However, I believe that it is the first time that a savings product being promoted by the Government (with tax breaks costing the Treasury revenue loss) has been introduced which also has some short-term savings objectives. I wonder how easily that will sit with the need to encourage long-term savings for our retirement and for our healthcare in retirement, where the costs are ever-increasing. It will be an interesting development and we shall await with interest its impact on savings ratios.
I have also read with interest the introductory comments on the product made by the Minister, Mr. Geoffrey Robinson, who said that it has been introduced for simplicity, flexibility, accessibility and fairness—a somewhat pious hope which I suspect that only a Treasury Minister could utter.
As my noble friend Lady O'Cathain mentioned, a number of administrative issues will prove difficult. I shall mention but one. It relates to the £50,000 limit. I believe that that refers to the market value and, if so, it will be almost impossible to police. If that limit of £50,000 is to stay—I would prefer not to have such a low limit—it seems to me that some form of contribution or book-cost method for determining that £50,000 should be adopted.
I turn now to the transitional arrangements for personal equity plans. I believe that the original proposals on which the Government are seeking consultation are somewhat defective. I hope that the article in the Independent on 5th February will prove to be correct and that the Budget on 17th March will include relaxation in that area. If it does not, there may be many who took out personal equity plans to secure long-term savings, such as mortgages, who will be aggrieved at the Government's proposals and would want another health warning to appear on the product which is being launched.
Having mentioned the Budget, it may be appropriate for me to turn to some taxation issues. The Green Budget produced by the Institute for Fiscal Studies argued that the reform of tax concessions for savings should be implicitly or explicitly linked to pension reform. A number of leaks in the press have suggested

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that the Government intend to embark on yet another series of taxation reforms of pension schemes, one of which relates to the removal of tax on higher rate payers. There are some 2 million of these individuals in the country who pay higher rate tax, many on relatively modest incomes. The peculiar position we face is that possibly a higher rate taxpayer will receive tax relief at a lower rate but will pay a higher rate when he retires. I do not believe that that is what the Government intend.
There has also been speculation that the Chancellor may introduce capital gains tax on occupational pension schemes. I note that that is something from which ISAs will be exempt. Linked with last year's Budget changes on dividend tax reclamation, one may ask oneself whether the Government really are in the business of promoting long-term savings. One of the outcomes not anticipated by the Government last July in their £4 billion raid on pension funds was the impact on personal pensions. They found that financial advisers throughout the country advised their clients to contract back into SERPS when faced with the removal of the ability to reclaim tax on dividends. In those circumstances the Government asked the Government Actuary to reflect on the loss. Having reflected upon it, the Government Actuary advised that the removal of ACT did have an adverse impact. I find that to be an interesting opinion given the Government's previously held view that their tax changes would have no adverse impact.
The Prudential in its written submission, and the noble Lord, Lord Barnett, this evening, have said that ISAs should be linked to pensions. That is an interesting structural comment but one that will certainly add to the complexity of ISAs and conflict with the Minister's view that simplicity is part of their attraction.
The noble Viscount, Lord Runciman, clearly outlined some of the regulatory issues surrounding such a move. One imagines that it will have an impact on life assurance unless the Government change the regulations. I fear that if we go down that road the regulatory system will make it very difficult to continue with these new products.
I make no apologies for widening the discussion this evening. We need to understand the close link between taxation policy and savings policy in this country. While ISAs, if improved following consultation, may encourage additional savings, the cost of long-term savings for retirement in this country is possibly very much higher than anyone outside our business appreciates. For example, if one is a 30 year-old and wants to retire at age 55 on a reasonable income of half salary one must start saving at a rate of 30 per cent. of salary per annum. If one bears in mind that this country is likely to enter EMU in future, with long-term gilt rates falling, that figure will increase to about 40 per cent. We already have an inefficient annuity market which I suggest the Government should also look at in their policy on savings.
I am about to overrun my time. However, I should like to turn shortly to the question of financial education. The new savings products and the realisation that the state will not provide for us in our old age mean that
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the level of financial information and knowledge must be significantly improved. Even if these new products are supposed to be simple, I believe that the whole area of savings in this country is so complex that thorough education is required. That should start in schools.
Finally, I am sorry to say that I believe the Government have missed a golden opportunity to reform the whole of the savings and taxation system in this country. While they may say that that is a Herculean task for them, I remind them that they have had 18 years to think about it.
6.45 p.m.
Lord Sainsbury of Turville: My Lords, before I begin I should like to declare an interest as chairman of Sainsbury's Bank and chairman of J. Sainsbury plc, both businesses which may become involved in the distribution of the new Individual Savings Accounts. I feel that my noble friend Lord Barnett has already declared my interest for me.
I do not think that anyone would disagree with the proposition that for economic and social reasons we should encourage as wide a group as possible to save, yet as a nation we save less than ever. The proportion of income saved in Britain has fallen in the 1990s. Here are a few of the more unpalatable facts. First, more than half the adult population has savings of less than £500, far too little at a time when people are living longer. Secondly, 26 per cent. of adults have no savings or investments. Thirdly, 40 per cent. of working adults contribute so little towards a pension that it is likely to pay out less than 40 per cent. of their final salary. Finally, a quarter of employees fail to make any pension provision at all.
Clearly, people are not saving enough. The previous government hoped to turn the tide by introducing TESSAs and PEPs. They cost the Exchequer in excess of £1.3 billion a year in lost revenue and it is not by any means clear that they have been successful. The evidence indicates that these tax-free schemes do not promote savings as such; rather, they subsidise individuals and families who would save anyway. I would have found the arguments of the noble Baroness more persuasive had she shown that PEPs and TESSAs had increased the level of savings. Those who need to save most on the whole have not taken advantage of the schemes. According to the Institute for Fiscal Studies, the 6.5 million TESSA and PEP holders are older and richer than non-holders. They are to be congratulated on their prudence and foresight, but there remains a vast group of people who still need to be encouraged to save more.
The current tax system is riddled with distortions in its treatment of different forms of saving. The system not only hinders the lower income investor; its lack of neutrality aids the higher income investor at the taxpayers' expense. Savings held in bank and building society accounts and direct investments in equities are treated less favourably by the tax system than pensions and housing. This penalises people who hold liquid assets as a precautionary balance against unforeseen changes in their circumstances.

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Any government would have had to cap the escalating charge of TESSAs and PEPs, which is forecast to cost the Exchequer in excess of £1.7 billion per annum by the year 2000. The new Individual Savings Account does this and more. I welcome it for two major reasons. First, it is a move towards neutrality in the tax treatment of savings by exempting interest income from bank and building society accounts. Secondly, it is an attempt to help the less well-off, many of whom save nothing at all at present and need to be encouraged to start.
However, I have a few technical reservations about the Individual Savings Account proposals as they stand. Since they are still at a consultative stage this may be a good opportunity to suggest a few alterations to the policy. First, the cash and equity elements of the ISA should be separated. There should be different limits for each, not sub-limits, making regulation easier. This will enable the cash product to be widely available without the necessity of offering equities, thus reducing the potential for advice being sought. Secondly, since one of the aims of the ISAs is to promote saving among those who currently save the least, it makes sense for the cash contribution of £1,000 a year to be substantially increased. Those who save by cash are typically those on the bottom rung of the savings ladder. To limit their cash investment to £1,000, while allowing an extra £4,000 a year in equities, life insurance and assorted other financial contributions, seems unduly limiting. The ceiling also seems slightly regressive since the TESSA cash limit was £1,800 a year.
Finally, a cash product with a limit of £1,000 is unlikely to be economically viable for financial institutions and will not, therefore, be made widely available. I think that a figure of £2,000 would be fairer and more effective.
Those reservations aside, I believe that the new ISA has the capacity to achieve its aim of improving saving levels among low income groups for a number of reasons. First, the most important feature of the ISA is the absence of a minimum holding period, making it attractive to low income savers with variable consumption needs. That is in stark contrast to the lock-in requirements of PEPs and TESSAs which appealed to those with greater financial security. Secondly, the lack of a minimum investment will provide an attractive savings product to many first time or low-income savers. Thirdly, the broad range of assets that can be held as part of an ISA makes it flexible for changing household needs and an attractive prospect to potential savers with less financial and employment security. Finally, ease of access in depositing funds should have a beneficial effect on the frequency, and hence levels, of savings.
Needless to say, all those features will be equally as attractive to high income investors as they are to middle and low income investors. Attractive and simple financial packages can increase savings. In this context I would mention the save as you earn share scheme option operated successfully by many companies across the country. My company has maintained such a scheme since 1974, and currently employees are saving at a rate
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of over £25 million per year. I believe that that scheme by virtue of its accessibility and incentives has increased the number of people who save.
To conclude, despite the few reservations I mentioned earlier, I welcome the introduction of the new Individual Savings Account. Any incoming government who wished to show financial prudence would have had to reform the escalating cost of TESSAs and PEPs. I believe that the new Individual Saving Accounts have the potential to redirect the tax system to help individuals on lower incomes without unduly harming the interests of current savers.
6.52 p.m.
Lord Naseby: My Lords, I declare an interest as a non-executive director of the Tunbridge Wells Equitable Friendly Society. The stated intentions,
"to encourage saving by persons who currently do not do so".
is a laudable aim. It follows that if it is to be successful the saver will want an investment that can be bought with total confidence and little risk. However, as one looks at the present design of the ISA, that is unlikely to happen. I shall put forward five reasons why difficulty might arise. First, the ISA product itself is a complex one. It has a whole mix of vehicles. That, in itself, will be difficult for someone who has not previously saved.
Secondly, there is a failure, as several noble Lords have said, to distinguish between short-term and long-term saving. Thirdly, and I believe this fervently, if someone is going to save, that person needs advice, because it is precious money for the family. Advice is needed on where that money should go. Fourthly, we in this Chamber should all be aware that there is at the moment no maximum charge prescribed for this savings vehicle. We have only to look at some of the charges in the market to understand the need for some degree of control and regulation.
Finally—this is a crucial point—for existing non-savers, the product must be integrated with the tax and benefits system. If it is not, there will be enormous repercussions for that group in society. As one noble Lord said earlier, there are enormous regulatory matters that are of concern. There are consumer concerns about the suitability, the prioritisation and the appropriate levels of contribution.
I do not wish to cross swords with those from the supermarket world, but one has to say that while new routes are being talked about for savings, and supermarkets can easily collect cash and distribute it, one wonders how they can provide advice. Provision is, and will have to be, a specialist function. It requires expertise. The regulators rightly state that they are worried about the quality of advice. They would be even more concerned were ISAs to be introduced without stringent controls on providers. That is something about which we should think long and hard.
We need also to think about priorities, particularly for this social group. Such people cannot afford to buy all the protection and savings that they would wish. So they have to choose. They must think about pensions, long-term care, life assurance and sickness benefit. In

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addition, they must think about savings. They need appropriate advice. That cannot be done just through a little brochure. They need regulated sales through a trained market of authorised providers who can meet the professional standards laid down by the regulators.
I turn to the potential problem, which I see as a large one, of tax and benefits. The middle classes, as your Lordships will know only too well, are not main users of benefits. Those who do not save at the moment use the benefit system. The question that has to be asked is: if savers acquire an ISA will they deprive themselves of other benefits to which they could be entitled but for acquiring that new government-inspired asset? If an ISA counts as an asset, the objective of increasing saving among the less well-off will be restricted severely.
I give a classic example from the friendly society movement. There used to be millions of sickness and accident insurance contracts. Once government provided that facility, those contracts were terminated. That was a natural shift in attitude by the market. What about "appropriateness"? What is the relative appropriateness of an ISA product versus alternatives with different tax regimes—pensions, national savings, unit and investment trusts? Will the result be a reduction in the purchasing of those products? Do the Government understand that if an ISA is to be endorsed by the Government the first-time saver might say to himself or herself, "Yes, this is preferential to anything else that I should buy?"
I return to the concept of encouraging saving by persons who currently do not do so. I had believed that the concept of the ISA offered the opportunity for a linkage between fiscal policy and welfare reform. Surely the ISA contract can be constructed so that rather than allowing the big financial institutions to cherry pick, and, in effect, just protect the citizens from the risk of tax, it could become the basis of welfare reform. To achieve that, the Chancellor must construct the ISA contract so that it benefits the "mutual" organisations such as the small building societies, the friendly societies, and the credit unions. I fear that if he does not these laudable groups will be swamped by the big boys. A few nights ago, we in this Chamber learnt all about differential pricing, loss leaders and the like.
It seems to me that there are two elements of the ISA; first, the life assurance element of the £1,000 premium level and, secondly, the savings vehicle. A few years ago, your Lordships and Members of another place passed the Friendly Societies Act which modernised the movement. I believe that with the ISA there is an opportunity to use that movement, the small mutual building societies and the credit unions. All offer a vehicle based on mutuality to the benefit of those who do not save. If that were done we could have the first building block to create a framework for approved welfare providers. To that could be added the provision for long-term care of sickness and perhaps pensions provision. But that is another debate.
7 p.m.
Lord Desai: My Lords, I thank the noble Baroness, Lady O'Cathain, for what has already proved to be a good debate. I hope that my remarks will be additional to, and not repeat, what has already been said.
I was greatly worried about the regulatory aspects of the ISAs and I am glad that the noble Viscount, Lord Runciman, has expressed his views. I can do no better. People do not save because they do not have enough money to save. Those who have money save; those who do not have money do not save. As my noble friend Lord Barnett said, later those who can save can have a variety of products to invest in depending on the tax concessions which they receive.
An appropriate reform would be to have an expenditure tax and not an income tax: then many of the fiddles would not be required. Why my right honourable friend is not taking that bold step early in what will no doubt be a 15-year reign as Chancellor of the Exchequer I cannot understand. It would break through the log jam of the many distortions which exist in the savings market and which confuse rather than help.
I am sorry to say that I am not a great fan of the financial services industry. As regards the small saver or small pension buyer, the experience of pensions misselling has been such that I should be frightened to advise anyone. With great respect to my noble friend Lord Sainsbury, the image of people in supermarkets with children and a large shopping trolley swiping in ISAs and buying equities from around the world is unrealistic. Hang on, let us get a realistic picture of what it is like to shop in a supermarket! For those who shop—and that is women—it is not as portrayed in the TV commercials; it is a much more hassled operation. I seriously advise the Government to rethink the trendy business of saving while you are shopping.
Similar misselling has occurred in respect of endowment mortgages and annuities. Women get a rougher deal with annuities than men. The financial services industry is not good to women and I hope that any such bias will be removed from ISAs.
Furthermore, equity buying is not easy, especially equities around the world. People do not understand equities and are surprised when Asian markets decline and billions of pounds are wiped out. A lot of advice will be needed. I hope that whatever products are on offer will be cheap, with few costs and penalties for withdrawal. I also hope that they will be easy to understand, like unit trusts.
I wish to conclude with an odd thought which may amount to nothing. Moslems are taking objection to the title of the Mecca shops. "Isa" is the Moslem word for Jesus. I want to point out to my noble friend that that might cause trouble. I hope that it is not so, but we should not bandy around such words.
7.5 p.m.
The Earl of Clanwilliam: My Lords, I thank my noble friend Lady O'Cathain for a brilliant introduction which covered the whole range of the subject. It is difficult to discuss the troublesome problem in relation

