Lords Sitting of 5 March 1998

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Lichfield.

Engineering Skills
Lord Evans of Parkside Lord Evans of Parkside asked Her Majesty's Government:
Whether they have any proposals to reduce the shortage of skilled engineers in the United Kingdom.
The Minister of State, Department of Trade and Industry (Lord Simon of Highbury): My Lords, engineering is a term that includes many different specialisms and a wide range of expertise within them. From time to time there may be shortages in one or more of the skill categories. These may result from mis-matches between the particular capabilities employers want and those possessed by the applicants. There can also be some discrepancies between the remuneration packages that companies want to pay engineers and those available to qualified individuals in other sectors of the labour market. In some instances, such as the automotive sector, where parties identify the need for collective action, the Government are participating in initiatives to address such shortages. Overall, and most importantly, the Government attach a high priority to raising skill levels in the workforce generally across the board.
Lord Evans of Parkside: My Lords, I thank my noble friend the Minister for that most interesting reply. However, is he aware that the car company Land Rover recently announced that, because of a serious shortage of British engineers, it would be forced to recruit over 100 engineers from Europe? I should point out that this is a company in the West Midlands. Is my noble friend also aware that some people within the engineering industry blame our education system for pushing youngsters away from engineering, while others in the industry point to the fact that the industry itself killed off the old apprenticeship scheme which not only produced qualified engineers but also produced men—and women—who became skilled craftsmen? Will my noble friend consider bringing together organisations such as the Engineering Employers' Federation, the TECs and the University for Industry to ensure that they put engineering skill training at the very top of their agendas?
Lord Simon of Highbury: My Lords, it is always a matter of concern when highly successful businesses are meeting constraints when they want to expand, especially in the labour market. As I said, the DTI has been involved, particularly in the West Midlands, along with local partners and vehicle manufacturers in initiatives to increase the supply of skilled engineers.
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I should point out to the House that the media report about Land Rover failed to mention that at that stage it was only advertising the posts on the Internet. The company then clarified the position with the local press. I am glad to say that that achieved a quite strong reaction. It was reported as a shortage of UK engineers, but basically it involved automotive engineers. Since then, land Rover has received a further 250 applications over the Internet and another 100 by post, most of which have been from British engineers. Therefore, I believe that the company is getting the desired result; indeed, it was quite good publicity.
As regards apprenticeships, I can tell my noble friend that we would certainly support an apprenticeship scheme and have always done so. I believe that that is something for the Engineering Council and the many bodies which represent engineering across the country to develop.
The Viscount of Oxfuird: My Lords, is the Minister aware that the comprehensive labour market survey commissioned by the Engineering and Marine Training Authority covering over 22,000 companies, for which 4,500 replies were received—some 20 per cent.—indicates that the engineering industry is not suffering from the desperate skill shortages that some would have us believe? Perhaps a little more responsibility and research on the part of members of the media might prevent these rather bogus exercises having to take place in determining such definitions.
Lord Simon of Highbury: My Lords. I tried to say in my original Answer, although I probably did so in a rather long-winded way, that I believe there are mis-matches and that what we should be doing is trying to make less use of categories to define differences between engineering skills and moving people from particular skill bases to the shortage areas where they are required. I very much agree with the point of view expressed by the noble Viscount.
Lord Ezra: My Lords, the noble Lord indicated in his initial Answer that the situation varied according to different parts of the country and according to skills. Is he aware that there is a particular shortage in the south-east? I happen to be in the energy business and we are finding it extremely difficult to recruit heating engineers to carry out essential work on combined heat and power and other essential energy saving schemes. Have the Government anything in mind to remedy this situation?
Lord Simon of Highbury: My Lords, sectoral shortages and regional shortages have much to do with remuneration packages. We know perfectly well that the competition for qualified people in the south-east is higher than in other parts of the country. I do not think this is a government issue; it is for employers to decide whether remuneration packages are adequate, and that the correct value can be attributed to the efforts of those people when they are in the business.
Lord Ponsonby of Shulbrede: My Lords, does my noble friend agree that our country's true wealth creators

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are engineers? Does he believe that our country's best managers in industry come from the engineering profession, and that everything should be done to encourage engineers to lead British industry?
Lord Simon of Highbury: My Lords, I think that if I answer the first part of that question in the affirmative I shall have to answer many more questions. Of course engineers play a strong role in our businesses. I have worked in the petroleum sector, with its strong offshore engineering industry, and I am well aware of the contribution engineers can make. However, I can think of other skill bases which are also required to make our country successful. Engineers can make good managers too and we need more of them in more of our businesses.
Lord Mackay of Ardbrecknish: My Lords, is not one of the problems in this country, unlike say Germany, that the word "engineer" covers everyone from the person who mends my Hoover, to the civil engineer who designs bridges and structures, to the mechanical engineer who designs machinery or the electronic engineer who designs circuits? Is not the problem in this country that we do not attribute enough status to the latter kind of engineers who have the intellectual ability which leads to the creation of the wealth that we need?
Lord Simon of Highbury: My Lords, there is a great deal in what the noble Lord says. The Engineering Council and the Engineering Employers' Federation have recently considered categorisation. They are trying to attribute greater status—if that is the appropriate word—and certainly encourage greater understanding of the vital role that those in categories other than chartered engineers can play. It is absolutely right that we should laud the contribution that many kinds of engineers can make, not just chartered engineers. I refer particularly to those who are involved in the application of engineering rather than discovery. That is an important area.
Baroness Turner of Camden: My Lords, does the Minister recall that some years ago the Equal Opportunities Commission ran what was known as the WISE campaign, that is, Women Into Science and Engineering? That was taken up by the then engineering industry training board, which made great attempts to try to ensure that women were trained for engineering. What are the Government doing to support such steps, because surely that is important?
Lord Simon of Highbury: My Lords, the Government are aware that we want the best people of any sex and in any shape or size. Good employment should be inclusive. We have a shortage of good people from wherever they may come.

Overseas Territories: Administration
3.16 p.m.
Lord Judd Lord Judd asked Her Majesty's Government:
What are their plans for the future administration of the remaining dependent territories, and what changes to the nature of citizenship they have in mind for their peoples.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, the future administration of the overseas territories will be based on the principle of a modern partnership with obligations for both sides. A White Paper will be published later this year which will contain details of the conclusions of the review of policy towards the overseas territories ordered by the Foreign Secretary in August last year. On citizenship, the Government are considering sympathetically offering full British citizenship to the remaining overseas territories which do not have it. But there are complex issues which need to be resolved before a decision can be made.
Lord Judd: My Lords, does my noble friend accept that many of us will find that Answer encouraging? Does she further accept that at a time when much parliamentary time is being devoted to the revision of our own constitutional processes and the regeneration of democracy within the United Kingdom, and at a time when much networking is being carried out internationally between states coming together to represent the interests of their citizens, there is a tremendous need to recognise that the citizens of our dependencies have every right to fulfilment, stakeholding and all the rest, as do any of us within the United Kingdom? All progress that can be made in this review is therefore to be encouraged.
Baroness Symons of Vernham Dean: My Lords, I thank my noble friend for his encouragement. I suggest that his remarks were also reflected by representatives of the dependent territories who attended the Dependent Territories Association meeting on 4th February this year when the Foreign Secretary outlined the interim conclusions of his review based on the modern contract to which I referred in my earlier Answer and a stronger and better partnership. The better partnership will be based on the four principles of self-determination, internal self-government, Britain's responsibilities to the territories and of course their responsibilities to Britain, and Britain's commitment to the territories to develop them economically and to assist them in emergencies.
Lord Steel of Aikwood: My Lords, I give a warm welcome to the Answer that the Minister gave a moment ago because it is contrary to some of the press speculation which suggested that the territories might be offered second-class citizenship. Does she recognise that the small, non-viable territories are few in number but the good will and strategic gain for this country would

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be enormous if full citizenship were granted? Will the White Paper consider the possibility of any kind of representation in this Parliament?
Baroness Symons of Vernham Dean: My Lords, I thank the noble Lord for his remarks. As I said in my opening Answer, there are complex issues to be decided. But the Foreign Secretary was clear that this was a matter that would be looked at not only sympathetically but urgently. The White Paper will also examine a number of different issues which the dependent territories have raised with us, including ways in which they can be better represented.
Lord Acton: My Lords, can the Minister say how many people are involved potentially in becoming full citizens?
Baroness Symons of Vernham Dean: My Lords, there are currently about 180,000 citizens in the dependent territories. Those from the Falklands and Gibraltar already have rights of abode in this country. The additional numbers are approximately 160,000.
Lord Naseby: My Lords, first, in preparing the White Paper, will the Minister consider the experience of the French Government with their dependent territories? Secondly, will the noble Baroness's department specifically look at possible representation in your Lordships' House and in another place?
Baroness Symons of Vernham Dean: My Lords, a number of different models for the relationship between a mother country and its dependent territories are under consideration. The French have a dual system. The départements d'outre mer are rather different from the territoires d'outre mer in the obligations between France and its dependent territories. However, different models have been put forward. All are under consideration at present.
Lord Janner of Braunstone: My Lords, will the Minister be good enough to reiterate that there is no question that the administration of Gibraltar will be handed over to Spain without the consent of the citizens? Meanwhile, will the Government do everything possible to ensure that the Spanish authorities do not continue with their provocation and restrictions, with problems created at the border for those wishing to cross over?
Baroness Symons of Vernham Dean: My Lords, I am able to give my noble friend the assurance he seeks on the self-determination of the people of Gibraltar, as I have done on a number of occasions in your Lordships' House. I am also able to assure him that when incidents of provocation of the type he describes are brought before government Ministers, we take the matter up with the Spanish Government.
Lord Beloff: My Lords, I do not know how many other noble Lords have received copies of a very moving letter written by two young people in St. Helena
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to the Prime Minister urging the case at any rate for the people of St. Helena to be given the possibility of citizenship so that the young can enjoy the full educational and career opportunities which coming to this country can give them.
Baroness Symons of Vernham Dean: My Lords, I am aware of the correspondence to which the noble Lord alludes. When the representatives of St. Helena were in the United Kingdom for the Dependent Territories Association Conference they were assiduous in pursuing the point that the noble Lord raises in relation to young people on the island. Her Majesty's Government have been left in no doubt about the strength of feeling on that point.
Lord Tebbit: My Lords, can the Minister assure us that the peoples of those territories will be left free to manage their own internal affairs, and that pressure will not be put on them to conform to someone's idea of political correctness which may or may not be suitable for this country but, in the judgment of those people, is not suitable for theirs?
Baroness Symons of Vernham Dean: My Lords, we are in discussion with the governments of the overseas territories concerned about a number of different issues. They have left us in no doubt about their views; and we are also pursuing the views that we have with them. We shall be able to report on it further at the time of the publication of the White Paper.
Baroness Rawlings: My Lords, why have the Government blocked the Bill of the noble Earl, Lord Iveagh, on St. Helena in the House of Commons?
Baroness Symons of Vernham Dean: My Lords, it was felt wrong to single out one of the dependent territories at that time. We hope that the issue will be resolved by the White Paper. I reiterate what I said to your Lordships' House. It is being considered not only sympathetically but urgently.

