Lords Sitting of 12 January 1998

Preamble
Reassembling after the Christmas Recess, the House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Bradford.

NHS Trusts: Appointments
Baroness Gardner of Parkes Baroness Gardner of Parkes asked Her Majesty's Government:
Whether all vacancies arising on or before 30th November 1997 for chairmen and non-executives of NHS trusts have now been filled; what is the number of local authority members appointed in each category; and what is the longest period for any of these vacancies and for vacancies for regional chairman since the general election.
The Minister of State, Department of Health (Baroness Jay of Paddington): My Lords, the noble Baroness asked several related questions and I must ask her and the House to forgive me if my reply is slightly longer than I would normally prefer. A total of 1,070 appointments were due to be made to National Health Service trusts by 30th November last year. Of those, 300 have still to be confirmed. The longest vacancies were for seven months. Clearly, that is more than we expected by this time. I have looked into the remaining vacancies. There are several different causes which I can detail if the noble Baroness wishes.
As the House knows, the Government are determined that membership of NHS boards should be more representative of the communities they serve. To help achieve that, every MP and local councillor was invited to nominate people to serve. I am glad to say that, as a result, of those appointed 17 chairmen and 140 non-executives declared that they took part in elections in the past five years. That will be particularly important in breaking down the barriers between health and other local social services.
In relation to regional chairmen, the chairmanship of the Northern and Yorkshire Region was vacant for four months. A careful recruitment process during that period led to the appointment of Mrs. Zahida Manzoor, an extremely able woman of Asian background with long experience in the health service. We are extremely confident that she and all the other people appointed to trust positions are the right people to develop our policy on the new NHS.
Baroness Gardner of Parkes: My Lords, I thank the Minister for her reply. Is she aware that the interviews and all necessary documentation to replace the non-executive directors of the Royal Free, of which I was chairman until 30th November, were completed by 10th October? At least six candidates were chosen as appointable out of the 63 who applied. I emphasise that the panel was fully independent with one member from
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the Government Benches in this House serving as one of the three along with myself and an independent trust chairman. How is it therefore that those appointments still have not been made? Does the Minister think it fair that those extremely able people who were recommended for appointment should still be unappointed 13 weeks later? Also, does she think it fair that the four remaining non-executive directors should carry the heavy workload associated with a major trust hospital when they are already overworked in attempting to chair committees? It is unreasonable that the two places, which represent two out of six, should be left vacant for so long.
Baroness Jay of Paddington: My Lords, I am second to no one, certainly not the noble Baroness, in thanking and respecting those who take on the enormous burden of being members of NHS trust boards. The noble Baroness chaired a large trust board for a long period. As she will know from long experience in the health service, the recommendations that she and other members of her panel made locally would have gone to the regional chairman. They would then come to the Department of Health. Unfortunately, it is not a region where I am specifically involved and I cannot therefore give details of the background of the appointments. As the noble Baroness will be aware, they are in the hands of the regional chairman.
Lord Dean of Beswick: My Lords, is the Minister aware that I wish to congratulate the relevant Minister on appointing Professor Hamden, a former director of research at the Christie Cancer Hospital, as chairman of the South Manchester Health Trust, and for appointing Mr. Egerton, who lives in the area and who is a former councillor with distinguished local service, as chairman of the North Manchester Health Trust? We are extremely pleased with those two appointments.
Baroness Jay of Paddington: My Lords, I thank my noble friend for those comments. As the House knows, the Government paid special attention in those cases to appointing people with local experience and a demonstrated commitment to the National Health Service.
Baroness Hamwee: My Lords, is it the case that those appointments were referred either in whole or in part to 10 Downing Street? If so, does the Minister agree that that is a degree of centralisation which has had an unhappy effect in leading to some boards acting illegally or, at any rate, in an inquorate manner?
Baroness Jay of Paddington: My Lords, I have no knowledge of any appointments being referred to 10 Downing Street. As I said in reply to the noble Baroness, Lady Gardner, we divided ministerial responsibilities for the appointments by region. That is why I could not give a specific answer in relation to North Thames. As far as I am aware, no ministerial

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appointments have been recommended in that way. I can also state categorically that no boards have been inquorate.
Earl Howe: My Lords, I am led to understand that one vacancy on an NHS trust has not yet been filled. I refer to the vacancy created on the appointment of the noble Baroness, Lady Hayman, to the Government in May. Is that correct?
Baroness Jay of Paddington: My Lords, that is one of the appointments which is outstanding.
Baroness Gardner of Parkes: My Lords, the noble Baroness says that these matters are with the regional chairmen. Will she accept from me that the regional authority stated that it had passed everything on to the department in October while I was still in office and that it did not consider any delay was caused by the region?
Baroness Jay of Paddington: My Lords, I can only repeat what I said. Not having detailed knowledge of the individual appointments to the North Thames region, I can only express what I said originally. The process goes through the regions and then on to the Department of Health.

European Air Traffic Control System
2.44 p.m.
Lord Gainford Lord Gainford asked Her Majesty's Government:
Whether they are satisfied that the present European air traffic control system, and in particular the controllers, can cope with the expected rise in air traffic; and whether the necessary funding is in place to secure adequate technology to cope with future demands.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman): My Lords, individual states are responsible for providing air traffic control services within their air space. To accommodate traffic growth, a European programme to harmonise and improve air traffic management has been adopted and centralised flow management introduced. The latter evens out the traffic flow over Europe and prevents controller overload. The 27 member states of Eurocontrol, including the UK, are expected to invest some 3 billion ecus in their air traffic systems over the next five years.
Lord Gainford: My Lords, with the leave of the House, and in advance of my Question on Wednesday, I declare an interest in that I am president of the Air Safety Group. I thank the noble Baroness for her encouraging Answer. Can she say whether any valuable lessons have been learnt following the unfortunate spate of near misses when airliners have nearly collided?
Baroness Hayman: My Lords, it is important that we learn from any "airprox" incidents or near misses. All
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possible steps are being taken to prevent such incidents; but human error cannot be eradicated completely. In this respect, fitting the traffic collision avoidance system in aircraft, compulsory in Europe for large passenger aircraft by 1st January 2000, will produce a valuable additional safety tool.
Lord Brabazon of Tara: My Lords, can the Minister say where the necessary funding for National Air Traffic Services will come from? Will National Air Traffic Services be privatised or not; and if not, how will the funding come from the public sector borrowing requirement?
Baroness Hayman: My Lords, I welcome the noble Lord to the Front Bench, although I think it is somewhat selfless of me to do so given his long experience as a transport Minister. As far as concerns the future of National Air Traffic Services, the Government are considering a range of options for the future institutional structure. However, I should say that, whether NATS remains in the public sector or is privatised, safety will be the paramount consideration. We would not contemplate any change to NATS' status if we had any doubt over future safety standards. There is planned investment of some £800 million over the next decade. This will require a capital spend of about £100 million per annum. The department is working with the CAA and Her Majesty's Treasury to examine ways in which the CAA and NATS might be allowed a more flexible approach to raising capital than is possible at present. It is, of course, open to NATS and other public bodies to look to public/private partnerships for investment. The new Scottish air traffic control centre is being progressed in that way.

Queen Mary's Hospital, Roehampton
2.47 p.m.
Lord Blyth Lord Blyth asked Her Majesty's Government:
What plans they have for Queen Mary's Hospital, Roehampton.
Baroness Jay of Paddington: My Lords, I am sorry that I cannot give the noble Lord a full reply to his Question today. As I think he knows, plans for service changes at Queen Mary's Hospital, Roehampton, are currently subject to formal consultation by Merton, Sutton and Wandsworth and Kingston and Richmond Health Authorities. If this consultation does not result in local resolution, the plans will almost certainly be referred to Ministers. Therefore, it is inappropriate to comment before the process is complete. I hope the noble Lord will be pleased to learn that just before Christmas the Government announced the allocation of £6 million of special assistance funding to the South West London Health Authority. This is to ensure that hospital services in the local area can be sustained while the health authorities consult on the longer term future of services at Queen Mary's.
Lord Blyth: My Lords, I thank the noble Baroness for that very helpful reply. I understand that Queen

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Mary's is losing accreditation for training junior doctors. Does she not feel that will have an adverse effect on the hospital? I am well aware that it is not the most modern hospital but it is a famous and friendly one and is much loved by the local people. I am a graduate of it who walked out.
Baroness Jay of Paddington: My Lords, I hope the noble Lord did not walk out because he felt that the accreditation was insufficient. As he will be aware from his involvement with the hospital, there have been longstanding concerns about clinical safety at Queen Mary's. In April 1996 the royal colleges of general surgery and orthopaedics indicated that they no longer considered services at Queen Mary's to be clinically sustainable. The hospital also lost doctor training accreditation for surgery, paediatrics, emergency services and children's services in April 1997 and accreditation for A & E in August 1997. I hope the noble Lord will be reassured, however, that, with regard to any decision which Ministers finally take about the future of the hospital, we will want to be fully satisfied that it is in the interests of local people.
Baroness Hamwee: My Lords, when may we expect to see the results of the team which is reviewing hospitals in the London area? That, after all, is the context in which decisions about Queen Mary's should be based. The noble Baroness will be aware that the various problems around Queen Mary's are leading to what has been described to me as a haemorrhaging of staff, which is a very unhappy situation. Secondly, and quite separately, can she give assurances as to the capital funding for the scheme which the health authorities are proposing? Their own consultation document indicates a shortfall of almost £30 million.
Baroness Jay of Paddington: My Lords, I am grateful to the noble Baroness. As 1 said in an earlier reply, I hope she will understand that because of the present statutory situation I cannot comment in any detail on potential future plans for the hospital. I can assure her that, as I said, we are making every effort to ensure that services are maintained in this very difficult period, which I recognise has led to the loss of some staff in this particular area. That is a problem. As I said in my initial reply, we are very concerned about the issue of clinical quality and the problem that may result in the long term.
Baroness Hamwee: My Lords, can the noble Baroness say when the results will be ready?
Baroness Jay of Paddington: My Lords, I am so sorry, but I genuinely forgot. The report is imminent. But there is a separate report on services at Queen Mary's. That is out to consultation until the end of January. That must be considered separately. I believe that the final date for consultation is 26th January.
Lord Jenkins of Putney: My Lords, can the noble Baroness tell the House what has been the average annual input of patients to Queen Mary's Hospital in
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recent years? Under the present plans, can the Minister say what percentage of them will have to look elsewhere in future?
Baroness Jay of Paddington: My Lords, my noble friend will be aware that one of the problems at Queen Mary's has been what is technically called the "case mix". That refers to people who have come in for acute care and where all the concerns that I have previously illustrated are very high. There is a very large input of elderly patients looking for more basic community care. That is the highest proportion. I believe that under any suggested plans that will continue to be the greatest number of patients to be looked after by this hospital.
Lord Gillmore of Thamesfield: My Lords, perhaps I may declare a personal interest in asking this question. For the past few years a close member of my family has been receiving the most expert and dedicated treatment at Queen Mary's Hospital. Can the Minister explain why the decisions that led to the withdrawal from that hospital of the in-patient beds, the maternity unit, the paediatric beds and the accident and emergency unit were taken before the results of the so-called South Western Review were known? Can the Minister say whether those responsible for the review—or the royal colleges whose withdrawal of accreditation led, I believe, directly to the removal of the accident and emergency unit—undertook any examination of the health needs of the people now being served by Queen Mary's Hospital or indeed carried out any proper consultation with them?
Baroness Jay of Paddington: My Lords, I am delighted that the noble Lord's relative has been so well looked after. Perhaps I may make it clear that the royal colleges are not deciding the future of the hospital. The Specialist Training Authority—the so-called STA—is legally responsible for approving hospital posts for training purposes and for safeguarding standards of postgraduate medical training. The royal colleges advise the STA and do work on its behalf, but the decisions rest with the STA. We believe that this is an important guarantee of consistency and excellence across a large number of medical specialties. We do not wish to see doctors trained in environments where they cannot benefit from the full range of experience or supervision. We view the decision of the royal colleges to remove these accreditations that I outlined in my original answer, as a key indicator of the clinical quality which, as noble Lords will know from our White Paper, is something that we want to stress in the organisation and the management of the NHS.
Lord Naseby: My Lords, when the Minister says that the London review is to be reported imminently, is that a matter of weeks or months?
Baroness Jay of Paddington: My Lords. I hazard a guess and say weeks.
Baroness Ludford: My Lords, can the Minister comment on the fact that the London review panel

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reported at the end of October? In following up the answer in which the Minister referred to "weeks", that means that the Government will have had about three months in which to decide on the recommendations. Can she explain what is causing the delay since the panel was extremely eminent and did its researches very thoroughly? Perhaps I may declare an interest in the future of Bart's Hospital.
Baroness Jay of Paddington: My Lords, I certainly agree with the noble Baroness that the panel was extremely distinguished and did its work very thoroughly. The detail of when it completed its work is something that we do not need to discuss. Some of it was conducted privately and some publicly. I believe that the discussion this afternoon about the details of the alteration of services at one hospital trust alone illustrates the complexities of the issues that are being looked at in the London review. It explains why Ministers and the regional organisations have wanted to look very carefully at the proposals which have been made.
Earl Howe: My Lords, is the Minister aware that there is a real fear locally that Queen Mary's Hospital is being allowed to wither away to nothing before that process can be halted? Will she convey to her right honourable friend the concerns that have been expressed on this matter and ask him to make it clear that the hospital will not be allowed to close without the Government fulfilling their pledge before the election that where closure of a hospital is suggested, a public local hearing should be held to give the local community the opportunity to cross-examine those putting forward such a proposal?
Baroness Jay of Paddington: My Lords, I shall certainly convey to my right honourable friend a sense of urgency about this decision. As I said in reply to the noble Baroness, Lady Hamwee, we expect the consultation period on this decision to be completed by the end of January. By then we will have had a very full and fair discussion of these issues at local level. From the interest which a number of noble Lords have taken in this matter, including my noble friend Lord Jenkins of Putney, who has kept me well up to speed on this, I am aware of the degree of local concern, local involvement and discussion. As I said in answer to a previous question, we shall not make any decisions which are not in the interests of local people.
Baroness Macleod of Borve: My Lords, is the Minister aware that Queen Mary's is an internationally renowned hospital especially for the limbless? As a number of people are coming here from the Middle East hoping to get new limbs, I hope that they will be treated at Queen Mary's.
Baroness Jay of Paddington: My Lords, I am grateful to the noble Baroness for drawing attention to the very specialist service which the hospital fulfils. As I am sure she will be aware, one of the proposals in the
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hospital review which is now out for consultation is that the limb-fitting and specialist rehabilitation service should be retained at that hospital. As I said to several other Members of your Lordships' House, this is now subject to formal consultation.

Trusts and Political Funding
2.58 p.m.
Lord Campbell of Alloway Lord Campbell of Alloway asked Her Majesty's Government:
How many trusts which contributed to the political funding of the Labour Party are in existence and what has been the extent of the contribution.
Lord McIntosh of Haringey: My Lords, this Question appears to seek information regarding past donations to the Labour Party. I am surprised that it has been directed at Her Majesty's Government. As a courtesy to the House. however, I am happy to repeat the information which I have already given to the noble Lord in reply to a Written Question from him on 11th December 1997 on a related, but not identical, topic.
As the House is aware, my right honourable friend the Prime Minister has asked the Committee on Standards in Public Life, chaired by the noble Lord, Lord Neill of Bladen, to undertake a wide-ranging review of party funding. The Prime Minister has proposed to the leaders of other political parties that all parties agree to making available in confidence to the Neill Committee the details of all donations to party funds since 1992. On this basis, I am informed that the Labour Party would be prepared to ask the trustees to include donations to blind trusts in this evidence. The leader of the Liberal Democrats has indicated his willingness to consider this approach. It is for the leaders of other political parties to respond. I understand that the leaders of the main political parties have agreed to provide to the noble Lord, Lord Neill, information which he has requested to enable him to begin his investigations. That does not include the name of donors.
Lord Campbell of Alloway: My Lords, I thank the noble Lord for his reply. Is he aware that because there was no effective reply to my Written Question I tabled this Question? Is he also aware that this and the previous questions were in no way concerned with any other political party than the Labour Party, which is now in government? Is the Minister further aware that, in view of the assurances that he gave your Lordships at Question Time on 13th November as to full disclosure, it would have been preferable for me to have been able to thank him for answering the Question?
Lord McIntosh of Haringey: My Lords, I am sorry that the noble Lord thinks that there has been no effective reply. I have set out the basis on which the Labour Party—and, as far as I know, only the Labour Party—is prepared to give the answers to the noble Lord, Lord Neill, which would give a response to the noble Lord's Question. If the noble Lord wants me to

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go further and to give a precise but more limited Answer and I consider that courtesy to this House requires me to answer the Question in the round, my Answer is that Mrs. Margaret Beckett still has a blind fund; that that blind trust is used only for the purpose of remunerating a member of staff; that the money from that blind trust goes to the Fees Office and not to Mrs. Beckett personally, so she derives no personal benefit from it; and that she has indicated clearly and in public that if the committee of the noble Lord, Lord Neill, decides that such a trust should be wound up, she is prepared to do so.
Lord Avebury: My Lords, does the Minister agree with me that it is grossly impertinent for a member of the Conservative Party to ask such a Question when over the years it has assiduously concealed the donations that it has received? Does the noble Lord also agree that it is a pity that the names of donors from foreign countries are not to be revealed in the inquiry so that the names of all those living abroad who have contributed millions of pounds to the Tory Party could be made known to the public?
Lord McIntosh of Haringey: My Lords, I have refrained from making that kind of point although I have been gravely tempted to do so. The terms of reference which the Prime Minister has given to the noble Lord. Lord Neill. are very wide-ranging. They include the question of foreign contributions. I note that, as the noble Lord, Lord Avebury, rightly says, the Conservative Party has refused to give any information about either foreign or domestic donations. I note that the information which the noble Lord, Lord Neill, now requires in order to start his investigation, which the Conservative Party has, of course, agreed to give, gives the numbers of donors in bands as opposed to giving the actual amounts, names or the origin of the donation.
Lord Campbell of Alloway: My Lords, with respect, may I remind the noble Lord that the Question—may I also ask him to answer it—asks "how many trusts" and the "extent of the contribution"? If the noble Lord declines to answer it, that is his privilege; but it is my privilege to ask.
Lord McIntosh of Haringey: My Lords, I have already answered that there is one trust and one trust only in existence. I have already told the noble Lord and the House that the Labour Party and only the Labour Party is prepared to give information on the extent of contributions—in the first instance, in confidence to the noble Lord, Lord Neill. I suggest that in future the noble Lord addresses his questions to his own Front Bench.
Lord Strathclyde: My Lords, is the noble Lord aware that I listened to the first part of his Answer with some concern? He gave the impression that he was doing the House a favour by answering this Question. It is not a favour. As a member of the Government, the noble Lord is obliged to answer. If a Question has been admitted to the Order Paper, it is our right, as a House, to be able to listen to a Minister's answers. I should be grateful if the noble Lord could put that straight.
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Perhaps the Minister will also reconfirm what I understood him to say: that no blind trusts are currently in existence since they have all been closed down since the general election, apart from one, but that a senior Cabinet Minister is still receiving funds from a blind trust in order to employ somebody in her office? Can the noble Lord advise the House what that person does and his or her obligations to the donors of the blind trust?
Lord McIntosh of Haringey: My Lords, I have already given as full an answer as it is physically possible for me to give. Although the noble Lord is, of course, right that a Question on the Order Paper has to be answered, there are rules protecting the impartiality of the Civil Service, and because of those rules it has not been possible for me to obtain briefing from civil servants on large aspects of the Answer to this Question; I have had to go to the Labour Party and to special advisers for my briefing material. Therefore, when I said in an answer that it was a courtesy to the House, I do not think that that is an inaccurate description of the situation in which I find myself and in which the House now finds itself. I should be interested to learn on how many occasions members of the Conservative Government answered questions about the funding of the Conservative Party as openly as I have answered this Question. That issue has always been plunged in the deepest darkness. The noble Lord asked me about what that member of Mrs. Beckett's staff does. I do not know, but I shall certainly find out and write to the noble Lord.

Petroleum Bill [H.L.]
3.5 p.m.
The Lord Chancellor (Lord Irvine of Lairg): My Lords, I beg to move that this Bill be now read a second time. This is a Consolidation Bill which brings together a number of enactments on petroleum. It deals with rights and licences to search for and get petroleum; the application of criminal and civil law to offshore activities; authorisations for submarine pipelines; and the decommissioning of these pipelines and offshore installations. The Bill has been the subject of consultation by my right honourable friend the President of the Board of Trade.
The main Acts which are consolidated are the Petroleum (Production) Act 1934; the Petroleum and Submarine Pipelines Act 1975; the Oil and Gas (Enterprise) Act 1982; and the Petroleum Act 1987, Parts I and II.
In the past, some model clauses for petroleum licences have been included in primary legislation. Although they were originally contained in regulations, it was considered that amendments to model clauses which were to apply to existing licences should be made by primary legislation. As a result, well over 100 pages of schedules to the 1975 Act and other Acts consist of amended model clauses. The Bill will enable all model clauses to be placed again in secondary legislation. where they originally belonged. Since this Bill is a consolidation Bill, it does not change the substantive

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law. The Bill will, however, enable any future legislation on petroleum to be easier to follow than the existing law.
I am sure that the House would wish to join me in thanking the draftsman and the Law Commission for their important work in simplifying and shortening the statute book. If your Lordships are content to give the Bill a Second Reading, it will be referred to the Joint Committee on Consolidation Bills in the usual way. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(The Lord Chancellor.)
On Question, Bill read a second time, and referred to the Joint Committee on Consolidation Bills.

Late Payment of Commercial Debts (Interest) Bill [H.L.]
3.7 p.m.
The Minister of State, Department of Trade and Industry (Lord Clinton-Davis): My Lords, I beg to move that this Bill be now read a second time. At the outset perhaps I may welcome the debut of the noble Earl, Lord Home, on the Opposition Front Bench and say how eagerly I look forward to the maiden speeches of my noble friends Lord Sainsbury of Turville and Lord Stone of Blackheath, both of whom have immense business experience, and to that of the noble Lord, Lord Hardinge of Penshurst. I know that the House will be anxious to hear all of them.
It is said in Proverbs that,
"the borrower is servant to the lender".
I am afraid that in modern commercial practice, all too often the reverse has become the case. Consequently, it should have been no surprise, particularly in the build-up to the election, that in our election manifesto the Labour Party promised to introduce a right to claim interest on the late payment of commercial debts. This was not an empty promise and our election success showed the country's support for the totality of the manifesto. I do not know why the noble Lord, Lord Strathclyde, should find that amusing. Certainly, the country had no regard for the totality of his party's election manifesto.
In the Queen's Speech on 16th May it was announced that legislation to provide the right would be brought forward during this Session of Parliament. Consequently, a Green Paper, entitled Improving the Payment Culture: A Statutory Right to Claim Interest on Late Payment of Commercial Debt, was published on 28th July outlining the Government's proposals. I am glad to say that more than 450 responses were received. I am delighted to bring forward this Bill which is the result of that consultation. The Bill will give suppliers a statutory right to claim interest from customers where commercial bills are paid late. Exercise of that right will be a voluntary matter and a matter for them alone.
It is important to put today's discussion in an historical context. The issue of interest is not new for the legislature and in presenting this Bill I should like
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to illustrate where it fits into the current law. As long ago as 1893 Lord Herschell, in the London, Chatham and Dover Railways case, expressed strong sympathy with a claim for interest, going so far as to say that he would be inclined to give effect to it if the law permitted him to do so. That the law did not allow him to do so was, I shall argue, a failure not of the judiciary but of Parliament. Sixty years before in the Civil Procedure Act 1833, the legislature provided that interest could be claimed on a late paid debt where a right to claim interest or a right to interest existed in a contract and the right was properly invoked. As this remained the law up to 1893 and given the particulars of the case before him, it was not surprising that Lord Herschell, albeit with a good deal of sympathy for the plaintiff, found that interest could not be claimed. It was his view that the Civil Procedure Act 1833 placed excessive restrictions on the power to award interest. However, as the legislature had essentially been given the opportunity had it so wished to provide more extensive powers in the 1833 Act and had chosen not to do so, Lord Herschell did not believe that he could provide the remedy and extension.
Forty-one years later the legislature passed the Law Reform (Miscellaneous Provisions) Act 1934. Here we find the power to award interest being advanced in a limited way in the interests of justice. I shall not read out Section 3(1) of the Act. I simply refer your Lordships to it and summarise its essence. The section provided any court of record with the power to include in any judgment on any debt or damages interest at a rate it thought fit from the time when the cause of action arose to the date of the judgment. That was a major step forward but it applied only to courts of record and, most importantly, only where the debt remained outstanding at the time of judgment.
In 1974 the Lord Chancellor, Lord Elwyn-Jones, requested the Law Commission:
"To consider the law and practice relating to interest on debt (where interest has not been provided for by contract) and on damages, and to make recommendations".
Some four years later the Law Commission made its report to the Lord Chancellor, including a draft Bill which, had it been adopted as a whole, would have provided a right to claim interest where a debt is paid late before any proceedings; where a debt is paid late after proceedings for its recovery have begun but before they have concluded; and where a debt remains unpaid until a money judgment is given following the conclusion of proceedings for recovery of the debt. The last point mirrored the 1934 Act. It is unfortunate that the government in power in 1982 saw fit only to give effect to part of the draft Bill. The Administration of Justice Act 1982 amended the Supreme Court Act 1981 to provide the courts with the discretion to award interest where a debt was paid late after proceedings had begun regardless of whether or not the proceedings concluded in a judgment on the principal debt. It still left suppliers who were paid late but before proceedings were issued unrecompensed for being kept out of their money.