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to ISAs, PEPs and TESSAs without examining the whole savings scheme, as has been done by several noble Lords. It is a wide and vital activity which divides into three. The most important is long-term pension savings for retirement. Secondly, there are savings for the intermediate term for mortgage cover and future debts for those who are prudent enough to have the money. Thirdly, there are short-term savings for holidays, the Christmas fund, next year's sales or to spend in the shops of the noble Lord, Lord Sainsbury.
We must analyse how those activities are provided for through the existing system. Primarily, and in the interests of government and taxpayers, the need is for long-term savings to provide retirement pensions. There are a range of existing plans which will be left in place. The noble Lord, Lord Barnett, indicated how ISAs can be attracted into them and I support that good idea. The PEP and the TESSA fulfil to a large extent the intermediate term savings from taxed income. I accept that the TESSA has had its day, being a short-term product, and that the savings from the loss of tax from the TESSA will be used to support the ISA. I wonder why we should not also support National Saving Certificates. I believe that a great deal of grief would be spared if we used this simple route of giving a tax rebate to saving certificates. They offer guaranteed security with immediate accessibility and an alternative to investing in the gilt market. Additionally, the local post office would benefit, a point which I made in a previous debate.
In particular, the sale of savings certificates would not require intervention on the part of the noble Viscount, Lord Runciman. The PEP plan should be left to wither on the vine with the additional political advantage that it would keep faith with the saving public by avoiding retrospective legislation. The saver will not save unless he has confidence in the probity of the Government and that is not encouraged when the new Chancellor starts off by raiding their accumulated funds and commits the "sin" of retrospective legislation.
The small saver is by nature a short-term saver and inherent in existing plans is the need to ensure some semblance of permanence to warrant the privilege of tax relief. That resolved itself in previous incarnations into the imposition of a minimum term before the seller benefited from tax relief. It also had the advantage that the cost of very small contributions could be written off over the term of the savings plan. Costs do not seem to figure largely in the consultative document, except for a rather airy reference to the use of swipe cards in supermarket tills, as already pointed out with skill by the noble Lord, Lord Desai. Perhaps we could hear more about that from the Minister when he winds up.
In the present ISA proposal, there is no time limit on the savings plan and there is no firm understanding of how the costs of those small sums are to be covered. It follows that there is likely to be no long-term effect on the savings of the population at which the Government are particularly aiming; that is, that part of the population which is particularly a target of the stakeholder pension plan. Does the Minister not agree that compulsion will form an essential part of the
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success of that plan? Where, then, will there be any spare money for the ISA unless the plan of the noble Lord, Lord Barnett, is incorporated into it?
I have spoken on several occasions in your Lordships' House on the subject of PEPs. It seems to me that the accumulated pension fund should be used specifically for providing retirement income at the expense, if necessary, of that old friend—the tax-free capital sum. Then the advantage should be left to the PEP or ISA saver if they are allowed to amass sufficient sums to pay off the mortgage and other accumulated debts. The PEP mortgage has become popular following the less attractive performance of with-profits endowment policies. It will be a sad day when the PEP is stopped. However, were ISAs to be a more attractive proposition with tax benefits, that would be all to the good. But surely the PEP should have the same advantage.
There is great merit in the principle that savers should have encouragement from the outset towards an intention to keep on saving. To that extent, the ISA does encourage that with partial tax relief from the proceeds.
There is certainly a case to be made for term assurance to be made through the ISA but it would seem to be more logical to attach life assurance to the pension plan, because that would augment the total pay-out in the event of death before retirement. The range of investment vehicles adds to complexity in reporting and referring between providers. I suggest that the Government should take a hand and appoint the regulator—it will be the noble Viscount, Lord Runciman—to prepare a schedule of OEICs, open-ended-investment-whatever-they-ares, showing the performance of the underlying funds over 20, 10 and five years which should be published regularly in the press and available on request by the investing public. It will then be possible to have a simple, single product allowing sums of up to £500 to be invested with a range of recommended single funds. That would make life much simpler.
The performance of shares over deposits has been demonstrated clearly since 1920 in the BZW analysis of shares with income reinvested. That would provide a guide for the investor, who, in my plan, could equally invest in gilts through savings certificates, granted a tax rebate on them. The OEIC would be available for immediate investment of sums up to £500 for the small saver.
There is perhaps one misunderstanding which I hope the Minister can clear up about the £50,000 limit. Will the Minister confirm that it refers to the premiums and not to the accumulated fund derived from the investment. If it refers to the premiums, then it is a paltry little thing which will be no good to anybody. Therefore, there is a great deal of work to be done before the ISA surfaces in all its glory. The insurance industry is not alone in adopting the acronym KISS—keep it simple, stupid.
7.10 p.m.
Lord Spens: My Lords, I congratulate the noble Baroness, Lady O'Cathain. I remember many years ago driving to work at the unfashionably early hour of six

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o'clock in the morning—unfashionable in those days—and regularly hearing her voice on the radio lecturing farmers in Oxford every time I switched on the radio. Her clarity then was brilliant; her clarity today was equally brilliant.
I must declare an interest. I believe that I am probably the only Peer in this House who is a practising chartered accountant who actually deals with individuals who come to me with problems of what to do about ISAs, PEPs and everything else. I subject people who come to me to a gruelling ordeal which lasts about an hour and I extract from them all the financial facts I can, including some, I suspect, which they do not declare to the Inland Revenue. I get a picture. I believe that that is best advice as designed by the SIB—and I am registered with the noble Viscount as an investment business adviser. I subject them to something called the Spens formula. I put all the facts into a computer, give it a kick and out come my answers.
It is very simple. I divide the people who come to me into two categories. I call category A the "haves". They have individually or combined as a couple a spendable income after tax and other deductions, like maintenance, of £18,000 per year. That is not very much. It is still in the lower levels of the tax regions. Category B is for people who have less than £18,000 per year, and they are the "have-nots".
I deal first with the "have-nots". My best advice, which I am required to give under the rules, is that they do not touch any of those products. They put their savings, if they have any, into their house. It is the single best investment that any individual can make today. I cite as an example my own house which I bought 30 years ago for £15,000; I had it revalued last year at £450,000. That is a multiple of 30 in 30 years. There is no other savings medium that does that, or can do that. Therefore, for anyone with less than £18,000 per year I tell them not to touch any of those products. I tell them to put their money into their house and to buy the best and largest house that they can afford.
I hope that members of the Treasury are listening to this because £18,000 per year is divisible by 12. It is £1,500 per month. After paying for a £50,000 mortgage, which costs, on interest terms, roughly £330 per month, they will have roughly £1,100 or £1,200 to spend. They will probably have to pay a redemption mortgage, which brings down the figure to about £1,000 per month to spend. That is roughly what a Peer in this House would receive for 14 days work if he claims for a secretary as well as his personal expenses. It is not very much. There is very little room for saving for any family on £1,000 per month.
To those who do wish to save and feel that they are able to do so, I advise them to put their money in a friendly society—where you get £25 per month subscription tax free—or a bank or building society. There is no point in putting the money anywhere else. Indeed, one attraction of the ISA, if there is one, may be the use of the cash investment option at Sainsbury's, or anywhere else where people can put that money, provided the operating costs do not kill it.
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Roughly £50 billion is invested in PEPs. Of those 40 per cent. are £6,000 PEPs, so that 40 per cent. are minimum subscription PEPs—roughly £50 per month or £1,000 per year. That is very clearly a vehicle for the rich and the people who have. It is not for anyone else.
I established with the M & G group that the cost of running a PEP is £22 per year. The minimum investment of £50 per month amounts to £600 per year. The income on £600 per year invested in a PEP is probably less than 3 per cent. Let us say that it is 3 per cent.—£18. That £18 comes nowhere near the £22 a year, even if you take into account the tax advantages, which produce another £3. It still comes to less than the £22 that it costs to run a PEP. Therefore, at the lower end of the market there is no advantage in a PEP. There is none whatever.
That takes me back to many dinners that I used to have with the Treasury years ago when we tried to fathom their minds. I learnt something which I called the Spens principle. The Treasury likes to do business only if it can complicate it. It has forgotten the basic business principle: the KISS principle—keep it simple, stupid. That is basically what the present PEPs do, but not, I am afraid, for youngsters or people who do not have £18,000 per year.
I turn to the complications which have been introduced by the Treasury. The annual limit of £6,000 has been reduced to £5,000. For goodness sake, that is not even divisible by 12. It is extraordinary. If you wanted to do a monthly subscription on that basis, it would cost £416.66.66 recurring pence. It does not even come out as a real number. Indeed, the Treasury must be out of its mind to introduce such a thing. Nevertheless, £4,800 does work.
The lifetime limit is very costly. We have been through that. Who is going to police it? The software would have to be created, and to the year 2000 problem I add that of the euro, which will come into circulation at roughly the same time. There are far too many unnecessary products. As for insurance policies, I have not recommended one of them for over five years—that is next week's scandal which is coming your way. Insurance policies are not transparent; they are not accountable; and they are costly.
M & G tells me that it would cost £8 a year, in addition to the £22, to make the scheme work for that group at the lower end of the market. That means £30 a year costs would have to be covered from income. The group will not get it because there is no method that I know of which makes investing in a PEP under £18.000 a year work. However, I shall say very quickly that the concept of the ISA with a cash element, provided that it can be taken from PAYE before it gets into the wives' hands, is one that will work. I hope that that will continue.
7.20 p.m.
Viscount Brentford: My Lords, I, too, am most grateful to my noble friend for introducing tonight's debate and for doing so fully and effectively. The debate follows both the December consultative document and also our debate on savings for retirement last October. I applaud the Government for encouraging savings by those with more modest incomes through being able to

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make payments to their ISA from many outlets, including supermarkets, shopping centres, garages and also by deduction by their employers from their pay. I was certainly requesting the noble Lord, Lord McIntosh, to examine this issue when I said in our debate on 22nd October (col. 746 of Hansard) that I wondered whether ISAs could be sold as widely as lottery tickets are sold today among those with regular pay packets. I am grateful to the noble Lord for carrying through that procedure.
I should like to ask the Minister a question on the components of ISAs; namely, cash, stocks and shares, life insurance and National Savings. I do not quite understand what my noble friend Lord Clanwilliam was saying about National Savings, as all are included that are not otherwise exempt from tax, such as National Savings certificates. Therefore, they must be outside the ISA. However, I am not clear why gilts are not included in that list. Perhaps the noble Lord will be able to tell me the reason. While they are free of CGT and interest can now be paid gross, the income outside an ISA would count towards personal allowances for income tax purposes. I should have thought that many investors, especially those with a more modest income, would feel happier to invest in a safe haven like a gilt, which can give quite a high income, rather than in stocks and shares.
I also have a question for the Minister about putting TESSA and PEP investments into ISAs—a question which many other noble Lords have mentioned. On page 10 of the consultative document, the Government say that they want,
"the great majority of those people who have invested in these schemes to be able to retain the benefit of tax-free savings in the ISA tip to the overall investment limit".
I wonder why they do not want all previous investors to retain the tax-free savings. Who are the minority to whom they do not want to carry through the tax-free benefit? I suggest that all funds should be able to remain tax free.
As far as concerns the £50,000 overall limit, can the Minister say why the Government will not consider increasing the amount to £100,000? I agree that there should be a limit, but I wonder whether the sum of £50,000 is too low. I give the Minister four reasons. First, as regards anyone investing up to the annual limit of £5,000 or even, if that was increased, £6,000, to facilitate the arithmetic of the noble Lord, Lord Spensfor 10 years of his working life, why should that person not be able to save in the system for longer?
Secondly, the value of an annuity purchased with an ISA on retirement would be very much more meaningful if that person were able to make the purchase with £100,000 rather than £50,000. It seems to me that that would be a great help on his retirement. Thirdly, it is an active disincentive for those who have already made substantial savings through TESSAs and PEPs that they should not go on saving. That is a great pity.
My fourth point has already been mentioned by noble Lords. My suggestion would help those institutions providing ISAs to balance their books and not make a loss because of the difficulty of dealing with small sums
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for short periods of time. Indeed, it would help them financially. Incidentally, I hope very much that the Government will keep their monitoring and compliance procedures as simple as they can, having due regard to the necessity of security. In that way management costs will be kept low.
I have one final question and answer to put forward. In their document the Government ask whether prize draws will lead more people to save. I believe that the answer is no. However, perhaps I may ask the Government a question. Will there be one entry per individual who invests in ISAs? On the other hand, if it was one entry per £1,000 invested in an ISA, so that a person with a £2,000 investment would have twice the chance of the person with £1,000, I believe that such a scheme would encourage investors to save more. I wish the scheme well, but I believe that there are a number of points which still need to be ironed out.
7.27 p.m.
Lord Currie of Marylebone: My Lords, I start by thanking the noble Baroness, Lady O'Cathain, for introducing this stimulating and timely debate. We have had a wide-ranging debate and I believe that the points that have been made will be extremely helpful to the Government in thinking through the details of the scheme that they propose. We should also thank my right honourable friend the Chancellor of the Exchequer for allowing us to debate this set of questions before the scheme is put in place. Without this clear and innovative commitment to consultation on a scheme which is clearly important for the future of savings in this country, we would not have been able to have such an informed debate and allow it to feed in to government thinking. Certainly it was not the practice under the previous government, but I hope that it continues to be the practice of this one. Indeed, it allows us to draw on wide expertise and it is an innovation that I warmly applaud.
Perhaps I may put the debate in a slightly wider context as regards the question of savings in the economy as a whole, and make a few broader points. If one is thinking about savings in the British economy, the major influence is not the sort of subject that we are debating tonight—that is, the details of tax, and so on, important though that is—but rather the fluctuations in the economy as a whole. I have in mind the boom-and-bust and the surges in inflation that we have seen in the past. For example, the personal sector savings ratio is driven very much by that—it was 13 per cent. at the beginning of the 1980s and halved by 1988 with the boom. It then went back up to 13 per cent. by 1992 and has been coming down a little ever since. That has nothing to do with the tax scheme and everything to do with the cyclicality of the British economy. The lesson I draw from that is that the surest way to maintain stable savings behaviour is to ensure a stable economy. That is why the decision to give the Bank of England independence—we shall consider that matter when we discuss the Second Reading of the Bank of England Bill on Friday—and the unpopular, but I

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think necessary, decision on interest rates are all part of creating an environment in which stable savings behaviour will occur.
There is also much evidence that tax treatment of savings does an enormous amount to move savings from one instrument into another but achieves rather little overall in promoting savings for the economy as a whole. Important though it is, it rather determines the form of savings and not the overall level. Indeed, one might think that tax breaks even have a perverse effect. For each person who is encouraged to save more through a tax advantage, there is someone else who may consider that he can put less aside and take advantage of the tax break in order to accumulate a certain amount at the end of the day. The net effect on savings in the economy may go the wrong way. Some studies try to analyse the effects of tax on savings. My noble friend Lord Barnett mentioned one of them. I encourage him in his "econo-scepticism" in this matter. That particular study for the national institute, fine though it is, is based on a calibrated model, which is technical economics jargon for "largely made up". It is not really based on firm empirical foundations.
Therefore it is better to focus on the individual effects of the tax treatment of savings. I echo the point that my noble friend Lord Sainsbury has made; namely, the tax benefits that we give in this area are enormously concentrated on those who are already better off, particularly higher rate taxpayers. I think it was said that one-half of the benefits go to lower rate taxpayers. However, the implication is that one-half go to higher rate taxpayers, and that is a disproportionate benefit. That focus is much more concentrated even than as regards financial assets themselves. It is clear that the savings in our society are unequally distributed. If one considers the tax benefits given through PEPs and TESSAs, they have been disproportionately focused—even more than the disproportionate distribution of assets—on the better off. That is why I applaud the Government's decision to introduce a scheme that will allow the less well off to save and to gain tax advantage in an appropriate form. It is clear that such groups cannot lock up their savings for extended periods, nor should they take risks. It seems to me that the new ISA could well meet the needs of that group of people.
I recognise the issues that have been raised in this debate. The noble Lord, Lord Spens, gave a fascinating account of the economics of the matter. Those points need to be borne in mind. Costs must be kept down; simplicity is the key. We need to tackle the regulatory issues. I believe that it would be desirable—it should not be beyond the wit of man or woman—to define a scheme which provides for no lock-in periods, even for safe investments such as deposits, requires no minimum investment levels and is marketed through more accessible outlets. I heard the reservations of my noble friend Lord Desai, but I believe that one of the reasons the marketing of financial products is directed to a disproportionately limited group in society is that we have not devised the simple products that we can sell in a safe and reliable way through much broader outlets. I should like to see that happen. I note that the
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Government hope and think that they may well attract an additional 6 million savers as a consequence. If that is achieved, it would be a most desirable result.
The previous government sought to extend share ownership through their successive privatisations with special terms for small investors. That was largely a failure long term as most of the small investors sold out—wisely in many cases if one studies the record of the share prices in question—and the shares ended up with the large institutional investors. That form of investment was not the appropriate one for that group of savers. I believe that the scheme we are discussing has the much more realistic aim of spreading the habit of saving more widely in the community, not through risky equity investment but through advantageous, safe, prudent forms of savings. I hope that we can all support that laudable aim.
If the scheme that has been put forward can give tax relief at the appropriate point to those in low income groups it is desirable. That clearly means that if tax benefits are to be spread more widely, there needs to be a limit on the overall contributions that attract tax relief. and hence the need for an annual limit. The implication is that if a scheme of this kind is to run for some time, one also needs a lifetime contribution scheme to avoid a large proportion of savings which already exist attracting tax relief and imposing a high cost on the Exchequer. If the interest on all bank and building society deposits were sheltered, that would cost nearly £3 billion. That is a large amount of money that the Government could better spend in other directions.
I hope that this scheme will be welcomed in principle by all sides of your Lordships' House, and that it will be well targeted on poorer groups of society who missed out on the tax cut, tax break era of the previous government. I hope that the Government will provide a detailed scheme that can be made to work in the light of the points that have been raised in this debate.
7.36 p.m.
Baroness Seccombe: My Lords, I was so pleased to see this subject down for debate today. I thank my noble friend Lady O'Cathain for initiating much needed discussion on this area of saving. I thank her and congratulate her on a typically robust introduction to the debate. I do not intend to detain your Lordships for long as I have no expertise in financial matters. However, I feel that I can speak as the man or woman in the street who just happens to like PEPs and TESSAs. I hope that your Lordships will forgive me if my contribution is seen as somewhat simplistic and brutal.
When my noble friend Lord Lawson of Blaby introduced PEPs I began to invest up to the annual limit. I did so as I understood that provided I kept the money in the PEP for at least a year it would remain free both of income tax and of capital gains tax. I felt it was the basis of a fund which one day might be called upon for long-term care and, if not, would provide for other needs. I have always thought that governments believed in people providing for themselves whenever possible. I even believed that the present government wished that also, but now I am not so sure.