Paintings on Loan from the Tate Gallery
3.26 p.m.
Lord Strabolgi: My Lords, on behalf of the noble Baroness, Lady Trumpington, and at her request, I beg leave to ask the Chairman of Committees the Question standing in her name on the Order Paper.
The Question was as follows:
What is the position with regard to the recall of paintings lent to the House by the Tate Gallery?
The Chairman of Committees (Lord Boston of Faversham): My Lords, the House has six paintings on loan from the Tate Gallery. Five of those were lent in 1990 and hang in the Barry Room; the other is "Dialogue at Waterloo" by Landseer, which hangs in the Peers' Guest Room and which was lent in 1985. The

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Tate Gallery has requested the return of these paintings as its current policy is generally not to lend to government departments and Parliament.
The Tate Gallery has been an extremely sympathetic lender to your Lordships' House. I recognise that some of your Lordships are concerned about the return of the paintings, especially the Landseer, but I hope that it may be of some comfort to the House if I announce that the Tate has agreed to delay their return for one more year. In the meantime, we shall continue to seek appropriate pictures to hang in their place.
On behalf of your Lordships, perhaps I might say that we all hope that the noble Baroness, Lady Trumpington, who is in hospital for an operation, will make a speedy recovery and be restored to us as soon as possible in her full vigour. I hope that the noble Lord, Lord Strabolgi, will pass that on to her. Perhaps I might offer a completely impartial view. The noble Baroness is, after all, one of the most popular Members of your Lordships' House.
Lord Strabolgi: My Lords, I thank the noble Lord for that remark. I am certainly glad to pass on his good wishes, and I am sure the good wishes of the whole House, to the noble Baroness, Lady Trumpington.
Noble Lords: Hear, hear!
Lord Strabolgi: My Lords, is the noble Lord aware that the Landseer in the Guest Room of the Duke of Wellington at the Field of Waterloo is the same painting that was greatly admired by Charlotte Bronte when she saw it in the Royal Academy of 1850? Sadly, during much of this century it was exhibited only rarely before it was lent to your Lordships' House. Why has the Tate's policy on loans been changed?
The Chairman of Committees: My Lords, perhaps I may deal with the noble Lord's final point first. I understand that the Tate is keen to lend in the future to exhibitions and regional galleries, and that that is the reason for its change in policy.
I was not aware of the first point the noble Lord made. It was of considerable interest. The noble Lord speaks with great experience of these matters. From the information I have received, I understand that he is right that the Wellington Landseer has not been on view in the Tate Gallery a great deal this century. Its recent history is that conservation work was done on it in 1965. In the following two years it was on loan to Apsley House. From then until 1985 it was at the Tate, although not on show. From that date it has been here.
Lord Annan: My Lords, does the Chairman of Committees agree that it may well be that the Tate is changing its policy because of the great expansion in space which will come into effect when the Bankside power station is reconditioned as part of the Tate?
Does the noble Lord also agree that it is reasonable for galleries and museums to lend pictures and objects to any state building and that that is reasonable particularly
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when the paintings or other objects may not be on display to the general public? That is a crucial point. All the reserve has always been on display in the National Gallery, although naturally it is not as well hung in the reserve area. But in many museums and galleries such items are locked up and cannot be seen. Therefore it is reasonable that they should be lent.
The Chairman of Committees: My Lords, the noble Lord's second point is very powerful indeed. In our further explorations, your Lordships' Curator of Works of Art has not been unmindful of what can be done by the other galleries around the country. This part of the Palace of Westminster is a wholly appropriate place in which to exhibit some of those paintings.
To deal with the noble Lord's first point, he is quite right. The Tate Gallery's collection has been increasingly stretched. Apart from the point that he mentioned, the gallery has opened branches in Liverpool and St. Ives, it will open the Tate Gallery of Modern Art at the former Bankside power station in the spring of the year 2000 and will relaunch the Tate Gallery of British Art in 2001.
Baroness Rawlings: My Lords, following on from the question put by the noble Lord, Lord Annan, even after Bankside opens the Tate Gallery will still have on show only 40 per cent. of its collection; the other 60 per cent, will still be unshown. Will the Chairman of Committees consider asking Nick Serota, the director of the Tate Gallery, to reconsider the matter and think of some other paintings to lend to this House?
The Chairman of Committees: My Lords, I cannot from my own knowledge confirm the figures given by the noble Baroness, but I completely accept them from her. I have no doubt at all that a way will be found to pass on her wishes, which were echoed around this Chamber, if I interpreted the voices correctly. Mr. Nicholas Serota and others at his gallery have been tremendously helpful.
Baroness David: My Lords, are Ministers still able to borrow paintings from the government art collection for their rooms in their departments? If so, does the value of the paintings they borrow depend on their rank? When I was a Government Whip in 1978, I chose some very nice paintings for my room at the department and was told when I went out that they were too expensive for my rank and that I must choose something cheaper. Is that still the policy? If Ministers can still borrow from the government art collection, why not this House?
The Chairman of Committees: My Lords, on the noble Baroness's final point, I think that those in charge of the government art collection feel that places other than the Palace of Westminster take priority. The noble Baroness will not be surprised to hear me say that I have no responsibility for these matters. I am quite certain that her words will be heard by those who handle the government art collection. I can only say that my own

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experience at the Home Office in 1979 was to receive a very happy series of three Stanley Spencers, which I much enjoyed during the limited time that I was there.

Turkey: Human Rights
3.33 p.m.
Lord Hyltonasked Her Majesty's Government:
What representations they and the European Union are making to Turkey about the arrest and detention of nine leading members of the HADEP (People's Democratic) political party.
Baroness Symons of Vernham Dean: My Lords, we have learnt with concern of the arrest and charging of seven directors of HADEP (People's Democracy Party) on 16th February. The British embassy in Ankara is in contact with the Turkish Human Rights Association to establish what developments there have been in the case. Officials from the embassy will raise this case with the Turkish authorities during talks next week. We are not aware of any representations made by other EU missions on this issue.
We regret this action taken by the Turkish authorities and urge them to abide by their international undertakings to uphold freedom of expression and democratic pluralism. We believe that the prosecution of politicians for the non-violent expression of their views is at odds with Turkey's international obligations, and that such actions will damage Turkey's international standing.
Lord Hylton: My Lords, I thank the Minister for her helpful reply. Can she confirm that the Turkish Government have closed down four political parties in recent years? Now a fifth is under attack. Will steps be taken by this Government to make it absolutely clear to Turkey that the freedoms mentioned by the Minister are a pre-condition of membership of all European institutions?
Lord Symons of Vernham Dean: My Lords, sadly, I can indeed confirm that the Turkish authorities have closed down a number of political parties in the recent past—most notably, the Democracy Party (the DEP) in 1994 and the Refah or Welfare Party, earlier this year. We regret that. We expect Turkey to act in accordance with its international obligations and to strengthen its democratic institutions.
The noble Lord raises the issue of preconditions for membership of European institutions. We make it clear to Turkey at all times that its record on freedom of expression is one of the many factors that will have to be taken into account in the development of the Turkey/EU relationship. My right honourable and honourable friends have raised these issues with the Turkish Government on no fewer than seven occasions since September last year.
Baroness Williams of Crosby: My Lords, will the Minister accept that many of us agree very strongly with the way in which she put the position in her Answer today? Many of us welcome the growing part that Turkey plays in central Asia. However, will the Minister further accept that all of us would wish her to put as strongly as possible to Turkey the absolute conditionality that human rights and civil liberties impose upon any would-be member of the European Union, and that Turkey has to understand that before the question of relations can be taken any further?
Baroness Symons of Vernham Dean: My Lords, the Luxembourg Council meeting made the points to the Turkish authorities that the noble Baroness puts so eloquently and trenchantly. We continue to urge the Turkish Government to distinguish between the peaceful campaigning of political parties and terrorism.
Lord Rea: My Lords, will the Government consider joining Greece in delaying the £260 million that is due to Turkey under the European Customs Union agreement at least until there is evidence that its human rights record is improving in the respects about which we have heard?
Baroness Symons of Vernham Dean: My Lords, these are matters that would be considered through the usual channels in the European Union. The Government are aware of the point that the noble Lord raises; it is one that will have to be considered during our presidency.
Lord Avebury: My Lords, will the noble Baroness ensure that in the statement which I hope is being drafted for presentation by the United Kingdom in its presidency of the European Union at the UN Human Rights Commission—which is to meet in Geneva on 16th March—reference will be made not only to these arrests but to the imprisonment of Leyla Zana and her colleagues from the predecessor in title of the HADEP; the banning of the Refah Party which she mentioned; and the constant harassment and intimidation of all legal Kurdish parties? These actions have made it impossible for them to function and have driven so many into the arms of the PKK.
Baroness Symons of Vernham Dean: My Lords, as I said, Her Majesty's Government continue to make representations on a wide range of different issues. The noble Lord mentions the case of Leyla Zana, which has been raised with the Turkish Government. The case has been raised of the noble Lord's own banning in Turkey, as indeed that of Mr. Jonathan Sugden. I regret to say that, following our previous discussion on this matter, we received a letter stating that the bans are still in place. We continue to make representations on these points, both bilaterally and through the presidency.

Criminal Justice (International Co-operation) (Amendment) Bill [H.L.]
Lord Evans of Parkside: My Lords, I beg leave to introduce a Bill to amend Section 12 of the Criminal Justice (International Co-operation) Act 1990. I beg to move that the Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Lord Evans of Parkside.)
On Question, Bill read a first time, and to be printed.

Competition Bill [H.L.]
3.38 p.m.
Read a third time.
Clause 1 [Enactments replaced]:
Lord McNally Lord McNally moved Amendment No. 1:
Page 1, line 14, at end insert—
("() Paragraphs 5 to 9 of Schedule 13 make particular transitional provision in relation to the Restrictive Trade Practices Act 1976 and the Resale Prices Act 1976.").
The noble Lord said: My Lords, I rise to speak instead of the noble Lord, Lord Morris of Manchester, who is unfortunately unwell, although happily now out of hospital. Noble Lords will recall that on Report, on 23rd February, in tabling these amendments the noble Lord said that they had two purposes. The first was to stay the Director General of Fair Trading's legal proceedings under the old Act where not to do so would put community pharmacies in double jeopardy. The second was to secure resale price maintenance for over-the-counter medicines for a minimum five-year period of transition. At that time the noble Lord, Lord Morris, said that he would withdraw the amendment to give him time to consider the Government's reply and to inquire further about the activities of the Director General of Fair Trading who, it had been reported, had been lobbying against his amendments.
On that point, the Director-General of Fair Trading said that he had not been lobbying but providing press briefing in order to inform the debate. I suppose one could say: "He informs the debate; I lobby; they improperly influence". I believe that regulators should be careful about their activities while Parliament is debating their powers and responsibilities. From his sick bed, the noble Lord, Lord Morris, is not happy with the director general's explanation.
There are other noble Lords more qualified than I to argue the merits of the amendment. It seems to me that there is a genuine dilemma between health and retailing, between community service and competition. Having listened to the previous debate, what worries me is that at this stage parallel objectives seem to be at work, with health Ministers talking about their commitment to community pharmacies and DTI Ministers emphasising, quite properly, their desire to see the consumer obtain the best value when paying for their medicines.
I believe there is a genuine case for a pause before action is taken under old legislation or new legislation is put in place which may irretrievably damage the community pharmacy provisions and before the Government know the full implications of the competition law that they are introducing. A strong case can be made on both sides, but I believe that there is an even stronger case for the Government to pause and for there to be some departmental co-ordination to ensure that the full impact of their proposals for competition law will not have a devastating effect on health and pharmacy provision.
3.45 p.m.
Baroness O'Cathain: My Lords, I rise to oppose the amendment. The noble Lord, Lord McNally, said that there was a case for looking at the matter again. He said that, if the amendment were not passed, pharmacy provision would be irretrievably damaged. We need to consider what is involved here. We are talking about over-the-counter medicines, which account for between 3 per cent. and 7 per cent. of the total turnover of pharmacies; we are not talking about prescription medicines, which account for about 80 per cent. of the work of pharmacies. The idea that the Bill's effect on that 3 to 7 per cent. can damage the future of community pharmacies is unbelievable.
We need to look at the matter again. We are talking about resale price maintenance. This is a competition Bill. The amendment is anti-competitive: it is in breach of Article 5 of the Treaty of Rome. The OFT survey found that the proposal would not be sensible since such a small proportion of products would be affected. It would be a tax on the low-income shopper. a blunt instrument which would maintain higher than necessary prices. Lone parents and low-paid customers desperately need price competition.
I draw the attention of the House to the fact that, when the Net Book Agreement collapsed, many predicted the death of small bookshops. That did not happen. When in doubt, policy-makers should always err on the side of the consumer, particularly when discussing the Competition Bill.
Finally, I draw attention to a paper in Consumer Policy Review, published by the Consumers' Association, in November 1996, which said that resale price maintenance of these products,
"is inappropriate because it is the wrong instrument for the wrong target. Rural and disadvantaged communities should have adequate access to pharmacy services. However, a regressive tax on all consumers is not the best means of attaining this goal. The inadequacy of RPM as a means of protecting marginally profitable pharmacies has been implicitly recognised by successive governments in the establishment and maintenance of the Essential Small Pharmacies Scheme and support for self dispensation by General Practitioners. It is to these schemes and this type of approach that we should look when attempting to protect access to rural and vulnerable consumers".
Lord Montague of Oxford: My Lords, I too rise to oppose the amendment. My reasons for doing so are not entirely the same as those of the noble Baroness. The point at issue is whether there should be a careful review now, as sought by the director general, or whether it