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It is 165 years since the Civil Procedure Act 1833 began the development of formal law on the provision of interest on late paid debts. It is my hope that the Bill before the House today will complete the evolutionary cycle. It returns to the recommendations of the Law Commission in 1978 and finally gives all suppliers regardless of when they are paid the right to claim interest on late paid commercial debts. In essence, then, the Bill is a simple extension of the current law, but behind it lie some fundamental views of this Government. We believe that businesses must try to be ethical, trustworthy and competitive. Many years ago when I was a Member of the other place I recall visiting a firm in which the following notice was exhibited:
"In God we trust. All others pay cash".
Wherever practical I should like to see businesses trusting each other rather more than that.
Let us examine the ethical question here. Surely, we can all accept that paying late is wrong and unfair. Any late-paying organisation is effectively saying that it does not value its suppliers or care enough about them to foster good relationships. Where an agreement has been reached as in other walks of life and elsewhere in business practice it should be honoured. Of course, different reasons exist for late payment, some of which we listed in the Green Paper, Improving the Payment Culture. They include deliberate unjustified delay to procure an unfair financial advantage; disputes over the provision of goods and services; temporary cash flow difficulties; administrative errors by either supplier or customer; misunderstanding or uncertainty over the agreed credit period; "pay when paid" contract terms; breakdown in payment systems; and an inability to pay due to insolvency or something close to insolvency.
Where a company cannot pay because it is insolvent there is little that can be done. But where it is for any other reason, aside from their own administrative error, why should suppliers have to bear the cost? They are not at fault. It is time that customers stopped using their suppliers as providers of credit without their agreement and resolved to honour their contracts. It is the Government's firm belief that the cost of late payment must be put back into the hands of those who can control it; the customers themselves.
I turn briefly to competitiveness. How many times have we heard of businesses that pay late because they think it is good business practice? It is not. Businesses must learn that. The costs of the supplier are the costs of the customer. Late payment is a payment made after the expiry of the agreed credit period. The supplier who has had an expectation that he will be paid before the expiry of the credit period finds his expectation to be ill-founded. Economically, the expectation is crucial. How can the supplier price his goods or services properly if he cannot be sure when he will be paid? If credit periods are ignored the supplier will start to increase his prices to cover the risk of late payment. This is an endemic problem in the economy. All businesses are faced with the cost.
The cost of the cash flow risk to the individual business is most plainly seen in the interest rate at which the supplier can obtain agreed loans from the bank. The
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rate is likely to be higher if there is a strong risk that the business's cash flow will be disrupted by late payment. I believe that all Members of the House agree that uncertainty is not good for business, especially smaller suppliers, or for the stress levels of its financiers. The upshot is higher prices. Customers who pay late add to their own costs: it is time for the absurd practice of late payment, which is all too rife, to be stopped.
The Bill before the House will encourage customers to pay on time, thereby working to eliminate the costly late payment problem. On the other hand, should late payment persist the supplier will be able to claim interest to cover the increased cash flow risk caused by late payment. The cost will no longer be borne by the supplier but by the late paying customer. I assure the House that this legislation is sadly needed now by business. The Green Paper which I mentioned set out the Government's proposals for a statutory right to claim interest on late paid commercial debts. Those proposals received widespread support. For example, the Institute of Directors received 1,700 responses to a survey of its membership, 69 per cent. of which favoured a statutory right to interest. In a concurrent survey by Graydon, a leading debt recovery and credit risk management company, 65 per cent. of respondents were in favour of the Government's proposals. I commend to your Lordships the summary of responses published by my department on 11th December. The charts in it are startling. All the Government's proposals received strong support. In light of that consultation we amended some proposals but the underlying policy remains unaltered from the Green Paper.
The results of the consultation exercise were not a complete surprise. What is a surprise is that the previous government did not provide the right earlier. A Cork Gully Report of 1991 for the CBI found that almost 60 per cent. of businesses regarded late payment as a significant problem. A survey for the British Chambers of Commerce and Alex Lawrie in 1994 found that 85 per cent. of respondents were in favour of a statutory right to interest. In 1996, 75 per cent. of respondents to a Lloyds Bank survey supported a statutory right to interest. It is only now, with a new government committed properly and wholly to competitiveness and economic growth, that action is being taken.
It would be churlish of me if I failed to mention that the previous government did at least in 1993 consult the business community on the merits of legislation for a statutory right to interest. Although the majority of respondents were in favour of legislation, which should not have been a surprise, the government announced in the 1994 competitiveness White Paper, paradoxically entitled Helping Business to Win, that they would not legislate. Instead, they announced a number of measures to help tackle late payment. They did make a commitment to review the case for legislation within two years if there had not been a significant improvement.
In January 1996 the then government consulted business organisations again and announced in May of that year in Your Business Matters—The Government's Response that they had decided against legislation on the grounds that it was likely to be used against small

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firms rather than by them; that it could lead to longer payment times; and that it could legitimise late payment. Soundings on our own proposals have shown that most of industry believed that approach to be wrong. We believe that the problems identified can be resolved by well drafted legislation.
I turn specifically to criticisms of the Bill's proposals. I shall take each main criticism in turn; no doubt others will be revealed during the debate. First, it is said that the legislation will be used against small businesses. Of course, it is possible that the legislation might he used against small businesses. If they pay late then they must accept the consequence. While the Government can see no reason for large companies to pay late, given the resources at their disposal, they recognise that some small firms may not have the credit management systems to ensure that they meet all their payments on time. That was recognised by the previous government. Measures have been, or are being, developed in partnership with the private sector to help small businesses which may have limited resources to develop the necessary systems. Those measures should be given time to assist small businesses before giving their business suppliers the opportunity to claim interest from them.
For that reason the Government intend, as set out in the Green Paper, to phase in the commencement of the Bill. When the first commencement order comes into force, the statutory right to claim interest will be exercisable by small businesses against all large enterprises, including the public sector. We envisage that the right will be extended, after a period of two years, for use by small businesses against all enterprises of any size, including the public sector. Finally, we envisage that the right will be extended, again after a further period of at least two years, to all enterprises, including the public sector, to use against all corresponding enterprises. Through that phased approach all businesses will be given the opportunity to implement systems that will allow them to pay their bills on time. Should they fail to do so, then, of course, they open themselves up to claims for interest.
The second main criticism is that the legislation will lead to longer payment times. The previous government said that a statutory right to interest would lengthen payment times. That seems to be missing the point altogether. A statutory right to interest, as I outlined earlier, is a tool to prevent late payment and the cash flow risk that it engenders. As long as suppliers know when they will be paid they can manage their cash flow. If they can only guess when they will be paid, then it is that which brings risk.
There is criticism that the legislation will legitimise late payment. I do not accept that. Late payment is never legitimate anyway. It ends up costing the company more money in the long run. By setting the interest rate at a level which both deters late payment and recompenses even the weakest companies for being kept out of their money, many businesses will find that paying late is no longer a cheap option in the short run either.
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Having necessarily taken some time to detail the background to, and rationale of, the Bill, let me turn to its format. Part I sets out to which contracts and debts the right will apply and from when interest will accrue. It also provides a power to set the rate of statutory interest by order of the Secretary of State. I confirm that it is the Government's recommendation that the rate of statutory interest be set at base rate plus 8 per cent. We have been advised by the Bank of England that that is the rate at which the weakest businesses may obtain agreed overdrafts or term loans. That is of course a departure from the suggestion contained in the Green Paper.
I turn to Part II. If the legislation is to be effective in curtailing late payment, it is necessary to restrict the ability of businesses to contract-out of the legislation. The Government, in drafting the legislation, have sought to limit restrictions on the freedom of contract to the bare minimum consistent with the philosophy of the Bill. Businesses will be able to negotiate their own contractual remedies for late payment unless such remedies are inadequate for the purpose of compensating the supplier or deterring late payment, and it would not be fair and reasonable to allow the term to oust the right to claim interest under the Bill. The courts will be able to strike down contractual remedies that fail those tests. Such remedies may include offers of nugatory interest or the imposition of excessive credit periods.
Part III deals with the treatment of advance payments of the contract price; the jurisdictional extent of the Bill; assignment and separation of the right to interest; and the definition of terms in the Bill. It is important that business should be able to pursue a claim for interest, even if the principal has been paid, and to be able to assign the right to that interest to a third party. By bundling together a number of claims, a third party would be able to pursue the interest more cost effectively.
I wish specifically to direct the House to the final clause. This includes a commencement power that has been drafted to permit the Secretary of State to introduce the statutory right to interest in transitional phases. I have already outlined how those phases will operate. The first commencement order will define a small business. We intend that a company be considered small if it has 50 or fewer full-time employees or part-time equivalents. Ninety nine per cent. of businesses will qualify as "small" businesses under that proposed definition. Those businesses represent nearly 46 per cent. of private sector employment. That indicates just how important the Bill is, and how consistent it is with our determination to ensure the increased prosperity and competitiveness of SMEs.
The Green Paper had suggested using the definition in the Companies Act. However, as that might change and is not wholly transparent, we have recommended relying on the third element of that definition alone—the number of employees. That meets our concern to ensure that the legislation is transparent and easy for the lay person to use.

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I apologise for speaking at greater length, on a short Bill, than I would have chosen. Some may say, "That is of characteristic length for the noble and learned Lord". However, I wish to conclude by making two important points. First, we recognise the importance of research on payment best practice during the phasing-in of the legislation. To that end the Government have commissioned work from Bradford University and we will seek similar support from the private sector. It is important that we are kept informed of what is happening in practice. We shall build on the emerging practice of large companies in setting out in their annual reports their record of payment of debts on time. That is a commendable practice and I hope that it can be widened.
Secondly, I do not wish to leave the House with the impression that we see this legislation as a panacea for the problems of late payment. We know that that is not the case. It is but one measure in a package of measures which the Government are following in partnership with the private sector in order to improve the payment culture. Advice on credit management, league tables of payment performance, the reform of access to civil justice—and, in this context, use of the small claims courts procedures is important—and support for payment standards and national vocational qualifications have a role to play in improving the payment culture. This legislation is the backstop. Where a supplier has done everything right and still finds that payment is delayed, I believe that the Bill will give the supplier the weapon that he needs, if he wants to use it.
The Bill constitutes a rebuttal of the Oscar Wilde thesis, which is:
"I don't want money. It's only people who pay their bills who want that and I never pay mine".
I believe that the Bill is important. In time, it will be seen to be of great value to small and medium-sized enterprises in particular, and I commend it to the House.
Moved, That the Bill be now read a second time.—(Lord Clinton-Davis.)
3.32 p.m.
The Earl of Home: My Lords, I thank the noble Lord, Lord Clinton-Davis, for his kind welcome and I look forward to further opportunities to debate matters of mutual interest. Furthermore, we on these Benches look forward to the contributions of the noble Lords, Lord Hardinge, Lord Sainsbury and Lord Stone, who are to speak later in the debate for the first time. No doubt they have had different experiences from the rest of us and we shall listen with great care to what they have to say.
I am pleased that through the publication of the Bill the Government have at least shown that they are prepared to continue some of the work which the Conservative Government did to address the problems faced by small and medium-sized enterprises. SMEs, if I may use the initials, have problems which larger corporations do not and it is self-evident that late payment and had debts hurt small businesses much more than their larger brethren.
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No one would dispute the importance of SMEs to the health of the country. Perhaps I may make it clear at the outset that the Conservative Party does not under any circumstances condone the deliberate unjustified late payment of bills, particularly by organs of government or by major corporations, especially if the sufferers are those in a poor position to fight back because of their size or status.
The greatest service which any government can give to SMEs is to provide the best economic and financial environment in which to operate. The Conservative Government provided those conditions with sustained low inflation and low basic rates of tax. Therefore, it is hardly surprising that there are 1 million more companies in this country than there were 15 years ago and the great majority of these are SMEs. In the private sector, some 35 per cent. of all firms employ fewer than 20 people and about half employ fewer than 100.
However, SMEs have considerable growing pains and the management of often meagre resources, in terms of both capital and bank facilities, is often stretched to the limit. There is a natural and understandable desire by the founders of small enterprises to keep control over all aspects of their business. These people are often inspired inventors, good retailers, excellent producers and fine marketers. However, often they are less interested in the financial side of their business, which is regarded as a necessary evil.
Last summer we had an excellent debate in this House following the publication of a report by the Select Committee on Science and Technology, chaired by my noble friend Lady Hogg, on the problems faced by SMEs in attracting capital into small businesses. It is good that today we have a chance to look at another factor which affects such companies, namely late payment. However, what worries me today is the way in which the debate has come about. We are not looking at a report produced by an erudite committee, as we were last summer, but at a Bill which we know is thought by many practitioners involved with SMEs to be premature or unnecessary.
In 1995, the Conservative Government issued the competitiveness White Paper, Forging Ahead, which urged smaller businesses to put forward their views on what type of policies would assist them. A series of conferences led by the Institute of Directors, with excellent participation from, inter alio, the Federation of Small Businesses and the Forum of Private Business, produced some interesting results.
During these conferences, which culminated on 11th March 1997, among other topics, we considered and debated with SMEs the option of statutory interest payments on late debt. That consultation was complemented by a five-month review launched in January 1996. The Minister mentioned that consultation, but he did not mention that eight out of nine small business representatives opposed compulsory interest payments on late debt because of the negative impact that could have on their members. In my view, the Conservative Government rightly supported eight out of the nine.

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Draft regulations were also laid before Parliament on 24th January 1997 by the then Minister for small businesses. They required each public company and each large private company within a group headed by a public company to state their payment practice in their directors' reports. Those statements provide information on how long on average it has taken the company to pay its bills. Requiring companies to disclose their payment performance will bring about greater transparency and will help small firms to monitor year-on-year payment records of larger companies with which they may consider doing business.
In September 1996, the new British Standard on payment performance (BS7890) was launched. That standard requires companies to handle transactions transparently, fairly and promptly, to provide clear documentation and to settle disputes quickly. Government departments were required to sign up to it.
The previous government, for good reasons, took the steps which I mentioned to tackle those problems and I believe that those steps will pay off. Regardless of the Bill, if it comes into law, I expect some continuing improvement in late payment statistics during the next few years as a result of the actions which we initiated. We on these Benches will therefore monitor the figures carefully, because I believe that the existence of a statutory rate of interest will have little or no extra effect on that trend.
Furthermore, I should like the Minister to tell us why the Bill is being brought forward now when we understand that a directive from Brussels on the topic will shortly be issued. Is this Bill not premature, or does the Minister already know what the directive contains? Is the content of the directive consistent with the content of this Bill? If it is not, are we to readdress this whole topic shortly after this Bill reaches the statute book? This proposed piece of legislation is quite complicated for the small businessman and it would be a nightmare for him to have to learn a new set of rules just after he has mastered the first set.
Last year the Federation of Small Businesses said of the proposal for statutory interest:
"In all likelihood, Labour saw the issue as a headline grabber. A statutory rate of interest will not change the late payment culture".
I share the federation's fear that this Bill may turn out to be a high profile attempt by the Government to be seen to be doing something for SMEs when in fact it will merely solve one small part of one of their difficulties.
Large figures have been quoted in relation to late payments. Some £20 billion was quoted as currently financing trade credit. However, those figures are meaningless unless the reasons for slow or late payments are analysed. Analysis shows that well over half of all late payments are due to administrative inefficiency at the supplier's end. A survey carried out by the REL Consultancy Group showed that 30 per cent. of invoices contained some error and that up to 90 per cent. of payment delays are due to disputes in relation to wrong price, wrong quality, delivery notes not issued or terms not agreed in advance. In such instances, it is
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perfectly proper for the purchaser to withhold payment for, although he is contributing intentionally to a late payment problem, he is not doing so maliciously. If the supplier could be taught to produce the right product at the right time to the right specification and then send the right invoice with the right reference to the right address, a large part of the problem would disappear.
There are some purchasers who are unintentional late payers. Again the evidence suggests that many small firms which pay late often do so through incompetence or because a manager doubles as a finance controller and does not get round to paying his bills on time. Again, those instances are not malicious and should be capable of amicable settlement between the parties involved without recourse to law.
The real culprit is the malicious late payer who delays settling invoices because that will help his own cash flow and he believes that the supplier will not dare take him to court for fear of loss of future business. Again, according to surveys carried out, those offenders are comparatively few and some, even some very large corporations, can be persuaded that their policies will rebound against them and they will face increased prices or lesser service in the longer term.
There is the proposal that companies or government organisations which are thought to be maliciously taking advantage of the minnows supplying them should be named and shamed into improving their treatment of creditors. We support that proposal wholeheartedly for it is unacceptable that they should be allowed to take unfair advantage purely because of size or status. Nor indeed has the Conservative Party ever hesitated to criticise strongly those who maliciously pay their bills late, even those in the public sector. My noble friend Lord Lang, the then President of the Board of Trade, said in 1996 that it is not right that government departments should let their payment performances slip.
However, this Bill will not force government bodies or big business to behave better. The Minister quoted many statistics. There is another statistic which shows that if the statutory right of interest existed, 59 per cent. of small businesses would not enforce it for fear that the customer would not pay and would take his business elsewhere. There is also a danger that malicious companies with power will simply force smaller enterprises to extend their contractual payment terms by the number of days that in the past they have paid late.
But it would be wrong to place all the blame on big business or government. Some big businesses behave extremely well towards their smaller brethren. The bulk of trade by SMEs is with other SMEs and, by and large. they have more cash flow worries than the large institutions or government agencies. Small purchasers may well pay late because they have genuine cash flow problems, but they are simply transferring their own problems to someone else.
The facts are that following initiatives taken by the previous government, the situation shows some sign of improvement, although it is early days to judge some of those results. Government departments and agencies have often attracted criticism but they have now agreed to abide by the CBI prompt payers' code and to

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publicise their payment performance. In due course we shall see from the figures whether that discipline will achieve the desired effect. But in the meantime, we should wait to see whether the trend continues.
The European Commission's report on late payments in commercial transactions shows that between 1995 and 1996 in the United Kingdom the number of overdue days in payment decreased from 23 to 22 while the contractual credit period remained the same. No other country in Table 2 of the Commission's report achieved more than we did; namely, an improvement of one day. In Austria, Belgium and Italy, average payment periods increased from 1995 to 1996 and all those countries have late payment penalties.
Although only seven countries are mentioned in that table, the Commission's report last year on 9th July stated that, by the time accounts payable are 30 days late. the United Kingdom's record is second only to Germany, and at 60 and 120 days late we have the best record. Indeed, Germany has the worst record when one looks at 120 days payment. The evidence in that report demonstrates that the poor payment disease is endemic throughout Europe despite many countries having statutory late payment penalties. The United Kingdom, so often cited as a poor performer, is overall no worse than many and is indeed better than some.
The Green Paper which the Minister mentioned states:
"The right to interest on overdue payments is found also in Spain. Legislation there has existed since 1985 and the average overdue payment period is just 6 days".
That statement is extremely misleading. It gives the impression that the SRI has made a great difference. But the average contractual period in Spain is 68 days. Therefore, the average payment period is 74 days, which is 25 days longer than in this country. Indeed, it is possible that in Spain the contractual credit period was shorter prior to 1985 and, in order to avoid interest payments, big business forced small suppliers to extend the contractual credit period which is offered. The Government cannot hold out Spain as a shining example of a country where SRIs have worked without producing the statistics prior to their introduction there. In any event, I venture to say that to quote a country with a 74-day average payment period is hardly something of which the Government should be proud.
There are several other points in the Bill on which we shall be seeking explanation from the Government both in Committee here and in another place. To the extent that the Bill applies to exports from this country, I believe it to be totally irrelevant. I do not believe that exporters will run the risk of extending contract negotiations or, indeed, losing a potential sale by trying to explain to foreign purchasers why they should pay interest on a late payment. Exporters will simply ignore this Bill.
We will also be asking the Government to tell us why the rate of interest formula cannot be on the face of the Bill. As drafted, the rate of interest can be purely the whim of the Secretary of State. The Secretary of State apparently does not have to consult the Treasury, the Bank of England or any other part of government
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involved with finance. I have myself been involved in many negotiations on export contracts and default interest, both under the auspices of the Export Credits Guarantee Department and on straight unguaranteed sales. It is hard enough explaining to a foreigner the rationale for default interest under a tried and tested system such as the ECGD system, but I shudder at the thought of trying to explain to a foreign purchaser why he should pay a rate of interest which may have been set by an individual with no financial experience and without reference to anyone who has such experience. We should be told what the formula is.
The Minister said that the rate of interest should be 8 per cent. over base rate. However, as I understand it. Brussels is talking about a penal rate of interest. How are these two reconciled? Is the Minister's proposed formula the rate that will endure, or do we go back to the whim of the Secretary of State? On this, I believe that the Government have been even more dictatorial with Parliament than usual, always assuming that they have decided what the formula should be.
Those and other points, such as the phasing in of the provisions of the Bill, need much clarification both in this House and in the other place. While we from these Benches agree that it is laudable and right to penalise wilful late payers, we do not believe that this piece of legislation will achieve that end. We shall continue to press the Government to improve it.
3.53 p.m.
Lord Ezra: My Lords, in his opening speech the noble Lord, Lord Clinton-Davis, gave us the reasons why the Government consider that it is now right for legislation to be introduced for late payment. The noble Earl, Lord Home, gave us the reasons why he did not believe that this was an appropriate way of dealing with the problem which he admits exists but which he believes should be dealt with in another way. I should explain that we from these Benches have long advocated a statutory right for payment of interest on late debts and, therefore, we support the broad thrust of the legislation. Despite attempts over recent years to achieve better payment of commercial debts by voluntary means, there are still widespread delays in payment which in extreme cases can put some smaller firms out of business.
I should like to commend the Government on the way in which they have handled the matter. As the Minister reminded us, a consultation paper was issued in July 1997, after which a very useful summary of responses to the paper was produced in December. The Government took account of a number of views then expressed and have intimated that they will also take careful note of comments made during the Bill's passage through Parliament. I trust that that excellent procedure can be followed in future, especially where there are technical aspects to the proposed legislation.
The case for introducing a statutory right to claim interest on late payment is clearly made out on page 7 of the consultation document. The majority of businesses regard late payment as a significant problem. The extent of late payment was revealed in a report issued last

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October by Dunn and Bradstreet, the business information service. In a survey of 86,000 companies, it showed that less than 20 per cent. of businesses pay their bills on time. Delay is more widespread among larger companies than smaller ones. That seems justification enough for the Government's proposed legislation.
However, there is also general agreement that legislation of this sort cannot, of itself, transform the payment culture. Indeed, that point was made by both previous speakers in today's debate. Some people feel that small firms would be reluctant to press for interest on late payment because of the risk of jeopardising their long-term business prospects. That point was also made by the noble Earl. So the legislation must clearly be buttressed by a series of other measures. In my opinion, three are of particular importance.
The first is the need for an effective legal system to enable a creditor effectively to enforce the statutory right to claim interest. The Green Paper sets out on page 10 ways in which small businesses could use the courts more effectively in enforcing their right to interest. The Lord Chancellor is currently reviewing proposals for the reform of the civil justice system with a view to reducing delay and costs. Respondents to the Green Paper were clearly concerned about existing legal arrangements. They consider that access to justice should be made easier and quicker and suggested that the small claims court limit should be increased and that there should be better enforcement of county court judgments. Clearly the issue of court access and enforcement of judgments is crucial to support the legislation on late payments.
Secondly, there should be publication of the details of the payment performance of public companies. That is to be undertaken by the Federation of Small Businesses on the basis of information now contained within companies' accounts, to which the noble Earl referred.
Thirdly, credit management procedures must be improved. A part of the difficulties that small firms in particular encounter in getting prompt payment is created by delays and errors in invoicing. Again, the noble Earl also mentioned that point. The DTI has published a guide on credit management and debt recovery and supports other measures to bring about better credit control among smaller companies. Associated with that are the efforts to promote the adoption of BS7890 (the British Standard) for achieving good payment performance in commercial transactions. The document setting out the responses to the Green Paper indicates a number of ways in which the payment culture can be improved.
An aspect which has stimulated much discussion, and one which was also raised this afternoon, is the proposed phasing of the introduction of the statutory right to claim interest on late payment. It is intended that this should be done by order under Clause 15 of the Bill. The Government's phasing proposals are set out on page 12 of the consultation paper and were also referred to by the Minister. They consider that a four-year phasing-in
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period is necessary to enable small businesses to adjust effectively to the legislation. However, it can reasonably be asked whether this is not too long a period.
Further, the distinction between small and large businesses is not entirely satisfactory. A small business is defined as one employing no more than 50 persons. Therefore, by inference, a large business is one employing more than 50 persons. It has never been my description of a large business that it should be employing, say, 51 persons. There are large numbers of businesses employing between 50 and 100; indeed, up to 200 persons. If it is intended to keep the definition of a small business up to 50 persons, then I suggest that there is a strong case for eliminating phase 1 (small businesses claiming against large businesses and the public sector) and moving straight away to phase 2 (small businesses claiming against all businesses and the public sector). At the expiry of two years the procedure would be opened up to all businesses.
It seems to me that there would be a number of advantages in this alternative. First of all, it would speed up the process. Secondly, it would avoid any difficulty in small businesses wishing to claim interest where acting in relation to a so-called large business and determining whether or not it was a large business according to the definition. There would undoubtedly be a grey area between the firms employing up to 50 and those employing more than 50. Thirdly, it might be argued that small firms could feel more at ease in a system which applied to everyone, rather than one that applied specifically to them. They might feel themselves somewhat less exposed to larger businesses in a generalised scheme from which larger businesses also could benefit. This would support a shorter phasing-in period.
I wish to raise a question in connection with the European Commission which is very much on the lines mentioned by the noble Earl. The Commission is due to bring forward a directive on the right to claim interest on late payments, but the directive itself is late. It was intended to have been produced by the latter part of last year, but it is still apparently some time away. The Government state that they wish to work closely with the Commission to ensure that the directive and UK legislation are consistent. The question is, how would the Government deal with any inconsistencies if the directive were still delayed after the present Bill was enacted? The Bill represents an important step towards changing the payment culture. We therefore support it in its broad thrust. But to be really effective it must be accompanied by other measures and these, in our opinion, are just as important as the Bill itself.
4.2 p.m.
Lord Hardinge of Penshurst: My Lords, may I first of all take this opportunity to thank the Members of your Lordships' House for the kindness and generosity of my welcome here in recent weeks, to thank the staff in similar terms, and to thank particularly everyone who has helped me with procedures, geography and research. My blunders will naturally be my own; but the space where many other blunders would have been will be mostly theirs.