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TESSAs, which were introduced at a later stage by my right honourable friend John Major, have also been a huge success. Millions of people, including myself, are on TESSA 2. These vehicles for saving have been both popular and encouraging. I cannot for the life of me understand why any government would wish to change the system unless of course it is really another two taxes to add to the 17 already introduced by this Government. I have tried to find some reliable information on ISAs—this Government's new idea—but so far without success. There is apparently no final decision yet as we are still in the consultation period.
However, I have heard not one good word until today, or seen one written, about ISAs by the investment industry, financial journalists or by individuals. If it was thought that this new initiative would be well received, I can only think that the Government must have been listening to the wrong focus groups or may even have been asking the wrong questions. I think it is right to have an annual limit, but not an overall limit for a lifetime, even for new investors. The greatest crime, if I may call it that, is to penalise those who have been prudent over the years. To impose a limit of £50,000 on those who have already saved more than that in PEPs and TESSAs seems ridiculous and completely unacceptable.
I, along with hundreds of thousands of others, feel completely let down and cheated. I do not wish to stash my limited savings abroad. I resented the proposed limit being announced by one who has done so.
The consultation period, I presume, will continue until shortly before the Budget. I can only hope that the Minister will draw the debate to the attention of his right honourable friend the Chancellor of the Exchequer. The whole episode of ISAs has been a disaster so far and the retrospective taxation will not entice newcomers to invest. Perhaps the best advice was from one financial columnist who suggested that it was a good idea to invest but only £1 because in that way one would qualify for the free draw.
It is extremely sad to reflect on the brilliant initiatives introduced by my right honourable friends and to think that they may be replaced by an initiative which will find few friends.
7.42 p.m.
Viscount Hanworth: My Lords, I, too, thank the noble Baroness, Lady O'Cathain, for introducing this timely topic. She did so in a spirit of constructiveness and in a way which has perhaps taken some of the wind out of my sails. I had thought that I could expatiate in an angry way; and I cannot do so. Nevertheless some noble Lords on these Benches were delighted to hear that the Government intend to dispose of one of the tax atrocities of the previous Tory administration which has been hanging over our heads.
It is worth while giving yet another summary of the provisions of the PEPs and TESSAs regime if only because they are so extraordinary. They represent a massive subsidy from public funds in favour of a few high income earners.
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Under the regime which is about to be abolished, a couple could save a total of £18,000 per annum in PEPs and another £2,000 in TESSAs and expect to derive an income which is wholly exempt from tax. The current cost to the Exchequer of the two schemes is estimated to be somewhere between £1.3 billion and £1.5 billion per annum. Little is known of the circumstances of the beneficiaries of these provisions beyond the fact that 50 per cent. of the tax relief is received by those in the highest tax bracket. In effect, a group of highly privileged persons is being rewarded over again for the privilege of being able to salt away large sums of money on an annual basis; and that benefice purports to be an incentive to encourage saving. The abolition of that abuse will surely warm the hearts of the egalitarians, of which there remain quite a few on these Benches. I am confident in asserting that and believe that we can declare roundly and without hesitation that the Government have got it right on this occasion.
Since December we have been hearing an extraordinary defence of the PEPs and TESSAs. In another place it has even been asserted that the abolition of the regime amounts to a kind of retrospective legislation. We have heard that, too, in this House. How can legislation which is intended to stem a flow of future emoluments to the rich, which springs from capital assets, be regarded as retrospective?
The new ISA scheme is designed to encourage saving among a wider class of middle and low income earners. We are told that 6 million people in all might come within its ambit. Even if that were the actual outcome, the ISA provisions would do little to amend the problems posed by the woefully inadequate pension schemes of the majority of our population.
People fail to provide for their old age because they fail to save. They fail to save because their incomes are inadequate for the purpose. We have been told that 50 per cent. of the population have less than £200 to their names, and not the more optimistic £500 about which we were told. If people cannot save on their own behalf, the Government must undertake to do so for them. And governments have been failing in this respect for many years. It is time to amend the situation.
The problems we face in securing adequate provision for people in their retirement cannot be explained by the lack of a culture of saving. They are to be explained by the startling inequalities of income and wealth in this country which deny the opportunity of saving to a large proportion of the population.
Perhaps it would be helpful to characterise the extent of income inequality in this country in abstract terms. The economists have a measure known as the Gini coefficient. To explain the measure we can perform the mental exercise of cumulating the nation's income, beginning with the incomes of those who earn least and progressing ultimately to the incomes of the highest earners. If income were distributed equally, we would be describing a straight line which rises at a slope of 45 degrees from the bottom left corner of a square box to the top right corner. As it is, the curve is almost flat at the beginning. Then somewhere beyond the mid-point of its base its slope begins to steepen radically as the

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earnings of the individuals entering the running total grow rapidly. Eventually the top right corner of the box is reached by an almost vertical ascent. We can measure how far the actual curve departs from the egalitarian line at 45 degrees. The maximum distance of this departure constitutes the so-called Gini coefficient.
The extent of income inequality in the countries of western Europe can be compared simply be comparing their Gini coefficients. The results of recent comparisons have been quite startling. They indicate that the UK suffers a degree of inequality which is in excess of the rest of Europe. I am sure that many of my colleagues on these Benches will join me in calling upon the Government to defeat the Gini of inequality.
7.47 p.m.
Lord Newby: My Lords, I join all other speakers in thanking the noble Baroness for initiating the debate. It has demonstrated that we are grappling with a fascinating, potentially important initiative but one which has a number of down-sides unless the Government get it right. The Government should be congratulated, too, on producing a consultation document which gives a relatively sensible amount of time in which to make comments. It is also easily readable.
On leaving university my first job was with Customs and Excise. I was given the task of helping to draft the first set of booklets which explained to retailers how they would account for VAT. I am afraid that it was not just beyond my abilities but beyond the collective abilities of the entire serried ranks of Customs and Excise officials. In the end we produced seven booklets on seven schemes. I think that it is fair to say that most of the small shopkeepers about whom we were worried—the equivalent of the small savers about whom we are concerned today—found it extraordinarily difficult to make any sense of the booklets. The consultation document is remarkably brief and clear. It has avoided the pitfall that all tax officials have in their mind—that unless they put in every last detail someone will say, "You didn't think of For many officials that is a severe worry.
From these Benches, we support the principle of encouraging higher levels of savings, in particular for those on relatively low incomes. We have to accept that for those on low incomes who do not pay tax, saving is a luxurious concept which is a long way from the reality of their daily lives. However, we clearly want to see the savings principle extended down the income scale.
I wish to talk principally about how that might be achieved. Perhaps I may make two points about the £50,000 limit. It has been mentioned by a number of speakers. The reason given by the Treasury in the consultation document as to why £50,000 has been chosen is that, combined with the annual contribution rate, that should keep the cost of the scheme in line with the estimated costs of continuing the existing PEP and TESSA schemes. A group of people feel aggrieved that what they saw as an ongoing tax saving will now in part potentially be taxed. What will be the additional cost to
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the Treasury if the existing holders of TESSAs and PEPs, with an aggregate total of more than £50,000, were enabled to transfer across the full combination without any proportion of it being taxed? I do not know, but I suspect that it is not a particularly large amount.
The second question that I wish to raise in relation to the figure of £50,000 is whether it will adequately deal with some of the purposes for which we all wish people to save. One such purpose, even if one has a pension or series of pensions, is long-term care. It is a very real issue for many elderly people. According to Laing & Buisson, the sector leaders in this area, the advice is that an individual should seek to have a fund of approximately £54,500 available for long-term care. That sum represents three years of care in an average nursing home. In certain circumstances the cost can be significantly greater. I know that the £50,000 is an investment sum rather than a capital sum at the end, but it seems to me that the sum is rather small if one expects it to deal with a number of major blocks of expenditure with which elderly people may find themselves towards the end of their lives. That should be a relevant consideration as Ministers decide whether £50,000 is the right figure or whether the amount should be rather larger. I hope that at the end of the day the figure is not determined merely in relation to the overall cost of the scheme.
The success of this scheme depends on attracting people who are on more modest incomes, and there are two components that need to be examined carefully. Incidentally, I believe, as the noble Lord, Lord Sainsbury, said, that the scheme has a number of features—of which flexibility is one—which suggest that it may be possible to change saving habits so that one is not simply looking at a static situation. The first question to be examined is how one can devise products that are simple to understand and not too costly to run. There is an inevitable tension between simplifying the product and having proper regulation in place. The history of pensions mis-selling leans towards a requirement for effective regulation. But, equally, there is a danger in that over-regulation pushes up costs and reduces flexibility of access.
When talking to one of the major clearing banks, I discovered some of the current illogicalities. For example, were I to order a PEP over the phone, the cost to the bank would be only one-twentieth of the cost of my going into the bank to fill in the form face to face. The reason, I gather, has to do with audit and the fact that the present regulations do not allow for what I believe is called screen audit—that is, there has to be a paper record. That kind of technical consideration, which imposes considerable costs on certain aspects of policy selling at present, needs very careful thought, while at the same time not throwing the baby of regulation out with the bath-water of simplicity.
A hugely important consideration is how to make this product more accessible. I do not know whether I need to declare an interest in that I have on occasion been to a supermarket and done the shopping—indeed to a Sainsbury's supermarket. Supermarkets have many virtues, and one can see the virtue of being able to deposit money there. The consultative document refers

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to making payments at supermarkets; it does not refer to making withdrawals at supermarkets. I do not know whether that is a subtle form of "quasi-lock-in", so that everybody will find it easy to put the money in but pretty difficult to get it out—in which case I congratulate the Inland Revenue on its ingenuity.
When talking about supermarkets, one also ought to look at any kind of retail outlet that sells lottery tickets. If an outlet is capable of doing that, it should be capable of doing a very simple financial transaction. I hope that possibility will be examined. Post offices and sub-post offices are another type of place that might be considered for this purpose—not least because people on all levels of income have a sense that a post office is the kind of secure place to which you go to deposit money and draw it out. Arguably, in some cases people might feel that more so than they would about a supermarket.
I wish to make one final point on accessibility. The noble Lord referred to the question of advice. For many, it is a hugely complicated area. Sources of advice will be greatly required. I have one thought as to where such advice might come from. I hope the Government might give some thought to the fact that trade unions are increasingly seeking to provide additional services. Why not encourage them to provide advice on this kind of savings scheme? It would provide access to many of the people whom it is hoped to bring into the scheme.
I have something of a quibble regarding the state of the debate. We can only assess whether this scheme will work in the context of what will happen to pensions. If we are to make a plea to those on modest incomes to save more, a fairly clear set of priorities will need to be given. Are we asking them first to put their money into a stakeholder pension? If that is compulsory, it will not be a question, but if it is not, presumably the Government will say, "That's the first place we want you to be putting your money", and in a sense the ISA is of secondary importance. Yet we are debating the ISA as if it were the only possibility. That whole issue needs to be addressed when we have the full menu.
In conclusion, we on these Benches believe that ISAs can play a useful role as one of a range of vehicles available to people who are looking to save. As I say, the nature of that role will become clear only when the Government's plans for the pension system have been outlined. The debate has demonstrated some of the knotty regulatory and technical issues that must be resolved if ISAs are to fulfil their potential. I hope the Minister has found the debate helpful, and that the details of the scheme will reflect many of the points that have been made.
7.57 p.m.
Lord Higgins: My Lords, I cannot but take up immediately a point made by the noble Lord, Lord Newby, since I was the Minister responsible for introducing VAT and steering the proposal through the House of Commons. For 25 years I have wondered who it was putting up those incomprehensible drafts. At last I find us face to face.
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All speakers in the debate have congratulated my noble friend Lady O'Cathain, not only on choosing such an appropriate subject but on timing it very well. The nature of this debate is very much in the context of the consultative document issued by the Government and seeking to persuade the Government on a number of important issues. I am bound to say that in many respects they need to think again before bringing forward a final set of proposals.
My noble friend said that in her view often problems were opportunities waiting to happen. I have a nasty feeling that this is an opportunity waiting for problems to happen. If one looks at the representations that have been made in the light of the consultative document, it is very clear how significant the problems are not least, for example, the regulatory problems raised by the noble Viscount, Lord Runciman of Dox ford. There is grave concern, and we have no very clear idea as to how the difficulties are to be resolved.
My noble friend Lady Seccombe stressed that in many respects both PEPs and TESSAs have been extremely popular and, in my view, they have been very successful. There are dangers if they are tampered with. There is much to be said for leaving them as a free-standing operation, and treating the question of ISAs as a separate matter. Although the Government's policy is now to say "savings for the many, not the few", since there are 6.5 million people who have invested in PEPs and TESSAs it would be rather odd to describe them as "the few". A large number of people have taken advantage of them.
There has been some dispute between the noble Lords, Lord Barnett, Lord Currie and others, as to the extent to which such measures actually increase savings. It may be that particular transactions transfer from one asset class to another. Nevertheless, there must be a general presumption that, if the level of return on savings and investment has increased, there are likely to be more savings. Also, TESSAs and PEPs have done more. I believe that they have a significant effect in widening share ownership. People who would not previously have invested in equities, particularly as regards single PEPs, now do so. The PEP has become an efficient way, in competition with other possible assets, of providing pensions and facilitating mortgages. However, in all those respects it is important to ensure that we do not damage something which has, in my view, been a success. In many respects the Government will need to clarify a number of points.
The consultative document has been helpful in a number of ways but, strangely enough, one crucial point has not been clarified. It was raised by the noble Earl, Lord Clanwilliam, as to whether the £50,000 limit is on the contributions or on the value of the fund. Strangely, that does not appear in the consultative document. Perhaps I may ask two specific questions, giving particular examples. If the overall limit of £50,000 for ISAs is to be on contributions, as seems to be the case from a parliamentary Answer given in another place, if someone has contributed £40,000 to PEPs, the value of the asset is now £75,000. Can that person still contribute another £10,000? It is not clear from the consultative document.

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Another example is the following. Suppose someone is transferring from a PEP or TESSA to an ISA, say, £50,000 and the shares subsequently increase in value. Does that person still get tax relief on those shares? One might expect that to be the case if it was the contributions criterion which was relevant. Alternatively, is that person suddenly to find that he or she no longer gets tax relief on the shares which he or she originally bought for significantly less than £50,000?
That brings out a point made by my noble friend who introduced the debate. There is an element of retrospection in what the Government propose. Alternatively, in the words which she used, there is a breaking of faith as regards contracts. I believe it is the case that if governments change the rules that is likely to have an effect on people who find they have been misled. At all events, that is the way they will feel.
Indeed, if one looks at the representations that have been received from various bodies, there is a critical approach not fully reflected in the debate this evening from the CBI, the Institute for Fiscal Studies and the National Institute for Economic and Social Research. I must declare an interest there as a governor. All made a number of important points, not least on breaking faith, but also as regards the cost. If we are trying to encourage people on lower incomes to save, we must recognise that at those levels the costs of the operation from the providers may well exceed any possible benefit. If one looks at the representations from Barclays Bank, it is doubtful whether, unless careful attention is given to the detail, providers will come forward to produce the kind of ISAs the Government have in mind.
Again, as regards the lifetime limit, it has been pointed out that it is not something in terms of revenue from someone who has retired or gone into a nursing home, where one might reasonably think it would be subject to—the rather unfashionable phrase"affluence-testing". The costs of regulation are likely to be considerable.
Incidentally, as regards the providers, some of the analysis which has been produced by outside bodies suggests that the amount of returns in terms of various details of the ISA accounts which have to be produced each year by the providers is likely to be a significant burden. It would certainly be far in excess of anything which they have been required to produce, in terms of either PEPs or TESSAs.
I wish to say one word about the extraordinary proposal to have a premium bond element. If I understand it correctly, it is obscure and no doubt the Minister will tell us whether it is per account, per individual or according to how much is invested. It seems to me a rather bizarre proposal. I do not think it will have any significant effect. But it will mean that someone will have to know at the end of each period, each month, if there is to be a prize every month, exactly who has ISAs and who does not. Who will collect all that information? The providers, the Government or who? In practical terms it seems to me unlikely that it will be easy.
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It is likely that perhaps the Government, on reflection, will regard it as an extra incentive which, in the classic words, creates more problems than it solves. The burden of doing that seems totally disproportionate, compared with the amount of money that might be involved.
Having said that, I do not believe that the debate has reflected the amount of criticism from responsible bodies. Perhaps I may quote from the report of the Consumers Association. It said:
"We are struggling to see the point of ISAs. We see no real advantages but a lot of problems".
We may consider other comments. Certainly the Sunday Times regards them as a disaster and it went on to say on 7th December 1997:
"ISAs could herald the end of free banking … ISAs will be the most complex instant-access accounts ever".
There are real problems with this. Even the Financial Times—not normally given to hyperbole—stated on 6th December 1997:
"The Individual Savings Accounts seems like another example of bureaucracy gone mad".
That is overstating it but the real point needs to be made. We have had a consultative document and in some respects it is helpful. But at the same time a number of important issues have not been resolved and are not clear.
I believe that one ought at this stage to say that there is a strong case for delay and for a serious re-think of the proposition. That is not least for the reason given by my noble friend Lady O'Cathain in her opening remarks that the strain on the IT resources will be considerable. It is not just self-assessment—a horrifying situation in many respects—but many banks will be heavily engaged in coping with the millennium bug, to which my noble friend drew attention, and also with the move towards EMU. The fact that we are not joining does not mean that the banks will not have an enormous burden to carry if it goes ahead on schedule.
I believe that this has been an extremely helpful debate but there are a significant number of important problems which ought to be carefully considered. I hope that the Government will not rush forward in a few weeks' time with the proposals but that they will treat the £50,000 limit as an assumption, which is the expression in the consultative document. I hope that they will look carefully at a number of the points that have been raised in the course of the debate particularly on the regulatory side and on the cost providers' side.
8.8 p.m.
Lord McIntosh of Haringey: My Lords, it is customary on these occasions for the Minister winding up for the Government to thank noble Lords who have taken part in the debate, particularly the noble Baroness who initiated it. I am fortunate, apart from two reservations, that I am able to do so wholeheartedly. The noble Baroness, Lady O'Cathain, knows my problem with her. The first of my two reservations is that she is so logical, so rapid in her delivery and so economical with words that I cannot even keep up with making notes of what she says, let alone try to understand it. So