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should be deferred for a period of seven years. I believe that what we shall hear in the debate will lead us to the view that the experts should look at the matter now and not defer it for seven years.
I am a past chairman of the National Consumer Council and have taken a close interest in the well-being of our pharmacies, which is a very important matter. I wish to draw to the attention of the House some facts which have not emerged during our discussions. Under the Essential Small Pharmacies Scheme, any pharmacy which prescribes fewer than 19,000 prescriptions per year receives a subsidy. The cost of that subsidy is currently about £4 million a year. It is a safety net for pharmacies. Indeed, new pharmacies are opening and using that safety net. One pharmacy receives a subsidy of £32,000 a year. It is not the case that no protection exists to prevent pharmacies from ceasing to trade. As the noble Baroness said, over-the-counter medicines represent only 7 per cent. of pharmacies' business. We should not ignore the fact that pharmacists' income is reviewed annually by a joint committee of the Government and pharmacists.
There are, however, other matters that I hope the director-general or the Restrictive Practices Court will examine. One which causes great concern in relation to the workings of the subsidy concerns doctors who provide pharmacy services. Where a new pharmacy opens under the Essential Small Pharmacies Scheme, doctors can no longer prescribe for a patient who lives within one kilometre of the surgery. That sounds fair because it is assisting the new pharmacy. But it is not very kind to the patients; it is not kind to people who have previously been making one stop when they are unwell, to have to make two stops. It is particularly difficult for elderly people. I hope therefore that whoever reviews this matter will bear that in mind.
There are other aspects to consider—one could go on forever—and we cannot consider them all here and now. The issue is whether all these matters should be considered now or whether they should be deferred for seven years. I suggest to this House that they should be considered now.
Lord Stallard: My Lords, I rise to support the amendment moved by the noble Lord, Lord McNally, for much the same reasons. I have taken an interest in the Bill since at Second Reading, through Committee and Report stages, and discussed it at length with the noble Lord, Lord Morris. As the noble Lord, Lord McNally, said, the noble Lord, Lord Morris, has been unwell, but we are pleased to see that he is on the way to recovery.
I am particularly concerned about a number of matters. I am a life-long supporter of the community pharmacist. I can remember even as a child when the only place one could go for assistance, advice or guidance was to the medical hall or the chemist because we could not afford a doctor in the days when we had to pay for every visit. There is therefore a long history attached to the community pharmacists, and that is being overlooked and brushed aside in the new approach. It is said that what was there before is no good and we must change it. But we cannot change things like the community pharmacy and the support for it in the community.
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I have no knowledge of the minute details of this Bill, but I have a great deal of knowledge of the support for the local pharmacy in the communities in which I mix, even to the extent that when people are told that it may cost 6p, 7p or 8p more if they agree to the change, they say that they would sooner pay. Whatever the supermarkets say about the reduction in prices of drugs, medicines and so forth, the balance will be added to other items. They will add 0.5p on the price of a tin of beans or I p onto something else. People will not save money because the supermarkets will recoup whatever reduction they allegedly give. That is therefore a false argument. People are not stupid and will see through that immediately.
Amendment No. 1 is mainly concerned with the double jeopardy question mentioned by the noble Lord, Lord Morris, and repeated by the noble Lord, Lord McNally. Community pharmacies are entitled to be concerned by the Bill as it stands. They are not arguing for specific protection for all time. Once the Bill becomes law, the transitional provisions will apply. If resale price maintenance cannot be justified under the test of this Bill, at the end of the transitional period it will cease. Why, therefore, did the director-general see fit to begin proceedings in January of this year against community pharmacies? Only he knows because it was only in January that the Bill began its passage through your Lordships' House. Why did he choose that moment to begin those other proceedings?
Many community pharmacies are barely viable at the moment. That has been confirmed many times in the course of the debates. Two sets of proceedings, one under the old legislation and one under the new, will impose heavy costs on pharmacies quite unnecessarily because they will have two separate cases to fight. To add to that, as the noble Lord, Lord Simon, reminded us, there is always the possibility that the European Commission will jump into the ring, and nothing can be done about that. However, we can remove the double jeopardy argument if we have a mind to.
The effect of the amendment is to stay the proceedings the director-general began in January for two years. If the provisions of the Bill are brought into force before the two years expire, the proceedings are automatically discontinued. If for any reason there is a delay in implementation, then the proceedings resume. That takes care of the point made by the previous speaker. I argue that the amendments are modest, but extremely important. I do not see why my noble friend the Minister should not accept them and look again at the whole situation.
Baroness Miller of Hendon: My Lords, I was pleased to add my name to those of other noble Lords proposing this amendment. With the permission of the House I should like to reminisce for a few moments about my experience in this area when I was chairman of the Barnet Family Health Services Authority. We wanted then to extend the advice and help given to customers on health matters, primarily to help the consumer, but also to relieve the general practitioners and avoid their time being wasted unnecessarily, and also to enhance the professionalism of the pharmacists.

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To that end we launched—as I said at Second Reading—a High Street Health project whereby pharmacies gave up a small part of their selling shelf space in order to create a private area where they gave free advice to customers. It resulted in the saving of a great deal of time and effort for local GPs. It won support not only in our area, but was also used as a pilot in numerous other parts of the country. Of the 6 million people every day who go to pharmacists, 1 million of them do so for their prescriptions. We know that 70 per cent. of customers show their loyalty by going to their regular pharmacist who, having the patient's medication records available, is in the best position to advise the patient.
Buying over-the-counter medication is not like buying cut-price beans or any other consumer product. The consumer cannot obtain advice from a supermarket shelf. I believe that the Secretary of State for Health knows that. Apart from the many statements that he has made in the other place, only as recently as last Monday he said at the Pharmaceutical Services Negotiating Committee's dinner that he wanted to see the role of the community pharmacist extended. He hoped that pharmacists would encourage people to use self-medication where it was appropriate. He wanted to see new and extended roles for the pharmacist in primary care.
If resale price maintenance on over-the-counter products is removed, that simply cannot happen. Removing resale price maintenance will result in around 3,000 of the barely viable pharmacists disappearing. Many more may disappear as well. I note what my noble friend Lady O'Cathain and the noble Lord, Lord Jacobs, said last week about nobody speaking for the consumers. Let me say that the Consumers' Association sent out solid press releases and briefs. The bottom line of all that is that unless there are pharmacies in the high street, the sick, the poor and the vulnerable will not be able to go anywhere for advice.
I understand the Minister's concern relating to competition and pricing. I understand that very well because I served on the Monopolies and Mergers Commission before I was privileged to enter your Lordships' House. But cost in matters such as this is a bad criterion. This is not a matter of competition: it is a matter of the health of the nation. With all the passion that I can muster I ask the Minister to see if he can go some way to accepting the amendment or, alternatively, that other noble Lords will follow us into the Division Lobby.
Lord Walton of Detchant: My Lords, I support the amendment, but with slight hesitation. In general terms, like the noble Baroness, Lady O'Cathain, I am opposed to restrictive trade practices and believe in the benefits of competition in our society. Having said that, and having listened in particular to the speech of the noble Baroness, Lady Miller, I too heard the speech by the Secretary of State for Health on Monday when he gave his support to the role of the community pharmacist.
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It is clear that the medical profession and the profession of pharmacy have been having extended discussions over the course of the past year or two in the hope of extending the role of the community pharmacist in giving advice and in persuading people—where appropriate—to buy over-the-counter medicines in order to treat illnesses which do not require the attention of a skilled medical practitioner. I have been persuaded by all the arguments I have heard and read that if this issue is not resolved in favour of the community pharmacists there is a serious danger that many small pharmacies in villages and in the countryside will be forced out of business because of undercutting by the supermarkets and the major chains. I accept wholly what the noble Baroness, Lady O'Cathain, said about the book agreement and the dire consequences which were suggested when that agreement was withdrawn. But pharmacists are in a very different position. We need a period of lengthy reflection before resale price maintenance for over-the-counter medicines is withdrawn. For that reason I strongly support the amendment.
4 p.m.
Lord Campbell of Alloway: My Lords. I support this amendment. I am not concerned with the interests of pharmacists. I am not concerned with the Consumers' Association. There has been far too much heavy lobbying. I am not concerned with the interests of the great supermarkets. I am concerned with the interests of those about whom the noble Lord, Lord Walton, has just spoken. It is their interests with which your Lordships should be concerned. After all, I do not suppose that any of us are members of the Consumers' Association but we are all consumers. Let us concentrate, not on these trade associations, but on the interests of the people in the country.
Lord Borrie: My Lords, surely there can be no disagreement in this Chamber as to the importance of a geographic spread of pharmacies throughout the country, whether those pharmacies are small community pharmacies or pharmacies found within the larger unit of a supermarket. Many people, including the noble Baroness, Lady Miller of Hendon, say that nowadays one expects pharmacists to give advice as well as to sell goods. That is one of the extremely valuable assets which we surely would not wish to lose. The question before us is not the importance of pharmacies for all these reasons but whether the ending of the dictating by drug companies of the minimum price at which over-the-counter goods shall be sold will result in serious damage or the elimination of community pharmacies. That question will be determined, if this House permits it to proceed, by the Restrictive Practices Court—which consists not only of a judge but of two businessmen—after hearing all the evidence and all the arguments. I do not know the answer. Many Members of this House have claimed today, and on previous occasions, to know the answer. They know that pharmacies will be destroyed if resale price maintenance comes to an end. They may be right, or they may not.

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Surely it is better that this matter be examined, since the inquiry has already started, or at least the proceedings have been started, by the body which exists for that purpose, the Restrictive Practices Court. It will certainly not be easy to establish, as is necessary under the present law, that there has been such a "material change of circumstances" since the 1960s that ending resale price maintenance is justified. That is a considerable hurdle to get over, but it seems to me that if it is established in the court that pharmacies would be damaged, then that would surely be against the public interest and the court would conclude that resale price maintenance in this specific field ought to continue and, under the existing terms of the Bill, it will continue for a period of five years.
With all respect to their Lordships who have spoken and who seem to know precisely what will happen in certain circumstances, we should allow the inquiry to discuss this matter in considerable detail and see what the outcome is. I think we should oppose the amendment.
Lord Milverton: My Lords, I support the amendment, as I have done previously. As my noble friend Lord Campbell of Alloway said, it is the person who counts. I cannot quite see supermarkets being able to give advice to a person. I have not changed my opinion. The pharmacies are important as places where people can receive advice. They do not always want to bother a doctor. So I support the amendment. Let us not just think of competition, but of persons.
Lord Hughes: My Lords, I put my name to the amendment at the request of my noble friend Lord Morris who just a short while ago was taken ill. In a way I am sorry that I put my name to the amendment, not because I have any doubts about it but because in previous discussions in Committee it was obvious that the fear of what would happen to small pharmacies was held by Members of all parties and no party. If I had not put my name to the amendment, the likelihood is that the fourth name would have been from the Cross Benches. That would have reflected better the feelings of the House.
This is the first time that I have supported amendment of a Bill put forward by a Labour government in 12 years of such government. Admittedly, for seven of those years I was a Minister and I did not have much choice. But even then, I can say that I always supported the Government on every occasion with the same degree of enthusiasm.
I put my name to the amendment because I do not regard it as a political amendment. If you are a Conservative, if you are a Liberal, if you are Labour, or if you are a Cross-Bencher, can you view with equanimity the closure of community pharmacies? I am certain that very few of us would say that it was a price worth paying for something else. At a previous stage my noble friend the Minister rightly pointed out that he is the Minister responsible for competition and that he did not feel that it was right for him to venture into the health side of the matter. But competition is not just
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one sided. There are other aspects. In relation to community pharmacies, health, the environment and the quality of life come into it.
In a village, people know each other. They know the chemist, they know the doctor. The doctor is not just a professional adviser. He is also a friend and their neighbour. People know the stress under which he operates. They know that it helps the doctor to carry out his work in the best possible way if he is not confronted with every minor ailment in his consulting room. That is where the benefit of the community pharmacy arises. People in the village know that if they have a minor ailment, or if they think they have a minor ailment which may turn out to be something more serious, they go in the first place to the chemist. They will get advice; and if the chemist thinks it is the right thing to do, he will supply them with the medicaments that they want. But on other occasions the chemist will say, "No, I cannot rightly deal with this. You must go along and see the doctor". People know that when they have seen the doctor and have been given a prescription they can go back to the chemist and, either immediately or within an hour, the prescription will be made out. If that shop is driven out of business they may have to go, as I have said before, to the nearest Boots or equivalent, which may be many miles away. They certainly will not get their prescription very quickly unless they go there to collect it. The great majority of prescriptions are free to the patient. But it will cease to be a free prescription if you have to add to it the cost of a bus or taxi fare to get to another chemist to collect the prescription.
There is another aspect. On competition, can it really be said that competition is helped every time a community pharmacy closes down because it is no longer profitable? Is it helped if 300 pharmacies close down or 1,000 pharmacies close down? If that happens, and the business goes to Boots or its equivalent, in many parts of the country we will be creating not competition but a local monopoly. I cannot see that that is in the interests of competition.
I have spoken about the help that chemists give to the doctors. Every year we know that thousands of general practitioners retire long before the normal retirement age because they can no longer stand the stress. If the village doctor, whose job, incidentally, does not just cover the 2,000 people in the village but covers a much wider area round about, has to retire and the pharmacy has to close down, patients' interests will not be served.
We have been accustomed in the past 10 months to hearing Ministers say, "This is a listening government". Not everyone believes it. On this side of the House, we do believe it, because there is now ample evidence that that is the position. But last Sunday 284,000 people put down their names to come to London. Not all of them managed to get there. I understand that some people in Yorkshire were held up because it was snowing and the coaches could not run. Those 284,000 people were in London not because they are opposed to the Foster Bill on fox hunting. Probably the majority are, but that was not their only interest. They were there because they were objecting to many other things and saying that the interests of the countryside were not being properly looked after—whether it was taking greenfield sites for