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I have been a bookseller for over 25 years. Currently I work for a medium-sized independent Scottish company, running its library supply and export division. I have worked for several small companies and never for a really large one, although my present employers are "un-small" by the definitions of the present legislation. I should mention that I sit on the export committee of the Booksellers Association and I am a director of Book Tokens Limited, which runs the booksellers' payments clearing house.
In case any mild carping that I may do should give the impression that I oppose the Bill, I should say at once that it seems to me justified in principle and correct for reasons already put forward. Suppliers are entitled to be paid to time. Exhortation is unlikely to achieve much; in fact, exhortation has already not achieved much. Legislation would be at minimum a powerful signal of disapproval towards the worst current practice. The other most powerful signal the Government could give would be to achieve their own targets. I particularly treasure the assertion that,
"public sector bodies are currently expected to pay bills within 30 days and so should already have the necessary payment and monitoring systems in place".
When the three months and over debtors schedule lands on my desk around the 10th of every month, public sector bodies are always notable by their presence. There are of course shining exceptions but that is the rule. There is plenty of work to be done in this area. I think, too, that paying in due time will turn out to have a significant impact on public sector administrative and financing costs. It is fair to say that UK public sector bodies are generally angels of light compared with their overseas counterparts.
The principle of the Bill, then, seems right, and the increased pressure it will put on public sector bodies seems mostly desirable. There remains the concern that large debtors can still bully small creditors in various ways. As one who has signed various outrageous contracts with large customers, I am sure this is true, but the obvious way of doing it—negotiating longer credit terms—represents some improvement over the present situation because of the greater openness. At present, a bidder for a contract may suspect that the purchaser will not pay to time, but it is hard to be sure. That uncertainty pushes everyone towards bidding on the basis that payment will be to time; and the untruthful are rewarded. But if a company asks for bids on the explicit basis of, say, payment in 120 days, the situation is different. The price will tend to rise in line with the expected cost of borrowing the money for the specified period. In fact it will tend to rise in line with the expected cost to the bidders of borrowing the money for the specified period. If the bidders are smaller than the purchaser, and the purchaser has access to cheaper funds, it may well be in the purchaser's interest to specify a short payment time.
But what about the creditors if this does not happen, and payment terms are extended? To my mind certainty is at least as important as actual payment terms. In my experience banks are pretty happy—sometimes too happy—to lend money against a known revenue stream. It is when the stream fails to flow that they become
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upset because they wonder whether one knows how to manage one's business. The present legislation will not of course produce complete clarity, but it can hardly fail to improve the current situation.
Having said that, practice and theory can be a little different. I think my employers are not untypical of the book trade, which is the only trade that I know at all well. We have nearly 30,000 suppliers, which is about 150 suppliers for every member of staff, and the number increases relentlessly. Negotiating any kind of special deal with more than a few hundred of the biggest is clearly completely impracticable. For the rest there is almost never a formal contract. In a typical month four members of staff in purchase ledger process between 25,000 and 30,000 invoices from a random subset of these 30,000 suppliers. Presumably this mountain of transactions—usually but not always small—will be regulated by some mixture of the present Bill, normal trade practice where that can be determined, and whatever conditions happen to be on the back of invoices. These are invariably unread even if they happen to be in English rather than in Dutch or Japanese.
I mention this because in this environment the only way order can be imposed on the proceedings is by doing one main payment run for these smaller suppliers at the end of each month. This normally includes invoices dated the previous month. Book trade structures such as the clearing house which I mentioned earlier have been set up to function on this basis. While page 11—I think it is page 11—of the DTI's summary of responses to the Green Paper seems to assert that businesses can trade on the basis of single monthly payments where this is trade practice, I see nothing to that effect in the Bill. The cash flow implications are not too serious, as the sums are usually not a huge proportion of total purchases, but the administrative work is potentially appalling and some comment on that would certainly be appreciated.
The final matter which concerns me is to do with exporting, and I have already declared an interest. The exporter is likely to be paying UK suppliers sooner than previously. After all, that is the point, and I am confident that changing the balance of power from retailer to supplier will make it harder to negotiate special export terms, in addition to the continuing difficulty of negotiating with very large numbers of suppliers. But payment will arrive at the same time as it did before, so exposure is likely to increase. Imports may well become relatively more attractive—I can think of one or two examples in our own practice—for the same reason. I do not know whether the Government have considered the implications of this and whether any reassurance can be given.
I shall not trespass upon your Lordships' patience much longer. Many years ago when my father was finishing his maiden speech here, he commented that he had been advised to be both brief and dull, and that he had had no difficulty in following that excellent advice. I have been rather less brief, and much duller, so it only remains for me to thank those present once again for their patience.
4.10 p.m.
Lord Borrie: My Lords, it gives me very great pleasure to follow the noble Lord, Lord Hardinge of Penshurst, who has delivered a notable maiden speech. He speaks from his immediate business experience. As he indicated, he has been a bookseller for 25 years. I am not sure whether he mentioned that his main seat of activity at present is in the city of Glasgow. He mentioned his work with the Booksellers Association. He has spoken from great experience of the commercial and business world. However, the first Lord Hardinge of Penshurst was a great public servant as Viceroy of India earlier in the century; and the noble Lord's grandfather performed great public service as private secretary to Their Majesties King Edward VIII and King George VI. The noble Lord made a notable speech today. As is often said in this House, we look forward to hearing him again. However, I say that especially because he will then be able to combine the public service of some of his ancestors with the commercial service of his father and himself which has been so helpful to us today.
The only problem I have with the legislation being introduced today is a fundamental one. Should the law intervene to provide a non-excludable right to claim interest on the late payment of a commercial debt when the commercial parties to the contract themselves have not agreed that such interest should be paid?
I have no doubt that when a business enterprise receives the benefit of goods and services and deliberately, or, as the noble Earl, Lord Home, put it several times, maliciously, fails to pay up in due time that is ethically wrong. There can be no doubt in any part of the House about that. It is immoral and shabby conduct in particular when the supplier is a small business so dependent on cash flow. It is shocking that a former Deputy Prime Minister should have boasted that paying late in respect of debts due was a practice he regularly engaged in when he was in business. Money delayed is money denied. The supplier is prevented from having the use of money that is rightfully his until such time as the debtor, in his own good time, chooses to pay up. In the meantime the supplier is cheated out of his entitlement.
Opponents of the Bill say that it is already quite possible to insert by way of a contract term an interest sanction on firms which pay late. Of course that is so. But it is rarely likely to be practical, in particular for a small business, to insist on a right to interest being provided for in the terms of the contract. That in a nutshell is the value and justification of the statutory right to interest introduced by the Bill.
I do not believe that every possible instance of immoral or unethical business conduct should necessarily be made unlawful. But, to put the Bill into some recent context, in recent years—I think of Bills introduced by governments of different political colours—it has become increasingly necessary for the law to reinforce ethical standards, especially in order to try to even out the imbalance of power that exists between business and the private consumer and big business and small business. Hence in recent years
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various governments have introduced all the legal rules about extortionate credit bargains, truth in lending, unfair contract terms and the financial services legislation of 1986. Free competition—it is favoured, I believe, by all sides of the House—which is so desirable to enhance efficiency for the good of all, can have the downside of causing a lowering of standards, as even the more reputable firms are tempted to reduce standards of quality and behaviour to their customers in order to cope with competition and to survive. Different governments have said many times in the past 30, 40 or 50 years that laws are needed in order to back up responsible standards of decent business morality.
If creditors normally have to go to court to obtain the benefit of the new statutory rights which the Bill proposes to introduce in order to claim interest on late payment of debts, the Bill will not have achieved a great deal. I agree with the noble Earl, Lord Home, who spoke from the Opposition Front Bench, that giving a small business a statutory right will not necessarily make it keen to challenge the people who owe it money any more than it is keen to do so now. The Bill will not have achieved much, therefore, if the person has to go to court in order to claim his rights. But a number of powerful incentives within and without the Bill help.
One powerful incentive for debtors to comply without being taken to court is referred to in the consultative paper at paragraph 3.5.2. Credit rating agencies are likely to,
"review their ratings of debtors who fail to pay interest".
Further incentives are provided by the useful scheme which has been organised by the Federation of Small Businesses to publish league tables showing the average payment times of public companies. I commend Clause 13 of the Bill, whereby the statutory right to interest extends to debts that are assigned to someone else, like a debt collector, who could make a business of bundling together a number of small debts, making it economically attractive to pursue the interest which one particular creditor might not think it worth while, or might be embarrassed, to pursue himself.
One of the many suggestions put to the Government in the course of the valuable consultation process was that chasing late payments should be a regulatory function. I do not think that the noble Lord, Lord Ezra, mentioned this but, like him, I am a vice-president of the Institute of Trading Standards Administration. In that context it rather naturally springs to mind that local authority trading standards officers could give information and advice and assist businesses to pursue claims to interest on the late payment of commercial debts.
Obviously, as the Minister said, legislation like this is not a panacea but, along with other matters that have been or will be encouraged by the Bill, it can change the culture.
Finally, I have a couple of detailed queries on the Bill. The first was referred to by the noble Earl, Lord Home, and the noble Lord, Lord Ezra. The European Commission is bringing forward a directive on the subject. The Government's July consultation paper envisaged that unlike its own proposals the EU

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would propose a penal rate of interest on late payments. The Government stated that they did not support a penal rate because it would not be proportionate to the perceived wrong and might increase the likelihood of debtors challenging in court the right to interest; for example, by alleging that the goods or services supplied were defective or deficient. How do the Government intend to ensure that their proposals in the Bill are compatible with the EU proposals, which we have not finally seen? Are the provisions of Clause 5, especially the reference in Clause 5(2) to "deterring" the late payment of debts, drafted deliberately in a broad way so that penal—or, to put it another way, deterrent—rates of statutory interest could be introduced by statutory instrument under the wording of the Bill?
My second detailed question relates to Clause 2, in which certain contracts are excluded from the operation of the Bill, including conditional sale and hire purchase agreements. Since such contracts have the same ultimate purpose as contracts for the sale of goods, I should like to know why they are excluded. I realise that payments due under those types of contracts are due periodically, by week or month, but I see also from Clause 2 that a contract for the simple hire—not hire purchase—of goods is included in the operation of the Bill. Such payments, like hire purchase payments, are also due periodically. Will the Minister explain those distinctions?
Finally, I wish the Bill a successful and speedy passage through the House.
4.21 p.m.
Lord Sainsbury of Turville: My Lords, I am delighted to have the opportunity of participating in the debate. When I became a Member of this House I was told that 1 should expect a friendly welcome but was also ominously warned only to speak in debates where I had some in-depth knowledge as there would always be world-class experts present.
In the short time I have been here I have already experienced with pleasure the courtesy and friendliness of the House and have heard enough of the debates to convince me of the risks of displaying my ignorance. With that experience, however, has dawned the awful realisation that my various areas of expertise, such as the financial appraisal of supermarket sites, the aerodynamics of shopping trolleys, and how to tell whether an avocado pear is ripe, are not subjects as widely debated by your Lordships as I had hoped.
I have therefore hesitated to embark upon my maiden speech. I think, however, that I can claim some knowledge about the corporate payment of bills, having been for 17 years finance director, and now the chairman, of a company which processes around 85,000 invoices a week and which has some 3,000 suppliers worldwide.
We believe that to achieve high levels of innovation and quality we need to have long-term relationships with our suppliers which are built on trust. We are proud of the fact that one of our current suppliers started supplying us with meat and poultry in 1898, another started supplying us with tea in 1903, and a third started
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supplying us with Stilton in 1914. However, such productive long-term relationships can flourish only if the energies of the participants are not wasted in constantly arguing about the late payment of bills. It is not possible today to have an efficient logistics system or rapid product development if trust does not exist between a company and its suppliers. I was brought up in business by my noble uncle, Lord Sainsbury of Drury Lane, to believe that what is right often makes good commercial sense, and the payment of bills on time is a good example.
I have a second reason for wishing to speak in the debate. While the subject may appear boring to some people, for many businesses, particularly small ones, being able to rely on an assured cash flow may be the difference between survival and bankruptcy. Too many small businesses rely heavily on trade debt for their working capital, with the result that the failure of one company can have a domino effect and lead to a chain of bankruptcies. As well as increasing the level of risk for business, the late payment of hills is also a major source of waste. Time and manpower have to he allocated to chasing up debtors, none of which adds to the value of the product or service in the marketplace.
In Britain the problem is especially severe because late payment seems unfortunately to have become an ingrained practice. A recent Bank of England survey showed that in the fourth quarter of 1996, less than 25 per cent. of businesses in the United Kingdom paid their bills promptly, and nearly 50 per cent. paid their bills more than 15 days late.
I do not think anyone could disagree with the basic principle of the Bill. Time is money and companies should be required to pay their bills when they say they will. There is, of course, room for debate as to whether a Bill such as this is the solution to dealing with late payment. In the past there has been considerable argument among organisations representing small businesses as to the merits of such legislation, although I believe the Bill now enjoys a wide measure of support across the business community, including that of the CBI, the Institute of Directors, and the Federation of Small Businesses. There have been two areas of concern. First, there are those who believe that the legislation will not be used by small companies because they fear that their more powerful customers will take their business elsewhere. Secondly, there are those who are concerned that stronger customers will invalidate the legislation by insisting on longer credit periods so that there is no danger of them paying interest.
I do not think that too much weight should be given to those arguments, and I believe that the Bill will be effective. I have two reasons for holding that view. First, in all other countries in the European Union, other than Ireland and Luxembourg, such legislation exists and is widely used. The statistics relating to the late payment of bills, as the noble Earl said, are not clear-cut, but if we look at late payment as opposed to payment terms, they support the Bill. In terms of payments overdue, the Nordic countries have the best record and also the highest proportion of businesses which charge interest on late payments. I do not believe that that is just coincidence. While I do not think that it is as easy as

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many people believe to copy the industrial legislation and institutions of other countries, in this case the evidence is compelling. And if large companies do formally lengthen their credit periods, that will quickly become clear to other businesses, and no doubt their suppliers will then charge them prices which reflect that fact.
Secondly, while there will always be cases where mistakes are made and invoices disputed, what this Bill seeks to address is the intentional, systematic abuse of an agreement entered into in good faith. A European survey recently asked respondents about the major causes of late payments. In the UK, 51 per cent. of businesses cited intentional late payment as the primary cause. It was one of the highest figures in Europe.
Action is clearly needed. In the circumstances, to talk of this Bill being premature is rather like criticising a tortoise for sprinting. But, as has been remarked, we should not think that by passing the Bill the situation will be transformed overnight. Further measures will be needed. What we are seeking to do is to change a business culture, and that can be a slow and difficult process.
Britain's best companies are among the finest in the world, and we have strong positions in some of the growth industries of the future such as biotechnology, financial services and educational software. The success of those businesses will depend on the enterprise, vision and skills of management. Government cannot provide a substitute for that. But it can provide a competitive and supportive environment for innovative businesses. It can create the framework within which businesses, whether large or small, can compete effectively in today's global market-place. That is the business of government, and this Bill is a small but critically important step in providing just such an environment for British industry.
4.29 p.m.
Lord Alexander of Weedon: My Lords, it is a very great pleasure on behalf of the whole House to congratulate the noble Lord, Lord Sainsbury of Turville, on a most excellent maiden speech which bore the characteristics of modesty. humour, expertise and common sense. It is also a great personal pleasure for me to do so because I have the highest regard and liking for the noble Lord, sharing, as we do, a passionate devotion to the work of the Royal Shakespeare Company and all that is needed to secure the further strengthening and development of that great institution.
As the noble Lord reminded us briefly during the course of his speech, the company he serves bears a great name and has a great history. But in part that reputation is maintained and enhanced because of the financial management and expertise that the noble Lord brings to the company, together with his tremendous integrity which is a beacon to all those of us who seek to work in business and industry. If I add that the noble Lord, like so many members of his notable family, has a reputation for great philanthropy and benefactions, then I am sure we are all aware of the great good fortune
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we have that he is among us. We look forward to all his speeches on all issues that come before the House, even European directives as to the quality of avocado pears.
The inability to recover interest on debt which is paid late has long been a total anomaly in our law. When I practised at the Bar, it was sometimes necessary to advise clients that the only way in which they could recover a debt with interest was to engage in the contentious activity of issuing a writ. If the debt was paid before the writ was issued, then no interest was payable. I was asked, not unnaturally, from time to time by clients what was the logic of that and the answer had to be short and somewhat apologetic. There was none.
As the Minister pointed out, the House of Lords in its judicial capacity recognised more than a century ago that this injustice cried out for reform. So this really is not a case in which it can be suggested that law reform is either over-hasty or ill-conceived.
I became even more conscious of the damage done by late payment of debt when I started to work for NatWest. We act as bankers to almost 30 per cent. of companies in this country. I am proud that we are widely regarded as the leading bank for small and medium-sized companies. I have consistently and all too regularly learnt of the havoc which the virus of late payment of debt causes many medium-sized and small businesses. This was particularly acute through the last recession. Where debts are paid late, it is extremely difficult for a business to plan its budget and in particular its cash flow. In turn, this makes it harder for banks to respond intelligently to financial requests based on the cash flow projections of smaller companies.
The concerns of many businesses over late payment have long been well known. They have been effectively expressed by Stan Mendham, of the Forum of Private Business, to whose articulacy and energy in mounting the case for interest on debt paid late I am glad to pay tribute.
Our own research has consistently highlighted the problems caused by late payment. The regular research of the Small Business Research Trust which we sponsor asked respondents to list the most important of 14 problems facing their businesses. In the latest survey, 1 1 per cent. cited cash flow/payment/debtors as their most significant problem. Perhaps even more significantly, in the 32 surveys carried out since research started some eight years ago. the issue of late payment of debt has appeared every single time as one of the three largest problems.
I well know that the last government were conscious of the problem and I compliment them on their actions in seeking to encourage measures which would lead to voluntary action reducing late payment. The CBI also introduced a payment code. All that was positive because, as the noble Lord, Lord Ezra, said, the law cannot be a panacea in this area. Understandably, perhaps, the last government sought to minimise the intervention of the law in the commercial world. But long experience has shown that this is an area where there now needs to be a legal framework to change the culture. Like the noble Lord, Lord Bone, I do not envisage a large number of actions for recovery of interest clogging up the courts on a daily basis.

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The purpose of legislation is often to change the culture and to create a climate in which attitudes are changed. We can all think of examples of legislation of that kind, whether it be equal opportunities legislation or statutory protection against unfair contract terms. I believe that this legislation will contribute to a marked change in behaviour. It is worth recognising that its impact will be limited so far as small businesses are concerned. As I understand it, the legislation will only apply as between business and business and will not apply to supplies or services rendered by small businesses to consumers.
The supposed difficulties in the way of this legislation have been canvassed from time to time. It has been said that it will be ineffective because dominant purchasers would respond by extending the credit period. I personally doubt whether this would be widespread, but if large purchasers adopted that cynical tactic, then no doubt adverse publicity would quickly flow and at least the supplier would know where it stood.
It is also said sometimes that the obligation to settle bills promptly will place a burden on small businesses themselves when in difficulty. But how can the difficulty of one business become an appropriate reason why it should unilaterally have the freedom to put another business which has fulfilled its side of the bargain into difficulties?
I know that the detail of the Bill will be scrutinised with care. It is clearly important that there must be a means of taking account of invoices which are legitimately unpaid because they are incorrect or the goods or services are inadequate. I also personally doubt whether it is desirable to have a limitation period as long as six years. I should have thought that creditors should be required to let their debtors know that they are claiming interest long before that period. In a statute designed to secure prompt payment, it surely seems reasonable to expect fairly prompt action by the creditor.
My noble friend Lord Home, in his thoughtful and constructive response to the Minister, raised the question of the invoice which was not sent promptly or not sent at all. The consultation paper says:
"It would be unreasonable for a business to charge interest on a late payment if it had not provided the debtor with the information necessary to make prompt payment".
There is a provision in Clause 6 which permits the remission of statutory interest but it is very general in terms. I would welcome the Minister's assurance that it is designed to cover situations where a bill is not sent accurately or promptly or where the goods are defective or there is some other valid reason for non-payment. At present, the clause is a charter for litigation because of the width and uncertainty of the terms in which it is drafted.
I echo the hope that there will be harmony between the statute and the directive which the European Commission intends to issue. This is clearly a concern to many of us here today. I should be glad if the Minister would explain why he is confident that harmony and compatibility between the two will exist.
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In summary, I see this as a simple, highly desirable. overdue Bill which should be of particular value to the small businesses which play a vital and increasingly important part in our economy. I am also conscious of the precedents which we as citizens have to bear. If we are late in paying our taxes we have to pay interest to the revenue in overdue tax. I see irresistibly the same, perhaps even more, basic fairness in ensuring that the contractual debts from one business to another carry an appropriate rate of interest.
I sit down with the greater pleasure because I look forward keenly, as do all noble Lords, to hearing the maiden speech of the noble Lord, Lord Stone of Blackheath.
4.40 p.m.
Lord Stone of Blackheath: My Lords, 1 too rise with some nervousness to address such a wise gathering. But I take courage on two counts; first, because since my introduction I have been warmly welcomed by your Lordships from all sides of the House. You have given me advice and encouragement and offered me immediate warm friendship, for which I thank you. Secondly, I am emboldened because what I intend to say today is not based on any presumed knowledge of affairs of state, but from 40 years of experience as a retailer—I hope your Lordships are wondering. "How can he have been retailing for 40 years and look so young?"!
On the street markets of South Wales, when I was in my early teens, my late father, Sydney Stone, taught me how to trade. His philosophy was different from the majority of stallholders. He used to say: "To ensure your business survives, be kind to those who work for you; give value to your customers; and deal honourably with your suppliers of goods". When I subsequently joined Marks & Spencer, a global retailer where I have now spent over 30 years, I was pleased to discover that it too was founded on those same principles—on the formation of close, trusting, long-lasting, co-operative relationships with all of the companies with which we deal.
I mention to you my father's small business and my current employer, a large firm, by way of declaring my interest in the Bill. And if I repeat some of what has been said, it is because I feel that I should cite long experience in a transactional business. What I have found throughout my working life is that everyone benefits when two or more parties respect one another, do business with a trust and mutual understanding and accept each other's point of view. I am not so naive as to believe that to be complete altruism, but neither is it true that business has to be a battleground between winners and losers. It may be called enlightened self-interest, but we do care for our partners, and we have proved that that approach works.
In itself perhaps this Bill may not bring about prompt payment from the large to the small in every case. Government can create a legal framework within which business can improve commercial relations, but one must leave it to the companies themselves to realise that acting in good faith leads to increased business and

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greater efficiency. Our company has practised partnership policies successfully for decades. We realised that it would be in our interests if those who supplied us were paid on the button, and in full, so that their cash flows would be healthy.
What we found as a result was that our suppliers worked hard to make our business thrive so that our lucrative business with them could grow. Eighty per cent. of our £5 billion clothing and homeware comes from 20 such suppliers. Nearly all of them have been with us for 25 years, over half for 40 years and we have traded with one, Dewhirst, for over 100 years. Today, whether our supplier is a major combine or a small firm in Dorset with only three permanent staff growing blueberries for us, we try to pay on time. That is the philosophy but yes, sometimes principles are not turned into practice. Despite our good intentions, we know from experience how easy it is for an invoice to get lost in the system.
The phasing-in of the Bill should provide an opportunity for large organisations to review their bureaucracy and ensure their systems work well. Scourging bureaucracy will not only eliminate their inefficiencies but it will be a God-send to their more vulnerable small specialist suppliers. Most innovative and entrepreneurial, fledgling British businesses manage their cash and credit on a knife edge.
I hope that the Bill does not lead some big firms to lengthen the payment terms in the contract or to try to exact a high discount for rapid payment. The prosperity of our small businesses is essential to our economy, and large businesses, banks and governments must each play a part in their development. I am pleased the Government recognise that.
Business Links and their equivalent in Scotland. Wales and Northern Ireland are being encouraged to support small firms and to help them have proper credit management. I am told that the DTI has produced a guide to cashflow management with the Institute of Credit Management, soon to be available on the Internet. And yes, another important area supported by the Government is the British Standard for Prompt Payment, BS7890. which was developed with the CBI.
This issue is not just confined to business. For an integrated, cohesive society we must extend partnerships out of commerce and into the creative arts and sciences, where small companies have big cash-flow problems. I have been involved in the arts in recent years, particularly small arts organisations. Yes, mainly they want us Lo raise funds. But it is crucial for them to know how to find cash within their current income and expenditure. For that they need help in the form of management resources to produce business plans and financial strategies.
Let me give two examples from last autumn. A contemporary dance company with which I was involved—AMP—had a brilliant choreographer, talented performers and experienced technicians, but was in mortal danger with a deficit of £360,000. Some generous angels lent it some cash and, with financial management help, it is now virtually self-sufficient. In
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my home village of Blackheath, a 100 year-old beautiful concert hall almost went to the wall. It was nearly torn down for the sake of a £50,000 deficit. It was owed money but could not collect it. It survived with a promised lottery grant and some local friends and professional cash management.
Not only are small arts organisations vulnerable: what about this country's record of failing to give help to our scientists and inventors? As a governor of the Weizmann Institute of Science in Israel, I know that a growing portion of the funding for this fine research institute comes from its subsidiary, YEDA, in which businessmen help scientists to start up new business ventures. None of those flounders for lack of innovation; if they die, it is from lack of cash. Our own British scientific and artistic start-ups today are the source of our future income.
In America, small businesses with fewer than 100 people create two out of every three new jobs. Last year over a third of its venture capital investments went to start up new enterprises. In Europe less than one in eight succeed. One of the major reasons is the ease of access to cash in the USA for entrepreneurs. Our banking system is more risk averse. We are not America, but we can be less confrontational and co-operate by paying promptly.
Laws on paying on time go back much further than merely 1893. The Jewish Association for Business Ethics, with which I am involved, relates the code of ethics taught in biblical writing of our faith to current business practices. Paying your labourers or your suppliers late has always been seen as theft of the worst kind—robbing those dependent upon you. In Leviticus it says:
"Thou shalt not defraud thy neighbour, neither rob him: the wages of him that is hired shall not abide with thee all night until the morning".
It will give me much pleasure also to cite one of four of our past chairmen to be welcomed by this House, the noble Lord, Lord Sieff of Brimpton, Marcus Sieff, who unfortunately is too ill to be here today. As the House knows, he is a man who has made many friends and has been successful at bringing together many partnerships in business, even across national borders in the Middle East to help peace. He has been a guide and mentor to me. In 1980, when I was his personal assistant, in his maiden speech he said:
"The creation of wealth for all to share demands a high working performance of everyone and needs co-operation, not confrontation … Conflict solves nothing and benefits nobody".—[Official Report, 4/6/80: col. 1443.]
We have even found it good to develop friendly relationships with our competitors. If I may say so. the long-standing warm relationship between the Sainsbury family and ourselves has been a source of much pleasure. We have co-operated in many of the interests I have referred to today. As your Lordships can see, we think alike. Forgive me if my remarks have wandered too widely. My purpose was to cite examples from personal experience where, in practice, increased prosperity has come from unselfish consideration of the needs of those who are vital to the success of your business. If you act with altruism pragmatically to help

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your partners, in most cases ultimately it turns out that you and your company have practised enlightened self-interest. Remember every debtor is at some time a creditor. If we pay up promptly and get paid on time each of us and the whole economy will benefit.
As has been said, this Bill is not just about redressing a balance between the mighty global corporation and the defenceless small trader; it is an important element in a package of measures designed to change a culture and promote a better way of doing business.
4.49 p.m.
The Earl of Kintore: My Lords, the privilege of congratulating the noble Lord, Lord Stone of Blackheath, on his maiden speech falls to me. I am sure that I speak for the whole House in saying that he gave us a most excellent and informative speech. The noble Lord obviously used the Christmas Recess to good effect. I have the crib so I know how old he is. He must have started his working life very young. As a managing director of Marks and Spencer, he will have a wealth of knowledge on business matters. I hope that he will be able to take part in the further stages of this Bill. It is so good to know that Marks and Spencer supports the prompt payment culture.
I thank the noble Lord, Lord Clinton-Davis, for introducing the Second Reading of the Bill. I take part as a fellow elect for a small business fellowship under the auspices of the Industry and Parliament Trust. Over the past 35 years I have been involved with a number of small service businesses, all of which have had to work on credit, not being paid until the particular service had been carried out. As small businesses we suffered late payment, which is a bad business practice. Particularly bad was payment of premiums when I was an insurance broker. The great game used to be to keep the broker waiting as long as possible despite our credit terms clearly shown on invoices. But we were well aware that other brokers could provide the same cover at the same premium, and if we pressed too hard we would undoubtedly lose the business at the next renewal date. Sometimes one had to wait until the client had a claim before he would pay the premium. The customer is always right; and if not right then is stronger than his service provider. Unless the service is unique and cannot be found elsewhere, I doubt that small service providers would ever dare threaten their customers with statutory interest for fear of losing their business.
I heard a story at the weekend about a company which gives a small taxi firm about 70 per cent. of its business but seemed only to pay twice a year, after the managing director used the service. The conversation apparently goes like this. Managing director: "Have we paid your bill recently, John?" Taxi owner: "No, sir". A rocket goes to the accounts department and the bill is paid, but it really is not good business practice.
My small farming partnership and estate cottages enterprise tries to pay valid invoices within 30 days. We usually succeed, as indeed do organisations which owe us money. But I am afraid I must report that a government department owes me money. I declare a possible interest in this Bill. The money is owed by
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the Department of Agriculture for Scotland, being its contribution of £375 to me, a successful entrant to its excellent countryside premium scheme which seeks to preserve and enhance the environment by moving my farming activities back from a river bank and a water course. I note I paid the Grampian Farming and Wildlife Advisory Group on 3rd October 1997 and sent its receipted invoice to a named individual at the department shortly after that. I admit that the department did not actually say when it would pay and I suppose in my innocence I expected 30 days. But it is now 60 days overdue despite two chasers. The Minister may say that this is a statutory function made in course of government and not a commercial debt and so outwith the scope of the Bill. Maybe so, but it is a commercial debt as far as I am concerned as it will reduce an amount I have paid from a commercial account. Wherever it falls, it has been outstanding for far too long.
If central government departments and agencies, public limited companies and their large private subsidiaries pay their bills on time, this will be helpful and set a good example. We may get to the situation which exists in Sweden where accounts are paid between six and 10 days late as opposed to our dismal average of 23 days after the 30-day period. But small business is not entirely blameless. Credit management is either non-existent or shambolic. I welcome the Department of Trade and Industry's scheme to assist small firms in better credit management and the development of a modular national vocational qualification in credit management. I should probably declare an interest as president of the Institute of Certified Book-Keepers, an examining and standards setting body with 26,000 students and members. When the Bill becomes law we shall have to amend part of the syllabus of the intermediate exam dealing with credit management, and probably rewrite module seven—credit control—in our diploma in small business management.
In a small business it will be the book-keeper who will be the credit controller, ensuring that the business pays its bills on time, like PAYE and VAT, to departments that are not renowned for allowing much credit, and also ensuring that the business is paid money owed to it. I think the worst case I can remember was an account sent to me 13 months after goods had been supplied. But tradesmen regularly seem to render their accounts some months after they have carried out work. These accounts also seem to be on the high side and one wonders whether a percentage is added for late payment which has nothing to do with my reluctance to pay but everything to do with the tradesman's incompetence in getting his bills out. Accounts should be well laid out, show what service was carried out and when, and show clearly when due for payment. If an account becomes overdue, chase it immediately. Be pleasant but assertive. If an account is disputed, deal with the objection swiftly and ask for payment of the undisputed part immediately and the rest immediately the dispute is settled.
If government departments and big firms can improve their payment performance and small firms their credit management, there should be no need for recourse to statutory interest. But if the right is there, small