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if she has got past my defences on a number of occasions—as I fear she has—she will have to forgive me. I shall read her speech with great attention.
My second reservation is what I would describe as a problem but what the noble Baroness would no doubt describe as an opportunity for the Government. The problem is that the consultation period on ISAs finished at the end of January. The results of the consultation and what notice the Government take of it—I can assure the House that the Government are taking serious note of the consultation—will not be known until the Budget on 17th March. There is nothing I can do to anticipate even the little I know of the results of the consultation and the decisions that the Government will take as a result. It is therefore a problem for me, but an opportunity for the Government.
I can say without hesitation that this debate has been the most valuable contribution to the consultation for which I could possibly have hoped. However, it may have been a little disappointing to the noble Lord, Lord Higgins, who has been reading the papers, the briefing material that has come to him and the views of those who have a vested interest, to find that they are a good deal more critical of ISAs and a good deal more defensive of TESSAs and PEPs than the debate has been. Perhaps on this occasion your Lordships reflect a more considered view than that expressed by others in the public domain.
I begin by re-emphasising the point made particularly by my noble friend, Lord Currie; that is, that the personal sector savings ratio is of enormous importance to our economy and that our economic policies in general must be directed, among other things, to improving the personal sector savings issue, which is peculiarly vulnerable, as he said, to instability in the economy. That is why the whole thrust of our economic policy in the past nine months has been to start with economic stability as part of a wider commitment to investment and saving.
Our commitment has been to low and stable inflation because low and stable inflation is the necessary prerequisite for investors and savers who expect us—and will not react unless we succeed in doing it—to break out of the "boom-bust" cycle which has been characteristic of our economy in recent years. The boom-bust cycle is bad for business; it is bad for individuals; and it is certainly bad for the kind of stability which encourages individuals to save. That is why we have given the Bank of England the responsibility of setting short-term interest rates on the basis of the long-term needs of the economy rather than on political considerations. That is why we put the emphasis on sound public finance with a five-year deficit reduction plan and the code for fiscal stability which was announced by the Chancellor in his pre-Budget report.
Therefore, both monetary and fiscal stability are the necessary climate for savings and investment. That is the context in which we should look at the issues being debated today. But of course my noble friend Lord Barnett is entirely right in saying that the issue of tax relief on savings is a good deal less important than the
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issue of the overall level of savings. I will not get involved in economists' arguments with him about the relationship between savings and investment, save to say that if we look at tax-relieved savings—TESSAs and PEPs—they represent only about 3 per cent. of individually held financial assets, admittedly on a definition which includes pensions and insurance. So, though we see those as part of a wider picture, we must not think of tax relief on savings as being a dominant consideration in the setting of the personal sector savings ratio.
The other distinction which should be made and which was made by a number of noble Lords is between the kind of savings represented by TESSAs and PEPs and to be represented by ISAs, and pensions. The noble Baroness Lady O'Cathain asked why we were dealing with the matter outside the pensions review. My noble friend Lord Barnett said that there would be more real savings if they were linked with pensions. Both are right. But we see the individual savings accounts as being complementary to pension provision. We do not apologise for the fact that we are carrying out consultation concurrently on stakeholder pensions in the consultation paper published by the Department of Social Security in November last year. That refers to something to which I shall return later, mentioned by the noble Viscount, Lord Runciman; that is, the need for simplicity and for regulation in savings. As a number of noble Lords identified, there is potential for conflict between a search for simplicity and the need for regulation and it is a matter which will be of great concern as we consider the results of the consultation.
A number of noble Lords, notably the noble Earl, Lord Clanwilliam, and the noble Lord, Lord Newby, asked whether compulsion was essential for a stakeholder pension. That is exactly one of the issues on which the Government will be taking a view as they respond to the consultation exercise currently in force.
Let us turn to the non-pension aspect of individual savings, which is what ultimately concerns this debate. The definition of what we are discussing is something which is not locked into retirement but is available on instant access—a characteristic of existing TESSAs and PEPs. The noble Baroness, Lady O'Cathain, asked me what she called a stupid question: why we are going through the rigmarole of changing to ISAs when we are happy with PEPs and TESSAs? We do not necessarily agree that we are entirely happy with the current system. Apart from anything else, the current system is based on an annual limit rather than a lifetime limit and the projections to the Treasury of tax foregone are explosive. We must consider the ultimate effect to the revenue of a system which relies only on annual limits rather than on lifetime limits and that constraint would apply to any government considering the future of TESSAs and PEPs whether or not they were going to be continued or replaced with another product.
The problem is that we know that much of the existing tax relief goes to those savers with the larger holdings; as my noble friend Lord Sainsbury said, to older and richer people. That is where the issues of fairness and equity, which featured so strongly in the design of the ISA, come into play.

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My noble friend Lord Sainsbury asked whether TESSAs and PEPs have increased savings overall. The answer must be that, given that they represent only 3 per cent. of all savings, it is unlikely that they have increased savings overall. The people who have been saving through TESSAs and PEPs are those who were likely to save by other means if those TESSAs and PEPs had not existed.
But we have a manifesto commitment that within the same constraints of public expenditure, which includes tax foregone, we will double the number of individuals who are given an opportunity to save and an encouragement to save by saving without tax. That is in the context, as we were reminded, of the fact that half the population of this country has less than £200 in savings and a quarter has no savings at all. That is the basis on which we are proceeding with this proposition.
I shall return to the capping issue later but I want to make clear that capping is an essential part of any tax-free saving package. It has to be. If one is to double the number of savers, if one is to bring more people into the ranks of those who are making provision for the future and benefiting the economy of this country at the same time, one simply cannot have explosive costs to the Treasury. That means lifetime capping and it means a figure. It may not be £50,000; I do not know. That is one of the issues for consultation. But one has to balance the benefit of extending tax-free savings to those who are—I was going to say "more worthy", but perhaps I should not say that—benefiting less from existing tax regimes. Half of the cost of tax relief, as we have been reminded, notably by my noble friend Lord Hanworth, goes to a very small minority of higher rate taxpayers. That is simply not acceptable as a use of what is in effect public money.
I turn to the question of the product itself, the individual savings accounts. I have already said that individual savings accounts are out for consultation. The noble Baroness, Lady O'Cathain, asked me whether we had not allowed too little time for industry to design ISA systems before testing them. The noble Lord, Lord Higgins, went so far as to suggest that the whole thing should be delayed. I can assure him that that will not go down very well at the Treasury.
This is the timetable. The Chancellor will be delivering his Budget on 17th March. That will be followed by detailed consultation with providers on the necessary regulations which we hope to lay in Parliament by the summer. On that basis, there should be approximately nine months to get systems going before the start of the scheme in 1999, including time for live system testing. We recognise that the industry faces difficult information technology programmes, a point made by the noble Baroness, Lady O'Cathain, and our discussion with the industry takes account of that.
What are the features of the proposals for consultation? They are not set in stone. The first is simplicity, and I very much like the acronym, KISS—keep it simple, stupid. I do not think it is in contrast to simplicity to say that there can be a wide range of products. There is provision for cash—up to £1,000 per
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annum. I take the point of my noble friend Lord Sainsbury about separating cash from equities; and that indeed may arise from the fact that we are going to have new outlets for this product. There will also be a wider range of stocks and shares. I can confirm to the noble Viscount, Lord Brentford, that gilts will certainly be included, particularly, for example, if they are part of the investment portfolio of a unit trust. There will also be life insurance to add an element of protection for those who want it. I shall have to come back to the question of insurance advice, which featured widely in the debate, but I have not forgotten it. There will also be the possibility of links with National Savings. I remind the noble Earl, Lord Clanwilliam, that the capping limit for ISAs, TESSAs and PEPs is in addition to tax free National Savings, but he is quite right to say that there should be a link. So simplicity is an important feature of our proposals.
The second is accessibility, and this is the question, first, of not having a lock-in period. I must disagree with the noble Earl, Lord Buckinghamshire. Instant access is an important way of removing the current disincentive to saving which exists for many people. There is no minimum investment level. My noble friend Lord Sainsbury had some useful criticisms on that point which we shall certainly bear in mind. There is also the whole issue of new outlets. Without treating it with disrespect, which I found in the speeches of my noble friend Lord Desai and the noble Lord, Lord Newby, I do not think the idea of having swipe cards in supermarkets is terribly funny. Provided it is not part of a re-evaluation of one's whole financial life history, I do not see why it should not be something that is done at the same time as one buys groceries. This is for people who do not go to banks or investment houses—and there are an awful lot of them.
Finally, there is the issue of fairness. We have had, although very muted, some expression of the concerns which have been expressed publicly about unfairness to existing TESSA and PEP holders. What I have to say on that point is that TESSAs in existence on 1st April next year will run their full five-year period and can transfer to ISAs on maturity. Existing PEP savers will be able to keep their PEPs until 1st April next year and then switch to ISAs. They will normally be doing it with the same fund managers. In any case, there is a six-month grace period.
I now turn to the issues of breaking faith and capping, which were raised by a number of noble Lords. The noble Baroness, Lady O'Cathain, referred to an unwritten contract. I do not think that is sustainable. First, there is no taxation of past gains. As I said, PEPs will continue to have tax-free gains until 1999 and TESSAs will be tax free to maturity. But in any case there is no long-term commitment by governments that there will never be tax changes which will not affect the way in which people choose to spend their money. That has been a feature of taxation since the time of William Pitt the Younger, if not back to Cardinal—I shall forget about the cardinal; or shall I say, Cardinal Morton? That, perhaps, would be more appropriate.

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Capping, and lifetime capping, has to be a feature of any scheme which is not explosive. The noble Earls, Lord Buckinghamshire and Lord Clanwilliam, and the noble Viscount, Lord Brentford, spoke as if there were something wicked about the £50,000 figure. Our evidence is that it will affect relatively few people. It is a figure for an individual rather than for a couple. It does not include tax-free National Savings. With one exception, which I must make clear, it is based on contributions and not on the final value, the exception being that we do not always know what the contributions have been on existing PEPs. That is a technical problem which has still to be resolved. But ISAs themselves will be free to enjoy unlimited capital growth, and, I believe, within a very short time this will be recognised as being an orderly change of taxation policy.
A number of noble Lords with particular expertise in this area referred to the administration and marketing costs. I respect that expertise, which I do not share. It will all be reported back as part of the consultation, as indeed will the comments about prize draws.
Finally, I refer to one aspect of the debate which I did not particularly expect, but which I was very pleased to hear play a major part in it. That is the question of security and regulation and the necessity for, and quality of, advice. I acknowledge that this receives almost no mention in the consultation paper. Someone said that it was only referred to in passing in paragraph 14. That is certainly a defect.
I believe that the noble Lord, Lord Newby, had it right. I believe that there is a conflict between simplicity, small numbers and the need for regulation. I do not believe that for most of the investments made in ISA they will be earth-shattering events in people's financial planning. Although we pay very great attention to what the noble Viscount, Lord Runciman, says, I am not convinced that the problems of the necessity for advice apply as severely as he believes to relatively simple products whose advantage to the many is tax relief rather than fine judgment as to the return on the investment itself.
It is certainly true that taking out life assurance needs advice. But it may not be true that small, additional payments for those who already have life assurance provision need the same quality of advice as required by the most fundamental decisions. As the noble Lord, Lord Naseby, said, it is true that in certain circumstances there will have to be some control of advisers. In the end, I do not believe that we shall find that the kinds of products and levels of saving which take place are going to bring into play the regulatory problems which some noble Lords have anticipated.
I have taken far too long. I repeat what I said at the beginning. This debate is part of the consultation process. It has been an extraordinarily valuable part. When noble Lords see the result at the time of the Budget or shortly thereafter, I hope they will feel that their participation in the debate has been worthwhile. I am convinced that it has been.
8.32 p.m.
Baroness O'Cathain: My Lords, I wish to thank all noble Lords who have participated in this debate. It was extremely good. I now confess that I was dreading this evening because it is the first time that I have introduced a debate in your Lordships' House. It is an occasion which is as terrifying as making a maiden speech. I thank all noble Lords who have made it so much easier for me. I said at the outset that I wished the debate to be constructive, and that was certainly achieved. It was the House at its best, allowing us to benefit from the expertise and experience of all Members. What great and wide-ranging experience we have listened to this evening. The debate was constructive and critical in parts—but it was constructively critical.
My noble friend Lord Buckinghamshire said that the Chancellor of the Exchequer had missed a golden opportunity. I take mild issue with him. We still have four weeks and six days before the golden opportunity is missed. I took heart at the suggestion of the noble Lord, Lord Currie, and that of the Minister that the debate will be helpful in the final deliberations. The proceedings this evening will make most interesting reading in Hansard. But those who are not here will have missed out on the wonderful humour and the mind pictures generated by the noble Lord. Lord Desai, following the harassed mother down the supermarket aisle, trying to discover whether she would be able to put an ISA on her swipe card, while the children and the goods on display were distracting her. It was wonderful humour, accompanied by serious and radical economic proposals. How I wish that the noble Lord had been my professor of economics.
Three other humorous pictures will stay in my mind, two of them generated by the noble Lord, Lord Spens. First, there was the vision of him feeding all the data into his computer and then giving it a kick. I thought. my goodness, it must be much more robust than my computer, or do I suggest that his kicking skills are on a par with those of the England and Ireland rugby teams last weekend? I guess that I shall loathe him for ever for the second one. Every time I see the amount of £5,000 I shall want to divide it by 12. The other humorous point was the description of the VAT booklets concocted by the noble Lord, Lord Newby.
On a more serious note, in passing I was saddened by the contribution of the noble Viscount, Lord Hanworth, but I shall not feel personally guilty for the fact that by judicious saving through PEPS and TESSAs I have been greatly helped in coping with a huge drain on income by providing long-term care for a seriously disabled person for nine years. No one should think nasty thoughts about people who wish to relieve the state of a burden that it would have to shoulder were it not for such savings.
I thank the noble Viscount, Lord Runciman, for his clear description of the regulatory framework. I knew that I would learn a lot tonight and I certainly have about that.

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My noble friends on this side of the House were unstinting in their support and encouragement. Their contributions were all so good and varied and, remarkably, there was very little repetition. I thank them all.
Finally, I come to the Minister. He said that this debate was the most valuable contribution that he could have hoped for. I take slight issue with his remarks about the explosive cost to the Treasury. Surely there is an offset in the reduction in demand on the public purse from those who use savings to provide for their old age and long-term care.
I thank the Minister for his comprehensive wind-up. On a personal note I thank him and all noble Lords on the Government Benches for always pronouncing my name correctly. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Mental Health (Amendment) (No. 2) Bill [H.L.]
8.36 p.m.
Lord Rowallan: My Lords, I beg to move that this Bill be now read a second time.
The subject of mental health is a comparatively new one for me. Last year I was watching a programme on television, which I very seldom have time to do. It was "Panorama". People were talking about the way the mentally ill were treated. To put it bluntly, I was horrified by what I saw. As the programme continued it became obvious to me that three things were not happening that should be happening. First, the mental patient was not receiving enough attention either because there were no beds available for him to be an in-patient or because care in the community was not working properly. Secondly, the psychiatrist was under intolerable strain working with a lack of proper facilities at hand. Thirdly, the general public were in danger as a direct result of the mentally ill being in the community before they were ready.
Since that programme every one of the patients interviewed has subsequently been involved in some crime—mostly minor, I am glad to say, but nevertheless worrisome—or is back in hospital as an in-patient having been released into the community. In the case of one patient he has committed murder, and a particularly brutal one at that. It received a lot of media attention at the time as a young policewoman was sadly killed entering a house without her bulletproof jacket on.
In Victorian times we put the mentally ill into large asylums and forgot about them. Out of sight, out of mind. Now we do the reverse. We throw them into the community and forget about them, leaving them to fend for themselves where they can stop taking their medication and lose all the progress that they have made in hospital. The medicines that we offer them are old and have side-effects, like feeling as if one has Parkinson's Disease, where one loses control and feeling in one's legs and arms. But they can be long-acting, for up to six weeks, if taken by injection.
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Modern drugs are more expensive, do not have side effects but, most importantly, are only found in pill form and so are not long lasting. So the mentally ill have to use an old drug in the form of an injection every five or six weeks, with side-effects or a new one in the form of a pill daily, which they have to go to a chemist for on a regular basis and also to their GP to get a repeat prescription, whereas they can get the injection from the hospital they have attended quietly and without fuss and without their neighbours knowing that they are ill.
The Mental Health Act 1983 is the current Act dealing with mental health. It still deals with Victorian thinking and desperately needs updating. This amending Bill that we have before us today deals only with in-patient care. I would like to introduce further legislation at a later date to deal with out-patient care. In an ideal world we should have a new mental health Act. Sadly, we do not live in an ideal world. There are more important issues for a government. Please note that I say "a government" and not "this Government", because mental health should not be a political issue. What surely is required is the provision of an environment for this group of unfortunate people whereby they can relax and get better; where the psychiatrist and the nursing staff have the facilities and the wherewithal to look after them; and where the country as a whole has the belief that the best is being done for them.
At the moment all too often that is not the case. Psychiatrists do not want to put their patients, especially female patients, into some units as it is not a therapeutic environment for them to recover in. There are insufficient beds and thus some patients are put out on to the streets to allow someone who, on that particular night and at the moment the decision is taken, is judged to be in an even worse state. When it turns out that those patients should not have been released because they later have a relapse, as happens all too often, the media get hysterical and we endure lurid headlines.
Aftercare is difficult as there is so little supervision as the ill move from carer to carer, from health authority to health authority and get lost in the social welfare system. Would it not be better to have sheltered units with a nurse and doctor on hand in the same way as we provide sheltered accommodation for the elderly? In that way, all such patients could be in one area where their needs medically, financially, and environmentally could be watched over with simplicity. They could regain a sense of independence, find peace and tranquillity and yet have all the help that they could want on hand, in a sort of halfway house between in-patient care and care in the community.
In 1989 a White Paper Caring for People was published. It proposed agreements with developers to build new places for the mentally ill to live in exchange for their developing the old asylums. Insufficient bridge funding meant too little has happened and 40 per cent. of the old asylums remain vacant at an annual maintenance cost of somewhere between £10,000 and £330,000 each. What a waste of resources! In 1994 the then government wanted to ring-fence that money. It was not done.