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housing, whether it was the closing of village schools, or whether it was the possible closure of the village pharmacy. Those were the things to which they wished to draw the Government's attention. What happened? The Government said, "Yes, we are a listening government. We will have to do more for the countryside". They are contemplating setting up a ministry of rural affairs. I would suggest to the listening Government that the best example of responding to what they have listened to would be to start with the community pharmacy.
I do not know whether this amendment is necessarily the best way of going about it. I have heard how the Government are anxious to protect community pharmacies. But, as far as I can see, what we are getting from the Government at this stage is only indications of what may happen. What we need is not possibilities; at the very least we expect probabilities; and the ideal would be if the Government were to give us certainties. I wholeheartedly support the amendment, to which I have put my name.
4.15 p.m.
Lord Desai: My Lords, when my noble friend Lord Morris moved this amendment at the Committee stage of the Bill. I tried to express my reservations about it. While it is quite true that community pharmacists perform many functions and we would like them to be preserved, there must be better ways of doing that than loading the costs on to the resale price of the medicine. This is a question of unbundling. The community pharmacists perform duties which are valuable and which should be rewarded, but the worst way of doing it would be to have resale price maintenance, thereby putting the costs on everyone, including those who do not need such help. I agree with my noble friend Lord Montague. We ought to have some kind of special fund to help small pharmacists and so recognise that they perform this function. This would be like a lump sum given to the pharmacists which would help them keep in business. But it would not carry over to the prices paid by the consumer.
Many noble Lords have said that consumers are loyal to the local pharmacist. That is very good. So even when resale price maintenance is removed, consumers will still go to their local pharmacist. Price will not be the only attraction. So consumers will be able to enjoy lower prices and the pharmacists will be given a lump sum to keep them in business. If some pharmacists disappear, which is what people want to prevent, the consumer will have to go to some other place and pay extra to buy the medicine. But the medicine the consumer buys will be cheaper than at his or her local pharmacy.
There are horses for courses here. When the Restrictive Practices Court, or whoever it is, looks at this matter it ought to consider ways other than resale
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price maintenance to help preserve these pharmacies and pass the benefit of lower prices on to the consumer. In that way, everyone would be happier.
Lord Campbell of Alloway: My Lords, before the noble Lord sits down, perhaps I may ask him a question. As there is not a special fund—
Noble Lords: There is!
Lord Montague of Oxford: My Lords, I hope I did not express myself earlier in a manner which misled the House. There is a fund. I named the fund. I stated the amount of money that has been paid by the Government. I can now tell the House the number of small pharmacies that are being assisted at the present time in England and Wales. It is 280. If any more fall below this threshold, they will be able to get similar funds from their local health authority. I may not have made myself completely clear; in which case I apologise.
Lord Jacobs: My Lords, I remain unconcerned that my noble friend Lord McNally moved the amendment while I am opposing it. As your Lordships will see, this is not an open and shut case. Noble Lords may have believed it was when they heard the speeches at the Committee stage, but they have heard a more balanced view today. Indeed, if the arguments were so clear-cut, why have the supporters of the amendment made such enormous efforts to prevent this going before the Restrictive Practices Court, where things could be properly evaluated? Perhaps they are not confident that they will win their case there.
The strongest spokesman for consumers in this country is the Consumers' Association. Last year it carried out a major study and said that it unreservedly opposed the continuation of resale price maintenance on these goods. Its research showed, on a survey of 2,000 people, that 13 per cent. of them were unable to afford certain medicines. This minority of just one in eight of the population is large enough to warrant the concern of noble Lords. If the removal of the RPM on medicines allows some of this group to purchase the medicines they wish, the social benefits will be considerable.
It is claimed that 3,000 pharmacists are at risk if RPM is removed on over-the-counter drugs. Regrettably, so far the report adducing this information has not been published, although it has been requested by the Consumers' Association. Those pharmacists which it is claimed are at risk will be the smallest ones, naturally, and they will have a turnover of between £120,000 and £150,000 a year. Eighty per cent. of that will be for regular prescription drugs and about 5 per cent.—there are differing figures ranging from 3 per cent. to 7 per cent., but the majority view is that it is about 5 per cent.—of that turnover will be on over-the-counter drugs.
If RPM is abolished, the Consumers' Association believes that there will be very little loss of business to supermarkets and other groups. It believes that customers will continue, as the noble Lord, Lord Desai,

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has said, to use local pharmacists for their convenience when they serve a local community and offer a good service.
I prefer to be more generous to the supporters of RPM by saying that perhaps as much as 50 per cent. of their turnover in what would be cut-price goods on over-the-counter drugs would go to the competition. The net loss of profit or margin for the 3,000 pharmacists in total would be about £7 million a year.
If RPM is not abolished, the Community Pharmacy Action Group believes that the cost to the consumer would be between 6p and 10p per week, which I am sure noble Lords will agree is a small sum—unless noble Lords have already calculated that even 6p per week is £180 million a year—which the consumers will have to pay to enable the £7 million a year of additional money to accrue to the 3,000 pharmacists. I can well understand why the Consumers' Association is so strongly in favour of the end of RPM.
The Government could compensate small pharmacists for the loss of business by a smaller amount of the dispensing fee which they receive and make up the cost of that by reducing by a small amount the dispensing fee given to the larger chemist shops. It has been argued before that the pharmacists do not want to go before the Restrictive Practices Court and are seeking a delay of five years before this matter is reviewed. That would be in order to protect the 3,000 small pharmacists who are at risk. Their loss of margin over five years would be £35 million. The cost to the rest of the nation for maintaining that system over five years would he in excess of £900 million.
I do not argue that the case against RPM is absolutely certain to win the day before the Restrictive Practices Court, any more than it is possible to argue that the supporters of RPM will win their case. However, this matter has not been reviewed for more than 27 years. I believe that the process of re-examination of the merits and demerits for the continuation of RPM should take place before the courts. As an opponent of RPM, I am confident that our view will be upheld, but so indeed are those in favour of RPM. Therefore, let it be judged before the courts, where all the facts and evidence can he produced. I ask your Lordships to avoid the temptation of being persuaded by some very good emotional arguments which I heard both at Committee stage and today.
Lord Peston: My Lords, in addressing your Lordships briefly I declare two interests. I am an honorary member of the Royal Pharmaceutical Society of Great Britain and I am also chairman of the Office of Health Economics, which is financed by the pharmaceutical industry. It is for that reason that I have refrained from addressing your Lordships on this subject until now. I do not intend to deal with the substance of the matter even on this occasion, except to remark acerbically that it is customary in your Lordships' House for noble Lords to address the amendments before the Chamber and not to debate other subjects—which most noble Lords have been doing either for or against resale
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price maintenance, which, unless I have lost all my ability to read, is not the subject of these amendments. They are about a related matter.
I mention the matter largely to ask my noble friend a question which relates to double jeopardy. That is the only reason I rise to speak. Assuming that my noble friend Lord Stallard is right—and I believe he is—we are discussing here the question of triple jeopardy, because the bureaucrats in Brussels may well take an interest in the subject.
I believe that my credentials on competition are at least as good as those of any Member of your Lordships' House. Indeed, I believe that they are better than those of one or two noble Lords who have spoken today. But again that is me in my acerbic mood.
My noble friend the Minister has dealt with the Bill generally so admirably, but he has not answered the double jeopardy question. He has dealt with many other matters but he has not answered that. As I say, I do not wish remotely to get involved with the substance of the debate because I believe it would be improper for me to do so. But I hope on this occasion when my noble friend replies that he will explain to us why the Government view with equanimity the double jeopardy side of this subject. I have an open mind. I am willing to be persuaded that it is right that pharmacists should have to argue the case once under the old legislation, which they might win, but if they do, they have to argue the case a second time, let alone on a third occasion. I fervently hope that my noble friend wishes to carry his friends with him. But he has to answer once and for all the case for double jeopardy. I am looking forward to that.
Lord Fraser of Carmyllie: My Lords, I express to the Minister for the last time the view that it is not for him to respond to this debate. I very much regret that, having indicated on a previous occasion that it might at least have been a courtesy to the House to have one health Minister, or more, on the Bench alongside the noble Lord. As he well understands, what concerns me and many others in this House is that there are two sets of government policies which are in conflict. If the declared single objective of this Government was that over-the-counter medicines were to be as cheap as possible to the consumer, there would be no contradiction whatsoever.
But the fact is that the Secretary of State for Health has repeatedly said, and as recently as Monday evening, as the noble Lord, Lord Walton, and my noble friend Lady Miller remarked, and emphasised at great length, how keen he is to see the role of community pharmacies extended. He wanted to see them helping people to use self-medication where appropriate. He wanted to see a new and extended role for community pharmacists in primary care. That is not only a clearly set out policy—from this side of the House I say that it is an extremely good one. If the Government wish to follow that I can signal to them that they will get unswerving support. I believe, from all quarters of the House in the pursuit of such a worthwhile policy. It reduces the load on general practitioners.

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In this debate we have over-concentrated on rural matters. I would like to see community pharmacies more extensively developing among some of the appalling housing schemes of our nation. That would be a much more important demonstration of the value of the extension of their role. That is what we are being told. In the White Paper for England, Wales and Scotland the Government have said that they wish to take competition out of the National Health Service. But by this change in the Competition Bill in a critical area of the policy they most wish to pursue they are saying that what will be paramount and the key issue, whether it affects community pharmacists or not, will be the price of such over-the-counter drugs. That is unacceptable. This is a health debate. As the noble Lord, Lord Peston, said, it may principally revolve around the issue of double jeopardy. However, the community pharmacists—and they are the people who have put up their own money and who run their own businesses—believe that if the limited protection now afforded to them is removed, their businesses will be put in real jeopardy.
It is unacceptable that the Secretary of State for Health should have gone to talk to the pharmacists on Monday night, praised them to the skies for all that they are doing and yet—although he is well aware that this is the one issue that is at the forefront of their minds—did not even refer to their worries during the course of a long speech. It would seem appropriate for a responsible government to say, "We understand your fears", and then either, "We do not accept them", or, "We are going to meet your concerns in another way by extension of the small pharmacy scheme or by some other device". None of those proposals has ever been offered to community pharmacists and I believe that their fears are well founded.
This is a matter on which we cannot be neutral. I understand that in answer to a question one of the Ministers responsible for health said that the Department of Health was neutral on this issue. It simply cannot be neutral on this issue because it is far too important for the future development of the National Health Service. I am aware that whatever may be the Government's view at present, over 100 of their Back-Benchers in the House of Commons have exactly the anxieties that have been expressed by the noble Lord, Lord Stallard, and others. In such circumstances, if those who are promoting the amendment are determined to put it to a Division, I shall advise my noble friends to support them in the Lobby.
4.30 p.m.
Lord Simon of Highbury: My Lords, I am clear that what I am trying to achieve this afternoon is an understanding of the implications of this Competition Bill to a particular sector. I am delighted to be asked to debate health policy during our proceedings on this Bill, but, again, I shall not rise to the challenge put to me because we are here to debate the Competition Bill. Although the noble and learned Lord, Lord Fraser, was very tempting in asking me to dispose of policy in another department, he will not find me willing to do so
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on this occasion. I am sure that if my noble friend Lady Jay were not in America she would be sitting here on the Bench beside me supporting me fully because what I am about to say relates to government policy. We are aware of government policy in both sectors.
As I have said before in previous debates (both in Committee and on Report)—I should like to make this clear to my noble friends Lord Stallard and Lord Hughes—the Government entirely accept the importance of community pharmacies. I fully understand that the CPAG wishes to press the arguments of community pharmacists and to outline their concerns about the future. However, as my noble friend Lord Borne explained—I agree with this point—at the moment we do not know whether resale price maintenance in that sector is a good or a bad thing. The issue is whether the independent bodies set up to examine such matters under statutory provisions should be allowed to do so, or whether the resale price maintenance for over-the-counter (OTC) medicines should be removed from scrutiny, both under the Resale Prices Act and under the Chapter I prohibition in the Bill until the year 2004. That is the purpose and the likely effect of the amendments.
The Director-General of Fair Trading has now initiated formal proceedings. I advise my noble friends that the proceedings have been on the stocks since October 1996. They were formally announced in January, but for 15 months people were well aware that the case was being prepared. Now that the director-general is seeking the leave of the court for resale price maintenance in OTC medicines to be reassessed, the Government are satisfied that it would not be desirable for the legislature to intervene to set aside the formal process which has been initiated. As has been pointed out, after nearly three decades, it is reasonable for the matter to be reviewed by the competition authorities. We do not think it could be justified to remove resale price maintenance from competition scrutiny until perhaps 2004. My noble friends Lord Stallard and Lord Peston have suggested that it is unfair and wasteful, and could involve pharmacists in double jeopardy, if they had to argue their case under the Resale Prices Act at a time when we are about to introduce a new competition regime.
As I said on Report, I can see the case for saying that the resale price maintenance of OTC medicines should be considered only under the new regime, in which case it should also benefit only from the one-year transitional period we are providing for most existing agreements. I can see the case for saying, as we propose, that the present action should be allowed to continue to a conclusion, but that if the result of the proceedings is that OTC medicines are exempt because their case is as strong as those promoting the amendment contend, resale price maintenance in those goods should benefit from a generous five years' transitional exclusion from the Chapter I prohibition from the date those proceedings end. But I do not understand the case for saying that the present action seeking a review of the exemption should be stayed and that resale price maintenance for OTC medicines should benefit from a five-year exemption.