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businesses will be ill-advised not to pursue outstanding payments in the belief that they are earning interest on the debt. The debtor may have no intention of paying the debt at all.
4.58 p.m.
Lord Graham of Edmonton: My Lords, I rise with some trepidation. Having sat in the other place for a number of years, I lay claim to the fact that we are taking part in a debate which by comparison with those which occur in another place stands out. We have here people who speak from a lifetime's experience and who are certainly at the sharp end of the topic they are talking about. We have had a feast of expertise and humility from those of the business community who have spoken today. The two retailers, the noble Lords, Lord Sainsbury and Lord Stone, have told us frankly how they conduct their businesses. If all other businesses were conducted in the same spirit of fairness and justice, the problem we are debating would not exist at all. The noble Lord, Lord Alexander of Weedon, also brought to the debate his undoubted breadth of experience in dealing with problems. I particularly enjoyed the contribution of the noble Lord, Lord Ezra, who at one time was the manager of a very big business which then declined into a very small business. I refer to the National Coal Board, which later became British Coal. What we have had today is a feast of experience which I venture to suggest cannot be found in any other forum.
In rising to speak in the debate I declare some interests. None of them is directly financial but all are declared in part 3 of the register. The first interest I declare is that I speak with the support of the Co-operative movement. That movement has in it big and small businesses. The Co-operative Wholesale Society is a big business and has more than 18,000 employees. But within its network there are small societies such as the Allendale Society, which has 10 employees. There are gradations. The point I am making is that this Bill is not for big or small businesses but to provide equity and justice. It has been said more than once that it is intended to try to change the culture which apparently exists in this field.
I also declare an interest of a non-financial nature in raising the problems and concerns of small builders and their trade association. I see the noble Lord, Lord Strathclyde, nodding. He and I attended one of its presentations some years ago when he was a Minister in the department. Regardless of what has been said about the concerns, whenever I listen to the representatives of small businesses, at the top of the list of their worries, besides the current political topic, is their concern at not being paid on time.
I do not make a political point and in my view this is not a political debate. The noble Earl, Lord Home, made an excellent speech. But he left me with the impression that he was far too defensive about the previous government's record. I and the House understand the problems. Over the 20 years or more that I have been in this House this problem has always existed. The solution that the Government have brought forward may not be the right one; it may need to be trimmed and altered as
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we go along. Nevertheless, I believe that this proposed legislation responds fairly to a situation that should be tackled differently in the future.
A recent survey suggests that only one in 10 big British employers pay on time within an agreed contractual payment period. The Forum of Private Business reckons that at any one time private business within the United Kingdom is owed £20 million in late payments, a statistic referred to by the noble Earl, Lord Home. If that is the situation, and businesses are being denied by their suppliers, one needs to look at the solutions. The noble Earl said that we should be worried about those who deliberately withhold payment. It has yet to be quantified how many of those, as a policy, deliberately withhold payment. The former Deputy Prime Minister said that part of the way he conducted business was by delaying payment for as long as possible. That is not a very good example to the country or the business community.
Small businesses have been placed at a great disadvantage because, as has been said by more than one speaker, there is the fear that if they become too aggressive in demanding their rights they may very well lose the business on which they depend. I am not as sanguine as some who believe that this is not a real problem. It is, but it is one that can be put right. I notice that the Minister said in introducing this Bill that to exercise that right is voluntary; that it is not an automatic, statutory right, but it should be brought into being. It is a weapon to be used by those who feel they have been disadvantaged.
I am well aware that the move will not be welcomed because some people will argue that the Government are meddling in the business community. To the extent to which they may be at the margin with a further, tiny involvement, then so be it. The advantages of saving thousands of small businesses from bankruptcy make that a small criticism, to be borne with equanimity.
As regards late payment, I believe that it is a canker which can fester, and big businesses, most of which I categorise as honourable, will be the losers. As the noble Lords, Lord Stone and Lord Sainsbury, said, big businesses are not dependent on one supplier but on thousands of suppliers. They would not maintain a relationship for very long if they had a bad reputation as a receiver of such services by treating those they relied on in a bad way.
I believe that there are many spheres of activity that will benefit from these provisions. The Federation of Master Builders tells me that it,
"is emphatic that more needs to be done in legislative terms to curb unpaid debts which inherently prevail in the construction industry".
If the Government and House are to listen to the views of those outside, I say to noble Lords that we ought to respect the views of those who are at the sharp end. The construction industry is difficult to manage, to guide and to organise. But the organised voice of the Federation of Master Builders tells us that that is its way.
I declare an interest as the honorary secretary of the All-Party Group for the Retail Trade. The British Retail Consortium, in a letter to the President of the Board of Trade, said that it,

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"felt it would be unlikely that small businesses, dependent on custom from large firms, will charge interest for late payment because of the fear of losing trade".
Is it not terrible that the nexus between small and large companies is an element of fear? It is not necessary for anyone here to spell that out because we can see the possibility. More than one noble Lord has said that this legislation may not be the answer. The noble Earl, Lord Home, said it will have very little effect on the margins. He may be right, but we shall see. But if the Government produce legislation for the business community which is to be used and not abused, that is a very good thing.
The basis of the Bill is quite clear. The statutory right to claim interest on late payments provides a stick. For the first time there will be a financial disincentive to settling bills long after they are due. The carrot, however, is the achievement of a fair payment culture over the long term. That must be good for large and small businesses and for those who do and those who do not pay on time. The House should welcome the Bill. I believe that the business community will be fair and equitable and recognise, whether one calls them black sheep, cowboys or anything else, that there are those in business who need to be reminded that business ought to be ethical and based on co-operation and give and take. The Government should be congratulated. I certainly support the Bill.
5.8 p.m.
Lord Meston: My Lords, perhaps I may begin by joining in the congratulations to the galaxy of maiden speakers who have addressed us this afternoon, each one of whom made a contribution greatly enhancing this debate.
This legislation is long overdue. It is 20 years since the Law Commission completed its work on the topic and, with respect to the noble Earl, Lord Home, I suggest that "premature" is not an appropriate description for it. The need for legislation remains obvious in order to help traders with their problems of vital cash flow, particularly the relatively small trader dependent on one substantial customer.
In the years since the Law Commission reported, we have learnt more about the knock-on effects of late payment and the general ineffectiveness of voluntary initiatives, including those relied on by the previous government as a reason for not legislating in this area. The previous government blandly suggested that there was insufficient evidence of a problem or that late payment was putting companies and small businesses out of operation. My reply would have been to suggest that one spends any Wednesday morning in the companies court listening to the depressing catalogue of small companies meeting their fate by being wound up.
I agree with the noble Lord, Lord Graham of Edmonton. that the Bill gets the balance about right. Although government departments have tried to lead by example with prompt payment of undisputed debts, I suspect that British Standard 7890 has had little impact beyond the great and the good.
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The noble Lord, Lord Alexander of Weedon, drew attention to an important limitation on the new remedy in the Bill in that each of the contracting parties must be,
"acting in the course of a business".
That is a phrase found in other statutes which has generated case law in some marginal situations but which now seems to be reasonably well understood and is capable of covering the one-off transaction or the transaction out of the usual run of business for a particular trader.
The noble Lord, Lord Borne, drew attention to the excepted contracts in Clause 2(3). I would add to the question asked by the noble Lord by asking what is meant by,
"a contract intended to operate by way of … charge or other security",
in sub-paragraph (c). Does that mean that a contract with any form of security is excepted, or does the phrase,
"intended to operate by way or,
have some limiting effect?
If a statutory right to interest is to be part of the solution for late payments, it is important that the legislative scheme is essentially simple and consistent. The Bill tries to achieve both simplicity and consistency. Clause 4 states the day from which interest starts to run. However, Clause 4(2) enables the contracting parties to agree some other day. Concerns have been expressed that the dominant party will persuade smaller traders to agree to substantial extensions beyond the 30-day limit in the Bill. Clause 8 deals skilfully with the ability of the parties to exclude or vary the right to statutory interest, but I am not sure whether it would restrict the extension of the time for payment to, say, 60 days or 90 days.
The noble Lord, Lord Clinton-Davis, referred to the operation of Clause 8 on excessive credit periods. With respect, that does not tell us what is likely to fall foul of Clause 8 as an excessive credit period. Perhaps there is room for the introduction of a statutory presumption that a purported agreement to extend the 30 days by more than a further 30 days does not leave the supplier with a substantial remedy for late payment and therefore falls foul of Clause 8.
Several noble Lords have mentioned the problem of late or inaccurate invoicing. Clearly, there is a problem, particularly with unclear running account statements. The noble Lord, Lord Alexander, pointed to one solution in the remission provisions of Clause 6 in which the conduct of the supplier can lead to the remission of part, if not all, of the statutory interest. The word "conduct" is defined as including "any act or omission". I suggest that Clause 4 might provide a simpler solution because time does not run (even beyond the 30-day period) unless and until the purchaser has had notice of the amount of the debt.
As to the rate of interest, understandably the Bill does not say what is to be the rate of interest. It provides for the Secretary of State to set a rate, which one would expect to be a realistic rate linked to the base rate and to whatever the rate at which the banks are lending at the time, so that the suppliers of goods and services can

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be compensated for what they have to borrow and so that purchasers are not tempted to delay payment because of any significant difference between what their banks may charge and the statutory rate. In that context, I share the anxiety to learn what is expected from the proposed European directive.
The word "penal" has been mentioned in that connection. That word has arbitrary overtones in English civil law. The noble Earl, Lord Home, referred to malicious non-payment or malicious default. Perhaps that is not a particularly helpful way of looking at things. The law, certainly in the equitable jurisdiction, already provides for what is called the "wilful default rate of interest". That rate of interest is above the rate normally provided by the court in order to ensure that no profit is made from a breach of an obligation. Perhaps rather than using the word "penal" (with its unfortunate overtones at least in English law), we should try to identify precisely what any rate of interest seeks to achieve in deterring the late payment of bills which have been properly rendered.
In this respect, I am concerned by the word "may" in Clause 5(2), which provides that the Secretary of State,
"may set the rate of statutory interest with a view to—
(a) protecting suppliers whose financial position makes them particularly vulnerable if they are paid late;
(b) deterring the late payment of qualifying debts".
Surely the main purpose of setting the rate is to do exactly both those things and, in particular, to deter. Indeed, surely the word "may" should be "shall" or there should be some other form of emphasis in Clause 5(2) to indicate the basis upon which interest will be set.
Clause 5 also provides the alternative for the Secretary of State to set the rate by prescribing a formula. I do not understand why this may be necessary and I hope that it will not be the chosen way of dealing with the matter. Apparently straightforward interest calculations can cause confusion enough for some people, including mathematically challenged lawyers who sometimes have to formulate claims. Statutory formulae, even if not as complex as those used in the areas of money lending and consumer credit, will cause more confusion and dispute. I suggest that they should be avoided unless absolutely necessary.
Finally, on the question of setting the appropriate rate, I hope, again in the interests of simplicity and consistency, that there will be some definite correlation between the statutory rate and the rate normally provided for judgments, which has been only 8 per cent. since February 1993 and which, according to the recent consultation paper from the Lord Chancellor's Department, is not to be amended. Of course, it is to be hoped that the new provisions will deter litigation, but I suggest that it will be a little curious if the statutory rate is 8 per cent. above base rate while the judgment rate, once a judgment has been obtained, is only 8 per cent. Perhaps some consideration could be given to the convergence of the two rates.
In the context of that consultation by the Lord Chancellor's Department, rather than directly under this Bill, the other question to be addressed will be whether
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the new statutory interest will affect the value of an action for the purpose of various jurisdictional and other limits in the county courts, including arbitration. Liquidated interest claims have an irritating habit of just tipping the claim from one financial limit to another, sending the lawyer off on an unsatisfactory hunt for the elusive answer to the question of whether that matters for the purposes of the particular limit concerned. That is part of the wider question, technical but important, of whether there is a separate right of action to interest as distinct from the principal debt. That has implications for the questions of assignment and limitation, to which the noble Lord, Lord Alexander of Weedon, referred.
As far as concerns Clause 15(2) and the phased introduction of the provisions of this Bill, the reasons for phasing and the proposed order of priorities were generally welcomed in the consultation exercise and there is perhaps no real basis for opposing the principle. However, I should prefer to see at least a definite overall time limit for full implementation to be stated on the face of the Bill so that there is no temptation to let matters drift. Likewise, the proposed two-year interval appears to be rather more generous than might have been hoped for, particularly if the 50-employee limit is used to define small businesses. That may be a source of difficulty for businesses with a fluctuating workforce that runs at about the 50-employee level.
I am sure that I am not alone in having received a helpful briefing paper from the Fair Payment Group. That body makes the point that phasing may be a source of considerable uncertainty, and that if phasing is applied it is vital that the subsequent phases are not conditional but are followed through automatically. It also suggests that accelerating the transitional period and reducing each phase to a year has the merit of decreasing the period during which businesses will face additional complexity in identifying which, if any, of their trading partners are subject to the provisions. A reduced period will also reduce the potential for unfair competition at the margin, which is a problem for all thresholds.
We welcome the Bill. Simple common sense suggests that its provisions have great potential for priming the economy, and we should not lose the opportunity to do our best to ensure that it works.
5.21 p.m.
Lord Strathclyde: My Lords, on behalf of the Opposition I should also like to congratulate and welcome all the maiden speakers who have spoken in the debate this afternoon. It has been extremely useful to have this debate and to hear noble Lords. It was also particularly surprising to hear so many noble Lords speak on the subject of their interest, which was mainly supermarkets. The noble Lords, Lord Graham, Lord Sainsbury and Lord Stone, referred to their supermarket interests. At one moment I thought that the Labour Party was harbouring a cartel. However, I observed that the noble Lord, Lord Borne, was in his place. He would ensure that none of that went on on the Back Benches.

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I am sorry to strike a rather discordant note in this afternoon's deliberations. This is a Bill whose aims I applaud but whose reasons for existence I do not. I wish that we did not have to deal with this Bill. I begin with a quotation:
"In the end, it is you and you alone who will determine whether or not your business thrives and whether our economy becomes more competitive and our country more prosperous".
That is a good quote and few of us would disagree with it. It is the kind of quote that I could have made myself, and probably have done in the past. The surprise is not that it is not one of mine but that it comes from the Parliamentary Under-Secretary of State for Small Firms, Trade and Industry, Barbara Roche. How strange, therefore, that soon after the publication of the extremely good document about the development of business links this Bill should come along, which is regulatory, bureaucratic, difficult to understand and takes away from businesses the ability to make decisions to enhance their own competitiveness.
The Government have decided that this is the best way forward. This Bill is a spin-doctor's dream. Take a perceived problem which has a certain amount of popular appeal and then provide a legislative solution which is the answer to all our prayers. So far so good, until one has to put it into practice and produce a Bill to deal with it. I believe that far from resolving the problems faced by small businesses the Bill will add to many of their difficulties. Think how many small firms do not employ 40 or 50 people but under five or which are small traders who often have to send out their own bills or ask their wives or husbands to do so. The extra worry now is whether they will be breaking the conditions of the Bill or whether they have inadvertently failed to agree to charge interest when they should have done so. If they decide to do so, what is the correct rate? How do they find out about it and how do they apply it? Those are the real problems which this Bill raises.
We are equally opposed to the late payment of debt. The noble Lord, Lord Graham of Edmonton, referred to fairness and justice. I agree with him, as does the Conservative Party. That was demonstrated over the past 18 years when we were in government. But there is no obvious solution to the problem of the late payment of debts. That is why it has taken some 165 years, as the noble Lord, Lord Clinton-Davis, reminded us, since the earliest development of discussions and law in this area. If it was such a good idea to bring in a piece of legislation like this it would have happened a long time ago. Rather like reform of your Lordships' House, if it was so easy to do it would have been done long before now.
I also agree with the ethical question to which the noble Lord, Lord Clinton-Davis, referred. A late payment is a bad thing and should be discouraged, but there are other ways to tackle the problem, to which I shall turn in a moment. There is no evidence that legislation will work. Indeed, there is substantial evidence internationally that legislation makes the problem worse because it extends the overall amount of time taken before bills are paid. Further, there is no evidence that there is a real need for the legislation. After all, there is no difference of opinion between us
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that businesses are currently extremely successful, that the economy is booming and that people are making money and improving their margins and the quality of their businesses. Where does this Bill come from, bar the need to put something easy and presentable into the election manifesto?
There are many people in industry, particularly the small business sector, who support the need for a late payment of debt. Like my noble friend Lord Alexander of Weedon, I salute the work done by Stan Mendham. For a long time Stan Mendham was a lone voice in small firms interest groups calling for this kind of measure. I do not believe that legislation is the solution and this Bill is perhaps the worst of all possible options. The Bill is bureaucratic, complicated and discriminatory and the law of unintended effects will apply. It is bureaucratic because smaller firms will not wish to do the work that this Bill implies. It is complicated because many firms will not understand its provisions and how to make the provisions work well. It is discriminatory because of the differences that will now apply in law between small firms and big firms. The noble Lord, Lord Ezra, said that just because a business employed 49 people it did not mean that it was necessarily a small firm or that if it employed 51 people it meant that it was a large firm. There are plenty of examples of very small firms with substantial turnover which no one would regard as very small firms and firms which employ 100 or 200 people and are highly work intensive but have all the hallmarks of smaller firms. That definition will give the Government a great deal of trouble. Why have the Government not put this definition on the face of the Bill? When will we see the amendment that brings it into the Bill? If there is to be a fundamental difference of treatment between large and small firms we should see it spelt out in legislation.
What about the law of unintended effects? All the evidence from overseas that I have seen shows that by introducing legislation one increases the amount of time taken by people to pay their bills. They increase the credit terms, but pay their bills more on time. That does nothing to improve cash flow, but it does a great deal to improve the figures cosmetically.
The noble Earl, Lord Kintore, made the point about cyclical businesses which receive their incomes at odd times of the year or rarely during the course of the year. Such businesses include agriculture and other rural industries which may rely on harvests. How will they be affected? What provisions are there in the Bill to protect such industries? There are many other industries such as transport and others affected by chains of contractors and subcontractors, most notably the construction industry mentioned by the noble Lord, Lord Graham of Edmonton.
Far be it from me to remind the Minister about the situation in the law. I understand that banisters wait a long time before they are paid. Will the Bill apply to them? Will they oblige their solicitors to pay them on time? I should also like to ask about those who object to charging interest on moral, religious, or conscience grounds. Will there be any exclusion in the Bill for them?

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Much has been said about statistics. Many studies have been made over the years. The Minister mentioned some of them. Of course he mentioned only those which favoured his case. There was no mention of the studies done by Grant Thornton, or Intrum Justitia of Amsterdam looking at the international question. Those studies are confusing and contradictory.
I could not resist smiling when the Minister reminded us of the words of the first competitiveness White Paper since I was the Minister who talked Michael Heseltine, who was then President of the Board of Trade, into ensuring that there was no commitment to a legislative right to payment of commercial debt, not that he needed a great deal of convincing, because he could see, as I could, that many of the cosmetic attractions of a statutory right to interest did not stand up to much scrutiny.
When I was in the DTI, I spent a great deal of time travelling around the country talking to small firms. I agree with those who said that one of their first concerns was the late payment of debt. However, in relation to some of the problems caused by a statutory right to interest, they were among the first to say that there may be different ways to deal with the problem rather than the legislative solution. The Government have made a classic mistake. They have looked at the first solution offered to them and accepted it hook, line and sinker.
I greatly regret that there has been no appraisal of the alternatives; for example, to encourage the use of the codes of good practice. Perhaps the Minister will tell us how well that works in government departments. If he has the figures, will he tell us what is the record of, say, the MoD in paying its bills on time? If he does not have that information perhaps he will be kind enough to write to me.
What about quicker justice? The noble and learned Lord, Lord Woolf, wrote a report on that subject not long ago which was broadly accepted by the then Lord Chancellor, my noble and learned friend Lord Mackay of Clashfern. He did not have time to put the recommendations into effect. Have the Government looked seriously at improving the whole basis of small claims and speeding up payment of debt'? Do they agree that that is a far better way to go than to produce a Bill such as this? The real problem, as I have discovered from my research, is created, first, by a lack of proper credit controls and, secondly, by the difficulties caused by the recession of the early 1990s.
On the subject of credit control, for companies that have improved their ability to send out invoices and chase them up, the late payment of debt has diminished substantially. I believe that the Minister will agree with me that, with the growth of organisations such as Business Links which give proper advice and training to firms, the problem has decreased substantially over the past few years.
The problems caused by recessions are obvious. During 1990 to 1992 late payment of debt became a real problem. It was also a matter of survival for many firms. Does the Minister believe that this proposed legislation
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will have any effect on that? Like the banks, many firms learnt a great deal from the experience of the recession. I greatly hope that none of those problems will recur.
Many noble Lords mentioned the difficulties which will now be associated with the European directive. Will the Minister tell us why it is that while we have the presidency of the Council for six months we are introducing this Bill? Should we not be using our time in the Council of Ministers to promote the idea—if that is what is required—of a European directive, and to make the touch as light as possible?
Finally, I hope that the Minister will take note of the drafting points made by his noble friend Lord Borrie and my noble friend Lord Alexander of Weedon. Sadly, the Bill shows all the worst aspects of the Government. It is a Bill about presentation and expectation. It will provide nothing. I doubt whether it will be a force for good. The Government will regret this measure. Unfortunately, ultimately it will be the small firms themselves which will pick up the bill. We shall play a full part in Committee. I hope that the Minister will be able to respond positively to the suggestions for improvement that have been made during the debate.
5.38 p.m.
Lord Clinton-Davis: My Lords, I agree with at least one thing that the noble Lord, Lord Strathclyde, said: his commendation of the maiden speeches that we have heard today. They were welcome to the House, and I shall come to them later. I agreed with virtually nothing else that he said. He was out of tune with many of his own colleagues, the mood of the House, the responses to the consultation document, and, characteristically, generally out of tune. I always like his excess of charm and talent so that whenever he sees the top he can never refrain from going over it. That he undoubtedly accomplished today in his forthright condemnation of this measure.
We now of course know that the noble Lord was the miscreant in the government who persuaded Mr. Michael Heseltine, when he was President of the Board of Trade, not to embark on this, although in the light of some of the comments that have been made in the debate about the statements made by Mr. Michael Heseltine, as someone who had engaged in business, when commending late payment, I do not think that he needed much persuasion. Therefore, if this is a triumph for the noble Lord, so be it; let him bask in it.
There is overwhelming evidence as to why the plight of small and medium-sized enterprises in particular needs to be met. I do not dissent from the fact that there are some anxieties about the Bill. I hope that, together with those who support its principles, we shall be able to work towards improving it. That is the purpose of consideration of the Bill in this place in Committee and at later stages.
However, I wish to point out one aspect at the outset; the Bill does not impose any mandatory obligations. It offers a tool, an instrument, which is available to small and medium-sized enterprises. I listened with great care to the speech of the noble Earl, Lord Home, and

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I commend him for a good speech. but he made that cardinal error. This Bill does not impose an obligation on anyone to claim interest, and that is clear.
I turn to the maiden speeches and to some of the comments which were made by my noble friends. I listened with great interest to the assertion of my noble friend Lord Sainsbury that he was not unused to dealing with eccentric issues in his business; for instance, the ripeness of avocado pears. He will not be disappointed to learn that from time to time eccentric issues are raised in this place. For example. in due course we may debate the importance of grandparents and beg to move for Papers. If that ever comes to pass, it is likely to receive attention at least from "Today in Parliament", because little else does.
My noble friend Lord Sainsbury and his colleague, my noble friend Lord Stone, come from two vastly important businesses and speak with great authority. However, I heard my noble friend Lord Stone say that people ask him how, after 40 years as a trader, he can look so young. I can assure him that now he is a Member of this House we will put an end to all that! The co-operation that has been enjoined between Marks & Spencer and Sainsbury over the years—we heard about it in their speeches—will become even easier as we witness a new phase in that development on our Back Benches.
Their contribution was important and is not to be lightly dismissed, as it was by the noble Lord, Lord Strathclyde—
Lord Strathclyde: No.
Lord Clinton-Davis: My Lords, the noble Lord says no, but he rejected their arguments, which were strongly in favour of the Bill and the principles underlying it. My noble friend Lord Graham spoke from considerable experience of the Co-operative Movement and an interest in the construction industry. He, too, thought that there were overwhelming reasons for commending the Bill to the House.
The noble Lord, Lord Ezra, comes from a background of considerable commercial experience. I am pleased that that continues, notwithstanding his retirement some years ago from the National Coal Board, where he was a most outstanding chairman. The noble Lord, Lord Alexander of Weedon, speaks as a banker but I remember him best as a distinguished Silk. All those noble Lords made the point that, in principle, the Bill is desirable. I give way to the noble Lord.
Lord Strathclyde: My Lords, I cannot let the noble Lord get away with that. I hope that nothing I said gave the impression that I did not entirely welcome the speeches of the maiden speakers. It is a natural courtesy of this House to do so. I rejected their basic argument and it is interesting that the noble Lord has repeated the point. All those noble Lords spoke from the point of view of big business. I wish to protect the interests of smaller firms. Big business can employ another credit controller, someone else to organise the accounts. That
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is the way to deal with the problem. However, small firms cannot and that is the point to which the noble Lord must address himself.
Lord Graham of Edmonton: Now he says it!
Lord Clinton-Davis: My Lords, the noble Lord, Lord Strathclyde, is making life more difficult for himself moment by moment. The fact is that each noble Lord dealt with small and medium-sized enterprises. The noble Lord, Lord Alexander of Weedon, specifically dealt with that point in his notable contribution to the debate. I do not in any sense seek to say that the noble Lord was being offensive to them. Of course he was not; it is not in his nature to be deliberately offensive. However, the fact remains that they disagree with him, as do I.
We heard a notable maiden speech from the noble Lord, Lord Hardinge, who has considerable experience of the Booksellers Association of Great Britain and Northern Ireland. He, too, declared that the Bill was justified in principle.
I wish to turn to some of the criticisms that have been made. Perhaps I may be forgiven if I do not deal with every point. Where appropriate, I shall write to noble Lords. I wish to examine the speeches with care because they were helpful—even those which were critical. The noble Earl, Lord Home, made play with the responses of business representative organisations to the previous government's consultation on the needs of small firms. Apparently the organisations to which he alluded did not favour a statutory right to interest. Perhaps that was so; I was not party to the consultation and I do not know. Due to my lack of knowledge, I certainly do not wish to refute what he was saying.
However, we consulted widely on our proposals set out in the Green Paper and that represented a different story. We did not rush into the matter, as suggested by the noble Lord, Lord Strathclyde. There was a profound and important consultation. Presented with properly devised policies, we found significant support. I set that out previously and I do not propose to repeat it. I commend to the House the summary of responses which we published on 11th December.
The noble Earl also mentioned experience abroad, specifically in Spain. However, that missed the point, too, because the measure is about expectations and risk. The legislation is about addressing problems which affect cash-flow management. It is imperative that we do whatever we can to stamp out late payment. That has been the burden of the argument across the House today, even from those who oppose what we are doing.
My noble friend Lord Sainsbury cogently set out experience in the Nordic countries, where a right to interest already exists, but we must make our own experience in this matter. We are not presenting the legislation as a panacea and there is nothing compulsory about it, as I have indicated. It is complementary to all the other measures which have been taken and the systems which have been proposed to enable small firms to better manage their finances. The legislation is only a tool, and I agree that proper credit and cash-flow