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That, in simplistic terms, is the background to the problems facing the mental health services today. Add to that governments of all shades who do not view the mentally ill as a high profile group and it is easy to see why so little is happening except for debate, debate and debate. It is not debate we need; it is action. We know the mentally ill exist, but we do not want to admit that they exist by doing something concrete to help them. They are the forgotten society.
Then there is the problem of the non-integration of the charities involved. All do a wonderful job dealing with their own speciality in a vast subject that ranges from bulimia and anorexia at one end through schizophrenia to manic depression and total madness at the other. Each charity is determined to provide for the betterment of the mentally ill, but often they are conflicting in their advice and thinking on how to achieve that panacea. I was delighted, therefore, to receive the backing of all of them for Clause 2 of my Bill which states that there should be single-sex wards in all psychiatric units and security for the patients themselves. It is a sad fact that the mentally ill become sexually oriented. At a time of emotional crisis when a woman needs to feel secure in order to recover, the last thing that she needs is to be harassed, abused or raped by a man in the very place that is supposed to be safe and therapeutic.
In 1996 the mental health commissioners visited hospitals and psychiatric units all over the country. They found to their horror that in over 50 per cent. of the units that they visited evidence of harassment to women existed. Only 35 per cent. of women have access to women-only sleeping areas with separate toilet facilities; 27 per cent. have to pass through male areas and wards to get to their bathrooms; 32 per cent. have access only to mixed bathing areas; and 3 per cent. have to sleep with men in the same ward. What a disgraceful state of affairs—and hardly conducive to a healthy environment for recovery.
In January 1997 the National Health Service chief executive, Alan Langlands, set health authorities the task of providing safe facilities for patients in hospital. By August of that year, only 43 per cent. could report that they had met the standards. Paul Boateng, the Parliamentary Under-Secretary of State in the Department of Health and with special responsibility for mental health, has indicated to me that the remainder must provide those standards by 1999, but admits that most have indicated their inability to give a guarantee that they can do it in time.
The performance targets are not enormous. They are, first, to ensure that appropriate organisational arrangements are in place to secure good standards of privacy and dignity for hospital patients; secondly, to achieve fully the Patient's Charter for segregating washing and toilet facilities; and, thirdly, to provide safe facilities for patients in in-care hospitals to safeguard their privacy and dignity.
Surely all that this Bill does is to give the Parliamentary Under-Secretary the extra clout that he needs to force health authorities to provide those things as part of law—all, I should have thought, easily
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achievable in the suggested timetable, and essential for the betterment of the mental health service. The resources are there, if the recommendations in the Caring for People White Paper are taken up.
I have dealt with Clause 2, so perhaps I should turn to Clause 1. Some of the charities have indicated to me that they are not so happy with Clause 1 as they think it is restrictive. MIND would like Clause I to read, "To prepare a strategy for the provision of care for persons who require treatment for acute episodes of mental illness". I can go along with that. It is the nub of the problem, as all too often there is simply nowhere for the patients to go.
The Mental After Care Association, MACA, says that bed-blocking and bed shortages are not best resolved by increasing the number of in-patient beds. It wants to see a greater provision of a range of community-based mental health services, so do I—so do we all, I presume, but we cannot run until we are walking, and the provision of adequate in-patient care is a jolly good starter for 10. When we have that, we can turn our attention to out-patient care.
The National Schizophrenia Fellowship and SANE both like the Bill. Both deal with the biggest mental illness, schizophrenia. There is a 1 per cent. chance of having that dreadful disease at birth. Three or four people in every 1,000 experience some form of schizophrenia at any one time. It is the same the world over—black or white, rich or poor, civilised or pygmy—the statistic remains exactly the same. Fifty per cent. of all admissions to psychiatric hospitals are schizophrenics. Their mortality rate is two-and-a-half times higher than that of the rest of the population; 15 per cent. will commit suicide; 25 per cent. will commit grievous bodily harm to themselves; between 10 and 20 will commit murder, of which one-third will be of total strangers and two-thirds of parents, nurses, carers or someone they know. One in five of the prison population are schizophrenics—perhaps we should think about taking them out of the prison system—and so are one-third of those living rough.
With those figures in mind, can any of your Lordships be content with the current situation? I think not. Something must be done and that something must be done sooner rather than later—and preferably now. The Parliamentary Under-Secretary of State wrote to Julian Lewis M.P., stating:
"While I agree it is important to ensure an individualised programme of care for each person who requires admission—and these principles are embodied in the Care Programme approach—I do not believe that physically separate in-patient facilities is the appropriate way to provide in-patient care".
I say that this Bill—and I am supported by eminent and respected psychiatrists, such as Dr. Martin Deahl of Homerton Hospital in Hackney, Dr. Mark Salter of Bart's and Dr. Mike Harris of St. Andrew's Hospital, Northampton—is in line with the departmental policy of separating out different types of patient. It cannot be right that mothers with young children should be in the same ward as people with acute psychotic conditions or that people with psychogeriatric problems, who are especially vulnerable, should be in the same area as people with acute problems.

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In 1998 Peter Tyrer, professor of community psychiatry at Imperial College, London, published an article in the British Medical Journal. He is recognised as being the country's leading expert in community psychiatry. The gist of the paper was that based on a cost/benefit analysis rather than on clinical care quality, the cost of providing a service in Brent, which just happens to be Mr. Boateng's constituency, where beds have been reduced too far, was double that of providing an identical service in a neighbouring health authority which has a heavy community presence and a much larger number of available beds.
The principle is therefore transparent: although community psychiatry is good, it needs to be backed up with appropriate numbers of acute beds within each catchment area so that community services can have the beds as part of the total service. This Bill does just that in Clause 1. SANE says,
"This Bill recognises in patient care should be tailored to the individual's needs, giving real choice to those currently denied help in hospital. Because of this crisis in inpatient care people with mental illness are being ignored and neglected and lives are being lost. These proposals may well prevent many unnecessary tragedies".
SANE has campaigned on the issue of beds—or rather the lack of them—for 15 years and feels strongly that patients must have the choice of where they want to be treated.
I remind your Lordships that through various Written Answers I have been told that no data are kept by the Government on how many mentally ill people commit crimes, nor how many commit them as a result of early release from hospital into the community. The Government should keep such records, as those involved in mental health care need them for future planning.
We have fewer psychiatrists per 100,000 people in London than in any other city in the world except Teheran and Bangalore, and because of exasperation with the system we have only 5,130 psychiatrists working full time with the mentally ill in Britain. There are 5,130 psychiatrists to deal with up to 6 million people, if it is accepted that one in 10 of the population are liable to have a mental problem during their lifetime. In practice most psychiatrists have 400 patients on their books at any one time, but 14 per cent. of all psychiatric posts-450 posts—are today unfilled. London has fewer hospital beds and a lower amount of available cash to look after the mentally ill than any other industrialised city in the world. What a sadness.
Most mentally ill people are not violent; most can walk unnoticed in the community; and most homicides and suicides are preventable. But these objectives can be achieved only with better care, better communication between the service providers and better risk assessments provided by better facilities in which psychiatrists can work. Then and only then can we ensure that there are fewer unnecessary deaths and at the same time the public will have their fears allayed and the ever-hysterical media can be silenced. We cannot wait for government-led primary legislation to upgrade the Mental Health Acts. However undesirable it may be to this Government, we must work piecemeal
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through the 1983 Act to provide what a modern society requires for its mentally ill minority. We must act now. This is the first step. It will help the patient, the doctor, the carer and the community at large.
Moved, That the Bill be now read a second time.— (Lord Rowallan.)
8.51 p.m.
Lord Hunt of Kings Heath: My Lords, I should like to begin by declaring an interest as a policy adviser to the Sainsbury Centre for Mental Health. I also thank the noble Lord, Lord Rowallan, for this opportunity to have a serious debate on mental health services in this country. This is a timely debate, although I regret that I have reservations about certain aspects of the Bill.
I have no objection to the provisions relating to single sex wards. I recognise that there have been considerable problems in this area in a number of psychiatric hospitals and that they have created considerable pressure and strain on both patients and staff. I am doubtful, however, whether legislation is the answer. The noble Lord believed that the Minister required the extra clout to put this into practice. The reality is that ministerial priority backed up by ministerial action is sufficient. But one should not underestimate the practical issues involved in moving very speedily to a solution in this area.
I have considerable concern about Clause 1 of the Bill. I recognise that there are problems in some areas in relation to the sufficiency of in-patient facilities. It is important that appropriate access is available to those who require it. But it is wrong to focus narrowly on the issue of beds in mental health hospitals. The danger is that by focusing solely on the issue of beds we will send the policy on care in the community into certain retreat. It is vital that on this issue we debate the whole context in which mental health services should be provided in this country. Mental health services are a very important part of the NHS. One-eighth of all NHS expenditure is spent on mental health. It has been estimated that mental health problems underlie up to one-third of GP consultations.
Despite the rather gloomy assessment made by the noble Lord, I believe that in the past two to three decades great strides have been made in the way that the health service has handled mental health issues. When I began my career in the health service 25 years ago I visited a considerable number of mental health hospitals. The conditions in those hospitals were pretty deplorable. They were overcrowded, had few staff, provided institutionalised care and lacked support. As we well know, the result was a series of inquiries in those hospitals in which staff had been abused in one way or another.
In the past 20 years we have seen a huge improvement. As we have developed community care thousands and thousands of people have had better support and care and have been able to live their lives in the community. Problems have arisen from the early discharge of patients without proper support. There have also been resource problems. We have been unable to provide investment to maintain some of the old hospitals

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while we have developed new services in the community. There have also been problems related to inter-agency working as between health and local authorities. Despite those problems we should not forget the dramatic improvements that have taken place in our mental health services.
Nothing that has happened in the past few years can justify the hysteria that has been created in relation to a number of homicide cases in which the mental health services have become everyone's whipping boy. Instead of looking just at bed numbers we must look at the much broader picture. I suggest that our approach to mental health services should be governed by three broad principles. First, we need to base it upon a recognition that people who experience mental illness are citizens who retain equality of access according to need to health services, social services, housing and other services. The second principle is that those who experience mental illness should have the opportunity, where possible, to manage their own lives and make their own distinctive contribution to society. The third principle is that good outcomes will flow from the integration of people who experience mental illness within society generally wherever possible.
I believe that the key elements in trying to ensure that those principles are put into practice effectively are the following. First, it is absolutely essential that we have integrated service plans which are agreed jointly by health and local authorities. Secondly, those should be underpinned by the pooling of budgets between those agencies. I very much welcome the Government's approach in this area. Thirdly, at operational level we need to go beyond simply talking about joint working. Health and social care staff must begin to work together and be integrated within the same teams. Fourthly, with the emergence of the new primary care groups under the Government's NHS White Paper we must ensure that they work very closely with community mental health teams so that there is a completely co-ordinated approach to primary and community care.
Further, we must tackle some very difficult staff issues. I do not believe that any of us can pretend that the morale of all staff working in the field of mental health is always at a high level. We must invest more money in the training and development of staff. We require a package of measures to support staff recruitment and retention. We must also concentrate on leadership in our mental health services. I am concerned that the people who manage those services can be isolated from the mainstream managerial cadre in the health service. I should like to see concerted action taken to implement programmes to develop and support that leadership.
The noble Lord referred to the public perceptions of the risks involved in community care. Certainly, they appear to have become negative and distorted in the past few years. I believe that that poses major problems for the morale of people involved in mental health services and those who have to develop and plan services for the future. I question the impact of compulsory inquiries into homicide incidents. I believe that often they have attracted maximum publicity with little new being learnt
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from them. They have undermined public confidence and placed an enormous amount of pressure on the people involved.
All of us recognise that public interest demands a mechanism to carry out reviews of all serious incidents. I wonder whether there can be developed a constructive alternative to public inquiry after public inquiry. I favour the suggestion that we might appoint an ombudsman who, on the basis of the available information, might advise as to whether a public inquiry were warranted in every case. Tackling public perception may be the greatest challenge that we face. It is an enormous task, but it is one to which we must devote attention.
Next, I shall reflect on the impact of the Government's White Paper on the NHS. The overall theme of the integration of services is consistent with what we need to achieve in the mental health field. There are a number of key issues which we must face. The first is our capacity to manage change. That is a large agenda. It is not for just a year or two, it is for a decade. We must look carefully at the support that needs to be given to the people who will have to lead that change in the mental health field.
Secondly, we must be careful about the potential marginalisation of stand-alone mental health NHS trusts. I well recognise why the Government have decided that that should take place. We need to have available a package of measures to ensure that those people working in those stand-alone trusts do not become isolated from the rest of the health service or social care.
We must look carefully at the commissioning skills available in health authorities and primary care groups. I have been worried about the scarcity of talented people available to health authorities to help commission mental health services. As primary care groups take on that role, there is a similar problem in trying to ensure that at that local level they have people who understand mental health services, and who can commission effectively.
We shall have to devise new ways so that scarce skills can be shared between primary care groups and between health authorities. Finally, in relation to the White Paper and its impact on mental health services, it is important that, as between trusts, health authorities and primary care groups it is clear who is accountable. We cannot afford for people to slip through the net. It must be clear as to which agency is accountable for which client of the health service at the end of the day. The White Paper offers overall a strong, positive way forward in relation to the NHS generally and specifically to our mental health services. It offers a much more positive way forward than the narrow concern about the number of beds available within mental health hospitals.
9.03 p.m.
Earl Howe: My Lords, one of the themes running through last week's memorable debate in your Lordships' House on the golden jubilee of the NHS was the progress which has been made over the past 50 years in making the NHS more responsive to patients' needs. That continuing aim, which the previous government