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The existing exemption of resale price maintenance for OTC medicines has always been subject to possible review by the court, if there is prima facie evidence of a material change in the relevant circumstances since the court took its decision in 1970. As I have said, the amendments take the opportunity of the Bill effectively to remove the practice from being considered until 2004.
I am not here to suggest in any way that the CPAG is hiding anything in seeking to avoid scrutiny of resale price maintenance of OTC medicines. As I have said, we recognise the public interest in a plentiful and well distributed supply of pharmacists, and we would hope, as well as expect, that the court will consider carefully any evidence against ending the exemption for OTC medicines.
I am sure that the pharmacists will be able to make a powerful case. But it is only fair to point out that the Director-General of Fair Trading has unquestionably studied this issue long and hard over a number of years and has reached a serious conclusion, to which many noble Lords have referred. There are factors which have changed considerably and the director-general has tried to lay out some of those factors publicly. I sense that the noble Lord, Lord McNally, implicitly criticised the director-general for making known his views which were reported in the press. I am assured that the director's intention was merely to put on record the issues which led him to refer the case and to set out the due process and merits of the case which would be properly examined.
The director-general notes that in 1970 the court was particularly concerned about the availability of ethical medicines should resale price maintenance be prohibited. He observes that resale price maintenance of such medicines appears to have been abandoned in the 1970s without there being the effects which the court feared. He questions whether the prohibition of resale price maintenance of the remaining medicines covered by the exemption would threaten the future of pharmacies. He points out, as noble Lords have pointed out today, that their mainstay is NHS dispensing, since over 70 per cent. of their turnover is accounted for by prescriptions. When the court made its order in 1970 pharmacy numbers were declining and branded OTC medicines made up between 10 per cent. and 13 per cent. of their sales. Since 1987 the number of pharmacies has been stable and these products account for about 7 per cent. of their sales. This is a real dilemma which the House has recognised. I believe that the director-general implies that pharmacies do not rely on branded over-the-counter-sales as they once did. As my noble friends Lord Montague and Lord Desai have pointed out, the director-general has noted that since the 1970 Essential Small Pharmacy Scheme has been instituted. That scheme protects small rural pharmacies from going out of business. Surely, a targeted scheme such as that to protect local pharmacies is a much more sensible policy for the Government and consumers than to make customers pay more for their goods. The Essential Small Pharmacy Scheme may well command greater support in the future.
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As for the disadvantages of resale price maintenance in the sector, the director-general has pointed out the dramatic increase in prices since 1970. A basket of medicines used by most families has risen by 17 per cent. in real terms since then, and continues to rise. Between 1990 and 1996 the price rose 20 per cent. above inflation. Small pack sizes, which are most popular with low income families and the elderly, have risen by almost 60 per cent. above inflation since 1977.
I do not outline the economic facts that the director-general has put to the public because I necessarily draw conclusions from them. That is not my job but the job of the court. I do so just to point out—here I agree with many noble Lords—that there are important points to consider. The amendments that have been tabled would prevent proper consideration of those matters by the court. To what avail is that likely to be? Like my noble friend Lord Peston, I come to the triple-jeopardy question that I cannot answer, having attempted to answer the double-jeopardy question. The triple jeopardy question is: what would the European Commission do if we did not make this examination and the case was not heard by our own authorities? I must warn the House that the consequences of accepting these amendments are unpredictable in that sense and may not necessarily be to the advantage of the sponsors of the amendments. I believe that it would be better to leave the matter to be dealt with on its merits by the court. We seek to press to a conclusion these very difficult matters over which I sense the House is also divided. If the proceedings result in an exemption, then under the Bill resale price maintenance for over-the-counter medicines will enjoy the benefits of a five-year transitional exclusion from the Chapter I prohibition from the end of the proceedings.
In conclusion, I must advise your Lordships against accepting the amendments. I believe that it would be undesirable for this House to set aside proceedings before a court of law brought by a statutorily appointed officer exercising functions confirmed on him by the Act, particularly as the proceedings concern the very pertinent question of whether resale price maintenance for medicines is in the public interest. There should be and will be other ways to assure the distribution network, but they cannot be part of this particular Bill. I ask the noble Lord to reflect very carefully before pressing this amendment.
4.45 p.m.
Lord Stallard: My Lords, before my noble friend sits down, can he explain why for the past 30 years successive directors-general have believed it to be in the public interest to retain RPM but suddenly the present director-general decides in the same month as this Bill commences that he must institute proceedings? Is it merely a coincidence, or am I being over-suspicious?
Lord Simon of Highbury: My Lords, I believe that my noble friend is over-suspicious. These proceedings were already on the stocks 15 months before the official laying of the case. Therefore, the matter had been in preparation for 15 months. As to whether the circumstances today have changed from 1970,

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effectively that is a matter for the court. That is why the court should hear the case and be given the opportunity to reach a judgment upon it.
Lord McNally: My Lords, the Minister has addressed the House with his usual candour. The debate has been peppered with expressions such as "anxiety", "a real dilemma" and "a House divided". That is true. On the other side we have had Hughes against Desai and Stallard against Borrie and on this side we have had Miller against O'Cathain and McNally against Jacobs. We have also heard the noble Lord, Lord Peston, who with his usual professorial humility told us that up until his intervention we had all missed the point. In that respect the debate has followed the usual course.
The Minister is dealing with a competition Bill and has clearly argued the competition case. The Government's health strategy, as stated by the Secretary of State for Health, is to retain as many community pharmacies as possible and encourage trained pharmacists to make a greater contribution to the National Health Service than they make at present. That has given rise to the cross-party debate this evening. We are not sure that to keep to the close tramlines of this Competition Bill will not do grave damage to the Government's other stated objective of expanding pharmacies. In the circumstances, I believe that the House must be divided. It will give Ministers an opportunity to ponder further how to allay the very real anxieties that have been expressed from all Benches this evening. I beg to move.
4.48 p.m.
On Question. Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 138; Not-Contents, 81.

Division No. 1

CONTENTS

Aberdare, L.

Clanwilliam, E.

Addington, L.

Coleridge, L.

Addison, V.

Cope of Berkeley, L.

Ailsa, M.

Courtown, E.

Alderdice, L.

Cowdrey of Tonbridge, L.

Alexander of Tunis, E.

Cox, B.

Anelay of St. Johns, B.

Cranbrook, E.

Annaly, L.

Cross, V.

Astor of Hever, L.

Cuckney, L.

Belhaven and Stenton, L.

Cullen of Ashbourne, L.

Berners, B.

Cumberlege, B.

Biddulph, L.

Davidson, V.

Blaker, L.

Dean of Harptree, L.

Blatch, B.

Denham, L.

Bowness, L.

Denman, L.

Bridgeman, V.

Dholakia, L.

Brigstocke, B.

Dixon-Smith, L.

Brougham and Vaux, L.

Donegall, M.

Burnham, L.

Elles, B.

Butterworth, L.

Erne, E.

Byford, B.

Ezra, L.

Cadman, L.

Fookes, B.

Campbell of Alloway, L.

Fraser of Carmyllie, L.

Campbell of Croy, L.

Gainford, L.

1318

Gisborough, L.

Onslow of Woking, L.

Gray of Contin, L.

Orr-Ewing, L.

Haig, E.

Oxfuird, V.

Halsbury, E.

Peel, E.

Hayhoe, L.

Pender, L.

HolmPatrick, L.

Pilkington of Oxenford, L.

Home, E.

Plummer of St. Marylebone, L.

Hooper, B.

Quinton, L.

Hooson, L.

Rankeillour, L.

Howe, E.

Rawlings, B.

Hughes, L.

Redesdale, L.

Hurd of Westwell, L.

Rees, L.

Hylton-Foster, B.

Renton, L.

Ilchester, E.

Renwick, L.

Kenyon, L.

Rodgers of Quarry Bank, L.

Kingsland, L.

Russell-Johnston, L.

Kitchener, E.

St. John of Fawsley, L.

Leigh, L.

Saltoun of Abernethy, Ly.

Linklater of Butterstone, B.

Seccombe, B.

Long, V.

Selborne, E.

Lucas, L.

Selkirk of Douglas, L.

Lucas of Chilworth, L.

Simon of Glaisdale, L.

Ludford, B.

Skelmersdale, L.

Stair, E.

Lyell, L.

Manchester, Bp.

McColl of Dulwich, L.

Stallard, L. [Teller.]

McConnell, L.

Steel of Aikwood, L.

Mackay of Ardbrecknish, L.

Stewartby, L.

Mackay of Drumadoon, L.

Stoddart of Swindon, L.

McNally, L. [Teller.]

Swansea, L.

Manchester, Bp.

Swinfen, L.

Marlesford, L.

Taylor of Warwick, L.

Mayhew of Twysden, L.

Tenby, V.

Merrivale, L.

Teviot, L.

Mersey, V.

Thomas of Gwydir, L.

Miller of Hendon, B.

Thomas of Swynnerton, L.

Milverton, L.

Thomas of Walliswood, B.

Mottistone, L.

Tope, L.

Munster, E.

Trenchard, V.

Murton of Lindisfarne, L.

Walton of Detchant, L.

Napier and Ettrick, L.

Weatherill, L.

Naseby, L.

Wilberforce, L.

Nelson, E.

Williams of Crosby, B.

Newall, L.

Windlesham, L.

Nicholson of Winterbourne, B.

Wise, L.

Northesk, E.

Young, B.

NOT-CONTENTS

Acton, L.

Hayman, B.

Archer of Sandwell, L.

Hilton of Eggardon, B.

Berkeley, L.

Howie of Troon, L.

Blackstone, B.

Hoyle, L.

Borrie, L.

Hunt of Kings Heath, L.

Brooke of Alverthorpe, L.

Irvine of Lairg, L. [Lord Chancellor.]

Burlison, L.

Callaghan of Cardiff, L.

Jacobs, L.

Carmichael of Kelvingrove, L.

Janner of Braunstone, L.

Carter, L. [Teller.]

Judd, L.

Cocks of Hartcliffe, L.

Kennedy of The Shaws, B.

Currie of Marylebone, L.

Kilbracken, L.

David, B.

Longford, E.

Davies of Coity, L.

Lovell-Davis, L.

Desai, L.

McIntosh of Haringey, L. [Teller.]

Donoughue, L.

Dormand of Easington, L.

Mallalieu, B.

Dubs, L.

Merlyn-Rees, L.

Eatwell, L.

Milner of Leeds, L.

Farrington of Ribbleton, B.

Molloy, L.

Gallacher, L.

Monkswell, L.

Gilbert, L.

Montague of Oxford, L.

Gladwin of Clee, L.

Murray of Epping Forest, L.

Gordon of Strathblane, L.

Nicol, B.

Gould of Potternewton, B.

Northfield, L.

Hanworth, V.

O'Cathain, B.

Haskel, L.

Paul, L.

1319

Pitkeathley, B.

Simon of Highbury, L.

Ponsonby of Shulbrede, L.

Stone of Blackheath, L.

Prys-Davies, L.

Strabolgi, L.

Puttnam, L.

Strafford, E.

Ramsay of Cartvale, B.

Symons of Vernham Dean, B.

Taverne, L.

Rea, L.

Tebbit, L.