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management is also extremely important, as is an efficient court system. The use of the small claims court and the procedures involved are being investigated by my noble and learned friend the Lord Chancellor.
My noble friend asked why an interest rate is not mentioned on the face of the Bill. I should point out that, in drafting legislation, we must ensure that it can stand the test of time. That is why, very often, we must rely on statutory instruments in order fully to implement the legislation. I am not trying to pull the wool over anybody's eyes. The formula is not stated in the Bill because it may not be incumbent on the Bank of England to announce the base rate of interest in the future. If that is so, we may have to announce the rate periodically. But we should like to pin the rate to the base rate if that is at all possible.
Of course, it is necessary to reflect on experience. That is why we are undertaking the research project with Bradford University to which I referred earlier. I assure the noble Earl that we shall be publishing a draft order in relation to the commencement of this Bill which deals with that matter, and we shall be able to consider it in Committee. Therefore, I hope that that gives the noble Earl some reassurance.
I turn to the speech of the noble Lord, Lord Ezra. I welcome his general support for the Bill and I shall take very careful note of the constructive ideas which he put forward. We have not finished consulting on the Bill but we shall continue to do so as it is being considered in this House and in another place. It should not be a matter of real political controversy. There may be technical matters on which we need to consult. Indeed, I have consulted with representatives of business during the course of the past few days.
The noble Earl asked how the Government will deal with any inconsistencies in relation to the proposed EU directive on late payment. Indeed, a number of your Lordships asked a similar question. It is likely to be of theoretical interest at least for the foreseeable future. We have been in consultation with the Commission and have been led to believe that our Bill will not require further legislation if the directive is adopted. But there is a point raised by the noble Earl, Lord Home. The directive has not yet been published and we have not yet seen a draft of it, but it looks as though it is somewhat behind time. With the processes which must be undertaken within the European Union, it is not likely to be enacted within the foreseeable future. I believe that it will take rather longer even than the whole of the period that we are contemplating for the phasing in of this legislation. I hope that that will not be the case but it is the likelihood. But again, I hope that what I have said is reassuring to the House.
I turn now to the concerns expressed by my noble friend Lord Borrie on the directive. The Bill includes powers that should enable it to take on board most possible changes which the directive may bring forward. Clause 5(2) is drafted to ensure that consistency with the directive can be ensured but also to ensure that, if the advice of business and Bradford University is that the rate of interest needs to be a deterrent, we can provide such a rate.
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My noble friend suggested also eliminating the first phase of the legislation, as did the noble Lord, Lord Ezra. The legislation would then commence by giving small businesses the right to claim interest against all their commercial customers, including other small businesses. In my opening remarks, I explained the rationale for phasing in: it is to ensure that small businesses are given a reasonable opportunity to develop their own payment management systems before they become subject to claims for interest. The Government, with the private sector, are pursuing another range of measures to help them to do so, and I do not propose to go into that again.
I should point out that something like 87 per cent. of business respondents to our Green Paper who expressed a view supported our phasing proposals and 85 per cent. agreed with the timetable. As I have already indicated, we shall bring forward a draft commencement order in time for discussion in Committee.
The noble Lord, Lord Hardinge, noted the performance of the public sector in meeting bills on time. We recognise that the public sector should lead by example. We propose to require all government departments, agencies and local authorities to pay on time and if they do not, they will be subject to the provisions of the Bill before the House today in relation to commercial contracts. We shall publish tables of the payment performance of central and local government. We have published recently a league table of the payment performance by departments for the financial year ending March 1997. The fact is that the majority of departments paid more than 97 per cent. of their bills on time. I do not claim credit for this Government for that. The previous government sought to impose that obligation on their departments.
All departments have signed to the CBI Prompt Payers Code and the British Standard for Prompt Payment, BS7890, has also been adopted.
The noble Lord also raised the legitimate concern that the Bill does not allow for end-of-month billing arrangements like BACS. I assure the noble Lord that it is our intention that such billing, where it is agreed by both parties to the contract, should still be permitted. I refer the noble Lord to Clause 14(2).
My noble friend Lord Borrie questioned whether it was necessary to prevent contracting out of the legislation. We understand that concern. But cash flow risk has a cost for the entire economy and must be addressed. Therefore, I agree with my noble friend that, if contracting out were allowed, there must be a risk that small businesses would be bullied into accepting contracts which do not provide a remedy for late payment. That should not happen.
My noble friend raised also the matter of the treatment of conditional sales and hire purchase agreements. Those have been excluded because they are used to grant authorised credit and usually provide for interest payments on default of the periodic payments being made on time. The supplier is normally more powerful than the customer and can insist on interest. In contrast, hire agreements may be used to provide goods for short-term projects and may not include provisions

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for late payments. We are giving consideration to excepting longer term hire arrangements where the asset is provided for much or all of its economic life span, as those agreements are on a par with those for authorised credit.
On the question raised by the noble Lord, Lord Alexander of Weedon, Clause 6 is designed to provide remission of interest where the creditor's conduct makes it unjust to require interest. That will cover circumstances of incorrect invoices, tardy responses to queries, being unavailable to receive payment and so on. But it is not possible to provide an exhaustive list of circumstances in which remission should be available. The noble Lord would probably concede that. But Clause 4(4)(b) also provides that the statutory credit period of 30 days does not start to run unless the debtor has notice of the amount due.
The noble Earl, Lord Kintore, raised the fear that suppliers would be afraid to claim interest from their customers. Of course there is a risk of that but I believe that the customers will be slow simply to cut off a supplier because of that particular issue. It is costly; it is bureaucratic; and it is difficult to find good suppliers just like that. I believe practice will ensure that that fear is much greater than the reality.
The Federation of Master Builders was mentioned by my noble friend Lord Graham. I assure him that I believe that payment will improve shortly within the building industry. There is a scheme introduced by the Department of the Environment and our scheme here is complementary to that.
I do not have time to go on and I have spoken for long enough in a wind-up speech. However, a number of important points were raised which, I assure the House, we shall consider in depth both before Committee and during the Committee stage in the Moses Room within the course of the next few weeks.
This measure has been mooted for some time. It is supported strongly by small business. We have sought to limit the restrictions on freedom of contract to the barest minimum consistent with the aims of the Bill. It is an important step in reducing business risk and improving the competitiveness of the country as a whole. For those reasons, I commend the Bill to your Lordships for a Second Reading.
On Question, Bill read a second time and committed to a Grand Committee.

Northern Ireland (Emergency Provisions) Bill
6 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Dubs): My Lords, I beg to move that this Bill be now read a second time. While this is a short Bill—just eight clauses—it is concerned with combating terrorism in Northern Ireland. The House is familiar with the emergency legislation, having debated it many times in the past.
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Noble Lords will understand the importance and the impact of the Bill before them this evening. Successive Emergency Provisions Acts have aimed to strike an appropriate balance between ensuring that the operational needs of the security forces and the criminal justice system in countering terrorism and protecting the community are met while at the same time ensuring that the rights of individuals who find themselves subject to the operation of the provisions are appropriately protected. They have also sought to meet our international obligations under the various conventions. These instruments embody principles which we share and respect, and our compliance demonstrates to the wider world our concern to protect civil liberty while still responding robustly to terrorist violence. The changes which the Bill proposes, and which I shall describe, are intended to adjust that balance still more finely in the light of changing circumstances.
The Bill is the second of three Northern Ireland Bills which the Government are bringing forward this Session. The others deal with parades and marches and reforms to policing. Together the Bills form a package of measures aimed at improving community confidence in the handling of security, policing and public order related issues. At the same time they aim to enhance the ability of the Government, police and others to tackle effectively the difficulties which exist in these areas. The RUC has been consulted about the measures and the police are in agreement with the provisions in the Bill.
Sadly, the period since Christmas in Northern Ireland has been overshadowed by a number of terrorist murders. On 27th December the Irish National Liberation Army (INLA) murdered Loyalist Volunteer Force (LVF) leader Billy Wright within the confines of the Maze prison. In retaliation, the LVF have murdered three Roman Catholics. Seamus Dillon was shot dead and three others, including a 14 year-old boy, were injured at the Glengannon Hotel in Dungannon on the evening of 27th December. Edmund Treanor and five others were wounded in a shooting attack on patrons in the Clifton Tavern on Cliftonville Road in Belfast on New Year's Eve. Mr. Treanor died of his injuries in the early hours of 1st January. The latest victim, Terence Enwright, who was at the Belfast club where he worked as a doorman, was gunned down in the early hours of yesterday morning. There have been other incidents—a large car bomb in Banbridge, thankfully made safe by the security forces, and a shooting attack in Fermanagh, to name but two—all of which have been deliberately mounted to try to sabotage the peace process. The groups claiming responsibility for the majority of these evils acts—namely, the INLA and the LVF—have refused to declare any ceasefire. While they are smaller than the main groups, they, and others who have not declared a ceasefire—for example, the Continuity IRA—still represent a threat, as they have shown. Their purpose is wholly negative; they have nothing to offer the people of Northern Ireland; they will not be allowed to succeed.
The security forces will not relax their vigilance against terrorism, whatever its source. Police investigations into all these incidents are under way:

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arrests and charges have already taken place. There have been finds both north and south of the border. That vital work will continue.
The only way to resolve Northern Ireland's problems is through dialogue, which is why my right honourable friend the Secretary of State has done everything in her power to ensure as full participation as possible in the talks which resumed today. At her meeting with prisoners at the Maze Prison last Friday, my right honourable friend the Secretary of State said:
"Recent acts of sectarian violence have once again left the people of Northern Ireland very fearful for the future. We will continue to take whatever steps are necessary to combat the threat of terrorism wherever it comes from. But the long term defeat of terrorism requires more than a commitment to support the efforts of the security forces. It requires a proper political settlement that is agreed between political representatives and widely supported on both sides of the community. Such a political settlement must address the issues and relationships which are of concern to both sides of the community. The talks process is designed to allow these and all other issues of concern to any participant to be discussed and resolved. It gives all sides an opportunity to achieve the goals which are of great importance to them without abandoning the values and principles they hold dear".
I am sure that noble Lords on all sides of the House would echo those sentiments.
On 18th November 1997, during the Bill's Second Reading in another place, my honourable friend the Minister of State, Mr. Adam Ingram, said of the peace process:
"The most difficult tasks lie ahead. It would be misplaced optimism to underestimate the challenge that faces the two Governments and all the parties engaged in the talks. They will require vision and courage in their quest for peace".—[Official Report, Commons. 18/11/97; col. 168.]
It is against that background that the House considers the Bill this evening.
The Bill has two main purposes: to ensure that the criminal justice system and the security forces in Northern Ireland continue to have available the measures that they need to counter terrorism; and to ensure that the rights of those who are affected by the operation of the counter terrorism provisions are appropriately protected. It extends by two years the life of the Northern Ireland (Emergency Provisions) Act 1996, which otherwise would expire in August this year. The Bill also makes a small number of important amendments to the existing provisions.
Successive versions of the Emergency Provisions Act have existed since the early 1970s. The provisions are exceptional. Parliament's consideration of their renewal each year, as required by statute, and the introduction, as necessary, of replacement versions of the Act, have proved controversial. That is particularly so when debates on the provisions have taken place during a time of ceasefire. I wish to make it clear, however, that while my party has objected in the past to particular aspects of the Emergency Provisions Act, it has never questioned the need for effective counter-terrorism legislation. For precisely that reason—the need to have effective counter-terrorism legislation—the Government announced in October last year their intention to present proposals to replace the Emergency Provisions Act and the UK-wide Prevention of Terrorism (Temporary
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Provisions) Act with permanent UK-wide counter-terrorism legislation. They will publish their proposals in the form of a consultation paper. Your Lordships will be glad to note that work on the paper is well in hand, although some further work needs to be done before it can be issued.
The preparation of the paper has been considerably assisted by the report published in October 1996 of the noble and learned Lord, Lord Lloyd of Berwick. Your Lordships will recall that the noble and learned Lord's report was predicated on there being lasting peace in Northern Ireland. Even against that background, his conclusion was that permanent counter-terrorism laws would be needed. I submit that there can be no question that the main provisions of the Emergency Provisions Act must be kept in place until they can be superseded by new, permanent legislation.
The legislation will be sufficiently flexible to be able to address the changing situation in Northern Ireland and the constantly changing nature of terrorism world-wide. The Bill before your Lordships this evening would achieve that short-term goal. It would keep the emergency provisions in place. subject, as usual, to annual renewal next year and the year after, if necessary, until 24th August of the year 2000.
I turn now to the detail of the Bill. As it is short, your Lordships may find it useful—and, I hope, not too tedious—if I explain its provisions clause by clause. Clause 1 does two things. It extends the life of the temporary provisions of the Act—that is to say, all of its provisions other than those that deal with extra-territorial offences and supplementary matters—from 15th June 1997 to 15th June 1999. It extends the life of the Act as a whole from 24th August 1998 to 24th August of the year 2000. The temporary provisions of the Act are currently subject to annual renewal. They have been continued in force by order until 15th June of this year. Thus, if Clause 1 were enacted unamended, and before 15th June, there would be no need for a similar order to be made this year. A further order would, however, be required in June next year, 1999, and in June the following year, 2000, were it considered necessary to continue the temporary provisions in force until the Act repealed itself in August 2000. I should add that the Secretary of State would retain the discretion she currently enjoys to suspend by order any of the temporary provisions at any time. Were she to consider that circumstances warranted it, she would act accordingly. That is to say, if during the life of the current Act a political settlement were achieved, it would be open to the Secretary of State, when she judged it right to do so, to allow such provisions to lapse.
The effect of Clause 1 is that subject to periodic renewal, as I have described, the following features of the existing Act would be retained: the schedule of terrorist offences; the mode of trial for such offences known as Diplock courts, together with associated safeguards including written judgments and automatic rights of appeal, and the different arrangements for admissibility and onus of proof; the additional powers of arrest, search and seizure for the police and Army; the specific offences against public security and public

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order, including offences relating to involvement with proscribed organisations; the regulatory provisions for the private security industry in Northern Ireland; the regime for terrorist suspects held under Section 14 of the Prevention of Terrorism (Temporary Provisions) Act 1989 in the holding centres and the related safeguards in the codes of practice governing their detention; and the appointment of the independent assessor of military complaints procedures.
The Bill makes a number of changes to the existing Act. These are in line with commitments given by my party and consistent with the aim of ensuring that, as far as it is sensible to do so, the treatment of persons charged with terrorist crime mirrors the treatment of persons charged with ordinary crime.
I turn to Clause 2. This amends Schedule 1 to the existing Act so that none of the offences listed in Clause 2 will any longer be automatically tried without a jury. Some offences are already subject to existing arrangements whereby only offences which are connected with the emergency are tried by a Diplock court—that is, by a judge sitting without a jury. The Government would wish to see eventually a return to the normal system of jury trial for all criminal offences, including terrorist offences. That is not possible at present because of the prevailing risk of jury intimidation. Criminal justice practitioners advise that jury intimidation continues to be a very real and present risk where the crime committed has terrorist or sectarian connections.
Schedule 1 to the Act provides a list of offences which are commonly perceived as being likely to be committed by terrorists. These are known as "scheduled offences". While this is the case, it also confers upon the Attorney-General limited discretion to "certify out" for jury trial certain of those offences, depending on the particular circumstances in which the offence was committed. The Bill extends the application of that discretion by making it possible for more scheduled offences to be considered in the first instance by the Attorney-General, who may certify them out. Examples of offences which, by virtue of the Bill, could be certified out at the Attorney-General's discretion are the common law offence of riot; some hijacking offences; some firearms offences; some hostage taking offences; and some offences under the Explosive Substances Act.
I shall not list all the scheduled offences which are covered by Clause 2. The Government's aim is to ensure that where such an offence is not connected with the emergency, it will be possible for the case to be heard in the ordinary way. While many offences in the categories I have mentioned may be committed by terrorists, it is quite possible that some such offences may be committed by a non-terrorist, perhaps even in a domestic context; for example a firearms offence. Clause 2 makes it possible for offences committed in that context to be treated in the usual way. It is entirely proper that such a facility should exist.
Clause 3 repeals the power of detention without trial, otherwise known as internment. Some regard this as the most controversial aspect of the Bill. The Government have long held the view that internment does not
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represent an effective counter-terrorism measure. I have already spoken of the need to strike a balance between effectiveness and overreaction. The power of internment has been shown to be counter-productive in terms of the tension and divisions which it creates. Quite apart from any judgment about its appropriateness in principle, the fact is that internment has not worked in practice. Indeed many would say it was a disaster when last used in the 1970s. There is nothing to suggest that it would be any more effective in the future. The Government's efforts at this time are focused on achieving stability and building trust within the community in Northern Ireland. We cannot envisage any circumstances in which we would seek to deprive an individual of his or her liberty without trial and without the normal safeguards that the law provides for the protection of suspects. Such action would surely run counter to the rule of law as it is understood internationally.
I shall deal with Clauses 4, 5 and 6 together. They are concerned with silent video recording and audio recording. Clause 4 addresses an omission in the existing provisions on silent video recording. Occasionally, the police require to interview at a holding centre a person who is in custody in the care of the prison authorities. Also, occasionally, a magistrate may order a person to be produced at a holding centre for questioning. Under the provisions of the Act, as currently worded, these categories of interview fall outside the requirement to be recorded on silent video. Clause 4 addresses this omission by enabling the Secretary of State, by order, to require such interviews to be recorded on silent video in the same way as other interviews conducted in the holding centres.
Clause 5 creates a new section to provide for the audio recording of police interviews of persons detained under the PTA. This is a significant step. The introduction of audio recording will provide additional protection for both interviewees and police interviewing officers against claims of verbal abuse, intimidation and harassment. It will also assist the judicial process by providing the best possible record of interviews conducted in the event that a criminal case ensues. The clause is modelled on the existing Section 53. which provides for silent video recording. It mirrors the amendment provided by Clause 4, ensuring that the order-making power conferred by that amendment will apply also to audio recording. As in the case of silent video recording, the first step will be to draw up, for public consultation, a code of practice which will govern the audio recording of interviews.
This leads me to Clause 6, which is an addition to the Bill as introduced. After consideration in another place the Government readily accepted the additional clause. It has the effect that an order bringing into effect a code of practice under the 1996 Act will be subject to the affirmative resolution procedure instead of, as at present, the negative resolution procedure. Matters connected with the operation of the emergency legislation are deserving of the strictest parliamentary scrutiny and the Government are happy to support this important addition to the Bill.

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As Clauses 7 and 8 are technical or deal with consequential matters, that concludes my description of the content of the Bill. In commending the Bill to the House I ask your Lordships to view it against the backdrop I have described—against the current security and political situation in Northern Ireland, and against the Government's longer term plans to introduce permanent measures for dealing with terrorism.
I ask also that your Lordships acknowledge the Government's positive but measured steps to make improvements, even in the short term, to the existing provisions. These improvements aim to protect further the interests of individuals, including the interests of police officers. I wish to commend all those who work to ensure the fair and consistent application of the emergency laws in Northern Ireland. I include the police, the army, the judiciary and those who administer the criminal justice system. I wish to mention the independent reviewer of the legislation, Mr. John Rowe QC; the independent commissioner for the holding centres, Sir Louis Blom-Cooper and his deputy, Dr. Bill Norris; and the independent assessor of military complaints procedures, Mr. Jim McDonald.
I pay special tribute to the security forces who continue, in circumstances which many of us can only imagine, to work diligently and fearlessly to counter terrorist activities and to bring to justice those who have committed some of the vilest acts of murder and destruction in the history of this country. I pay tribute also to all those who have paid the highest price in the line of their duty, those who have suffered, and all the innocent victims of the violence in Northern Ireland. For our part the Government will be tireless in our pursuit of a political settlement and a new beginning for Northern Ireland. In the meantime, we will not leave our people without the protections they need. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—((Lord Dubs.)
6.20 p.m.
Lord Patten: My Lords, I am glad to have the opportunity to speak for the first time in your Lordships' House. I realise that I am the fourth maiden speaker during this afternoon's business. Indeed, three distinguished maiden speeches were made during the last debate. During the course of that debate, while preparing his own lucid contribution, my noble friend Lord Alexander of Weedon found time to send me a note which I shall treasure. My noble friend wrote,
"You will know that the 5th Duke of Devonshire is said to have fallen asleep during his own maiden speech".
I do not know whether or not what my noble friend conveyed in that note is true; doubtless it was intended to calm any nervous feelings I might have. However, I hope that the ever helpful Library of this House will never record that I have had that effect on myself or on any of your Lordships during the course of my brief remarks.
The Library has produced a statistic at my request. Fifteen sitting weeks have elapsed since I was introduced in your Lordships' House. Some may think that to speak now is tardy; others, perhaps more old fashioned, may
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think it somewhat pushy to speak after so short a period. Similar inquiries revealed that in 1979 when I first took my place in another place I waited 11 weeks before speaking. That was nothing like as long as one of my predecessors, Viscount Valentia, who had represented my constituency. He waited 11 years before making his maiden speech in another place. "Those were the days", some would say.
Our views are formed by our experiences when seeking to speak about any subject. Mine have been formed to a certain extent by spending some of the happiest years of my life living for part of the time in Northern Ireland, knowing many people in Northern Ireland as close personal friends, and listening to a wide range of opinions across the political spectrum. I think of the views of my noble friend the Duke of Abercorn, for example, or those of the noble Lord, Lord Fitt, at whose feet I have sat on many an occasion in both the Province and here. I have followed carefully the words of wisdom about the Province from such noble Lords as the noble Lord, Lord Molyneaux of Killead. So my views are formed by a wide range of influences and contacts in Northern Ireland.
I must also point out that in a debate of this kind it is difficult to follow your Lordships' excellent practice of being absolutely non-controversial. Even the words "Northern Ireland" are deemed by some to be controversial. At one end of the argument some would prefer "Ulster"; others would prefer "the six counties" or "the northern part of the island of Ireland", or some other politically correct phrase. I guess that I can get away with being controversial by using the phrase "Northern Ireland" because it is on the face of the Bill which has been introduced so excellently by the noble Lord, Lord Dubs.
I have four points that I wish to make to your Lordships. First, I sympathise, in the correct sense of the word, and understand the burdens and challenges which face any Ministers in the Northern Ireland Office. In dealing with security issues they have, of course, my strong support. I listened with great care and attention to everything the noble Lord, Lord Dubs, said when he reported to the House on the present tense security situation in the Province.
Secondly, I wish that those who comment on Northern Ireland—the chattering classes, the commentators, those who appear on television screens, the radio and newspaper pages—who have been so rapid in coming forward when Northern Ireland has been in the news would take a sustained and detailed interest in the affairs of the Province over a period of years in order not to make a flip and rapid comment but rather to help inform the people on this side of the water about the realities of the situation that the people suffer on the other side of the water. It is perhaps that lack of care and attention by most of those, although by no means all, who comment and form our opinions in this country which has led to some confusion, which I intend to address in my third and fourth points, about what the words "security" and "peace process" mean.
Thirdly, it is important that people on this side of the water recognise that security has nothing to do with colonial oppression, ideology, or party politics, but

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everything to do with ensuring that everyone enjoys the same high level of security in every part of the United Kingdom. Security is not some tradeable option which can ever be used in negotiation.
Fourthly, and lastly, there is great misunderstanding on this side of the water about what the phrase "peace process" means. Quite rightly, to many people it means men and women of good will from democratically elected political parties coming together to try to heal the problems of three centuries of discord and three decades of turmoil in Northern Ireland. Alas, to other people on this side of the water sometimes the peace process means doing all that you possibly can to stop people firing guns and setting off bombs under you. At a time when things are moving so helter-skelter in Northern Ireland, it is important to remind ourselves that that route leads only to seeking to accommodate people who in the past have used cease-fires as a tactic rather than as a commitment. To borrow the phrase from one distinguished observer of the scene in Northern Ireland, it is critically important that all our efforts in the peace process, and as regards security, are underpinned by seeking confidence-building measures for the peaceful majority of people who live in Northern Ireland.
At the beginning of my speech I mentioned those who have, in different ways, influenced my thinking about the Province. I referred to my co-religionist, the noble Lord, Lord Fitt. I well remember being addressed by my Permanent Secretary in the Department of Health and Social Services, as it was called in 1981. One of the most urgent briefs on my desk when I arrived in office was a submission seeking my advice on how we should approach a manufacturer of chemical goods for elderly people in Northern Ireland which branded its products as "Gerifit".
The civil servant was an extremely distinguished man, Mr. Norman Dugdale, Commander of the Bath. He influenced a great number of junior Ministers in the Labour and Conservative Administrations of the 1970s and 1980s. I conclude by quoting not from his advice, because that would break all the conventions of government, but from some of his published poetry in a book entitled Running Repairs, published in 1983. One of the poems was addressed to new Northern Ireland Office Ministers. It is called chillingly Provincia Deserta and refers to,
"gentlemen newly come To live here at the Governor's Lodge. Two years from now You will be safely home again and dining out On your bizarre experiences".
Mr. Dugdale went on with resonant bitterness to speak of,
"All punishment that is random and condign, each Adult male doubling as both predator And victim—a symbiosis which ensures All suffer in the end alike".
He ends wistfully by writing of a Northern Ireland—and he was from this side of the water originally—
"Which will shadow you always, beckoning Still. however far your country".
Northern Ireland certainly beckons me and we must ensure that within the Union of the United Kingdom it
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always enjoys the same high level of security and the same confidence-building measures as every other part of the United Kingdom.
6.30 p.m.
Lord Molyneaux of Killead: My Lords, it is a real personal privilege and pleasure to follow the noble Lord's maiden speech. With typical modesty he has understated his own contributions to our national affairs. However, these are all well known to your Lordships so perhaps he did not feel that it was necessary to say more. He was similarly self-effacing in his references to his outstanding services to Northern Ireland and the people of Northern Ireland, as a Minister who was widely respected across the entire community there. I assure him that a very real reservoir of affection still remains among all classes and creeds in the Province which he served so very well. I note that in his entry in Dod the noble Lord lists one of his recreations as,
"Talking with my wife and daughters".
There is no mention of the guillotine ever having been applied. I am not quite certain by whom a guillotine might have been imposed, but perhaps we shall hear that in due course. It seemed to me, as a bachelor, to be a very necessary device. The noble Lord's maiden speech was understandably restricted. However, I know that he can be relied upon in future to add to the sum of knowledge and understanding of the difficulties of Northern Ireland.
In his opening remarks, the noble Lord, Lord Dubs, indicated that much has changed since the Bill completed its passage in another place on 11 th December. Regrettably there has been a resumption of the murderous campaign, in some cases by sub-contractors of established and recognisable terrorist organisations and in other examples by splinter groups. Other forms of terrorism, not unconnected to the drugs scene, have sought to dominate entire communities in Northern Ireland. That, too, is very regrettable.
Defending the Bill in another place some weeks ago, Ministers appeared to be influenced by American supporters of Irish terrorism—although in fairness it must be said that those American supporters are rather less charitable when it comes to Libyan or Iraqi terrorists. Ministers appeared to be sensitive to what was perceived as the importance of confidence-building measures to secure the compliance of Irish terrorists, regardless of the demoralising impact on confidence in the minds of law-abiding people in Northern Ireland and indeed throughout the United Kingdom.
It is just possible that something positive may result from all the current high wire acts at Stormont, and more recently in Tokyo. The problem is that a so-called settlement cobbled together under the glare of the spotlights may collapse when some of the contracting parties or groups discover that the small print fails to deliver that which they had thought they were promised. In that unhappy event, there will be the usual accusations of betrayal and double dealing, resulting in the splintering of some parties which have acquiesced in the arrangement. Sadly, that has been the history of Irish politics for a century and a half. But even more