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endorsed, perhaps most tangibly in the Patient's Charter, and which the present Government have also recognised expressly in their White Paper on the future of the NHS, is not merely ethically right, it is also, almost self-evidently, a part of that necessary process which ensures that resources are utilised efficiently.
Responsiveness to patient need is a principle which runs right through the health service. It is a theme which resonates with particular clarity in the area of patient care to which my noble friend has so graphically drawn our attention—that of mental health.
Improving mental health is one of the four key targets in the Government's recent public health Green Paper, Our Healthier Nation. The prevalence of mental illness and its profound consequences on so many aspects of our national life are starkly delineated in that document. I shall quote a brief section from page 76:
"mental health problems are a major cause of ill health: the 1995 Health Survey for England showed that 20 per cent. of women and 14 per cent. of men may have had a mental illness; mental disorders accounted for an estimated 17 per cent. (more than £5 billion) of total expenditure on health and social services in 1992/93 (the largest single cause); they also accounted for 15 per cent. and 26 per cent. of days of certified incapacity in the early 1990s in men and women respectively".
Those statistics, shocking as they are, reflect a multitude of different conditions and disabilities whose causes are varied and complex. Ever since the Mental Health Act 1959, which did so much to destigmatise mental illness, it has been the policy of successive governments to shift the emphasis of caring for mentally ill patients from the institutions to the community. That process gained added momentum, of course, with the National Health Service and Community Care Act 1990.
However, in implementing that broad policy, which has attracted cross-party agreement, both this Government and the previous one have recognised the importance of in-patient care, and the need to ensure an adequate number of psychiatric beds in hospitals. A great deal of discussion has taken place recently on whether there is a need to create more such beds, both acute and long-stay, and whether, in particular, the apparent pressure on acute beds could be alleviated by better management of admissions and discharges. But those are not issues which need to concern us this evening. What matters in the consideration of this Bill, or more precisely Clause 1 of the Bill, is that there is a clinically acknowledged need for in-patient care which NHS trusts and health authorities have a duty to meet.
My noble friend set out the background to the Bill with skill and persuasiveness. I shall not go over the ground which he covered so ably. But if we accept that there is a clinical need for in-patient care and that provision of that care is not always—for whatever reason—readily available, then two conclusions must follow. The first is that the minds of health authorities should be focused on the task of ensuring that the needs of mentally ill patients are properly met; and the second is that the conditions in which such patients are looked after must meet basic standards of safety and privacy. Those standards are ones which we expect to find, and usually do find, in community psychiatric homes. They
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are also standards which are of fundamental importance for the care and rehabilitation of disturbed, and sometimes highly vulnerable, men and women.
Worryingly, a recent report by the Sainsbury Centre for Mental Health, looking specifically at London, highlighted major differences in standards between NHS hospital wards and community homes. It suggested that, compared to the consistently high standards to be found in community homes, hospital wards were often in a poor state of repair, with residents more likely to be isolated and less likely to enjoy any measure of privacy.
A report published in 1996 by the Royal College of Psychiatrists makes similar points about the standards of care in NHS psychiatric units, laying particular emphasis on the need to improve on standards of hygiene, safety and privacy. But it is perhaps the vulnerability of women patients that has given rise to the greatest concern. My noble friend has already rehearsed the sobering facts revealed by the recent report of the Mental Health Act Commission. It is perhaps impossible for anyone who has not experienced life on a mental ward to imagine the fear and trauma experienced by women who find themselves harassed, molested and sometimes horribly injured by fellow patients whose close proximity in the hospital ward has allowed all too easy a level of access to those unfortunate individuals.
The best efforts of nursing staff are bound to be insufficient in such circumstances. The commission report revealed that more than half the wards it examined had experienced incidents of sexual harassment, some serious. On that issue, a report last year by the King's Fund, London's Mental Health, described the number of assaults and cases of sexual harassment on in-patient wards as "unacceptably high". Over a period of a fortnight in January 1995, 131 assaults were committed by patients in London's psychiatric units, of which four resulted in major physical injuries. The survey was repeated a few months later and the findings were, if anything, even more alarming. The point here is that violence is not only to be condemned in itself, but, as my noble friend emphasised, its prevalence calls into question the ability of psychiatric units to provide a safe and therapeutic environment for patients.
The Government's acceptance of the principle of single-sex wards is on the record. No one doubts their commitment to making that a reality across the NHS over a period of time. The Minister may say that for some health authorities time is needed and that, in any case, legislation is unnecessary because appropriate guidance is already in place. No doubt there is a case for accepting such a response for the generality of NHS hospital patients. But there is a real difference between a general surgical ward and the ward of a psychiatric hospital.
In a psychiatric unit, the issue is not simply one of preserving the dignity of the patient; it is that without the kinds of measure specified in Clause 2 the patient's physical safety is in constant jeopardy. For that reason, and with respect to the noble Lord, Lord Hunt of Kings Heath, I believe that primary legislation is an entirely

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proper way for the issues to be addressed and that it is proper, too, for the necessary resources to be allocated to fulfil the legal requirements which ensue.
The aims of the Bill have attracted support from the major voluntary organisations representing mentally ill people; MIND, the National Schizophrenia Fellowship and SANE. Of those, only MIND has expressed reservations, and then only on the effectiveness of Clause 1 as drafted. I do not believe that this is an all-or-nothing Bill; nor is the wording of the Bill wording to which we necessarily need to feel wedded. Indeed, my noble friend indicated his readiness to look at amendments which might serve to improve the Bill.I hope that the Government will take note of that and respond constructively. In other words, I hope that they will look for ways to accept the key elements of this Bill, even if the precise approach adopted by my noble friend is not one which they can endorse entirely. At the very least, I would like to hear the Minister say tonight that she will go away and reflect on what she has heard and, if necessary, offer to meet my noble friend prior to the Committee stage.
I take serious note of the authoritative and thoughtful speech of the noble Lord, Lord Hunt of Kings Heath. However, the objective of the Bill is to ensure that the requirement on the Government to provide adequate standards of psychiatric care is strengthened by a specific duty to address some of the grave shortcomings which impact directly on the care and well-being of some of the most vulnerable members of our society. I cannot for one moment quarrel with that aim. The Bill deserves the support of your Lordships.
9.14 p.m.
Lord Sainsbury of Turville: My Lords, I congratulate the noble Lord, Lord Rowallan, on bringing forward this Bill. It raises the vitally important issue of in-patient care for mentally ill people. Your Lordships will be aware, I am sure, of the intense pressure on acute psychiatric beds, especially in inner cities. The Bill attempts to address that pressing issue. It is surely right that health authorities should have costed and timetabled strategies for developing local psychiatric care.
However, the Bill, I believe, is less helpful than it could be because it seeks to address in-patient provision as if it existed in a vacuum. Most people who suffer from mental illness live in the community and have done so for decades. For 95 per cent. of people who suffer from severe mental illness this is also the best place for them to be. It is essential therefore that reform and improvement to our system of mental healthcare addresses support for people in the community as well as the adequate provision of in-patient care. These are not separate options which can be pursued independently. We have to make progress on both fronts simultaneously.
Studies of pressures on acute beds have shown that patients often remain in hospital because they have no accommodation to go to, and there is little or no skilled support available in the community. Equally, we know that community mental health teams often find it hard to cope because they do not have ready access to beds
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when the condition of a patient is deteriorating. Simply investing in beds will not solve the problem, as these beds will then be rapidly occupied by people who cannot be discharged due to lack of appropriate housing or support. More beds may be needed in many places but they must form part of balanced and comprehensive services. If investment in beds did take place at the expense of community services as a consequence of this Bill, that could make the crisis in mental healthcare worse rather than better.
A poorly balanced strategy also makes little financial sense. Maintaining someone in a hospital bed or similar environment costs around £50,000 a year whereas providing someone with a severe mental illness with suitable residential accommodation and a high level of support outside hospital costs £10,000 to £20,000 a year. The maths speaks for itself.
I would argue that developing targeted systems of care for severely mentally ill people is the single highest priority within mental health. We are relying far too much on a limited range of services. Little account has been taken of the international evidence that shows how to run mental healthcare successfully. Severely mentally ill people require the same range of services and support as do other disabled or vulnerable people. Crucially, this includes adequate supported accommodation, and something useful or interesting to do during the day.
Successful services will particularly require skilled and dedicated workers to be in touch with patients frequently—sometimes daily or twice daily. They must be able to offer a range of health and social support services. These workers should be organised into what is known as assertive outreach teams that have a specific responsibility for delivering services to the most mentally ill people. On 9th March, the Sainsbury Centre for Mental Health will be launching Keys to Engagement, a report which will set out clearly and forcefully the arguments for assertive outreach.
Finally, I would like to say a word about mental health legislation generally—the third part of a mental health strategy besides community support and places of safety. I believe there is now a need to review mental health legislation to see what more can be done to support and enable staff to work with the most ill people. We need to examine what can be done to help ensure patients can be taken into hospital rapidly when they begin to show signs of illness in the community instead of waiting until they become very ill. As always, we need to be balanced in our approach, and I would like to make it clear that I am not supporting the draconian style of community treatment orders, which I do not feel would be widely acceptable in our country. But the time has come to see what can be done to make mental health legislation fit more effectively with modern mental health services.
Like other noble Lords before me, I very much welcome the opportunity to have a debate on this vital subject. But I cannot emphasise too strongly the need to develop mental health policies and mental health law that address the whole spectrum of mental health services including hospital, residential care and intensive support outside hospital. A piecemeal approach to this issue simply will not work.
9.18 p.m.
Lord Mottistone: My Lords, I congratulate my noble friend Lord Rowallan not only on introducing the Bill but also on the great interest he is taking in the very important problems of mental illness, for the reasons that he told us.
The principles of the Bill are strongly supported by both SANE, which helped Dr. Julian Lewis prepare the Bill in its earlier stages, and by the National Schizophrenia Fellowship. Your Lordships will be aware, although perhaps not those who are present now, because there have certainly been some changes on the Benches opposite compared with a year ago, that I am chairman of SANE and that I have been supporting the National Schizophrenia Fellowship in this House for over 15 years.
My noble friend Lord Rowallan explained the purpose of the clauses of the Bill, with which I agree. I wish to underline particular points. With regard to Clause 1, there is no doubt that the over hasty shutting down of mental health wards and the removal of beds by all health authorities throughout the kingdom during the past 20 years has had two very adverse effects.
Before I go on to tell noble Lords about those effects, I have to say that when I listened to the noble Lord, Lord Hunt of Kings Heath, and the noble Lord, Lord Sainsbury of Turville, I agreed with practically everything they said, if not everything. However, particularly in the case of the noble Lord, Lord Hunt, I felt that his speech was devoted to the White Paper which he mentioned and not to the Bill. Much the same really applied to the speech of the noble Lord, Lord Sainsbury, which was concerned with what the debate ought to have been about rather than the Bill. The Bill is important but its contents are not the only things that matter. I ask the noble Lord, Lord Sainsbury, whether you must wait until you can have a monster revision of the 1983 Act, which is what he was roughly suggesting, and not tackle immediate problems because there are some immediate problems. I shall mention two of them which relate to Clause 1.
First, the shutting of beds too quickly over a long period has meant that, in too many cases, there is now not enough suitable accommodation for all the mentally ill people who are at times beyond the capabilities of any form of care in the community, whether with their families or in some sort of public care. Secondly, there is now not enough suitable accommodation for all the mentally ill people who seek temporary protection from the stresses of any community as voluntary patients.
Clause 1 invites health authorities to assess how, in their area, the balance of beds needed to rectify the current shortage for the two types of patient I have mentioned can best be provided. It does not require immediate extra expenditure but points to the best direction for that to be provided when the moneys are available.
Clauses 2 and 3 deal with the more immediate need to provide safety and reassurance for people who are in the care of mental hospitals either as patients in instances where care in the community cannot cope or as voluntary patients of the type I have described.
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Action to provide such safety factors should be taken soon in those hospitals which need them. It seems to me that at this stage they are not getting the encouragement that they need. It has become obvious to me over many years of studying the problem that, by the way in which the National Health Service is run, the Government have been able to escape criticism for far too long on shutting down beds because they could say, "Oh well, it is all being done by the local health authorities; it is not our business at all." In fact for a long time they would not even say they had the figures. They said they were being collected locally. Therefore one could not obtain the relevant statistics. If one has not come across such a response in a parliamentary framework, one might not quite appreciate this point. Governments can escape and not do things when they want. They can blame someone else; they can say that someone else is responsible. That is a matter which needs to be tackled. As Back Benchers in this House we need to keep a sharp eye on that. I am not being in any way critical of the present Government. I am really being critical of my own noble friends, one of whom is sitting on the Front Bench but did not have to deal with this subject.
It seems to me that what my noble friend Lord Rowallan is trying to do, and what Dr. Julian Lewis was trying to do in another place, is to help the Government reverse the swing of the pendulum of care for the mentally ill. It has swung too far towards the community and away from care in proper buildings. I spent much of 10 years before the election trying to persuade my noble friends in the previous government that they were allowing local health authorities to push the pendulum too far and too quickly towards community care. At the time I felt that many noble Lords who now support the Government, and who are not present tonight, agreed with me. They are perhaps not here because they seem to have forgotten their earlier concern.
Before I realised that there was such an early change of heart on the part of Back Benchers opposite, I was most surprised that the Government used the blunt instrument of talking out a Commons Private Member's Bill showing what seemed to me to be their contempt for the efforts of those who really care for the sad fate of mentally ill people when there are not enough of the caring facilities they really need. I hope that we shall see, as a result of this Second Reading debate, more understanding shown in this House and by the Government, and that they will make an effort to see how they can help the Bill achieve an acceptable wording which can be made to work and so help the legislation through both Houses of Parliament.
9.27 p.m.
Lord Acton: My Lords, it is a great pleasure to follow the noble Lord, Lord Mottistone, even when he criticises my noble friends Lord Hunt of Kings Heath and Lord Sainsbury. At least he was even-handed; as I understood it, he also criticised the noble Earl, Lord Howe, and the rest of his Front Bench.
At the outset I should say that I am a vice-patron of MIND. Between 1992 and 1994 that leading mental health charity's "Stress on Women Campaign" heard from women all over the country that they did not feel

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safe in psychiatric hospitals. Accordingly, I welcome the principle in Clause 2 of the Bill introduced by the noble Lord, Lord Rowallan, which places a duty on health authorities to provide single sex ward areas in all existing psychiatric units. So much for Clause 2.
I am firmly opposed to Clause 1 of the Bill. It is solely concerned with treatment for in-patients and will therefore increase the proportion of mental health spending allotted to hospital beds. This scheme immediately brings to mind the 1994 report of the Audit Commission, Finding a Place: A Review of Mental Health Services for Adults. At paragraph 27 the Audit Commission stated,
"Where most of the resources are tied up in providing hospital beds it is difficult to break out of the vicious circle and to relieve the pressure on them".
Exhibit 9 graphically depicts the vicious circle: most resources are tied up in providing hospital beds; thus there is no spare capacity to develop community services; thus people are unsupported in the community and so are admitted to hospital; thus hospital beds are full, so most resources are tied up in providing hospital beds, and round and round and round the circle goes.
The Audit Commission called on all authorities to plan how to break the vicious circle and work out what mixture of services users and carers required. Applying that thinking to Clause 1 of the Bill, health authorities, as my noble friend Lord Hunt of Kings Heath said, preferably together with local authorities, should not only prepare a strategy for hospital provision but also for community services such as 24 hour crisis care, non-medical crisis houses and houses with flexible care and support for up to 24 hours a day. Other services users, requirements include home care to help them plan their day or week, employment advice, drop-in centres, support for self-help groups, counselling, befriending and various forms of therapy.
Alas, on all such community services Clause 1 is silent. Far from breaking the vicious circle, Clause 1 merely perpetuates it. I emphasise to the noble Earl, Lord Howe, that MIND opposes the clause and explains,
"By creating a duty focusing only on in-patient facilities for acute patients it will distort the allocation of resources and in particular divert resources from community based provision".
On 12th December last year, a debate was held in another place on an equivalent Bill. The noble Lord, Lord Mottistone, mentioned it. Mr. Patrick Nicholls, the honourable friend of the noble Lord, Lord Rowallan, gave the impression from the Opposition Front Bench that Clause 1 could always be deleted in Committee. That is the course of action that I would advocate now. By all means proceed with the provision of single sex ward areas. But take heed of the Audit Commission and of MIND. Do not make the circle even more vicious. And, with a single clean stroke, sever Clause 1 from the Bill.
9.32 p.m.
Lord Lucas of Chilworth: My Lords, I am grateful to my noble friend Lord Rowallan for his limited Bill and the way he described it. I cannot agree with the noble Lord, Lord Acton, who wishes to delete Clause 1 from the Bill. My noble friend describes the Bill as one
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step on. Let us not delete too much, nor at a later stage add too much to it because that will confuse the issue. Let us treat the Bill as one step along a long and tortuous path.
Other noble Lords who have spoken have taken the advantage—it is an advantage that I shall take, perhaps to the ire of my noble friend Lord Mottistone—of not discussing the Bill any further but of discussing the somewhat narrow but immediate issue concerning mental illness. In that regard I beg the indulgence of your Lordships' House today.
Some noble Lords may ask why I am involved in matters of health. I am not well known in your Lordships' House for discussing these matters. It is simply because I have been approached over the past three or four months by a large number of people, some of whom are engaged in the health service and in the area of mental health and by patients who are frightened and concerned and who do not know what is happening.
I have a number of examples. However, it is late and perhaps I should give just two. One is from the professional side. A clinical services manager in a mental health resource unit tells of a patient who is very well-trained, about 40 years of age and has been in and out of employment over a number of years. The type of work that the patient does is stressful, and when the stress reaches certain levels he becomes disoriented and unstable and then has to fall back on the medical services available. Each time, his benefits are scrutinised; sometimes they are removed and sometimes they are replaced. I am given to understand that in circumstances such as that suicidal tendencies emerge. As noble Lords will know, there are very many cases of attempted suicide, probably more as a result of the stress associated with the illness—in trying to combat it and so on—than of the illness itself.
A "Panorama" programme on Monday night discussed these matters in relation to Merthyr Tydfil. An instance was given where both the GP and the wife were quite convinced that it was the stresses associated with the illness—the stresses of getting adequate support, including benefit—that drove the husband to suicide. It was a sad example. I fear that other, similar evidence may come to light unless we are extremely careful.
On the patient's side, the patient in my second example has been reassessed. I shall return to that point. Without being given a particular reason, that patient has had her benefit cut. She now has some six or eight weeks' rental arrears. There is nowhere to go and nobody to help. Perhaps that is why she came to me, believing that ignorance is bliss and that I could perhaps take up the point.
The point of course is, just at this moment in time, that the plight of the people to whom I have referred—and as I said earlier, there are many of them—rubs off onto others. So before very long, a whole number of people are infected with that fear.
The publicity currently given by both the Government and the media to the Benefit Integrity Project and the use of "adjudicating officers"—I do not know what an adjudicating officer is in relation to health matters, and