Rendell of Babergh, B.

Thomas of Macclesfield, L.

Richard, L. [Lord Privy Seal.]

Turner of Camden, B.

Sandwich, E.

Walker of Doncaster, L.

Serota, B.

Wedderburn of Charlton, L.

Shannon, E.

Whitty, L.

Shaughnessy, L.

Wilcox, B.

Shore of Stepney, L.

Williams of Elvel, L.

Sidmouth, V.

Williams of Mostyn, L.

Resolved in the affirmative, and amendment agreed to accordingly.
4.57 p.m.
Clause 2 [Agreements etc. preventing, restricting or distorting competition]:
Lord McNally Lord McNally moved Amendment No. 2:
Page 2, line 23, at end insert ("and has, or is likely to have, a significant effect on competition within the United Kingdom").
The noble Lord said: My Lords, the Minister knows my approach to the Bill. It is a technical competition Bill—which is how I understand the Whips lured him into looking after it in this place—but it is also an opportunity for interested bodies to raise issues where they can get a proper ministerial response. At an earlier stage I raised the matter of look-alikes. The Minister rebuffed the amendment, but it is interesting that the British Brands Group says:
"We are delighted that the position of the Government appears to be moving, albeit slowly. At least it has now been recognised that the problem exists, which represents a considerable advance from where we were in November".
I do not plan to divide the House, which is a subtle ruse to allow the Minister's troops to go home, but in raising these issues I see an opportunity for the Minister to give assurances. The amendments in my name are proposed by representatives of small business who are concerned with the broad sweep of the Bill. Many of its provisions can be handled very easily by large companies but could cause difficulties to small businesses.
The amendment inserts an appreciability test into the Bill. Such a test is crucial for small business. Its effect is to distinguish agreements which have a significant or appreciable effect on competition from those which do not. Such an appreciability test was included in the 1966 draft Bill, but it has been deleted from the present Bill on the grounds that the courts will interpret the legislation in a manner which is consistent with EU jurisprudence. It has been suggested that that will imply an appreciability test in the same way as one is implied in Article 85. But there can be no guarantee that the UK courts will interpret the legislation in that manner. The amendment is intended to end any uncertainty. It helps to ensure that the Bill achieves one of its stated goals and is interpreted consistently with the Treaty of Rome. I beg to move.
Lord Campbell of Alloway: My Lords, I support the amendment. Its origins, and the justification for it, have
1320
been established by the Commission and the ECJ in a body of jurisprudence on the interpretation of Articles 85 and 86 concerned with affecting trade between member states. Here we are concerned with affecting trade within the UK. For the avoidance of doubt, and because of difficulties over registration, in the early days of Regulation 17 the Commission started applying not just de minimis but the test of,
"has, or is likely to have",
which comes straight from its own jurisprudence,
"a significant effect on competition".
If it were necessary for the Commission and the ECJ, in the interests of certainty and to avoid doubt, to do that. it must surely be appropriate, as was said by the noble Lord, Lord McNally, to bring it onto the face of the Bill.
Lord Fraser of Carmyllie: My Lords, my name is also to the amendment. I support what the noble Lord, Lord McNally, said, with one exception. The word "significant" appeared, as I understand it. in the 1996 draft Bill. It is not an issue that has been around since 1966. It was in the 1996 draft. Its inclusion was warmly welcomed by business, and for good reason. Because of the wide interpretation of Article 85 in Europe regrettably the result was a mass of unnecessary notifications with which the Commission has been unable to cope within a reasonable timespan.
Our objective in seeking the inclusion of these words in the Bill is to avoid that experience within the UK. I appreciate that this is a matter we have dealt with at previous stages of the Bill. The Minister has given a number of answers pointing out that under EU law the scope of Article 85 is limited to arrangements which have an appreciable effect on competition. We propose that the word "significant" should be introduced. On reflection, I do not accept that the wording will hinder the overall aim of consistency with EU jurisprudence. I do not believe that it will be contradictory. We thought that the Government would share the aim that it is desirable to avoid that mass of unnecessary notifications. This is a simple way to achieve that object. I support the amendment.
Lord Simon of Highbury: My Lords, as the noble and learned Lord said we have considered most carefully the arguments advanced during the first Committee day and on Report by the noble and learned Lord, Lord Fraser, and the noble Lords, Lord Kingsland, Lord Ezra and Lord Campbell in support of the same amendment we are now debating. I remain convinced, as I said on Report, that we should not insert an express significance test on the face of the Bill.
As I explained on Report, the case law of the European Court of Justice clearly establishes that Article 85 applies only where there is an appreciable effect on trade and competition. I also gave an example of how the UK courts have clearly accepted the existence of the appreciability test under Article 85. The same result will follow for the UK prohibition of anti-competitive agreements as a result of the governing principles clause.

1321
The requirement of appreciability will also be included in the director's guidance which will assist business in understanding what is expected of it in terms of notification.
We should not tinker with the wording of the Chapter I prohibition. There is no express significance test under Article 85. Insertion of such an express test for the Chapter I prohibition would, as I have argued before, create the impression that we were trying to depart from established European principles. That would create greater uncertainty. Worse still, I remain concerned that an express significance test might inadvertently create so high a threshold for action that we could impede the effective tackling of anti-competitive agreements.
The example of special treatment for small companies under the Dutch legislation given on Report by the noble and learned Lord, Lord Fraser, did not appear to amend the prohibition itself. Rather, it seemed to operate by way of specific exclusion. The Bill, of course, does provide special treatment for undertakings with a low turnover and we will shortly be debating amendments on that very subject.
So what of the concern expressed by noble Lords on Report, and today by the noble and learned Lord, Lord Fraser, of the risk of unnecessary notifications which Brussels has faced acting under Article 85? Many of the bureaucratic problems experienced by the Commission can be attributed to the way in which Article 85 has been applied to vertical agreements. Indeed, that has prompted the Commission to review its treatment of vertical agreements.
As I explained on Report, an important factor guiding the treatment of vertical agreements under Article 85 has been the single market objective of the Community. That is borne out by the study I referred to on Report prepared by Professor Whish and Dr. Bishop, a copy of which is in the Library of this House. Single market objectives will not be relevant to the interpretation of the domestic prohibitions. This fact therefore makes a comparison of the experience of the number of notifications to Brussels not an entirely fair one.
Even though single market objectives are not relevant to the interpretation of the domestic prohibitions, as I explained on Report we recognise the case for special treatment of vertical agreements under the Bill. I am not able to announce any special measures to this House, but work is continuing in consultation with business and the regulators.
We are taking steps to ensure that the regulators and business are not burdened with unnecessary notifications. Altering the nature of the prohibitions themselves, for the reasons I have explained, would be an uncertain and potentially dangerous course. I therefore urge the noble Lord to withdraw his amendment.
Lord McNally: My Lords, before the Minister concludes, will he clarify whether, in his guidance to the director, there will be specific guidance on the treatment
1322
of small businesses, because, as I said, that is what is motivating this and subsequent amendments? That would give some reassurance.
Lord Simon of Highbury: My Lords, I can confirm that that is the intention of the consultation process now taking place and will be part of the rule-making approach.
Lord Fraser of Carmyllie: My Lords, before the noble Lord sits down, he may think it is unusual for me to complain about an answer that seems to me to be exclusively court-focused, but does he not understand that what concerns us is that without the word "significant" those companies will have to reach a view as to whether or not they must make a notification? If they do not understand the threshold, the risk is there. It is a very real risk and has been perceived to be so by the CBI. If there is not a threshold like this, there is a real risk that the experience that the European Commission has encountered over the years, although I hear what the Minister says about the single market complication, will be duplicated here in the United Kingdom. That would be extremely undesirable. We should be looking at this matter from the point of view of businesses quite as much as from the point of view of the courts.
Lord Simon of Highbury: My Lords, I suggest that we are looking at it from the point of view of business, while understanding that this is a Competition Bill to deal with occasions when businesses are not conforming with the practices with which we should wish them to conform.
I believe that further advice should be in the guidance and not on the face of the Bill. The purpose of taking the text as per the prohibitions in the European jurisprudence is precisely so that there is not additional confusion for businesses and extra work is not created because of that confusion.
Lord McNally: My Lords, in the light of the Minister's reply, I beg leave to withdraw the amendment.
The Principal Deputy Chairman of Committees (Lord Tordoff): My Lords, is it your Lordships' pleasure that the amendment be withdrawn?
Lord Fraser of Carmyllie: My Lords, no.
The Principal Deputy Chairman of Committees: My Lords, the Question is that this amendment be agreed to. As many of that opinion shall say Content.
Noble Lords: Content.
The Principal Deputy Chairman of Committees: To the contrary, Not-Content.
Noble Lords: Not-Content.
The Principal Deputy Chairman of Committees: My Lords, I think the Not-Contents have it.
Noble Lords: Content.
The Principal Deputy Chairman of Committees: My Lords, clear the Bar.
5.12 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
*Their Lordships divided: Contents, 20; Not-Contents, 91.

Division No. 2

CONTENTS

Ailsa, M.

Merrivale, L.

Berners, B.

Monson, L.

Braine of Wheatley, L.

Montgomery of Alamein, V.

Campbell of Alloway, L.

Munster, E.

Courtown, E. [Teller.]

Murton of Lindisfarne, L.

Dixon-Smith, L.

Orr-Ewing, L.

Erne, E.

Pilkington of Oxenfond, L.

Fraser of Carmyllie, L.

Rawlings, B.

Holderness, L.

Swansea, L.

Howell of Guildford, L.

Teviot, L.

Kingsland, L. [Teller.]

Trenchard, V.

NOT-CONTENTS

Acton, L.

Kilbracken, L.

Addington, L.

Linklater of Butterstone, B.

Alderdice, L.

Longford, E.

Amos, B.

Lovell-Davis, L.

Archer of Sandwell, L.

Ludford, B.

Ashley of Stoke, L.

McIntosh of Haringey, L. [Teller.]

Berkeley, L.

McNally, L.

Blackstone, B.

Mallalieu, B.

Blyth, L.

Merlyn-Rees, L.

Borrie, L.

Milner of Leeds, L.

Burlison, L.

Molloy, L.

Carter, L. [Teller]

Monkswell, L.

Cocks of Hartcliffe, L.

Montague of Oxford, L.

Currie of Marylebone, L.

Nicholson of Winterbourne, B.

Nicol, B.

David, B.

Peston, L.

Davies of Coity, L.

Pitkeathley, B.

Desai, L.

Ponsonby of Shulbrede, L.

Dholakia, L.

Prys-Davies, L.

Donoughue, L.

Puttnam, L.

Dormand of Easington, L.

Ramsay of Cartvale, B.

Dubs, L.

Rea, L.

Eatwell, L.

Redesdale, L.

Elis-Thomas, L.

Rendell of Babergh, B.

Ezra, L.

Richard, L. [Lord Privy Seal]

Farrington of Ribbleton, B.

Rodgers of Quarry Bank, L.

Gallacher, L.

Simon of Highbury, L.

Gilbert, L.

Stallard, L.

Gladwin of Clee, L.

Steel of Aikwood, L.

Gordon of Strathblane, L.

Stoddart of Swindon, L.

Gould of Potternewton, B.

Stone of Blackheath, L.

Hanworth, V.

Strabolgi, L.

Haskel, L.

Symons of Vernham Dean, B.

Hayman, B.

Thomas of Macclesfield, L.

Hilton of Eggardon, B.

Thomas of Walliswood, B.

Howie of Troon, L.

Thomson of Monifieth, L.

Hoyle, L.

Tope, L.

Hughes, L.

Tordoff, L.

Hunt of Kings Heath, L.

Turner of Camden, B.

Irvine of Lairg, L. [Lord Chancellor.]

Walker of Doncaster, L.

Watson of Invergowrie, L.

Jacobs, L.

Wedderburn of Charlton, L.

Janner of Braunstone, L.

Whitty, L.

Jeger, B.

Williams of Crosby, B.

Jenkins of Putney, L.

Williams of Elvel, L.

Judd, L.

Williams of Mostyn, L.

Kennedy of The Shaws, B.

Young of Old Scone, B.