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dangerous will be the continuing efforts by existing groupings to eliminate those whom they regard as quislings in their own ranks. We have already seen such indications but conspiracies are gaining ground, with the object of launching a co-ordinated murderous campaign before Easter.
Your Lordships may feel that I am painting a very sombre picture. I hope that you are correct. But intelligence North and South, and here in this island, convinces me that it would be supreme folly for democracy to lower its guard in this particular year.
Nor has the need for vigilance been reduced by the drama of the past few days, culminating in the bargaining by satellite from the Far East. Those signals have not been interpreted by us because they have passed over our heads and the details are therefore by no means clear. It is safe to assume that, as usual, the Dublin Government will have demanded far more than they expect to receive, and will consequently be pleasantly surprised to discover that the despised British negotiators have fallen for Irish blarney. If that does not happen this time, it will he an exception. We can only hope that this time the representatives of Her Majesty's Government will have identified the traps and "wised up".
I trust that Her Majesty's Government will have recognised that terrorist movements deal in terms of absolutes and not compromises. That is always the pattern; and that is the weakness. For a terrorist leader to settle for a devious form of words, capable of many interpretations, would put him at risk of liquidation by his own side, and the result would be an escalation of terrorism by the disenchanted, possibly on a large scale. Over decades Irish governments have been acutely aware of that truth, and it is for that reason that the Irish Republic has been wise enough to retain the power of detention which the Bill before us is prematurely throwing away. It is beyond comprehension that Her Majesty's Government are promoting this Bill—surrendering the power to detain; certifying out a whole range of offences which will result, for example, in the sort of fiasco seen only a few weeks ago in the trial of those accused in the £300,000 terrorist funding raid in Boucher Road, Belfast—the terrorists escaping conviction through an indulgence in various technicalities. And there is the Government's blind refusal to provide for the acceptance of wire tap evidence, which was used to great effect last year in trapping those IRA terrorists who came within an ace of destroying power stations throughout the South of England. On that occasion MI5 and the police forces in England were commended for their activities and their efficiency in defeating terrorism by the use of wire tap evidence.
Finally, I hope it is not too much to ask the Government to reflect on these crucial points and to consider whether public safety throughout the Kingdom will be greatly endangered by the Bill in the highly dangerous situation created by a resumption of terrorism and the further escalation now predicted by every reliable intelligence source.
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I appreciate, as the noble Lord, Lord Dubs, said, that there is a requirement for bridging legislation before the present legislation expires on 24th August this year. However, I ask the Government to consider the preparation of alternative fast-track legislation more appropriate to the unfolding situation, which will be made worse, not better, by all the uncertainty attendant upon every political high wire initiative which has dogged Northern Ireland, the whole of Ireland and the United Kingdom in general over the past three decades.
6.39 p.m.
Lord McConnell: My Lords, the Minister rightly began with a consideration of the background to the present situation. He mentioned the Maze Prison and what has happened there. That is a very important consideration. It is unbelievable that in one of Her Majesty's prisons in the United Kingdom the conditions could have existed about which we now know and have suspected for a long time. There are men convicted of serious criminal offences, very often of killing women and children. Their political supporters refer to them as political prisoners, but anyone who thinks that they are political prisoners has a very debased view of politics. They are ordinary criminals, no matter what may have been their motives, and they have committed atrocious crimes. For the Government even tacitly to accept that they are political prisoners is quite wrong and a complete misrepresentation of the facts.
Recently, as we all know, there were two incidents, one in which a prisoner escaped dressed as a woman and the other in which there were apparently guns available within the prison which resulted in the murder of one of the prisoners. It is said that the prison staff are kept out of the prisoners' quarters and that the prisoners have mobile phones. It has been alleged that some of the prisoners have directed terrorist offences on the phone to their subordinates outside the prison. The Government and Ministers may shrug off responsibility for running a prison on that basis, but I hope that there will be an independent inquiry and that those who are found to be at fault will be removed from any positions which they hold.
For a long time weakness has been shown in the government of Northern Ireland. Much of it can be traced back to the Tory Anglo-Irish Agreement. But although it was concluded by a Conservative Government, it was enthusiastically backed by some Labour Members on the basis that it was a good step towards a united Ireland. It has, of course, resulted in a nest of civil servants being installed in a place called Maryfield, just outside Belfast, who have to approve of most of the measures and appointments made by the administration. It is time that Northern Ireland was run by British citizens of the United Kingdom, whether they originate in Northern Ireland or in other parts of the United Kingdom. It is time to have no more talk about confidence-building measures.
Apparently there is some kind of sub-committee to decide matters which seem to comprise releasing various criminals from prison. That certainly does not build any confidence for the ordinary citizen, no matter

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what his views happen to be. It may give confidence to the organisations to which these criminals belong and which we could well do without.
There is also the question of doing away with the power of internment, as we call it. I do not suggest for a moment that at the present time, or even in the near future, it would be of use to exercise such a power, but I should like to know whether the Dublin Government have given up their power of internment as well as our having what is in the Bill. I know that I am being pessimistic, but it is conceivable that, in the worst scenario, if some kind of agreement is reached and the terrorists say that they will have a ceasefire and all their men are let out of prison, after a while they may return to terrorism. If it is on a bad scale there ought to be some way of getting the men back behind bars. I see no reason why that power—which we are unlikely to have to exercise—should be removed. Again, it is just another so-called confidence-building measure.
There is a great feeling in Northern Ireland that far too much attention is being paid to the views of terrorists. The fact that Mr. Gerry Adams was received as an honoured guest at 10 Downing Street did not inspire confidence among peace-loving people of any persuasion in Northern Ireland. It made it possible for them to say at the next election: "Vote Sinn Fein. Our leader has the ear of the Prime Minister; therefore you should vote for him". What we should try to achieve is for the republic to agree to wholehearted co-operation in seeking out terrorism and to do away with its claim to Northern Ireland under Articles 2 and 3 of its constitution. It is hard to say that those from the republic are there with impartial standing when they have a claim which they have not removed to part of the territory of the United Kingdom. Therefore, there is a great deal to be done by firmer government and greater respect being paid to ordinary decent people in Northern Ireland, no matter what their politics happen to be. They are more important than the terrorists who are so often placated.
6.47 p.m.
Lord Cooke of Islandreagh: My Lords, the Minister made it clear—and gave good reason—why the Bill must be looked at in relation to the circumstances that exist in Northern Ireland today. The noble Lord, Lord McConnell, has just spoken on some aspects which I wish to amplify.
It is difficult for the ordinary, sensible and law-abiding people in Northern Ireland—they must represent about 90 per cent. of those living there—to believe what they have been seeing, hearing and reading. For some time, we—and perhaps I may include myself as being one of those ordinary, sensible and law-abiding people—have been hearing about confidence-building measures. I assume that that means confidence in government. But we have not seen any. What we have seen is a series of bribes offered on an almost daily basis to Sinn Fein/IRA. Then, only two weeks ago, a leading Protestant paramilitary, Billy Wright, was shot inside the Maze by other residents of a different faction and it was found that there were many guns in their possession.
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Since then we have heard something of the conditions in the Maze Prison where apparently there has not been a thorough search perhaps for years; where there are no regular roll calls; where prison warders are not allowed into the prisoners' wings without permission; where visitors are not hand searched and are not even put through an electric gate, something which all air travellers accept as a matter of routine. Unfortunately, retaliatory shootings followed—one yesterday—and an attempt has been made to destroy the centre of Banbridge with a 500 pound bomb. Then, on Friday, our Secretary of State went into the prison to persuade Protestant paramilitaries to support the peace process because, it appears, she thought that the future of the talks process depended on the agreement of those paramilitaries.
All that is happening in part of the United Kingdom. It is almost unbelievable. Many people are outraged by what has happened in the past week. The only reason people can think of to explain such events is that our Government, the Government of the United Kingdom, are prepared to do anything or give anything to Sinn Fein/IRA or to other paramilitaries in order to stop them bombing London and what the consequences are to the people of Northern Ireland is not significant. It is horrific to think that that is what good, sensible people believe to be the policy. It is difficult not to give credibility to that horrific suggestion. But it is with that in mind that any legislation in respect of Northern Ireland must be examined. The Northern Ireland (Emergency Provisions) Bill which we are considering today is intended to extend the Northern Ireland (Emergency Provisions) Act of 1996. That is necessary and understandable. But are the amendments to the Act which are proposed in the Bill intended to assist the authorities to deal with terrorism? Or are they intended to please the terrorists in accordance with the government policy which I have suggested?
The principal change in the Bill is to remove the power of internment. It seems extraordinary that that power, which has not been used for 25 years, should he removed when the omens for the future are not good. The power of detention without trial has been used effectively in the past and by the government of the republic on several occasions. Only in 1972 was it misconceived. Why remove it now when no one is to know when it may be required at short notice? To await the granting of the necessary powers by Parliament would mean that the godfathers and others on the list for detention will have gone into hiding elsewhere.
The other change incorporated in the Bill is to require audio recording of interviews, the effect of which seems very questionable. Will it help the police or will it make it more difficult to convict a suspect terrorist? Will it not make it more difficult for the police to obtain information which will identify other suspects? The merit of the clause is certainly questionable. Is it intended to help the security forces or the terrorists?
My noble friend Lord Molyneaux mentioned the question of wire tap evidence. It seems that that is something which is necessary and such evidence is

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accepted in other European countries. Why is it not included in the Bill? It would send out a signal to terrorists that the Government intend to get on top of future outbreaks of violence.
I make no apology for looking at the provisions of the Bill in this way; it is the way in which the majority of thinking people in Northern Ireland will look at it. It should be noted, and I hope that the Government will have regard to those views and consider them when deciding how to deal with the situation in the future. If the solution to republican terrorists which the Government believe will persuade them to put away their pikes in the thatch, and if the political process and democracy in Northern Ireland are to have a future, it is necessary that the Government are honest with the people of Northern Ireland and cease to show that violence pays.
6.55 p.m.
Lord Fitt: My Lords, I rise for a few moments to congratulate the noble Lord, Lord Patten. As he reminded us, he was a Member of another place when we were both elected representatives. I congratulate him today on his maiden speech and hope that he will partake in debates. There will be many more debates in relation to Northern Ireland before we can ever begin to see a resolution of the conflict.
When showing visitors around the House of Lords I am frequently asked what is the difference between this place and the House of Commons. After I have explained how one gets in here, I concentrate on the fact that when we are making a speech in the House of Commons, we are at all times looking over our shoulder at the electorate and hoping to make a speech which will appeal to the constituents back home and thus enable us to be re-elected at the next election. Therefore a tribal response is given on any subject, particularly in the field of security.
Those who come from a nationalist background in Northern Ireland will be opposed to the legislation, opposed to the PTA; they will say that the legislation is not effective. Those who come from a Unionist background in Northern Ireland will say that the legislation should be kept; in fact, it should be consolidated and improved. Both sides in Northern Ireland say that this legislation is either for or against their interests. I hope that the tribal response to events in Northern Ireland from this House will be somewhat diminished.
I listened to speeches of noble Lords on this side of the House this evening and they seemed to concentrate on the awful atrocities committed by Sinn Fein/IRA. The whole House will understand—the noble Lord, Lord Patten, will recall—that since the inception of this legislation in 1973 when I was a member of the standing committee taking part in those debates, I vehemently opposed IRA terrorism. I have opposed it all my political life. Indeed, my attitude to republican terrorists throughout my political career led to my political downfall when it was perceived by republicans and
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Nationalists in Northern Ireland that I was not engaged in the tribal support that they expected of me. No one, therefore, can question my opposition to terrorism.
As I said, the speeches on this side of the House this evening concentrated on IRA terrorism. But what has sickened me over the past weeks and months is to see people guilty of the most atrocious murders in Northern Ireland—particularly John White, who murdered my closest friend, Senator Paddy Wilson, in one of the most brutal murders that has ever taken place during these troubles, and Michael Stone, a Loyalist murderer who shot dead six people attending a funeral in Northern Ireland—being given the facility to stand in front of television cameras and give their views on what is happening in Northern Ireland. Indeed, one of my friends telephoned me and said that to see Michael Stone standing there with his staring eyes and long haircut giving his opinion to the cameras reminded him of the murderer Charles Manson many years ago.
Terrorism is not simply a question of the IRA and republicans; it means all forms of terrorism in Northern Ireland. I now sit on the government side of the House, but when I sat on the Opposition Benches any criticism that I felt in all honesty I could make, I made. But the terrorists are now going to Downing Street, or are standing in front of the cameras, or are sitting in their cells at the Maze waiting to meet the Secretary of State for Northern Ireland because of what the Conservative government did a few years ago when they decided to have one of the most bogus and rigged elections in the history of Ireland, an election which was so contrived and rigged that representatives of murderers, paramilitary organisations—the UDP and the TUP—were elected. I absolve my noble friend the Minister because he was not responsible for that. However, the former Conservative Government were. That gave those organisations the legitimacy which they so ardently craved. Now they are running the prison in their own interests.
By the way, a sense of humour has been evident in Northern Ireland for many years. Within the past few days, one of the warders at the Maze, which is supposed to be one of the most secure prisons in the world, said to the press, "The Maze is like Butlin's and, unfortunately, we are the redcoats". That is the truth.
There would be no need for this legislation if we had a political solution. I want to give some advice to my noble friend. I can see the whole situation in Northern Ireland from a perspective that existed in 1973 and 1974 and is still quite obvious today. I was part of the Sunningdale Agreement. It made provision for the setting up of an executive in Northern Ireland which would combine nationalists and unionists, Catholics and Protestants. To have been part of that agreement was the apex of my political career. What killed the agreement, which was one of the best and most far-reaching solutions that we have ever had to the problems of Northern Ireland, was the second strand, which sought to set up a body that would have executive powers. I would advise my noble friend the Minister that we are in exactly that position. If the nationalists, the Irish

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Government, Sinn Fein and the SDLP insist on having executive powers for a Council of Ireland, that will lead to the downfall of any peace process.
I should like to see this legislation being unnecessary. We are about to go into the new millennium. I hope it will be unnecessary to have this legislation. However, I advise my noble friend to do whatever he can to ensure that those emotive words "executive powers" are not the obstacle that brings the whole process to an end.
7.3 p.m.
Lord Holme of Cheltenham: My Lords, it is a great, if unexpected, pleasure to be following the noble Lord, Lord Fitt, whose dexterity in leaping into the gap I often have cause to admire. I would certainly want to remove any artificial suspense from your Lordships' proceedings by saying straight away that from these Benches we shall support the Bill and the renewal of the powers. How good it is to see the Labour Government now within the tripartisan consensus on this issue in a way that they found difficult in Opposition.
Before I talk about the specific provisions of the Bill I should like to make one or two points about the context in which we approach it. The first concerns the political context. It is true at all times in Northern Ireland that all situations become delicate. The language of crisis can easily be overused. The noble Lord, Lord Patten, in his outstandingly elegant and thoughtful maiden speech, was right to say that the near hysterical language of the media does not contribute to the calm and stability that is needed for progress in Northern Ireland. We are all potentially liable to use overheated words. Nevertheless, this is an unusually sensitive moment in the affairs of Northern Ireland as the talks reconvene. It is good to see the parties huddled around the glow of the talks. But they know and we know, as the noble Lord, Lord Fitt, has just reminded us, that there are some dark and sinister figures, of both republican and loyalist persuasion, in the shadows.
I should like from these Benches to pay tribute to the Prime Minister and the Taoiseach, who have both shown a freshness of approach, a willingness to take risks and an extraordinary willingness to pick up the telephone that would delight Bob Hoskins. I gather that the Prime Minister and Taoiseach have spoken about eight times in the past 24 hours. Indeed, it is good to talk. We should also pay tribute to the Secretary of State, who like so many of her predecessors, one at least of whom is in the Chamber this evening, finds herself the subject of criticism. I pay tribute to her for her willingness, as is the case also with Senator George Mitchell, to roll up her sleeves and get stuck in. That has made a great contribution.
We are approaching a real moment of truth in the next week or so. Can nationalists accept that the unity of Ireland is not on the agenda for generations and then only in a different Ireland, an agreed Ireland, and by consent? Can they accept that? Can Unionists accept—I have listened with interest to some notable speeches from noble Lords who are Unionists—that they must share power and parity of esteem within Northern Ireland and that they must accept a legitimate interest
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on the part of Dublin in the rights and welfare of the minority community? We shall know very soon when we have reactions to the proposals on the table this afternoon, building on the Downing Street Declaration and the framework document in which Mr. Major's Government played such an important role. I hope that the reactions from all sides are constructive and workmanlike rather than in the overheated terms which too often characterise political debates in the Province. In fact, I have just been told that the first reaction from all parties, except possibly Sinn Fein, seemed constructive when the talks adjourned an hour or so ago. I was very impressed by the noble Lord, Lord Molyneaux, who, in a speech which on the whole looked on the dark side, allowed that this might be a moment of progress. We must all hope that that is the case.
There is no doubt that we need the legislation that the Government have put before us this afternoon. If nothing else proves it, the events leading up to and following the murder of Billy Wright on 27th December show just how febrile the atmosphere is and why, however reluctantly, we must support the renewal of these powers. I could equally well refer to the fact that the terrorist forces on both sides are still on standby. Their structures are intact—the so-called punishment beatings continue—rather than being disbanded. As Gerry Adams said—in this, at least, he spoke candidly—the IRA has not gone away.
There is also the legislative context. The Home Secretary has promised a review of how the EPA and PTA might be brought together. The Liberal Democrats suggested that originally and we certainly support it now. When the noble Lord, Lord Dubs, replies, can he tell us when we shall see that consultation paper? He referred to it in his opening remarks. Will it be days, weeks or months? It is important to know as it affects the attitude of all of us to the progress of the Bill.
The noble Lord referred to the review of anti-terrorist legislation, ably conducted by the noble and learned Lord, Lord Lloyd. Some of its proposals have been incorporated in the legislation before us. The noble and learned Lord said in his report,
"Once lasting peace has been established in Northern Ireland there will continue to be a need for permanent counter-terrorist legislation to deal with the threat of international and domestic terrorism".
That is why this potential consolidation of anti-terrorist legislation is so important when considering this particular Bill.
Specifically, I welcome the changes in the new Bill. I welcome the change in Clause 2, which means that the Diplock courts will in future be used by exception. There are legitimate concerns about one judge courts. It is right that in future these will have to be justified. While one can understand some of the concerns about jury trials, surely it is preferable, within the British system of justice, to try by jury whenever possible.
Clause 3, to which several noble Lords have referred, removes the internment provisions. I welcome that. When they were last used in the early 1970s they were widely regarded as being counter-productive. When this

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was debated in Standing Committee in another place in November the Conservative spokesman, Mr. Malcolm Moss, said,
"I think that everyone, including Conservative Members, would accept that in the 1970s the introduction of this measure was clumsy—ham-fisted, even, and ineffective. It probably had the opposite effect from that which it was intended …".
In fact, in another place the Conservative Party divided the House on this issue of the retention of internment. I do not know whether that is the intention of the Conservative Benches. I very much hope that it is not, because not only was internment in practice counter-productive but I do not agree with the argument that one should keep it hanging like the sword of Damocles in case it is ever needed. A lot of things might be needed in the future. At some point we might need to have conscription. If that were so and British security had deteriorated in such a way that we needed conscription the matter would come before Parliament, which could decide to re-introduce it.
I believe that internment is very much in the same category. It is an extreme measure which is not needed in ordinary circumstances. I do not support the argument that by keeping internment one gives some kind of signal. I believe that the reverse is true. It is used consistently by the IRA as propaganda to raise money, particularly in the United States, on the basis that the British Government resort to inappropriate measures. As the noble Lord, Lord McConnell, said, since there is no prospect of internment being used in the near future and when it was used it was counter-productive, turning terrorists into martyrs, I believe that it is better to remove it, as the clause does. If it is needed on the statute book at a later date than let us by all means reinstate it. I do not believe that the retention of internment is a proper reaction to the situation which we now have in Northern Ireland.
Clauses 4 and 5 deal with both audio and video recording of police interviews. I ask the Minister one question about that. From these Benches we pressed for this five or six years ago. I do not have the precise chronology, but I believe that about two years ago the Government agreed that it would be appropriate. But as I understand it, there is still no silent video taping of interviews taking place. Obviously, the process set out in what I now recall was the 1996 legislation was quite lengthy. But what is the position now? How long will it be before there is silent video recording?
I have one or two final points. I believe that the issue of the right to silence when a solicitor is not present, which was raised in the Murray case and has been discussed in your Lordships' House, has not yet been answered by the Government. Your Lordships will recall that the issue arises where people may be refused access to a solicitor. If a presumption of guilt is likely to be drawn from an interviewee's silence, having a solicitor present becomes much more important. That was the issue that Murray took to the European Court of Human Rights. The Government now intend to incorporate the European Convention into British law, but they do not seem to have solved this problem. To put it crudely, I believe it is a question of having a
904
solicitor present, in which case the right to silence can be construed more constructively. So what plans do the Government have to bring us into line with the European Convention in this respect?
Finally, I wish to raise a point which comes from Mr. John Rowe's report of the operation of the legislation in 1996. It shows that the waiting time for prisoners to be brought to trial in Northern Ireland is still quite excessive. That is a matter on which the previous government said they would try to take action. Mr. Rowe reported that in 1996 it took 27 weeks to get cases to the point of arraignment. That is against 29 weeks in the previous six years, on average. So there has been no real improvement. If one adds the further time taken through to trial, a period in excess of six months is the norm for prisoners on this kind of charge in Northern Ireland. That appears to be quite excessive. When the Minister replies, I shall be grateful if he can indicate whether there is going to be any progress in that regard. With those provisos, we shall support the Bill in its progress through the House.
7.16 p.m.
Lord Cope of Berkeley: My Lords, we have had an interesting debate made much more so by the elegant maiden speech of my noble friend Lord Patten. I used to call him "my right honourable friend" but always, I hope, "my friend". He served in the Northern Ireland Office, which is not all that exclusive a club as these things go. There were quite a number of us. But he is a very distinguished member of that club. As often when he speaks, he improved my literary education at any rate. I shall look, rather belatedly I admit, at the poem to which he drew our attention. He gave us good reason to look forward with pleasure and interest to his future contributions to your Lordships' debates and to what one might call more things to come.
I now turn to the Bill. Like others who have spoken, particularly the noble Lord, Lord Fitt, at the conclusion of the Back Bench contributions, I hate the necessity for this Bill and emergency provisions. But no one should doubt at all that there is that necessity. We hope that the time will come when we can relax these powers both in Northern Ireland and Great Britain. It is good to think about that time, but it has not yet come. So I support the renewal of these powers. My reservations are about those clauses of the Bill which do not renew certain of them.
In general, the powers themselves are necessary in Northern Ireland because of the existence of terrorists of all tribes, or whatever description the noble Lord. Lord Fitt. prefers. Terrorists are determined to substitute the terror of bombs and bullets for democratic decisions. No democracy can accept that. The first duty of any democracy is to defend itself against force and anarchy. As my noble friend Lord Patten said, security is not a tradeable option.
As a matter of fact, I believe that republican terrorism has made co-operation between the north and the south of Ireland much more difficult over the years. It has hardened attitudes and closed minds throughout many decades. So-called loyalist terrorism claims to be solely

905
reactive; to be an attempt to meet terror with terror and to prevent republican terrorism from defeating democracy. That claim seemed to have some validity at times, but it will completely collapse if the loyalist terrorists break the ceasefire before the republicans do.
In any case, the ceasefire on both sides is incomplete and has deteriorated in the past few days, as has already been drawn attention to in this debate. The list of incidents, killings, punishment beatings, bombs and arson testifies very strongly to that.
But we all know, too, of the statements by republicans and others that the ceasefire, such as it is, is merely a political tactic. We know that the arms and explosives are still out there in the hands of all sides. As long as those arms and explosives are there, with people willing to use them, we need the most effective emergency provisions that we can devise to support the security forces. I join in the tribute that the Minister rightly paid to them at the end of his remarks.
Of course, we all hope that the current talks will make such provisions unnecessary in respect of terrorism based in Northern Ireland, but we shall still need to discuss United Kingdom anti-terrorism measures in a much broader context, and we shall be doing that later this year when we see the White Paper. In any case, it is difficult to be confident about the outcome of the current talks. It is difficult to judge the handling of the talks from outside, particularly when things appear to be moving quite quickly, as today, or even, I suspect, to judge the progress of the talks from the inside. However, I am certain that it is a difficult and delicate process and I do not want to say anything to make it more difficult.
The noble Lord, Lord McConnell, drew our attention to the Maze Prison and particularly to the visit by the Secretary of State and to the other things that have come out since. The problem with the Secretary of State's visit is that it emphasised and built up the role of convicted terrorists in the decisions on peace. Everybody who knows Northern Ireland knows that, whether we like it or not, prisoners' opinions are a factor. However, there should be no doubt that we do not like it. As has been pointed out, those prisoners have been convicted of hideous crimes against other human beings. The fact that those murders and other crimes have been committed in an attempt to terrorise the democratic process does not make them more acceptable than murder for some other purposes. Indeed, if anything, I think that that makes them worse. After all, if those terrorist crimes succeeded in their aim, that would open the door to more and more terror.
As I have said, the opinions of prisoners matter in Northern Ireland. The whole difficulty of the talks is that unless the terrorists and their godfathers accept whatever agreement can be reached, peace will not result. However, every time that one builds up the terrorists and extremists at either end of the spectrum, it takes away a bit more of the initiative from the democratic parties which should be at the centre of the talks and from the law-abiding people whom they represent, to whom the noble Lord, Lord Cooke, referred and among whom he rightly included himself.
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Therefore, the reductions in the emergency powers in this Bill are part of that same process of easing the pressure on the terrorists. If it were being done in exchange for concessions, for movement towards agreement or for some change of expressed attitude, it could be acceptable, but at present there seems to be no change of attitude by the terrorists whatsoever. None was visible in the visit to No. 10 by Mr. Adams and his colleagues and none has been visible on other occasions. Our fear is that all these concessions, of which this Bill is a part, are being given for nothing in return.
We hear today that the Irish Government have backed the proposals being scouted by the Prime Minister from Japan. We have had no opportunity to study the details of this afternoon's events, but I hope that that indicates a more positive attitude from the Irish Government than we have sometimes seen in the past, rather than a falling into Irish traps by the British Government, as the noble Lord, Lord Molyneaux, suggested.
It is no good the Irish Government constantly telling British governments to be balanced while they are wholly partisan in their views. They also have to take some risks for peace. They constantly press for "confidence-building measures" directed at republicans and nationalists, but they should also consider measures that they can take to build the confidence of unionists, starting with an agreement to rid their constitution of its offensive clauses as part of any settlement. Perhaps I should add that those clauses are offensive not only to unionists but also to international law. Without that, the unionists are bound to see any potential agreement as a potential notch in a ratchet towards the domination of the north by the south.
I believe that if Irish governments for 75 years since the creation of the state had assiduously tried to build up the confidence of the unionists, they would have got much further towards all-Ireland co-operation. The decline in the number of Protestants in the Republic of Ireland over those years is a measure of attitudes there, and those attitudes have accordingly shaped the attitudes of the Protestants in the north.
Co-operation between the two parts of the island is possible. There are plenty of examples to show those who doubt that, but the best is to watch a game of rugby when Ireland is playing any other nation. That shows all-Ireland co-operation in full swing. Co-operation is possible, but the domination of one part of the island by the other is not going to be forced on either part of Ireland. That is why the definition of "cross-Border bodies" is so important. I hope that the appeal made by the noble Lord, Lord Fitt, will be listened to carefully.
I am afraid that I am inherently cynical in my view of Irish governments because the one with which I had to deal was that of Mr. Haughey, but he seems to be being dealt with now anyway. As it happens, I got to know Bertie Ahern before I went to the Northern Ireland Office, when we both worked in other capacities, and I believe that the present government in the Republic of Ireland are of a different character. They could and should look to their own position as well as criticising others. I hope that they have taken a step in that direction today.