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particularly mental health matters—has given further cause for concern. What is happening? What is going on?
In a Written Answer in another place on 9th February, the Minister responding said that,
"This Project is operating under the normal assessment and adjudication rules that are applied to all DLA cases"—[Official Report, Commons, 9/2/98: col. WA 76.1
She states that the matter can go to an appeal tribunal and so on.
But, surprise, surprise, on the very day that that entry appeared in Hansard, in Middlesbrough at a party meeting, as reported on Tuesday 10th February in the Daily Telegraph, Ms. Harman insisted that information about the care and mobility needs of DLA beneficiaries was essential, but acknowledged that she was,
"unhappy with the quality of the decisions made so far".
Apparently Ms Harman has now banned officials from automatically withdrawing or reducing benefits. Against the background of a White Paper on welfare reform, it seems rather odd to me that a new or enhanced project should be set in place. The Minister said that she was unhappy at some of the decisions that had been made. What about the feelings of those disabled by mental illness who have been affected? What about the case that I quoted? Will there be compensation for that person with the rent arrears? Will someone have a further look at some of the recent decisions and, where they have borne harshly on people, will some immediate remedial action take place?
I do not believe that those of us who enjoy full health can understand what an unending struggle it is to be disabled through any cause and what a great desire there is among disabled people to make a contribution—limited though it may be—to the society in which they live. They should he helped to do that rather than being harassed by officials, many of whom I am given to understand have no medical experience whatever.
9.41 p.m.
Baroness Young of Old Scone: My Lords, I shall keep the noble Lord, Lord Mottistone, happy because I shall discuss the Bill. I also hope to make him slightly happier about the people he faces across the Chamber by talking about my credentials as a newcomer to the debate.
I was responsible for the management of mental health services in North London for about 10 years, working in some of the most deprived inner-city districts such as Lambeth, Haringey, Brent, north Kensington and parts of north Westminster. That included arrangements for the appropriate care of people with mental illness in connection with the run-down and closure of some large mental hospitals.
This is a serious and important subject that we are addressing tonight because mental illness is a personal catastrophe for individuals and families. It is a drain on society's resources and, alas, it is an increasing phenomenon. We are seeing mental health problems connected with a range of subjects arising through unemployment, racial tensions, homelessness and
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refugee status. There is a whole variety of reasons why mental health is becoming a more and more pressing issue for society these days. It is most pressing in terms of its personal load on individuals when they are unable to take a normal role in society.
I shall be brief tonight. It is in the interests of the mental health of us all that we get home and get some sleep. I do not think anyone could argue with Clause 2 of the Bill in terms of content. Quality of care is vitally concerned with issues of single sex areas and appropriate security devices. But there is already guidance available in the provision of those facilities. It is inappropriate for them to be the subject of legislation.
Clause 1 is more difficult. It asks for a strategy for in-patient facilities. One could say that drawing up a strategy is a fairly harmless activity, but there are three reasons why it is inappropriate to legislate for that strategy. First, as we heard from other Members of the House, in-patient facilities and services are only part of a wider picture. What we need is not strategies for in-patient resources but a strategy for comprehensive and integrated mental health services and a balanced service system. The ability to give support to the damaged people who suffer with problems of mental health depends on a range of services. We have heard some of them outlined tonight. Crisis in-patient services are only one part: community crisis services are vital as well. Also, there is 24-hour staffed nursing homes, the kind of outreach services to which my noble friend Lord Sainsbury referred in terms of the ability to prevent mental health breakdown, issues of employment, long-term care, intensive home support. A whole range of services needs to be provided. In-patient care is only one of them and to plan piecemeal is inappropriate.
A second reason why the Bill is inappropriate is that services cannot be planned by health authorities alone. Many aspects of care that are required are not delivered by health authorities: they are delivered in conjunction with social services and housing authorities. Strategies therefore need to be planned with all three of those authorities working in conjunction. We want to see the same professionals providing care across the divides of different authorities. We need a care programme approach which focuses on individuals, and it would therefore be inappropriate for a Bill to require health authorities alone to prepare the strategies.
The third issue has already been touched on; that is, the question of distortion of priorities if in-patient care is given inappropriate high priority as a result of being the subject of legislation. I believe that the provision of in-patient beds in many settings, particularly in inner cities, is one of the most inappropriate forms of care. I do not know whether any other noble Lords have spent a night in an acute psychiatric ward anywhere in this country but particularly in some of the inner city units. As we see the rising tide of mental illness and fewer and fewer resources available for mental health care, we see in some of the in-patient wards the most inappropriate people, who are in a severe mental health crisis. I may be accused of being flippant, but nobody in their right mind would want to go into one of those facilities on occasions. They are quite often full of extremely disturbed people, often in an inner-city area.

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They arrive there as a result of being collected by the police, possibly under section, and often with extreme racial tension on some of the wards. It is highly inappropriate for many people to be admitted to such facilities. We need a range of appropriate facilities as part of an integrated care service.
My last point is that there is already a requirement laid on health authorities by the NHS Executive for strategies for a comprehensive range of mental health services. We do not need more strategies or more legislation. We need more sharing of good practice, more evaluation and monitoring and perhaps particularly we need sufficient resources in the highly deprived inner-city areas to provide an adequate standard of mental health care for everyone.
I congratulate the noble Lord, Lord Rowallan, on bringing these issues to our attention, but I urge your Lordships not even to consider these issues as being appropriate for legislation.
9.47 p.m.
Lord Swinfen: My Lords, it is an honour to follow the noble Baroness, Lady Young of Old Scone, with her detailed knowledge of this subject. I must admit that my knowledge of the issues surrounding mental health is minimal. As the House knows, I normally speak on issues to do with physical disability. However, the Bill should be welcomed from all quarters of the House as an honest attempt to raise this issue and to produce a possible solution.
I have a strong feeling that when the Minister responds to the debate, the answer is likely to be a lemon—not necessarily because she believes it but because the Treasury has got its sticky hands around her throat. And that is enough to drive anyone mad.
The noble Lord, Lord Sainsbury, pointed out that 95 per cent. of people with a severe mental illness are cared for in the community. I agree that in most cases that is probably the best place for them; as near normality as possible. I have a feeling that madness breeds on madness. Like other diseases of an infectious nature, I am sure that people who have a severe mental illness are not helped by being cooped up at the same time with others with slightly different mental illnesses.
Mental health patients, even those in the community, go through crises from time to time and need more intensive care. I may be wrong, but I do not see in Clause 1 of the Bill provision for respite care. I may have misread it. In that case, I apologise to my noble friend. However, I feel that the Bill could be improved by making specific provision for respite care. That is where immediate short-term help can be given to those from the community who are going through a crisis. The help is not just for them; it is for their family and their carers at the same time.
If those who care for the mentally ill in the community are not given proper support, they themselves will become ill—possibly mentally, but more likely physically. That in itself will cost the community more than giving them and the person with the mental illness the appropriate support when required. Not only will there be additional costs in trying
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to restore that individual to health but there will be loss of service to the community because often they will not be able to continue in work and there will be a loss of tax to the nation because they will stop earning and not pay tax. There could also well be the additional burden of social security payments.
Clause 2 of the Bill deals with the question of single-sex accommodation, which, as the House will know, is part of the Patient's Charter and is therefore recognised by the present Government, as it was by the previous government. I know that it will take time to bring in single sex accommodation everywhere, but it is of course desirable because a mental illness may possibly have started—I am not a skilled psychiatrist and I may be talking through my hat—by the individual having been sexually abused or raped at an earlier time. That goes for men as well as for women.
There is also the fact of religious concerns. In some communities women have to make certain that they are not seen by any male other than members of their own family. Being in a mixed ward, going to and from the bathroom under these circumstances, could have a deleterious effect on their health. In one extremely strict Moslem sect a woman may not even shake hands with a male who is not her father, her husband or her son. Every other male is off limits even for the purpose of shaking hands. That makes it extremely difficult for her. In looking after people with mental illness, we must also ensure not only that they do not suffer any form of sexual harassment when in hospital but that they do not suffer racial abuse or abuse on grounds of their sexual orientation.
We should support the Bill but I feel that we may need to improve it as it makes its way through the House.
9.54 p.m.
Lord Alderdice: My Lords, I would first like to thank the noble Lord, Lord Rowallan, for bringing this Bill before your Lordships' House and also to declare an interest. I am a consultant psychiatrist and psychotherapist working in Northern Ireland. I say that not only to declare an interest, but also to say something about the background that I come from. It is one of commitment to working with people in the community. When establishing a service in psychotherapy, I chose to move out of an acute hospital trust to work in a community trust. I work in Northern Ireland, where health and social services have been integrated since the early 1970s and where so many of the problems that were so eloquently spoken about by other noble Lords in that sense at least do not apply. I am a psychotherapist and have spent a good deal of my interest and time working with people, not using medications particularly, sometimes working with patients with severe psychosis, but with very limited use of medication. I say that because it is important that noble Lords understand that background, since some of the things I shall say will be at odds with some of what other noble Lords have said.
Let us go back a little in history. It is perhaps rather striking that we are speaking about these issues of community care—and, particularly in relation to this

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Bill, about in-patient care—so shortly after the death of Enoch Powell. He was a man with whom I disagreed on almost every issue. Yet in 1961 it was he, as Minister of Health, who spoke about the big mental hospitals being places that we should move towards closing down, moving people into the community, which was much the best place. On that issue, if on almost nothing else, including Northern Ireland, I very much agreed with him.
That possibility arose for a number of reasons. In the 1950s there had been developments in psychological terms and also in the production of pharmaceutical preparations which made the discharge of patients into the community a more realistic possibility. There was also a change of philosophy which helped people to accept into the community those whom they had wanted to banish away. For a number of years, slowly, much too slowly, there was a gradual move towards community care.
Then two things happened which combined to speed up the development of such care and, more importantly, the closure of the mental hospitals. One was the more radical attempt to develop community care which said, "Let us close down as many of these hospitals as possible". There was also concern about public expenditure by a Conservative Government which realised that when people are put into the community it is much more difficult to measure whether one is producing adequate services for them. There was also the excuse of closing beds and wards to enable people to go out into the community. The result was that many people, particularly on this side of the water, went out into the community with a lack of preparation.
For various historical and other reasons the case of Northern Ireland was much less a problem of that kind. Very considerable preparations were made and a whole range of services of the kind referred to by noble Lords have been provided. Yet I believe that within all this what sometimes was forgotten was that there are patients who need in-patient care for a period of time. There are also others who need a variety of other kinds of care, such as 24-hour nursed beds, out in group homes, and all kinds of other things.
But it would be very wrong of us indeed to pretend to ourselves, as people often have in the past, that there is not a need for people to be looked after for sometimes prolonged periods of time and, in other cases, shorter periods, in acute in-patient psychiatric facilities.
I know that the move towards community care was very important. I will never forget being called at three o'clock one morning to see an elderly lady with a medical problem in a psychiatric hospital where I was working as a junior psychiatrist. She was in her 80s. She had been in the hospital for over 50 years. She had been admitted with moral imbecility: she had had a child out of wedlock. That was sufficient for her to be admitted. That experience on its own, never mind the many others, convinced me that many people had been incarcerated in mental hospitals who did not need to be there. On the other hand, more recently, I have become increasingly convinced that there are many people who are being denied adequate in-patient psychiatric care. Many go
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into hospital and find places without adequate staff, who themselves are feeling inadequately supported in their work.
One only needs to look at the statistics, which can lie in all sorts of ways. There are bed-occupancy rates well in excess of 100 per cent. Psychiatric staff are leaving hand over fist and 14 per cent. of consultant posts are vacant, with hundreds of psychiatrists leaving the service as soon as they can, because they find themselves working in an environment which is stressful, unpleasant and, frankly, untherapeutic and indeed, sometimes, anti-therapeutic. The percentage of patients admitted on orders has increased by 300 per cent. since 1980. That has created an environment of fear, tension and enormous difficulty for patients and staff alike.
It is self-delusion to suggest that the resolution of that problem will come with the integration of health and social services and the provision of many more community facilities. It will not. Of course, things could be done to help and, yes, some of those in in-patient care could be provided for in 24-hour nurse-staffed units, if those units were adequately staffed. However, we should not pretend to ourselves that there are not those who need such care and who at present are not receiving it.
If I could make two amendments to the Bill, the first would be to expand Clause 1 and to ensure that it related not only to in-patient but also to other residential facilities. I do not think that that would detract from the Bill; I think that it would strengthen it.
Secondly, while considerable care is taken in Clause 2 to speak about the separation of the sexes, there is absolutely nothing about young people who find themselves entering in-patient psychiatric care with adults. Adolescents or those in their early 20s frequently enter in-patient care having been sexually abused, but they find themselves on wards with those who are, or have been, abusers. We are not necessarily talking about massive numbers of people. That is one of the reasons why separate facilities have not been provided, but that should not lead us to the very attitude that we deprecate in our predecessors who turned their eyes away and who put out of sight the most disturbed. If we say to ourselves that the solution to the problem is merely to provide community care and to provide it at its best, we are averting our eyes from some of the most disturbed people with the most difficult of problems. We should not put such people into places where we would not. and could not, work. Increasingly, staff are finding that they cannot work in such places and are leaving the service.
A serious input of resources is inevitably required. However, community care is not necessarily a cheaper option, because many of those who can be cared for in that way require intensive domiciliary arrangements. That is not necessarily the cheapest option. We have done that in my trust, particularly with patients with dementia. It has been markedly successful, but there is then the problem of resources and of being able to fulfil one's financial requirements.

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It is sometimes suggested that we do not need more strategies. It is only a few days since we had the Turnberg Report, which referred to mental health services in London. It recommended that we address the situation of mental health services because that is the service that is under the most pressure in London. It was said that we need a mental health strategy for London, but what did the Secretary of State for Health say? He said that he accepted the whole of the Turnberg Report and its recommendations.
We have to face the fact that some of the perfectly legitimate arguments that have been put forward tonight by noble Lords are based on two difficulties. First, they have argued a case that has already been made. The case for moving to better community services is made. I fear that we sometimes forget that there is also a case to be made for in-patient care. The other problem is providing the resources for all that care. Those on the Benches opposite have a fundamental problem there because, having accepted the spending limits of the previous administration, they find themselves not easily in a position to provide the necessary resources either for community care or for in-patient care.
The suggestion that the way to improve community services is to rob even more resources from hard-pressed in-patient care will lead to a shortage of trained staff. An extraordinarily high level of expertise and commitment is needed to work in such facilities, particularly if you take a psychological approach rather than one dependent on medications alone. I fear that those who do have to be in-patients—the young, the middle-aged, the elderly, men, women, whoever—will increasingly find themselves in a kind of custodial care that is a shame to us and the community at this time.
I support the Bill, not because I want to see less community care or because I want to see more people receiving in-patient care, but because I want those who require care to be properly catered for. I want staff to work in situations in which they can survive during their professional lives rather than simply opt out and leave it to juniors and agency nurses. I want better community care, but I am honest enough to say that it will require resources. Robbing Peter to pay Paul will not better the community health of our nation one whit. I ask noble Lords to support the Bill not only at this stage but at the next stages. If one or two minor amendments are made, as I believe they must be, the Bill can be improved and can proceed. But let us not commit the most dreadful mistake of all and make the ideal for which we all strive the enemy of the good which we can achieve by the passage of a Bill of this kind.
10.6 p.m.
Baroness Ramsay of Cartvale: My Lords, I believe that some considerable time has elapsed since your Lordships have debated the issue of mental health. I very much welcome the debate this evening and the valuable contributions that have been made. We have benefited from an impressive breadth of experience and expertise from all sides of the House, and we are all grateful for that. In declarations of interest and experience by noble Lords throughout the House we have heard the names of organisations with proud
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records in the field of mental health: SANE, MIND and the Sainsbury Centre for Mental Health. At the same time, noble Lords have an impressive record of present and past health service management experience. Last but not least, we have heard from a noble Lord who is a practising consultant psychiatrist. In this debate there has been an impressive degree of caring, experience and knowledge.
I agree with the noble Lord, Lord Rowallan, that mental health is not a political issue. The Government accord mental health a very high priority. We have identified mental health as one of the six medium-term priorities for the NHS in 1998–99. We agree with the desire expressed by the noble Lord, Lord Rowallan, and other noble Lords who have spoken tonight, to develop strong mental health services which are responsive to different levels of need and in particular the varying needs of different groups of service users and their carers.
While I agree that this is not a political issue, I cannot completely disregard the legacy that the Government have inherited of inadequate action on mental health services over the past 18 years. Some progress has been made in developing local services. Many dedicated people have worked very hard to make the policies work. But, as my right honourable friend the Secretary of State for Health said recently, for many the move from institutional care to care in the community has failed to deliver the necessary levels of support. The noble Lord, Lord Alderdice, spoke of that in his very impressive contribution.
We are determined through our policies to build public confidence and trust in the mental health services. Although I agree with the noble Lord, Lord Rowallan, that improvements to the infrastructure are necessary, I am afraid that I cannot agree that the proposals set out in the Bill are the right way forward. It is not just a question of resources, although I am sorry to spoil the dramatic imagery of the noble Lord, Lord Swinfen, of Treasury hands around my throat. It is true, as the noble Lord, Lord Alderdice said, that we have accepted the overall spending limits, but the spending will be to our priorities.
The intention in Clause 1 of this Bill is to extend the provisions of the Mental Health Act 1983 to establish an entitlement to separate and therapeutic environments for patients who need care and treatment. To go down this road would, in our view, severely restrict the capacity of health authorities to plan services flexibly while taking account of national priorities.
Any statutory provision for a right of access to such services would cut across fundamental principles of the National Health Service Act 1977 which place a duty on the Secretary of State to continue to promote a comprehensive service and to provide services as he considers necessary to meet all reasonable requirements. Current gaps in mental health services result to a large part from chronic under-investment in the past 18 years. But as the noble Lord, Lord Rowallan, is well aware, new resources to redress the situation are not available as if one could turn on a tap. In this context it is vital