*See Col. 1366.
Resolved in the negative, and amendment disagreed to accordingly.
5.21 p.m.
Lord Kingsland Lord Kingsland moved Amendment No. 3:
Page 2, line 25, at end insert—
("() Any infringement of the Chapter I prohibition is actionable by any person who may he affected by that infringement. subject to any defences under this Act and to the defences and other incidents applying to actions for breach of statutory duty.").
The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendment No. 14. The amendment relates to the rights of third parties to bring an action under one or other of the prohibitions. In Clause 48, there is a right for a third party to bring an action in circumstances where that third party wishes to "vary a decision" taken by the director-general. However, there is no other third party right on the face of the Bill.
In Committee, I believe the Minister expressed the view that he thought that third parties did have rights to bring actions under the prohibitions in the legislation. Under European Community law, it is clear that these rights exist under Articles 85 and 86 of the treaty because both those articles are directly applicable. That fact, together with the doctrine of effective remedies, has meant that British courts have been prepared to express those rights through the tort of breach of statutory duty. Therefore, the amendments seek to accord the same rights to our citizens under the relevant clauses in the Bill. In my submission, it is a very important point to clarify. If the Minister believes that this ought to be the case anyway, I do not see how he could possibly have an objection to these two amendments.
One of the interesting things that has been happening in the European Community is the increasing desire of the Commission to see a greater number of cases under its own competition law being taken and pursued not by the Commission but by individuals in member states. I suggest that it is preferable for competition issues to be pursued by the least bureaucratic means possible; in other words, third party actions by individuals, taking advantage of these prohibitions, is a desirable alternative to seeing the British prohibitions (and alleged wrongs under them) pursued either by the Director-General of Fair Trading or by the regulator. That is the basis upon which my two amendments have been tabled. I beg to move.
Lord Borrie: My Lords, I feel sure that my noble friend the Minister will agree that it is most important that third party rights are not only available but also that they are widely known to be so. It would be most unfortunate if complainants against the prohibited conduct of cartels or anti-competitive practices should have only one choice; namely, to go through the nominated official, the Director-General of Fair Trading.
I have always thought, as I am sure is the case with my noble friend the Minister, that one of the great advantages of the changes being made in this Bill by the Government is to enable businesses, individually if they so wish, to attack the anti-competitive practices of others and to do that in their own name, quite irrespective of the duties and responsibilities of the director-general.

1325
The amendment seeks to make that right explicit on the face of the Bill. At first sight, that certainly seems to have many advantages. If the response of my noble friend to the amendment is that it is unnecessary because such private rights of action are clearly incorporated into the Bill through what is now Clause 60 (the general principles clause which incorporates the European jurisprudence), that is fine as far as concerns the substantive matter of their being third party rights. However, I have two questions for my noble friend. First, is there any good reason why this should not be made explicit, if only for educative purposes? Secondly, if there are reasons against making it explicit in the Bill, what recommendations does my noble friend have for the director-general, or his own department, to ensure that the availability of private rights of action, and all that that involves, is widely known throughout the business community?
Lord Simon of Highbury: My Lords, as my noble friend Lord Haskel explained on Report, rights of action under the domestic regime are to be the same as those under Articles 85 and 86. The courts have held that a right of action exists for breach of the EC prohibitions. The same right of action will exist for breach of the UK prohibitions. Clause 58, regarding the use of findings of fact made by the director, clearly contemplates such rights of action.
We do not want to go wider or narrower than the rights which exist for breach of the EC prohibitions. We believe that the best way to achieve this result is for the Bill to remain silent on the issue of private rights of action. Perhaps I may explain our reasoning. It is clear that Community law confers rights arising from a breach of Articles 85 and 86. This is a "principle" laid down by the European Court of Justice within the meaning of subsection (2) of the governing principles clause which will be imported into the domestic system, as implied by my noble friend Lord Borrie.
However, Community law is still in the process of development, for example, in terms of the class of persons able to claim such rights. If, say, a company with a wide consumer base were to breach the EC prohibitions, could it be said that all the consumers affected directly or indirectly had Community rights arising from the breach? Such a question is yet to be resolved.
An express right of action for breach of the prohibitions would need to provide answers to these unresolved EC questions. That, in turn, could lead to a divergence between rights of private action under European Community and UK competition law. We would not want a situation where the extent of rights of private action depended on whether the agreement affected trade between member states, often a difficult line to draw. Leaving the Bill as drafted will ensure that our courts can evolve third party rights of action as they evolve in the context of Articles 85 and 86.
As regards damages and injunctions, the consequences of breaching Community rights is left to national law, provided that the remedy meets a
1326
minimum standard for protecting the rights. The European Court of Justice has confirmed that on many occasions.
It is already well established under UK law that private parties may seek an injunction for breach of EC competition law. Clause 58, relating to the use of findings of fact by the director in court proceedings, clearly contemplates such private rights of action for breach of the domestic prohibition. Rights to seek injunctions will therefore be available for breach of the domestic prohibitions.
Equally it is generally recognised under UK law that breach of the EC prohibitions may entitle third parties suffering loss as a result of the breach to claim damages. The majority of this House, by four to one, in the Garden Cottage Foods case stated obiter that such entitlement did exist. This ruling has generally been taken as authoritative, including by authors of leading textbooks in this field. In the light of this explanation I invite the noble Lord to withdraw his amendment.
Lord Kingsland: My Lords, I am much obliged to the Minister for that helpful response. I understood him to say that, as a consequence of his interpretation of what is now Clause 60 of the Bill, it is crystal clear that the courts of this country will derive from that private rights of action for breach of statutory duty and the array of defences that also go with that for a defendant in such cases. On that basis I am happy to withdraw the amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.30 p.m.
Lord McNally Lord McNally moved Amendment No. 4:
After Clause 2, insert the following new clause—
Loss LEADERS
(" .—(1) The Chapter I prohibition applies to agreements for the supply of goods where the supplier has reasonable grounds to believe that the purchaser intends to use the goods as loss leaders.
(2) In this section the "use of goods as loss leaders" means a sale of goods to consumers not for the purpose of making a profit but for the purpose of attracting to the establishment at which the goods are sold consumers likely to buy other goods or otherwise for the purpose of advertising the business of the person selling those goods.
(3) A sale of goods shall not he treated for the purposes of this section as the use of those goods as a loss leader where the goods are sold as part of a genuine seasonal or clearance sale, not having been acquired for the purpose of being resold as loss leaders.").
The noble Lord said: My Lords, as I explained when I moved an earlier amendment, I am quite consciously raising issues where Ministers have an opportunity to respond to real concerns from various sectors of industry. I have tabled this amendment as I have been lobbied by small shopkeepers and particularly independent newsagents. Their concern is that the current Bill has nothing to say specifically about loss leaders and the dumping of products in the market-place. Loss leaders and the dumping of products are significant commercial weapons. They are

1327
used by the powerful and wealthy to drive out of business competition which does not enjoy their financial "muscle". I am told that there are numerous examples of this taking place in the newsagency business.
Clearly we must not impede ordinary commercial activity, especially regular clearances or sales. Thus the amendment provides a specific exemption for goods which are genuinely sold at a reduced price as part of a sale. The Minister may have alternative proposals to that expressed in this amendment. There is clear evidence that small businesses may be vulnerable to loss leaders. I am sure that they, I and the House will be interested in the Minister's observations. I beg to move.
Lord Haskel: My Lords, I welcome this opportunity to address the concerns of small companies, particularly newsagents. However, we have dealt with loss leaders earlier in the Bill. The issue arose in relation to an amendment tabled by the noble Lord, Lord Kingsland, to the clause providing immunity from penalties for small agreements. Then, as now, we maintain our view that the Bill should not introduce any automatic rule in relation to loss leading. Our view is that the Competition Bill will properly address what constitutes anti-competitive behaviour. Special exclusions are unnecessary because anti-competitive behaviour will be assessed on the basis of the effects of the behaviour in question. Prohibiting anti-competitive behaviour as judged by its effects is an approach which should generally apply. It should apply in the case of newsagents and loss leaders.
In an individual case, whether or not the Chapter I prohibition applies to restrictions placed by a supplier on a retailer to prevent loss leading will depend on the effects on competition in the individual circumstances. The same is true for the supply of goods to a retailer in the knowledge that it will loss lead. Quite rightly this will ultimately be a question for the director—or on appeal to the tribunal or the courts—to decide in accordance with the governing principles clause.
Support for this Bill on all sides of the House has arisen because the current competition regime under the Restrictive Practices Act and the Resale Prices Act is considered to be too formalistic. That is one of the main criticisms of the current position. One of the purposes of the Bill is to move away from that formalistic approach and instead to concentrate on the effects of behaviour. This amendment would add to this much criticised formalism. It would mean that we would move backwards. On that basis, I suggest to the noble Lord that he might want to withdraw his amendment.
Lord McNally: My Lords, I thank the Minister for that reply. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McNally Lord McNally moved Amendment No. 5:
After Clause 3, insert the following new clause—
TRADE ASSOCIATIONS
("—(1) The Chapter 1 prohibition does not apply to agreements made between a relevant trade association and its members, or to decisions or practices of such an association which have the object or effect of enabling the members of that association to—

(a) compete effectively with other undertakings; or

(b) negotiate or conclude agreements with manufacturers, producers, distributors or suppliers for the supply of goods or services on competitive terms.

(2) For the purposes of this section a trade association is a relevant trade association if all of its members are small enterprises or micro-enterprises.").
The noble Lord said: My Lords, Ministers may be pleased to know that the end is nigh as regards my moving amendments. The origin of this clutch of amendments lies with small businesses which are concerned that this Competition Bill is concerned with big business and that somehow small businesses will be squeezed by some of the Bill's provisions. I hope that Ministers can put their minds at rest.
This proposed new clause would provide exemption from the Chapter I prohibition for agreements which are made between a trade association representing small businesses and its members. Such an exclusion is important to allow small businesses to compete effectively or to negotiate agreements for the supply of goods and services on competitive terms. Certain industries are complex oligopolies. This means that one part of the vertical supply chain is dominated by a small number of powerful companies while another part consists of a large number of small businesses. Clearly the large players are often able to impose terms on the many small businesses. I believe this is the case in the newspaper distribution industry. That causes problems. Small businesses' only defence is to combine together in a trade association, but when they do so small businesses find that their opportunities to combine are severely restricted by the current Restrictive Trade Practices Act which takes no account of the relative "muscle" in the market-place of the different parties.
I refer to Amendments Nos. 28 and 29. It is common sense that small agreements are those between small and micro-businesses. These amendments seek to confirm that that is the case. Amendments Nos. 42 and 43 are consequential to the proposed new clause relating to trade associations and the amendments to Clause 38. However, they also provide a general clarification. I beg to move.
Lord Haskel: My Lords, as the noble Lord, Lord McNally, has indicated, the purpose of these amendments is to provide protection in varying degrees from the Chapter I prohibition for agreements between small firms which are members of a trade association and such association and decisions/practices of the trade association. Before turning to the detail of the amendments, it may be helpful if I make three points which are relevant to the position of small firms under the Chapter I prohibition. That is the concern of the noble Lord, Lord McNally.