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However, much as we hope for the success of the talks, we are certainly not there yet. That is why this Bill extending the emergency powers is necessary. It is also why I think it unwise to relax protection, as the Bill does.
As the Minister indicated, the most important clause in this respect is that ending internment powers. We all accept that internment did not work 25 years ago and, indeed, that it was counter-productive. However, that is not the only example of internment that there has ever been on the island of Ireland. In any case, the intelligence on which internment depends crucially for its success is much better now, partly because of the advances in electronics but also partly because of the tremendous skill and effort put into it over so many years. The fact is that internment is the one threat that makes life difficult for the godfathers. Those who carry out these dreadful deeds can sometimes be caught and convicted. Those who manage terrorism are much more difficult to catch or to convict.
At intervals during the past few years, it has been thought that internment might be re-introduced—and the mere thought that it could happen disrupts the terrorist organisations most effectively. Besides, anyone who knows Irish history can envisage the possibility of the British and the Irish Governments—as the noble Lord, Lord Molyneaux, told us, the Irish Government have retained such powers—wanting to prevent small bodies of extremists making a settlement reached by more moderate people impossible to implement. If we take away the power of internment from the statute book, it cannot be used effectively.
In response to the noble Lord, Lord Holme, there is a crucial difference between conscription and internment. Surprise is essential if internment is to be effective. We shall return to that argument in Committee.
I am also concerned about the recording of interviews. It is well known that the interrogation of suspect people can yield all kinds of information both directly and incidentally but only if the suspect can be absolutely sure that the terrorist godfathers do not know that the information has been given. This is one respect in which fighting highly organised and totally ruthless terrorist organisations is fundamentally different from dealing with ordinary crime. Members of terrorists organisations are carefully trained in resisting interrogation and comprehensively threatened about what will happen if they talk. If recordings may be disclosed to others involved in the defence of the accused, less intelligence will be forthcoming; and intelligence is the single most important element in combating terrorism. That is something to which we shall return in Committee.
Clause 2 of the Bill heightens the role of the Attorney-General by making him—or possibly her at some stage—decide in each case whether a particular matter should go to a Diplock court. We have been brought up to believe that the Attorney-General makes decisions based solely on legal considerations and not political ones. However, the Attorney-General is a politician and even if he is absolutely scrupulous he is
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not seen to be making decisions solely on legal grounds. People expect politicians to be influenced by political considerations even when they do their best not to be. The position is a peculiar one. The Attorney-General found this out the other day, if he did not already know it—I am sure that he did—when the son of the Home Secretary got into trouble. But the provision in the Bill is altogether more serious. It will make it appear as if every decision as to whether a case should go to a Diplock court is a political one. Even if it is not it will unarguably he a decision of a politician. That is the difficulty with this clause. However, we shall return to that matter later in our discussions.
Overall, like the noble Lord the Minister and others who have spoken, I believe that this Bill is essential. We need emergency powers. They do not by themselves cure the problem of terrorism. Talks and everything else are important to achieve that end. However, the emergency powers have helped to contain terrorism. Without them we would be in much greater danger. We need this Bill. We shall try to strengthen it at later stages, but the Bill is needed for the sake of democracy.
7.32 p.m.
Lord Dubs: My Lords, I thank all noble Lords who have contributed to this interesting, useful and important debate. I believe that terrorists try to undermine democracies in two ways. First, they use the gun and the bomb. Secondly, they seek to undermine the institutions which are the real reason why democracies exist. Therefore, we need to arm ourselves with the legal powers and proper security forces to deal with those who use the gun and the bomb, but we must do it in such a way that the fundamental basis of our democracy remains. I believe that, looking at the events of the past 25 years in Northern Ireland, many of the fundamental principles of democracy are still there. That is a sign of our strength.
The intention of the Government in this Bill is to make sure that the right balance is struck and that we have the right powers to deal with terrorists who still kill, murder and maim in Northern Ireland while at the same time we move a little closer to the principles of democracy, some of which have been slightly weakened over the years. We want to make Northern Ireland as normal and as similar to other parts of the United Kingdom as possible. Those are the principles that underlie the Government's approach, which I believe have been well understood in many of the speeches made this evening.
I should like to congratulate the noble Lord, Lord Patten, on his maiden speech. I do not believe that he is a bit pushy. If being pushy is to make speeches such as the one made by the noble Lord then I hope that he will become more pushy than he has been so far since becoming a Member of your Lordships' House. His speech merits further consideration and rereading in Hansard. I believe that he put his finger on many of the key issues that underlie the difficulties in Northern Ireland and the way in which we must move ahead. I believe that he and I went to the other place as a result of the same election. I have followed his very successful political career with interest and look forward to his

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further contributions, pushy as he wants them to be, to the deliberations of this House. He put his finger on some of the key issues that underlie the Government's approach to Northern Ireland.
The noble Lord, Lord Molyneaux, is one of the most experienced Members of this House in terms of his knowledge and understanding of Northern Ireland and he must be listened to with the greatest of respect. He painted a depressingly sombre picture of the situation there. I should like to take issue with him on one or two points. I deal first with the question of wire tapping. The noble Lord is aware that this is a complex issue. There is a need to balance the desirability of adducing evidence with the requirement to protect intelligence-gathering techniques. That dilemma has bedevilled the matter in Northern Ireland. My right honourable friend the Home Secretary confirmed last October that the Government were considering precisely that issue. A review is under way. It is being conducted in a serious and comprehensive way, as the noble Lord would expect. The issue is an important one and we are determined to get it right.
I believe that when the review is completed the noble Lord will be able to see how we have dealt with the points that he has made this evening. The noble Lord referred to negotiations from Tokyo and suggested that the Irish Government were calling the tune. I do not believe that that is right. The propositions that have been put forward stem from extensive discussions with the parties. They will be subject to further discussion with the parties. It is not the case that the Government have capitulated to demands made by the Irish Government. We adopt a robust attitude to the discussions, as do the Irish Government. We have not capitulated. We have sought to feed into the talks what we hope is a basis for agreement among the parties. Both the Prime Minister and the Taoiseach have been involved in this process, and that is right and helpful. The Prime Minister sees it as his duty to do all he can to ensure that the talks move forward. But all of us are clear that it is the participants in those talks who are the key players in reaching a settlement, and that is how it should be.
I deal now with the question of internment raised by one or two noble Lords. In this Bill, the decision has been taken to get rid of the power of internment. Frankly, it has not worked. The Government cannot see any circumstances in which they would wish to use the power of internment. It is fundamentally a process that is against the rule of law and undermines democratic principles. The Government believe that to get rid of the power is sensible and signals their adherence to the rule of law and democracy. We do not believe that it in any way weakens the power of the Government to deal with terrorism. The use last time of internment to deal with terrorism was a failure. We believe that the use of internment would strengthen the terrorists because it would give them a further argument in their communities against the Government and we want to deny them that.
The noble Lord, Lord McConnell, and other noble Lords referred to recent events in the Maze. An independent inquiry into recent events in the Maze is now under way. That inquiry is being led by Mr. Martin
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Narey, director of regimes in the Prison Service of England and Wales. In addition, there is to be an inspection of HM Prison Maze by the chief inspector of prisons for England and Wales, General Sir David Ramsbotham. No one can be other than dismayed by recent events—both the escape and the existence of a firearm—in the Maze. I very much hope that both the inspection and the independent inquiry will enable us to find out what happened and be clear as to what further action should be taken.
The inquiry and inspection teams will make themselves available to receive representations from political and other interested parties. The reports of the inquiry and the inspection will be published and made available to political parties. A series of measures designed to improve the security and safety of inmates and others have already been introduced. The RUC is undertaking a full police investigation into the death of the prisoner, Billy Wright.
The noble Lord, Lord McConnell, talked about co-operation with the Irish Government on security. The Irish Government's determination to combat terrorism has been well illustrated over the years—for example, by recent finds of explosives and associated arrests in the republic. I am sure that your Lordships will welcome that recent success by the security forces in the Republic of Ireland.
The noble Lords, Lord Cooke, Lord Patten, Lord Molyneaux and Lord McConnell, talked about confidence-building measures. It is widely accepted in the House that there is a need to build trust and confidence on both sides of the community, and that that is crucial to the development of the peace process. The Government have consistently adopted a fair and even-handed approach to the issue of confidence-building, despite what some people with malicious motives sometimes suggest.
We have taken measures in respect of the Northern Ireland Grand Committee. We are taking steps to pay tribute to the victims of violence, which is a matter of importance to the unionist community. We will continue to act to build confidence throughout the community in Northern Ireland. But confidence-building has to be a two-way process. It is not the responsibility of the Government alone. The biggest confidence-building measure would be a permanent end to violence, and the achievement of a political settlement, acceptable to both sides of the community, which could pave the way for a brighter future in Northern Ireland.
The noble Lord, Lord Cooke, described the changes in the Bill as concessions. As I have explained, the changes to the existing Act contained in the Bill are not concessions, but are justified on their merits. They include the removal of the power of internment for the reasons that I have already explained, and the introduction of audio recording, which has the support of the Chief Constable. I can assure the noble Lord that the Bill has nothing to do with concessions, but represents measures by the Government which we believe will improve existing powers.
I always listen with interest to the noble Lord, Lord Fitt, because of his enormous knowledge and his background in Northern Ireland. I take on board his

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comments. I can assure him that the Government will continue to work tirelessly towards finding a solution which will achieve sufficient consensus within the talks. We are aware of the sensitivities to which he referred.
The noble Lord, Lord Holme, asked about the timescale for the publication of the review. That work is urgently in hand. There are issues of some complexity to be explored, as he will understand. I hope to see the consultation paper published as soon as possible. I hope and expect that that will be a matter of weeks rather than months. I cannot at this stage predict a definite timescale for its completion. I can assure the noble Lord that intensive work is taking place. I am afraid that I cannot go further than that at the moment. It is a matter which we see as one of urgency.
The noble Lord asked also when silent video recording would be introduced. I expect it to be introduced next month. I hope that that will give him some reassurance. He talked also about delays in bringing people to trial. The administrative time limit scheme was introduced in 1992. It is based on the type of regime that will be required if the statutory time limit provisions in Sections 8 and 9 of the Emergency Provisions Act should be commenced. To date, over the lifetime of the scheme, applications relating to 59 scheduled defendants would have resulted in their being released on bail had a statutory time limit scheme, along the English lines, been in force. Some long-standing problems need to be considered in the round; for example, it is anomalous that there is no statutory provision for time limits for non-scheduled remand cases, which form the bulk of the caseload.
My right honourable friend has therefore charged the comprehensive cost-cutting and spending review of the criminal justice system in Northern Ireland with considering how to introduce statutory arrangements for tackling delay in the criminal justice process in Northern Ireland. The delays are too long. We have to find ways of tackling them.
The noble Lord asked also about the case of John Murray, and representation by solicitors, and how that will affect the European Convention on Human Rights. The Murray judgment has been studied carefully by the Government. A number of options are being considered in response. It is a complex matter which raises issues about the treatment of suspects under emergency and criminal law. Wide consultation within government has been necessary. I hope that we can make some progress, but the noble Lord will accept that it is a difficult point, because of the need to strike the right balance. It has sometimes been alleged that solicitors present in such circumstances have themselves come under pressure from terrorist organisations outside. That means that information that they have obtained may get into the wrong hands. We have to strike the right balance on this matter.
I thank the noble Lord, Lord Holme, for his overall support for the Bill and the noble Lord, Lord Cope, for his qualified support for the Bill. The Secretary of State visited the Maze not to negotiate, but to make it clear that talks are the only way to reach a settlement, and that an overall settlement is the only way to tackle the
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issues which are of concern to the prisoners. There is no doubt that the Secretary of State did the right thing. If the talks had collapsed because she had not taken that step, she would have been to blame. She did the right thing. The fact that the talks resumed today is at least some evidence to support her decision.
The noble Lord, and other noble Lords, referred to audio recording. We of course have to get the balance right between intelligence and evidence; that is to say, between not giving away intelligence and securing evidence. The police support the change to having audio recording. There will be better evidence in the courts as a result of the audio recording process. The noble Lord. Lord Cope, talked about the Irish Government's role. Like ourselves, they recognise the crucial importance of building confidence in the talks. They have already made a commitment to amend Articles 2 and 3 as part of an overall settlement. That is the right way forward. We agree that that is an important and vital step.
I hope that I have dealt with all the main points that have been made. I hope that it is clear that the Government will not be soft on terrorism; that we shall ensure that the security forces in Northern Ireland have all the means at their disposal to deal robustly with terrorism; that we also value democratic principles. The move we are making in the Bill represents a good balance and therefore the way forward. The security situation in Northern Ireland is as I have described it. Some terrorist groups remain active and represent a serious threat. There can be no question of leaving the security forces without the measures that they need to counter that threat.
I commend the Bill to your Lordships' House. It will provide the means to counter terrorism and enhance existing protections until the Government can bring forward the new legislation to which I have referred.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Architecture and Design in Public Buildings
7.50 p.m.
Lord Inglewood Lord Inglewood rose to ask Her Majesty's Government what steps they are taking to improve the standard of architecture and design in public buildings and buildings which are wholly or partly paid for by public funds.
The noble Lord said: My Lords, my remarks tonight are intended to be positive and I hope that they will be received as such. However, I hope that at the beginning I shall be forgiven for being a little negative on a number of points although I do not wish to go into detail.
We are told that this is the season of good will. I do not want party politics to intrude into the debate. Philistines crop up in the most unexpected places in the political spectrum and I see no correlation between political opinion and an interest and concern in architecture. One may disagree about whether a

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particular project should go ahead, but once a decision has been taken that it should surely we can all agree that it should be done well.
I do not want to spend much time talking about the Millennium Exhibition. For a couple of years I was a Minister in the Department of National Heritage. When responsibility for the exhibition was passed to the Chancellor of the Duchy of Lancaster, my noble friend Lord Freeman, I was charged to speak in this House on behalf of his office. I am prepared to concede that initially I was sceptical about the project, but I was won over.
I wish to make two points. First, the exhibition is not only about the Dome. Sir Norman Foster is designing the bus station arrangements while Alsop & Stormer are designing the new Underground station. In addition, there is to be major regeneration of the Greenwich peninsula. I can see no reason why it should not be a great success in the tradition of the Great Exhibition and the Festival of Britain, but I believe that a necessary pre-condition is that the project is professionally organised and managed and does not focus on the meretricious. If it were to be a flop—and I hope that it will not be—I believe that that will he the reason.
After reading the Sunday papers, I understand that there is tension in the air. A certain amount can be good for creativity, but I suspect that, like good claret, too much has the opposite effect. Equally, I do not wish to concentrate on what might be described as "swagger projects", although I shall deal with the Scottish parliament later in my remarks. We are considering the less glamorous projects for which the Government are responsible; that is, housing, schools, offices, perhaps warehouses, hospitals, doctors' surgeries, Underground stations, citizens advice bureaux and public lavatories.
Directly and indirectly, the Government are the largest patron of building in this country. Before the establishment of the National Lottery, they were spending approximately £4 billion a year. The lottery is a wonderful instrument of patronage and can provide opportunities for the best of our architects to be admired around the globe. Furthermore, the Government, of all patrons, have perhaps the greatest moral obligation to provide the bench mark for the rest of society. When I recently spoke to Dicken Robinson of the Peabody Trust I was interested to hear that he believed that businesses should contribute to the wider community. The trust believed that building good buildings was what it could do most effectively.
Let us he clear that the Government commission good buildings; for instance, the Inland Revenue building in Nottingham and the Crown Court at Truro. There are many such examples, but there are some poor ones. For example, when from time to time I visit the local social security office where I live in the north of England I do not find it to be a good building. Many are much worse.
A building cannot be good unless it works properly. It cannot be built on the cheap, but at the same time it need not be self-indulgently lavish. Good buildings matter because as a society they inform the wider world about our country's attitudes and values. By extension, they inform us how we value our fellow citizens
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individually and collectively and the environment in which we live. Furthermore, they inform the future about our age. Buildings are the great icons which identify the generations. We look hack at history and identify the various ages by reference to the buildings left behind. Finally, good buildings deliver better than bad ones.
Government, as patron, operate within a framework. In general, modern governments in the western world have properly developed elaborate systems about the custodianship of public money. One is sometimes tempted to believe that from time to time the rules get in the way of doing good. A more recent development is the mechanism for consumer protection and redress for the public in respect of services provided by the state. I refer to the developments arising from the former Prime Minister's initiatives via the citizen's charters. For example, if the train arrives late you get some of your money back and if you write letters to government departments you have a right to expect a reply within a certain period.
How does that framework relate to buildings? We must admit that as regard building projects that facet is least satisfactory. We are developing techniques of full life costing, but they depend on valuation. As regards redress for a bad building, the only long-term redress is that if it is sufficiently unsatisfactory, demolish it. That is drastic and expensive. As regards political responsibility, neither I nor anyone I have spoken to can think of an example of a politician being sacked or voted out of office for erecting a bad structure.
I return to the custodianship of public money. I speak as a chartered surveyor who has never professionally valued anything. But valuation and evaluation are subjective activities. The longer the life of the asset one is considering the more difficult it becomes. That is exacerbated by high interest rates. I do not believe that any valuer or accountant has found a sensible way of valuing the worth over time of good design and good concepts. That is important. The noble Lord, Lord Bridges, who is sorry he cannot be here tonight, commented from his experience of a building erected for the British Embassy in Germany, which was frequently upstaged by the local Mercedes dealership. He went on to say that he was pleased that the proposals for the new embassy in Berlin are more satisfactory. But when I was in Berlin I was told that it was intended that the main reception room should be available to the adjacent hotel as a function room. That does not sound right at all. I suspect that valuing buildings is most akin to valuing works of art. One does not value them by colour, size or the amount of wallpaper that it is not necessary to provide. It is an art.
When I was in government it was a subject for which I had responsibility and one which interested me. I took a few small initiatives, as had other Ministers previously, and I believe that that will happen again in the future. Two issues come clearly to mind which are prerequisites of getting things right. First. I believe that the person in charge of any building project, and those involved in it, need to know and care about the building. One cannot have a good building without a client who

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wants to build a good building. An architect cannot produce a good building if his client does not wish to do so.
Furthermore, time is important. One cannot expect something excellent to emerge instantly. I am not saying that we should expect all projects to take as long to come to fruition as the British Library, but one must allow enough time for the project to develop to a satisfactory form. If the rules on the availability of public money militate against that, something is wrong.
At the end of last week I heard on the radio the proposals for the new parliament building in Edinburgh. I am an Englishman from Cumbria, which historically has had an antipathy towards, and a suspicion of, the Scots. I enjoy Edinburgh as a great city, even though I do not know the site of the proposed building. As an Englishman and a Cumbrian, I do not take too much of a detailed interest in Scottish affairs. I understand that we on these Benches were opposed to the policy which involves the construction of a new parliament building but we lost the argument. Now that project is going ahead—and I come back to an earlier remark—let us make sure that it is as good as possible. Because we are all British and because of my "Britishness" I feel that the project affects me.
An interesting parallel is the reconstruction of the Reichstag in Berlin under the direction of Sir Norman Foster. I visited it just over a year ago. I could not help thinking how extraordinary it was that in 1945 hundreds of thousands of people had been killed capturing the building while in 1996 the contract to revamp it was captured by an English architect, not using a gun but through the European Communities public procurement directive.
I very much hope that the Minister will be able to confirm that the Government will be seeking the best possible design for the building which will house the Scottish parliament, even if it means that a German or—dare I say it?—an English architect will take the project forward. After all, it seems to me that the Scots and the British deserve the best, just as much as the Germans do.
I do not expect that the Minister will be able to tell us that everything is absolutely right and never again will the Government allow any public money to be involved in the creation of a poor building. I do not believe that the world is like that. Indeed, I do not believe that even new Labour could claim to have built the new Jerusalem in just over six months.
I know that in the Department for Culture, Media and Sport there are Ministers and officials who feel as strongly about this issue as I do, as do others who are to speak in the debate. That is so not only in the department but right across government. If we in this House raise the topic from time to time at decent intervals we shall be able to help them in their endeavours to try and make things better. If we can get on their backs, they will get on the backs of other Ministers who will get on the backs of other officials who actually get things done.
I am sure that I shall not be the only person to raise this topic. If I am to believe what I read in the newspapers—I am an hereditary Peer—I see that I am probably about to be served with a notice of demolition, which will take effect in about two years' time. I shall be replaced by some post-modernist creation constructed on different principles, presuming, I understand, to replace wood by high technology. The Government may or may not find that they have created a similar building but I hope that the House as a whole will take forward this aspect of public policy because it is important to everybody. I believe that we in this House can serve the nation by taking it forward and drawing it to the Government's attention.
8.3 p.m.
Lord Rogers of Riverside: My Lords, I congratulate the noble Lord, Lord Inglewood, on introducing the debate and asking the Government what steps they are taking,
"to improve the standard of architecture and design in public buildings and buildings which are wholly or partly paid for by public funds".
I thank the noble Lord for his excellent speech, to which I listened with great interest.
I would argue that we have the means, both financial and human, to create public buildings and spaces of the highest quality. Therefore, if this debate is taking place at all, it is because we have not had the political will to introduce policies which ensure that public architecture is of the highest quality. That must change.
Good public buildings directly benefit society as a whole. One in five of us lives in public housing; one in five of our workforce works in public buildings; and almost 10 million of us go to state schools and universities. We all use our hospitals, town halls, public libraries, public parks and squares. The quality of these buildings and spaces therefore directly impacts on our daily lives and in more ways than we may imagine, because, over and above any functional contribution, buildings can create what I will call social capital.
Let us take as an example the Palace of Westminster itself, which was the result of a design competition held in 1835. It was designed by Barry and developed together with Pugin, who Pevsner called,
"the most fertile and passionate of the Gothicists".
Pugin was only 23 and Barry 40, a youthfulness that reflects the confidence of the period. The Palace is now recognised as a symbol of democracy throughout the world, an object of national identity and of pride.
Let us now take the example of our schools. Too few even satisfy the teaching methods that we are trying to promote. But, beyond meeting the specific functional requirements of the children and their lessons, a building of real architectural quality can focus the community, inspire the student and provide pride and status to the teachers. Imagine schools as the hub of the community and the playground as the local square. In that scenario, the parents become directly involved with the school and education and citizenship fuse into one.