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that health authorities retain the flexibility to commission and develop services, within government priorities, according to local need.
Health authorities are, in any case, already required to have a strategy for the provision of an appropriate range of facilities for the care and treatment of people with a mental illness; for example, in-patient facilities, 24-hour nursed beds and crisis care, form part of this range of provision.
We agree that it is important to ensure an individualised programme of care for each person who requires admission. Those principles are embodied in the care programme approach, introduced by the previous government to ensure continuity of care, and which we are keen to see remains in place as the cornerstone of policy.
We do not believe, however, that physically separate in-patient facilities for different conditions are the way forward.
The reservations in that connection expressed by my noble friends Lady Young and Lord Sainsbury, and other noble Lords, are well-founded. First, the benefits for patients of a supportive and therapeutic milieu are well documented. The low prevalence and incidence of certain conditions could result in some patients being kept in almost total isolation and that would not be to their benefit.
Secondly, there is sufficient common ground between different conditions to mean that it is of positive benefit, and not merely an expedient, to continue to provide for their needs for a generally supportive and therapeutic environment in one place.
Thirdly, operationally and in terms of the diagnostic framework, it is not clear where we would stop creating separate environments. The principles outlined in the care programme approach reinforce the fact that what matters is what care is provided rather than where. Asylum can be provided effectively in the community. Points in connection with that aspect were excellently made by my noble friend Lord Sainsbury. I agree with his point that in-patient care does not take place in a vacuum.
The noble Lord's Bill would also place health authorities under a duty to monitor progress in implementation of the suggested strategy and place an obligation on health authorities to provide the Secretary of State with an annual report on progress. Monitoring progress on the implementation of comprehensive mental health services already forms a part of the NHS Executive's performance management framework. A review of mental health services was carried out this year and similar exercises were undertaken in the previous two years. There is no reason why Ministers should not continue to request an annual review to be undertaken and for the findings to be reported to them. There is nothing to be gained from enshrining these requirements in primary legislation.
I turn to Clause 2. I wish to reassure the noble Lord, Lord Rowallan, and other noble Lords, who have expressed concern about single-sex wards. I acknowledge in particular the concerns raised by my
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noble friend Lord Acton, the noble Lord, Lord Rowallan, the noble Earl, Lord Howe, the noble Lord, Lord Swinfen, and others. We abhor, as does everyone, attacks upon vulnerable women within in-patient units and we want to create a framework which minimises such risks and ensures the privacy and dignity of individuals. I repeat what has been said at this Dispatch Box on many occasions; that we are totally committed to working towards the elimination of mixed sex accommodation. I am grateful to the noble Earl, Lord Howe, for accepting that our commitment on that point is real and sincere.
It might further reassure your Lordships to know that health authorities have been required to set local performance targets for trusts within their boundary in order to deliver the following objectives. First, to ensure that appropriate organisational arrangements are in place to secure good standards of privacy and dignity for hospital patients. Secondly, to achieve fully the Patient's Charter standard for segregated washing and toilet facilities across the NHS. Thirdly, to provide safe facilities for patients in hospital who are mentally ill which safeguard their privacy and their dignity.
The noble Lord, Lord Rowallan, confirmed that he discussed the matter with my honourable friend Paul Boateng. Therefore, he knows that many health authorities have already achieved or made considerable progress towards these objectives. However, a substantial number of health authorities have told the NHS Executive that they will not be able to deliver these objectives until after April 1999. That is not acceptable. The NHS Executive is reviewing with health authorities any target which has been set for after April 1999 and is considering what scope there is to bring that forward. A cental monitoring system is being developed which will provide further, regular information on authorities' performance against those objectives. It has been piloted and will be issued as soon as possible.
I turn now to the noble Lord's suggested amendments in relation to the security and design of psychiatric units. Guidance prepared in 1996 by the NHS Executive Estates Agency already contains advice on both issues.
The guidance makes clear that, where possible, patients should be able to lock their bedroom door for safety and security and to safeguard their property when they are not in their room. But also it recognises that staff need to be able to open the door rapidly in the event of an emergency. The guidance also explains that it is desirable to have en suite toilet facilities whenever possible to avoid situations where female patients have to move about the ward in night attire.
Wards should be capable of flexible use and sub-division to separate sexes, where appropriate, to safeguard the needs of in-patients. But staff observation of the patients is a fundamental requirement for safety both of the patients and staff.
Staff are expected to supervise ward entrances to prevent access by people who have no valid reason for attendance. At night closed-circuit television surveillance of the entrance at a staffed base should maintain the necessary level of security. Security may

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be achieved by temporarily locking doors but care must be taken to ensure that such arrangements do not contravene safety measures, including fire regulations.
The guidance also explains that staff at the reception desk need to be able to see clearly through the entrance area in order to greet people arriving and also as a security measure. They should be able to raise an alarm in case of danger from violent behaviour or other emergency situation. We require project directors to ensure that design teams are familiar with the standards issued by the NHS Estates Agency as the basis for any new health buildings.
The noble Lord, Lord Rowallan, raised the problem of the mentally ill who are homeless. The noble Lord will wish to know that through the Department of Health's homeless mentally ill initiative—and I should say that that initiative was announced in July 1990 in response to concerns about the visible concentration of homeless and mentally ill people on the streets of central London—the Government are making available £4.2 million to local authorities in areas where rough sleeping causes a significant problem to assist with the care costs of homeless people with mental health problems. The initiative has recently been independently evaluated to determine its effectiveness. My honourable friend Paul Boateng is currently considering the report of that review.
In that connection, the work of the Social Exclusion Unit is also relevant. That has been established by the Prime Minister to help co-ordinate action across government policies; to move towards preventing social exclusion; and to find more integrated ways of tackling the worst problems. The unit's early priorities include considering ways to reduce further the extent of rough sleeping. The role of the Department of Health's homeless and mentally ill initiative will be encompassed within that programme.
I hope that your Lordships will begin to understand why we are not convinced of the need to legislate along the line of the noble Lord's Bill. Our views are shared by others, as has been mentioned by other noble Lords who have spoken this evening. MIND has said that it does not support Clause 1. The Mental Health Aftercare Association, while expressing its support for improvements regarding single-sex accommodation and security devices, does not believe that primary legislation is necessary, and similar views have been expressed this evening by my noble friends Lord Hunt and Lady Young.
Generally we do not favour piecemeal changes to a complex piece of legislation such as the Mental Health Act. Significant changes to the legislative framework should, in our view, be taken as part of a full review of the Mental Health Act. I can confirm that we will be considering the need for a review of the Act and will take into account the views of all interested parties.
As I have already said, mental health is and remains very high on our agenda. My honourable friend, Paul Boateng, has established an independent reference group to advise him on mental health issues. This group of experts in the mental health field includes service users and carers. Ministers will be looking to them
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particularly for help in identifying what needs to be done to strengthen existing arrangements to ensure that we have a range of mental health services throughout the country. We have asked the group. as its first priority, to consider the issue of the closure of the remaining long-stay mental hospitals. We are anxious to ensure that no more closures should go ahead without proper consideration of the needs of all the patients involved and that, as a result, there are proper plans to put in place the full range of services that are needed.
The noble Earl, Lord Howe, raised the question of the state of mental health services in London. The review of London's mental health services, which was published last week, showed that London's mental health services face greater problems than many parts of the country. In real terms, London health authorities have received increases in their 1997–98 allocations and will also receive real-term increases for 1998–99.
The Mental Health Challenge Fund has been used in the past to target some of the problems in London. London boroughs also receive core funding from the mental illness specific grant. Moreover, 85 authorities receive target fund support, including 23 London boroughs. The mental health task force also visited 12 London health authorities. An interim review in the autumn of 1996 showed that, despite some progress, barriers remained. A further review is currently under way and its outcome will be included in a national report to be submitted to Ministers in early 1998.
As the White Paper, The New NHS, sets out, we will be introducing new National Health Service frameworks to promote consistent access to high quality care across the country. In future patients with continuing health and social care needs will get access to more integrated services as a result of joint investment plans, which all health authorities are being asked to produce with partner agencies. We will also be exploring the scope for even closer working between health and social services through, for example, a pooling of budgets. 1 felt that my noble friend Lord Hunt spoke most convincingly on that point.
At this point I must say to the noble Lord, Lord Mottistone, that, even if our faces are new to him, his reputation and interest in this subject are not unknown or new to all of us. So he should rest assured in that respect. I am sure that the noble Lord will welcome the action that we are taking to stimulate public and patient involvement in the NHS. We have set out our vision in the White Paper, which proposes a stronger role for health authorities in communicating with the public and ensuring that the public has a greater say in decision-making about local health services. We envisage a greater emphasis on openness through the publication of more local information about strategic plans and on how local services are performing. A new national survey of patient and user experience will ensure that patients' views and concerns are listened to and acted upon.
The noble Lords, Lord Rowallan and Lord Hunt of Kings Heath, both addressed issues concerning shortfalls in the workforce. The White Paper emphasises that we attach the utmost importance to ensuring that

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mental health services are staffed adequately. In April 1996 new arrangements for non-medical workforce planning and commissioning were introduced. The Department of Health has emphasised the importance of staffing issues in planning guidance. We are concerned about the vacancies in psychiatry. We have been addressing this in collaboration with the Royal College of Psychiatrists. Psychiatry has a high priority for targeting available funding to create posts for training future consultants. Some £5.7 million was provided to implement the 1996–97 increases and a further £4.5 million for 1997–98.
There are already good examples of partnership working, including working with service users. I know that the noble Lord, Lord Rowallan, visited mental health facilities at Homerton Hospital in Hackney recently, as indeed has my honourable friend Paul Boateng. I think the noble Lord, Lord Rowallan, would agree that City and Hackney Health Authority has a positive approach to working in partnership with the local authority to develop mental health and social care services which address the broad range of needs of their communities.
There are also examples of innovative multi-disciplinary co-operation, for example the Vista Road Centre in Warrington, which provides a holistic approach to mental health, from listening and advice to medication and psychological therapy. The north Birmingham model provides a range of services—for example 24 hour cover for psychiatric and emergency treatment and outreach for people with severe mental illness—and it also involves several multi-disciplinary teams covering the whole of the local population.
The noble Lord, Lord Sainsbury, has made a valuable contribution, as one might expect from someone who has such a keen interest in this important subject. He was absolutely right to stress the need for the full range of services. This is at the heart of the work now being undertaken by the independent reference group on which the Sainsbury Centre is, I am glad to say, represented.
As regards reviewing the legislation, I have already said that we are considering the need for a review of the Mental Health Act. My noble friends Lord Sainsbury and Lady Young of Old Scone also spoke about assertive outreach. Assertive outreach teams currently exist in small numbers within mental health services. One such service is provided in north Birmingham and, as the noble Lord, Lord Sainsbury, will be aware, is funded from a combination of moneys from the Sainsbury Centre for Mental Health and the Department of Health. Assertive outreach may form one part of the range of provision including 24 hour staff, beds, psychiatric in-patient facilities and other elements of provision in primary and secondary care.
My noble friend Lord Hunt of Kings Heath questioned the virtues of mental health inquiries into serious incidents as they are implemented currently. I think he said that he would like us to consider an ombudsman to determine whether an inquiry was necessary. I acknowledge my noble friend's concerns
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about the effect of mental health inquiries. We shall certainly take into account his views as we develop our thinking around this issue.
The crucial point here is that we learn lessons when things have gone seriously wrong. Locally commissioned independent inquiries play a crucial role, but we need to develop a better understanding of the overall picture, and that is why we have the national confidential inquiry into suicide and homicide by people with mental illness to look into the factors leading up to serious incidents of this nature. We have asked the inquiry to make recommendations on measures which it believes should be taken to reduce the number of deaths.
But having good specialist mental health services alone is not enough to tackle mental health problems and inequalities in our society. The Green Paper, Our Healthier Nation, published last week is a major step in the Government's push to reduce inequalities in health. It forms the basis on which we can develop a health strategy.
The Government have identified mental health as one of the four priority areas for the strategy. The Green Paper proposes that we should aim to reduce deaths from suicide by a sixth by the year 2010. This will be a challenging target. To achieve it we shall have to consider not only how to improve services for people with severe mental illness but also other factors associated with poor mental health such as unemployment and stress in the workplace. Our Healthier Nation is being widely circulated as part of the consultation process to ensure that everyone can have an opportunity to influence the detail of the strategy, including those involved in the mental health field.
I hope that your Lordships' House has been reassured by the initiatives I have outlined this evening. They show that the Government are genuinely committed to improving mental health services in a flexible and responsive way. I should like to pay tribute to the valuable contributions which noble Lords have made tonight. If I have omitted to deal with specific points raised, I shall of course write to noble Lords.
We have had a useful, serious and well informed discussion on a topic of great importance to our society. I thank the noble Lord, Lord Rowallan, for providing us with the valuable opportunity to have this discussion. The noble Earl. Lord Howe, asked whether I would be prepared to meet the noble Lord, Lord Rowallan. I have done so already before this Second Reading debate. I shall always be happy to meet him to discuss any aspect of this matter. Therefore I am at his service for that.
We shall take the points raised tonight into account as we determine the future direction of mental health policy. However, I hope that your Lordships understand why this Bill is not, in our view, the way to advance.
10.37 p.m.
Lord Rowallan: My Lords, I thank all noble Lords who have taken part in the debate. I wish also to thank Dr. Julian Lewis, Member of Parliament in another

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place, and Dr. Martin Deahl, who have been present throughout the debate, for the great help they have given me in producing the Bill.
Perhaps I may say this to noble Lords on the other side of the House, in particular the noble Lord, Lord Hunt of Kings Heath, and the noble Lord, Lord Sainsbury of Turville. I am happy to look at the broader picture. As I have stated—when noble Lords read Hansard they will see that I have stated it again and again—this is a starter for 10. The main point of the exercise was to have serious debate on the problems that the mentally ill face. I am grateful to the noble Baroness, Lady Ramsay of Cartvale, for the detail she has given the House in her reply.
Three points worry me. First, she referred to mental health as being one of the six medium term priorities in 1999. She referred to the aim to reduce deaths from suicide by a sixth by 2010. I appreciate that nothing happens today. But I feel that that is a long time to make the mentally ill wait for mental health services. I offered to put this Government's thoughts into my Bill. The offer remains. I hope that we shall be able to discuss it further at Committee.
It was nice to have the support of noble Lords on this side of the Chamber. My noble friend Lord Lucas of Chilworth gave us a marvellous red herring. Nevertheless, it indicated how many problems are associated with mental health. My noble friend Lord Swinfen spoke from the heart on similar subjects. It was nice to hear the speech of the noble Baroness, Lady Young of Old Scone. I thought that she was an expert on the RSPB. I am most impressed. She is a lady of many talents. I trust that we shall be able to debate her thoughts at great length in Committee.
But the biggest praise goes to the noble Lord, Lord Alderdice, who is in the front line in mental health. I agreed with every word that the noble Lord said. He had no notes. He simply gave us a wealth of personal knowledge, straight from the heart. None of us can
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afford to ignore his remarks. It is one of the wonderful freedoms enjoyed by this House that your Lordships are able to introduce Private Members' Bills and have them debated by Members with a huge range of knowledge, as we have witnessed.
The National Schizophrenia Fellowship says
"The rhetoric is all in place, however, what has always been missing, and is still to be delivered on. is the resources".
Tessa Jowell, the Minister for Public Health, stated:
"Mentally ill people still live in the margins of our society. For too long our concern and the public resources it represents have been as marginal".
The Health Service Journal states that the outmoded Mental Health Act 1983 is inadequate and needs replacing. Paul Boateng, the Under-Secretary of State, said:
"Mentally ill people must be cared for in safety and security. We must rebuild public trust and confidence in the mental health services".
SANE says:
"In our view all too often, usually as a result of bed shortages. people are all placed together in a psychiatric ward regardless of the nature or severity of their condition. Sane believes this bill will ensure Health Authorities increase in-patient provision—thereby lessening the pressure on beds and reestablishing the true sanctuary aspect of psychiatric care. It is clear the measures contained in this bill envisage an entitlement to a bed for anyone who requires it, and to anyone a section 12 doctor decides needs in-patient care, thereby enlarging access to a group of patients who in the absence of these measures might otherwise have been sent away to cope at home".
As I said in my opening remarks, in an ideal world we should have a new mental health Act. Sadly, we do not live in an ideal world. But we can, and should, make a start now. Sadly, I have not heard a commitment from the Government that there will be, in the short term, any move towards a new mental health Act. I commend the Bill to the House.
On Question, Bill read a second time and committed to a Committee of the Whole House.
House adjourned at eighteen minutes before eleven o'clock.