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On even the tiniest scale, good public architecture makes a difference. A public convenience and flower stall hardly seem relevant to this learned debate, but, when a young, talented practice, CZWG, took on precisely this public brief in Westbourne Grove near Portobello Market, the impact on the neighbourhood was startling. Previously a dead and littered space, the stunning light green tiled building with its beautiful curving supple forms, its elegant glazed flower stall, its glass canopy to protect those sitting on its benches and its large public clock has turned what was a desert into a pleasant and secure neighbourhood centre. and the WCs seem to work well!
How can we secure better quality of design? We need good public clients who use good architects. Sadly, in recent years and perhaps decades, the Government have had a poor record of patronage. It is therefore imperative to appoint knowledgeable selection groups to help carry out public procurement policies aimed at improving the choice and proper briefing of good architects.
Ironically, Britain is universally recognised as having some of the world's best architects, both young and less young, though to find their major work one usually has to go abroad. In all cases those architects have won their commissions through public design competitions.
The national lottery regulations have changed that situation for lottery projects, by insisting on a design competition procedure and a thorough assessment of a project's long-term value. This is helping to reverse the recent public procurement strategy based on fee bidding and lowest capital cost. A tendency that is supported by research in the private sector proves that buildings of higher architectural quality offer landlords better long-term value, higher returns and lower maintenance.
The competition system is a proven procedure. It can take a wide range of forms, from the international design competition open to all architects to local competitions open to young architects, and from competitions which ask for detail design and costing, to competitions by selection of the best architect by CV and interview. Each is tailored to satisfy the individual needs of the client.
The International Union of Architects, the Royal Institute of British Architects and the Department of the Environment and Culture, Media and Sport have all produced guidelines recommending more or less the same strategy. The process of using design competition to improve the standards in public buildings is recommended by the EC, and most of Western Europe has been using this system for the past 25 years. In those countries it has produced a new generation of talented architects (some of whom are British) and a plethora of good buildings.
To maximise the chances of creating a good public building or for that matter a good public space, the Government need a coherent strategy and appropriate advisers. It should not be, I must add, a heavyweight bureaucratic structure, another layer in an already overburdened system. The system must be flexible, lightweight and capable of responding to local issues and of creating diversity. Procurement is a complex issue and it is my strong recommendation that it be the responsibility of the Ministry of Culture, Media and Sport.
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Mark Fisher, the Minister for the Arts, has been working up proposals for some time but has been unable to convince the different departments to adopt this coherent approach. That is a shame because, if we are to improve the standards of our buildings, we need a robust policy that crosses departmental boundaries. I ask the Government to do this by backing the Department of Culture, Media and Sport and by setting up a small committee which would ensure that the £4 billion of public money, and more, currently spent annually on our public buildings achieves the best results. If that money were to be used on buildings of high quality, let us just imagine the cumulative effect on the quality of our cities and of our citizens' lives.
8.10 p.m.
Lord Palumbo: My Lords, I should like to begin by thanking my noble friend Lord Inglewood for promoting tonight's important debate. It would be difficult to imagine any more ideal setting for it than your Lordships' House—a felicitous collaboration between Sir Charles Barry and Augustus Pugin. It also represents a benchmark of what a government are able to achieve by way of public commission, and—dare I say it?—a grand projet on the grandest of scales, when they set their mind to it. I hope that your Lordships will forgive me for stating the obvious when I say that government have no money; what they have is access to the use of taxpayers' money. That means that they have an overriding responsibility to use that money wisely and to account for it fully and properly.
It also means that such money should never be used to celebrate the second rate. Government patronage of the built environment, both central and local, is by far and away the largest in the land. It involves billions of pounds every year and yet the record of the commissioning by government of public buildings is, on the whole, woefully mediocre. One notable exception, in my opinion, is the magnificent new British Library, designed by Sir Colin St. John Wilson. I hope that those noble Lords who have not already done so will take an early opportunity to visit that largest and most important public commission in Britain during the 20th century.
What, then, can be done to ensure that taxpayers' money, wisely spent by an enlightened government, can be harnessed to the creative genius of architects and designers throughout the British Isles in a way which is unparalleled anywhere else in the world? I believe that the answer lies fairly and squarely in the competition system, carefully and meticulously administered so that every public commission is subjected to that process. That process has been used to great effect in Finland, where the standard of public buildings is higher than in any other country in Europe. It involves the preparation of a comprehensive and an unambiguous brief in which the function of the building is made abundantly clear, but more of that anon.
It involves too the preparation of rigorous technical specifications and the widest possible public consultation. It also involves a judging panel of international standing, and monetary controls to ensure that the building contract is brought in on time and within budget. It is no pie in the sky formula; it is a

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formula which can and does work. The fact that the competition system in this country has had a somewhat chequered history should not blind government to its advantages, nor deflect them from the fact that it is the way forward for the future as we approach the third millennium.
Mention of the millennium leads me to the Millennium Dome in Greenwich. I suppose that there are historical precedents where a government have commissioned a great architect to design a structure without informing him of what precise function the structure is to accommodate, but I do not know of any. No less than three-quarters of a billion pounds of taxpayers' money is to be allocated for the exercise. It is an exercise in pure political caprice—a game of Russian roulette played with huge sums of taxpayers' money. It is also a political time bomb waiting to explode which no amount of spin-doctoring will be able to defuse. It would be ironic but perhaps, in a way, appropriate if the significance and the symbolism of the Millennium Dome were to reside in its architecture alone and in its surroundings; and, indeed, in the technological wonder that it undoubtedly represents.
With the greatest respect to my noble friend Lord Rogers of Riverside, the name of a single architect most likely to spring to the lips of the man on the Clapham omnibus would be that of Sir Christopher Wren. It was he who said that the aim of architecture is eternity. That is what we should surely strive to achieve. We certainly have the talent and technology to do so. However, we need to raise our eyes and expand our horizons and have the courage of our convictions as the Victorians and the Georgians had before us. Above all, they were confident societies whose confidence was expressed in the monuments that they left behind. After all, it is by the monuments that we leave behind us that we shall be judged when our history comes to be written. I believe that it is the competition system, properly administered, and an appreciation of art and design fostered from an early age in the National Curriculum which will enable the Government to lay claim to the respect of posterity.
8.17 p.m.
Lord Hankey: My Lords, I, too, am grateful to the noble Lord, Lord Inglewood, for initiating tonight's debate. I was also glad to hear his reference to the importance of values of the built asset. As we have just founded the All-Party Group on Architecture and Planning, where perhaps we can generate better synergies between government and the professions, I propose to base some of my remarks on one or two perspectives generated from those professions.
My first point is that architecture should be created by architects and not by professions untrained in design and in the science of construction. The Royal Institute of British Architects, since its charter of 1837, retains its objectives as a learned society to extend the body of knowledge upon which the practice and appreciation of architecture are based. In my professional opinion, most architects are concerned with the quality of the physical and built environment and the social and environmental impact of development. They are concerned with
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developing successful links between the public or private clients and the design professions and the process of serving the client and the consumer. They are concerned with improving the efficiency of the profession and its ability to compete in world markets; and they are concerned with increasing the understanding of and synergies between the diverse skills within the professions and the construction industry as a whole. The RIBA, through its code of professional conduct, standards of admission, a series of publications, register of practices and programmes of continuing professional development, seeks to extend the standards of integrity and competence of its members.
Architects must essentially be able to look at the total context of a design problem if the right answers are to be arrived at. The process of design requires special training and can involve many skills and diverse aspects of the design process. All must be taken into account at the early stages of design if problems are not to appear later and require revisions and consequential loss of time and additional costs.
Most projects require a special solution to suit the context of the site, its access, its orientation, the functions of a building and its structures and the financial constraints of a client. The built environment is special and getting the right solution is always a question of skilled teamwork—often between diverse professional and contracting skills—and essentially teamwork with a client. Both architects and planners and the project sponsors carry great responsibility for the integration of all the personal and community interests and all the specialist skills needed to arrive at the best possible outcome, and in such a manner as to carry the convictions and interests of the final user, the investors and the markets.
The achievement of the appropriate standards of architecture and design of public buildings sponsored by public clients can be threatened by failure to enable any one of the processes of procurement, production, operation, maintenance and management. Project sponsorship is itself, as the noble Lord, Lord Rogers, stated, a skilled task and may require well trained, professional architects and planners to help in the process of project development. The RIBA has recently issued a useful document entitled A Decent Standard: procuring Good Public Architecture. It is worth considering and gives an idea of the perspectives on this problem from one of the main professional bodies.
The Government have been effective in issuing advisory documentation such as the series of planning and policy guidelines. Ministers of this Government and previous governments are committed to the improvement of standards of design and architecture. Those in individual departments of the Government have themselves developed useful standards and guidelines to permit the innovation and experience of the private sector to design within the context of the particular public client.
Perhaps first and foremost of the problems in the achievement of good public architecture is the failure—at times today and certainly in the past—of public

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bodies to commission work only when the structure of the project and its requirements have been adequately defined. All too often the exigencies of time and cost lead to decisions on the manner of proceeding when there is inadequate analysis of the project. A professional relationship between client and design team at the feasibility stage is of great help. When a good client has the character and the experience to participate in the project development with the professional team, great results can be achieved. I think of an example in Hackney with the new sports centre.
There is a great need for skilled procurement of services, for the selection procedure to assess design quality as well as price as the criterion of selection. The RIBA is particularly critical of the effectiveness of compulsory competitive tendering where the criteria of cost do not always achieve the most appropriate results. Certainly the advent of CCT can seriously reduce the incentive of the professional to look for the benefit of the client and the quality of the building. With CCT the client and building owner hope that the professional will give quality where it may not always be included in the budget. But, alas, is that a reasonable view of human nature? Is that a responsible attitude of project sponsors?
The benefits of good design have been recognised increasingly by the private sector because of its investment structures which depend upon market perceptions and changing needs, user satisfaction and the retention or enhancement of asset values. I believe public buildings come under the same series of assessment criteria. The public building programmes may often be limited, however, by economic and revenue considerations, but it is just these limitations that should be offset by the quality of design, which does not necessarily mean higher capital costs.
Fine public architecture adds value. It aids the delivery of efficient public services and in the urban planning context it often plays a critical part in the perceived quality of the environment. It contributes significantly to the quality of life, as the noble Lord, Lord Rogers, has said, and as he said most eloquently in his Reith lectures. I believe it also contributes to the cultural attachment to a place. The RIBA states, and I agree,
"Good design can engender pride and encourage the development of a sense of community and ownership".
But,
"Good design is seldom achieved without direction, leadership and commitment from the public body itself".
In supporting the Government's policies on best value, whereby both property and services are responsive to changing needs, where they are subject to continuous improvement, where they are sustainable and achieve the best value for money, the RIBA recognises that the community for whom the whole service is developed must also be the principal driver of the best value process. The whole idea of community involvement and "ownership" relates to the same social and democratic principles that in my opinion must be the driver and judge of the policies of devolution. It is the public who must be the participants in the policies for the regional development agencies and the effective creators of the future government for London.
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Market testing of services is important. but I believe the futile regulations which at times demand retendering in mid-project, as for the Great Court of the British Museum, lead to redundant effort and must bring the system into disrepute. The cost and effectiveness of PFI and the hidden consumption of financial resource among the competitors is also a serious problem that is, one hopes, being adequately addressed. The recession in the building industry in recent years and the cost of PFI has not been a good combination. The Bates review identified the need to improve the PFI process and to reduce bidding costs, making an important series of recommendations. But the RIBA believes that there are further beneficial methods of reducing the time and cost of arriving at the preferred bidder. Having myself acted for procurers in the development of bid documentation and in the private sector in the assessment of hid documentation, I agree with the suggestions that architects should be given a greater responsibility in the development and assessment roles of the PFI process.
I mention another of the problems of maintaining the public estate. So often the redundant buildings are not assessed for their reusability early enough in relation to the markets and property managers are not aware of their asset value and the need to sustain this value. The delay of capital spending for maintenance contributes greatly to the degradation of the urban environment and to the burdens on government employees. The existing built asset is also of great value. In years past the responsible attitude to utility properties and their maintenance has been poor and has contributed to the negative perceptions of our environment.
The RIBA is keen to be of assistance to government in considering these issues and many others issues written up in its new publication. The institute undoubtedly has essential experience and would wish to be closely involved in the development of policy and roles and relationships between government and the professions. There are in my experience some excellent clients emerging in the role of sponsor for public projects. I believe that the process of improvement is well under way but the lessons of the past must be learned and remembered.
So my third point is that the process of developing synergies with the primary stakeholder (the voter) and the users of the built environment and synergies between the project sponsors and the members of the design teams is of critical importance to the outcome and the quality of the product.
The spreading awareness among the public of the factors contributing to the sustainability and enjoyment of our environment is a most encouraging factor. I believe strongly that the heightened awareness through the influence of the media offers us the opportunity to incorporate a much wider range of people into the body responsible for the quality of our environment and the planning of our future facilities and political structures. But our present political structures and the historical and often unplanned nature of our environments lead to alienation and social problems, inefficiency of urban systems and costly regeneration and renewal. We have to improve the standards of public architecture planning and design for the well-being of the population in order

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to increase their sense of ownership and to combat the social and criminal diseases that the planning and political system has brought upon itself. There is hope but we cannot afford to lose time.
8.31 p.m.
Lord Howie of Troon: My Lords, I apologise to the House for leaping into the gap during the interesting debate introduced by the noble Lord, Lord Inglewood. I shall not speak long enough to make a splash but a mere ripple.
I wish to underline one key point made in the very practical speech of the noble Lord, Lord Hankey. We are discussing the possibilities of improving the standard of architecture and design in public buildings. From my recollection of debates on such matters in recent years in this House, the most severe blow to improving those standards was the introduction of compulsory competitive tendering upon which the noble Lord, Lord Hankey, commented. That policy was a great error. In those days—it was from the other side of the House—some of us, with the assistance of the noble Lord, Lord Rodgers of Quarry Bank, opposed CCT as actively as we could. We were defeated. CCT was not the fault of the noble Lord, Lord Inglewood; I do not think he was to blame in any way. I absolve him totally from that policy.
However, I wish to suggest that my noble friend Lord McIntosh of Haringey, pays particular attention to that part of the speech of the noble Lord, Lord Hankey. I do not ask my noble friend to promise the immediate repeal of CCT; I ask only that he ponders the matter, and in the fullness of time I dare say that it will move away. That one single act would lead to the improvement in standards we are discussing tonight.
8.33 p.m.
The Viscount of Falkland: My Lords, I ask the forgiveness of the House for being perhaps the least qualified speaker in the debate. Without offending the Benches opposite, perhaps I may class myself today as the people's speaker.
On a very pleasant afternoon today as I crossed St. James's Park pondering what I should say in the debate, it occurred to me how typical that park is of what appeals to an Englishman. One has the combination of landscape, buildings of a most attractive and pleasing scale, and water. When considering my travels around the country—I have perhaps more of a visual sense than any other—it is that aspect which impresses me about England rather than the United Kingdom, although it probably applies also to buildings in Scotland. As one travels the length and breadth of the country, one is impressed by the buildings and their surroundings which have been passed down to us by our forefathers. There is the noted absence of what one might call monumental architecture. That makes us somewhat different from other countries in Europe.
Those who are better qualified than I am may take me to task later outside the Chamber, but it seems to me that the Englishman has a certain reticence, a certain
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fear, of monumental architecture. It is the domestic scale which attracts him. The noble Lord, Lord Rogers of Riverside, may disagree with me on this, but that may be why British architects have been such a success outside the United Kingdom. British architects may have become somewhat frustrated by the limitations placed on them, and have gone out into the world with great energy and applied themselves to monumental architecture which has been well received in countries outside the United Kingdom. My feeling—it may be shared by others who wander the streets and byways of Britain—is that when there is the possibility of putting public funds into a large building, whether it be a large police station or a hospital, the concern of everyone, except possibly the architect, is that it should not be too flamboyant or imposing.
I admired the speech of the noble Lord, Lord Inglewood. It was a speech such as one normally expects from the noble Lord. It was most interesting and passionate. The issue inevitably leads on to the plans for the millennium. Again, perhaps I express a people's view here. I have no great taste for the millennium. I enjoy the satirists on television who poke fun at it. I particularly enjoy the row that is taking place now about the dome. I am not too much concerned about the money. I am not too much concerned about the fact that the dome will apparently last only 20 years; I believe that that may be a plus point. However, as regards the Millennium Dome at Greenwich, I am concerned at the extraordinary unwillingness to let us know what it is all about. If no one knows what it is all about and we have to wait for Mr. Mandelson to come back from Disneyland to tell us, why does someone not say, "We're not sure but it's a jolly attractive and technologically advanced piece of building, and we'll get something to put in it or leave it empty"?
I believe that the noble Lord mentioned the exhibition of 1851. That exhibition had the clear purpose of presenting to the world our inventiveness and our products, since we were in the vanguard of the industrial revolution. The success of that exhibition was built upon 11 years later—it was late as British buildings often are; it was not 10 years later as intended—by an even greater exhibition in South Kensington. Although the buildings no longer now stand, I believe that the impetus the exhibitions gave to British inventiveness and production has lasted. Even now scholarships are awarded as a result of moneys made out of the 1851 exhibition. What will be the lasting results of the Greenwich Millennium Dome? If it is to be empty, we know that there will be none. If it is to be a theme park, that may well suit the present mood. It will offer instantaneous satisfaction of some kind, and then we shall all forget about it. Surely our aim ought to be to create, if not a permanent structure or even something permanent inside, at least an effect which will endure, so that in a hundred years' time people will say, "That was a very curious promontory into the Thames, but the ideas were extraordinary. Look how ahead of its time and how stimulating it was". The noble Lord may be able to give the House a clue as to how we are to be stimulated.

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I read in today's Guardian a most interesting and amusing article by Mark Lawson, tongue in cheek, comparing our attempts at creating a "Millennium Experience", as it is now called, with that in France. In France they display great style and imagination in these matters. Apparently they plan to pour a lot of scent into the River Seine, and there is to be the enormous hatching of an egg under the Eiffel Tower, which will then transform itself (I do not know quite how) into a huge area of screens and so on. Mr. Lawson thinks this will probably frighten Mr. Mandelson into trying to follow along the same lines. We await his announcements with trepidation.
The Minister is an amiable, understanding and patient man. He will know that I am not being unkind but am saying in a tongue-in-cheek sort of way that it is essential that the purposes, when they are revealed—I believe an announcement is expected next month—of this "Millennium Experience" (in the horrible term that is now used) will lead to something lasting. The buildings will not last—it has been clearly stated that they are built to last 20 years—and I doubt whether whatever is inside will last either.
The monumental architecture of the British Library has gone way over budget and way over delivery, as they say in the shipping world, but it has one advantage over the French national library. The British, being pragmatists, have put our people upstairs and our books below. I believe that in the French national library the opposite has been done. I hope that English pragmatism will always be brought to bear on British architecture.
My interest as regards visual matters is mainly in cinema. Architecture is very close to cinema. Indeed, some of the directors whom I most admire started their careers in architecture. Architecture is very important to us in relating to our history and the scale of the world in which we live—both the immediate scale and the larger one. This is a very important subject. It was extremely kind of the noble Lord, Lord Inglewood, to start us off after the Christmas Recess with a debate that is so topical and important.
Finally, I reiterate that in this country we have all the skills of innovation in so many fields, exactly as we did in 1851. We have people who are highly qualified in all kinds of creative and technical fields. We can, as is proved by the success of our architects all round the world, produce buildings which are second to none. I rather like much of the modern architecture in the City. What has been done is extremely impressive. The buildings in what used to be the terrible, fish-smelling area around Lower Thames Street have been done beautifully and look as though they have been made to last. I am not pessimistic, as a man in the street, about the state of English architecture; I am concerned about letting people run free with ideas which are fanciful, such as the millennium idea, and which contain no long-term benefit for our successors. Taking the country as a whole, by and large what was done by our predecessors was extremely impressive and extremely appropriate for the country in which we live and to our moods and traditions. I hope that that approach will not change. I look forward to the noble Lord being able to give the House some encouragement, and perhaps some
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hint of what we are to expect along the Thames. I hope that it is not men's aftershave in the river. I am sure that it will not be.
8.45 p.m.
Baroness Rawlings: My Lords, I too offer my thanks to the noble Lord, Lord Inglewood, for introducing the debate. It has been both fascinating and constructive—quality rather than quantity—with most distinguished speakers. There are just a few points that I wish to add at this late stage.
First, I hope that Her Majesty's Government will not forget to promote the better use of their fine stock of existing historic buildings, of which there are many examples around the country. One such example is the naval dockyards at Plymouth. These buildings are our heritage.I do not mean simply that they should be conserved but that they should be properly used—enjoyed and cherished rather than left to rot. Such buildings were often the centre and catalysts of community activity when they were first built. Now, with sensitive adaptations, there is no reason why they should not become the same once again. We owe a great debt to the Prince of Wales not only for championing this very important cause but for making possible all the work that is done by his successful Phoenix Trust and his Architectural School.
It is also vitally important that the higher education proposals from Sir Ron Dearing, now the noble Lord, Lord Dearing, regarding the training of architects are taken seriously. The noble Lord, Lord Hankey, rightly stressed the importance of training. Sadly, the experience of the 1950s and 1960s, as well as the excessive emphasis on project management considerations, has led many in this country to be reluctant to take risks in architecture. As a result, architects with commercially established practices have a great advantage over the imaginative architects with small practices when it comes to winning commissions. That attitude sits uncomfortably with the dynamism, creativity and entrepreneurship of the country as a whole.
British architecture is in fact more appreciated abroad than it is at home. I agree with the noble Lord, Lord Rogers, the distinguished architect, who spoke so eloquently on the importance of good public architecture. Yet our David Chipperfield has been selected for the reconstruction of the Neues Museum by Stiller next to Shinkel's Altes Museum at the heart of historic Berlin—the most important and prestigious project in the whole country. But, here in the UK, in the provincial museum and gallery sector he won in the past only smaller commissions.
Rick Mather has produced elegant and simple solutions to the space problems of the Wallace Collection and the Dulwich Gallery which are ideal for historic buildings. Where, however, are buildings such as the Museum of Modern Art of Frankfurt by Hans Hollein or the Guggenheim of Bilbao by Frank Gehry?
A small provincial town like Ulm has the courage to ask Richard Meier to build its cultural centre on the historic town square, right next to the medieval

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cathedral, creating a wonderful, and not jarring, contrast. Here, Robert Venturi, who won through the competition system so rightly stressed by the noble Lord, Lord Palumbo, designed with great sensitivity to the context a beautiful extension to the National Gallery which is so unassuming yet so attractive and functional that it fades into the background and yet enhances the gallery.
If new Britain is not simply to be a PR gimmick, this Government should encourage change of the widespread attitude towards architecture. For example, they should throw their weight behind the ground-breaking and wonderful project by Daniel Libeskind for the Spiral in the new V&A. We need to preserve the best of the past and ensure that we create new buildings that will be worth preserving.
8.50 p.m.
Lord McIntosh of Haringey: My Lords, I understand that this is the first debate on architecture that has taken place in either House since the last election. For that reason, if for no other, we must be especially grateful to the noble Lord, Lord Inglewood, for drawing our attention to it and for assembling a cast—if I may put it that way—of distinguished speakers this evening. I acknowledge his initiative in doing that and the impetus behind it which, as he rightly says, is not in any way party political but is concerned with a matter with which we are all concerned: the improvement of the quality of public buildings in this country.
My noble friend Lord Rogers pointed out the importance of public buildings, and I am again glad that the noble Lord, Lord Inglewood, expressed his Question so widely as to cover buildings which are not necessarily built entirely with public money but have a public use. That is the important consideration. My noble friend gave statistics concerning the extent to which we are all involved in public buildings. I acknowledge our responsibility, which was pointed out by the noble Lord, Lord Palumbo, to ensure that this vital part of our future heritage is of the highest possible quality.
Of course, it is common ground that our past architectural heritage has been of enormous distinction over the centuries. We may look at the variety of syles of architecture in this country over the past millennium and the way in which English architects and architects from other parts of the British Isles have played their part in European and world architecture in that period. If we consider that, then the responsibility we have to enter the new millennium at the highest possible peak of architectural quality is all the more onerous on us.
Fortunately, our architectural heritage is well sustained by the generations of architects now in practice in this country, even though—as noble Lords said—some of the best of them have been doing their best work abroad.
Before I leave that point, my noble friend Lord Rogers referred to the contribution of young and, I believe he said, not so young architects. I wish to pay tribute to him in his chairmanship of the Architecture Foundation. I have had the opportunity of looking at the
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publication on emerging practices which is due out at the end of the month. I have been enormously impressed by the quality as well as the variety of the work of young architects—that is, young in the sense of in their 20s, 30s and possibly 40s—displayed in that publication. If that is a pre-publication "puff" I do not apologise for it.
It has to be said that, despite our architectural heritage, recent performance in the public sector has been variable or patchy. The noble Lord, Lord Palumbo, calls it "woefully inadequate". That is a little sweeping. It is quite true that for every Truro courts or Inland Revenue building in Nottingham there are probably several examples more like Marsham Street or the local social security office of the noble Lord, Lord Inglewood, than we would wish to see.
There is a great mixture of good and bad in public architecture in this country. We do not aspire to the same consistently high standard or perhaps the consistently high-based standard which the noble Lord, Lord Palumbo, rightly mentioned as characterising public architecture in Finland.
Why is it that despite our inheritance there is such a patchy performance? It is apparent from the speeches this evening that it is because we have lacked a coherent approach to design procurement. In other words, we have not thought enough or clearly enough about the role of the Government as client. I say that in full recognition of the work which the noble Lord, Lord Inglewood, did in his position in the Department of National Heritage as it then was. Behind him, I wish to pay tribute to the work of Mr. John Gummer, who was particularly keen on the quality of design procurement.
That raises the question: what do I mean by design? Other noble Lords have referred to it, again we are not talking just about appearance. We are talking about architecture as solving problems. providing fitness for purpose in a wide variety of public buildings. That means problems in the use of the site or the space around and within the buildings, problems of the use of materials, the reduction of maintenance costs, energy efficiency and access problems, particularly for people with disabilities. Fundamentally there is the need for public buildings to provide an enhancing living, working or leisure environment. Behind all that there is the whole issue of low lifetime costs. If we neglect design at the beginning because of penny-pinching at the procurement stage, then the price that we will pay will be very high indeed. I remind your Lordships that the design fees on a building are usually less than 1 per cent. of the lifetime costs of the building.
How are we to improve the quality of design procurement? How are we to improve the performance of the Government as a client? Let me say immediately to the noble Lord, Lord Hankey, that I acknowledge the initiatives which the RIBA has taken. The Government are grateful to it. There are both supply and demand aspects of how to overcome the problem. From our side, the government side, the first requirement is that there should be better design briefs. As the noble Lord, Lord Inglewood, rightly said, that means that there must be a more adequate timescale allocated to the

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preparation of the design brief. The Inland Revenue building at Nottingham which it was proposed should be built in the cheapest and most clumsy way but was then rightly handed to Sir Michael Hopkins and Partners is a good example of a worthwhile investment in adequate time for the preparation of the design brief.
Then there are all the opportunities which exist through the use of juries and, above all, public competition. That was a theme from a number of noble Lords. We were reminded that the Palace in which we live and work was the result of open competition in the 1830s.
I rather liked the reference by the noble Lord, Lord Hankey, to open government, because the two go together. If we are to encourage—as we shall—open government in all its aspects, we must open up the architectural procurement process as widely as possible to as many people as possible. We must have exhibitions of designs, as we have had in more recent years.
Competition of itself is not an unalloyed good. Competitions are expensive to run. They can take a long time. They involve abortive costs for those who do not win them, and in order to be attractive and successful they must offer substantial prizes, including prizes for those who do not succeed. It is not a universal panacea. But clearly the enhancement of good architecture has been improved by competitions and that is an area where we need to give further thought to the guidance we produce.
Again on the aspect of improving the Government's performance as a client, I draw attention to the revised Planning Policy Guidance No. 1, particularly Annex A on design management. That was produced in February 1997 under the previous government and it is a good document which we want to support. Leading on from that, we are producing a manual on the role of good design in the planning system. We have the government construction clients panel. The Treasury has been producing procurement guidance notes, all of which may be helpful in improving the quality of the design procurement process.
But then we must consider the supply side as well. We must think about the quality of the architects who are available to undertake the work. I have already paid tribute to the quality of current work and to the work of the Architecture Foundation. I certainly acknowledge that the architectural profession has gone through a dreadful time in recent years with the decline in work available. Many architectural practices have lost partners and many architects have been driven out of business.
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Having said that, there is a sense in which architects could do more to follow up the design and construction work that they do and to understand more the way in which their buildings operate. As a local councillor in the 1960s I was responsible for building up a considerable architectural department in a London borough. We had the greatest difficulty in persuading architects to go back to buildings once they had been completed, other than the minimum requirement of a six-month inspection. They would not even do what Erno Goldfinger did, which was to live in his own flat in East London, and he only did that for a week. There is scope for improvement in that regard and I hope that architects will not take my comments amiss when I have sympathised with their economic plight and praised them.
Behind all of this is the need for us to encourage a multiplicity of commissioning sources. It would not be right for the Department of Culture, Media and Sport to be the universal commissar of design or to lay down the law on what should be done in public buildings. The great advance in any art is a wide variety of impulses for that art. That applies also to architecture.
The PFI could be a threat, but it need not be if we make sure that we have adequate design guidance for PFI projects. Design and build could be a threat, but there are plenty of examples of good design and build—the Bridgewater Hall in Manchester is one of them—which show that even there it is possible to obtain good results.
The availability of capital expenditure on buildings through the various lottery funds is an enormous boost to good architecture in this country, as is the Millennium. I do not have time to pursue the questions of the noble Viscount, Lord Falkland, in relation to the Millennium Dome, which are slightly outside the range of this debate. But I say to the noble Lord, Lord Palumbo, that the dome is not without a purpose. The detail of the various activities which will take place under the dome are still to be worked out and discussed in public, but the dome itself—as I am sure my noble friend will agree—has a clear purpose whatever goes on inside.
Above all, we should avoid "monopsoly"—the economists' word for a supply cartel; for a unity of supply comparable to monopoly on the other side of the equation. It is in variety; it is in letting 100 flowers bloom that we shall see a continuing improvement in architectural quality of public buildings in this country. This Government gladly accept the challenge posed by the noble Lord, Lord Inglewood, and other speakers this evening.
House adjourned at six minutes past nine o'clock.