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First, as a matter of principle, it seems to me to be wrong to attempt to make additional specific exclusions on the face of the Bill unless there is good reason to do so rather than relying on the mechanisms already provided in the Bill. This is the same argument that I put forward regarding loss leaders.
Secondly, it is only where there are appreciable effects on competition and trade that the Chapter I prohibition can come into play. Therefore many agreements between small firms should not be caught in the first place.
Thirdly, even where there are appreciable effects on competition and trade, the Bill already provides a mechanism for dealing with them. Where there are countervailing benefits within the exemption criteria, the director-general may issue an exemption. In addition, the Bill provides a process for block exemptions to be made. Agreements falling within the terms of a block exemption would not have to be notified to ensure there was no infringement of the Chapter I prohibition. There may well be a case for a block exemption relating to, for example, co-operatives.
We are seeking in the Bill to put right the defects of the existing regime to ensure that there is adequate deterrent against anti-competitive behaviour and to provide effective remedies where it occurs. Even though the chances of small firms falling foul of the Chapter I prohibition must be lower than that for large enterprises, the size of the perpetrators is not conclusive. It is the effects on competition which count. As my noble friend the Lord Borrie commented during Committee, "When one talks about small businesses one should not assume that they are all good boys". Why should persons who have suffered as a result of anti-competitive agreements only be able to seek protection or redress if the perpetrators are big business? We have to have a balance.
We are alive to minimising as far as possible compliance costs on small businesses. That is why we have provided the additional comfort of immunity from fines for small agreements within the terms of Clause 40 if they happen to infringe the Chapter I prohibition. The threshold for limited immunity under this clause is to be set by secondary legislation. As I said at Committee, the Government's present view is that the threshold should be the combined turnover of the parties at a level between £20 million to £50 million. It is not possible to be more precise at this moment because we shall need to make a judgment nearer the time and we shall wish to consult on the detailed provisions.
Any discussion of the treatment of small firms must be seen against that general background.
I hope that I have demonstrated to the noble Lord that the Bill takes into account the particular vulnerability of small and medium-sized companies and seeks to protect their interests.
I am not satisfied that it is right to make specific or special provisions in the Bill for certain classes of agreement. The Bill provides for the threshold for limited immunity to be set by secondary legislation. I am sure that that is the better approach. We shall need to see how the new competition regime works in practice. It
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may be that whatever figures are prescribed in secondary legislation will need to be adjusted as lessons are learnt as the new regime beds down.
I hope that I have been able to give the noble Lord assurances regarding his concerns for the small and medium-sized companies and that he will feel able to withdraw the amendment.
Lord McNally: My Lords, I do not think that anyone is beguiled into believing that all small firms or small retailers are good boys. But it is equally true that the capacity and opportunity for sinning are all the greater among the big boys.
I am reassured. I hope that those who motivated me to move the amendments will read what both Ministers have said in their replies. The Government are sensitive to the needs of small retailers and small firms in particular. They play such an important part not only in our economy but in our social fabric that it is right that the Bill should be alert to their needs. In the spirit in which the Minister responded, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 [Individual exemptions]:
5.45 p.m.
Lord Haskel Lord Haskel moved Amendment No. 6:
Page 3, line 37, leave out from first ("may") to end of line 38 and insert ("extend the period for which an exemption has effect; but, if the rules so provide, he may do so only in specified circumstances.").
The noble Lord said: My Lords, this is a technical amendment which clarifies the effect of Clause 4(6).
It seems to us that the subsection might be interpreted as preventing the director from extending the period of an individual exemption if the rules do not specify any circumstances in which the period may be extended.
The amendment clarifies that the director may extend the period for which an individual exemption has effect even if rules under Clause 51 do not specify any circumstances in which the period may be extended. If the rules provide he may extend the period of exemption only in specified circumstances, his power is so restricted. I beg to move.
On Question, amendment agreed to.
Clause 6 [Block exemptions]:
The Deputy Speaker (Lord Murton of Lindisfarne): My Lords, if Amendment No. 7 were to be agreed to, I shall be unable to call Amendment No. 8, owing to pre-emption.
Lord Kingsland Lord Kingsland moved Amendment No. 7:
Page 4, line 37, leave out from ("may") to end of line 38 and insert ("cancel a block exemption in respect of a particular agreement if that agreement has effects which are incompatible with the criteria in section 9.").
The noble Lord said: My Lords, Clause 6(6)(c) provides that,
"A block exemption order may provide & that the Director may in specified circumstances cancel a block exemption in respect of a particular agreement".
I imagine that those "specified circumstances" are circumstances to be defined by the set of rules to which we all look forward under Clause 51 of the Bill.
The provision seems to be too wide. Therefore the amendment seeks to discipline the circumstances in which a block exemption can he cancelled by adopting the words in Clause 9 which reflect paragraph 3 of Article 85 of the Treaty of Rome. I beg to move.
Lord Haskel: My Lords, I was interested to hear what the noble Lord, Lord Kingsland, had to say. He is also, of course, quite right. The Commission block exemptions do what he said. However, the amendment was tabled only on Tuesday and I have not had the opportunity to give the matter full consideration. Certainly I am not content with the precise wording of the amendment, but I believe that the noble Lord may have made a valid point. I believe that this matter will need to be reviewed in another place. I hope that on that basis he will be prepared to withdraw his amendment, which, as we have heard, would pre-empt Amendment No. 8 in my name, to which I shall now speak.
Amendment No. 8 is a further technical amendment to tidy up the provisions of the Bill. The Bill enables a block exemption order to provide a power for the director to cancel a block exemption in respect of a particular agreement in specified circumstances. The amendment clarifies that this power applies to the block exemption which is created by the order, not any other block exemption.
Lord Kingsland: My Lords, I feel quite disconcerted by the noble Lord's reply. I hasten to beg leave to withdraw the amendment before he changes his mind.
Amendment, by leave, withdrawn.
Lord Haskel Lord Haskel moved Amendment No. 8:
Page 4, line 37, leave out ("a") and insert ("the").
On Question, amendment agreed to.
Clause 17 [Enactments replaced]:
5.50 p.m.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 9:
Page 10, line 23, after ("practices)") insert ("and those provisions of the Fair Trading Act 1973 relating to the investigation of a structural or scale monopoly").
The noble and learned Lord said: My Lords, This amendment relates to the investigation of scale monopolies. It relates to a point that we have considered previously. I hope the noble Lord will not take it amiss if I say that I have never been entirely convinced that the full weight of his own intellectual rigour lies behind the response that he has offered. I shall not elaborate the argument; the noble Lord is well aware of my view. This is not just "belt and braces"; it is a wholly unnecessary additional power. It seems to me that the argument that at some time and some place in the future it might be desirable to be able to resort to these powers is a less than compelling argument.
It might be argued that the provision should be retained, just in case it is necessary to use it. But what troubles me is that while the Bill seeks to ensure full and effective competition policy, at the same time our policy should be to reduce so far as is possible unnecessary duplication in bureaucratic terms, and reduce so far as is possible the uncertainty for business and the risk that it might be confronted with attacks on more than one front for no good reason.
My understanding is that leaving these provisions in place will ensure that there is imposed within the United Kingdom a more extensive regime for regulating the competitive behaviour of firms than presently exists anywhere in either Europe or North America.
If the noble Lord, Lord Simon, can confirm that that assessment is correct, I shall make one final attempt and ask him to set out the argument that he regards as compelling for retaining what, I am bound to repeat, seems a wholly unnecessary provision. There would he no risk to competition policy if this particular part of the existing arrangements were to be removed. I beg to move.
Lord Borrie: My Lords, it is a great pity that the noble and learned Lord pushes this amendment for the third time in the course of debate on this Bill.
It is true that if we were a country in the European Community which had no experience of these matters in terms of competition policy, we should probably simply incorporate in a tidy way, holus-bolus, Articles 85 and 86 of the Treaty of Rome, and there would be no other provision.
I am glad to say that the noble and learned Lord has admitted, at least implicitly, that continuation of the old-style complex monopoly references is desirable; otherwise, there would be a possible hole between the Chapter I prohibition and the Chapter II prohibition.
So far as scale monopoly references are concerned, it is to be generally admitted that it is only a somewhat remote possibility that such would be needed after these prohibitions of the Competition Bill have been initiated and incorporated into our law.
It may be desirable, in relation to a scale monopoly—which would be some very dominant company in a market that had been engaging in serious anticompetitive practices or excessive pricing—that the only satisfactory remedy would be the structural one of divestment, of requiring a de-merger of a company. That possibility is provided as a remedy in the Fair Trading Act but is not included in the Competition Bill because it is not within the European Union jurisprudence. It would be a pity if it were to be lost. It would be as if our own experience of this kind of possible scale monopoly reference over the past 40 years was simply cast aside and we did no better than a country which has had no such experience at all. This Bill is intended to make a dramatic and radical change in competition law, but not in such a way as to ignore valuable experience from the past.
Lord Simon of Highbury: My Lords, as the noble and learned Lord said, we debated this same proposal

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on Report. On that occasion the noble and learned Lord, Lord Fraser, set out eloquently why he felt that the scale monopoly provisions should be repealed. Indeed, on that occasion my noble friend Lord Borrie set out with equal intellectual rigour why they should remain in place.
I respect the noble and learned Lord's position and his reasons for wanting to raise the matter again today. Fortunately, he does not have to test my intellectual rigour so much, because the argument has already been provided by perhaps the most experienced exponent of competition law in this House. I freely admit that we have said that there is scope for debate about the precise powers that need to be retained under the new regime. We invited an open debate on the retention of the scale monopoly powers and we have listened carefully to the views that have been expressed from the other side of the Chamber. However, having listened to all the arguments, I am not yet persuaded that it would be right to repeal the scale monopoly powers.
I have explained in earlier debates that we believe that these provisions will continue to have value in situations where, as my noble friend Lord Borne said, it is the fundamental structure of the market, and not any specific abuse, which is the problem. In these circumstances the scale monopoly provisions enable the more flexible imposition of structural remedies, including the divestment of part of a business, as my noble friend Lord Borrie mentioned.
We have said that the prohibitions will be the primary weapons against anti-competitive behaviour, and that the scale monopoly provisions will be very much a reserve power. Nevertheless, in some circumstances they may prove the only real means of remedying a market in which structural factors inhibit free competition.
I entirely agree that firms should not be subject to double jeopardy. I was grateful to the noble and learned Lord, Lord Fraser, for giving me an opportunity on the second day of Report to clarify how we intend the Chapter II prohibition and the scale monopoly provisions to interact. As I made clear on that occasion, it is not the Government's intention that the prohibitions and the Fair Trading Act monopoly provisions should be used in parallel on the same matters.
I also re-stated during the debate on Report, the Government's policy on future use of the scale monopoly provisions. We intend that these powers should be used in the future only in circumstances where there has already been proven abuse under the prohibitions, and where the director believes that there is a real prospect of further abuses by the same firm. In these circumstances the more flexible powers to impose structural remedies that we have discussed may be the only effective means of preventing further abuses.
As I also said on Report, the use of the scale monopoly provisions in the regulated utility sectors is being considered separately under the utility review.
In conclusion, we have considered carefully the arguments that we have heard on this issue, and they have been eloquently put. The debates in this House have been particularly valuable in this respect. We have
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concluded that our policy of retaining the provisions, albeit as very much a reserve power for use in limited circumstances, represents the right balance. I therefore invite the noble Lord to withdraw his amendment.
Lord Fraser of Carmyllie: My Lords, like many others in this House, I of course acknowledge the wide experience and distinguished manner in which the noble Lord, Lord Borrie, conducted himself in another role. However, "he would say that, wouldn't he?" when it comes to a desire to retain yet a further set of powers possibly to confront a remote set of circumstances where there might just be a degree of anti-competitive behaviour.
I make no apology for returning to this matter. I am concerned that, as this Bill is about to leave this House, we have not yet struck the balance correctly in the sense of making sure that we have a proper, clear, lucid competition policy, but at the same time we do not impose unnecessary burdens on business in the United Kingdom. I do not believe that that balance has been achieved.
Until half an hour ago, I was minded to test the mood of the House on this amendment. I do not propose to do that, although I make no apology for raising the matter again. I hope that I correctly picked up the emphasis in the response of the noble Lord, Lord Simon, that he is not yet persuaded that before this legislation concludes its passage through another place it will be recognised that this is an unnecessary duplication of the powers. If, as the noble Lord, Lord Borrie, said, this is a dramatic and radical change in our approach to competition policy, that ought to be enough without leaving in place an unnecessary power in relation to scale monopolies. With that grouse, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6 p.m.
Clause 18 [Abuse of dominant position]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 10:
Page 10, line 26, after ("undertakings") insert (", which carry on business in the United Kingdom,").
The noble and learned Lord said: My Lords, at the risk of irritating the Minister, this is yet another set of amendments we have previously considered. At an earlier stage, the noble Lord, Lord Simon, emphasised that if there were a lack of clarity in the Bill the courts could have regard to Hansard to clear up any ambiguities that might exist. Of course, I understand how that would work. On reflection, it is of greater concern to me that Clause 18 is one of the linchpins of this legislation. It is not an incidental provision within the Bill; it is one of the two most important clauses. If there is any ambiguity about it, and that has been recognised, it is desirable that we should clear up that ambiguity now and place on the face of the Bill a set of terms that will not require the courts, companies or anyone else to search Hansard to discover exactly what the Government had in mind. That might be desirable, following on the Pepper v. Hart decision, if ambiguity

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unintended by the draftsman and government emerges at a later point. If we know there is ambiguity or difficulty, it seems to me desirable to make the matter clear on the face of the Bill. It is for that reason that I return to the point, particularly as it seems to me that there is little of substance between the Minister and myself on what we wish to achieve.
Amendments Nos. 10, 11 and 13 are grouped with Amendment No. 12, which seeks to clarify the relationship between Chapter I and Chapter II prohibitions. At Community level, conduct may be investigated under both Articles 85 and 86 as those articles provide two distinct means of addressing competition issues in relation to the development of the single market and the over-arching objectives in Article 3 of the treaty. Such considerations are not, in our view, relevant on a domestic level.
Both the Chapter I and Chapter II prohibitions concern behaviour which prevents, restricts or distorts competition. The distinction between them is that Chapter I addresses such behaviour between two or more undertakings while Chapter II addresses such behaviour by one undertaking alone. In order to reduce uncertainty, compliance costs and litigation, the Bill should make clear that, if conduct does not prevent, restrict or distort competition and thus falls within Clause 2(1), it cannot and should not fall within Clause 18(1). It is to avoid that duplication that I return to this amendment. I beg to move.
Lord Kingsland: My Lords, the comments of my noble and learned friend Lord Fraser are all the more powerful in view of the Minister's response to the previous amendment on scale monopolies. If it is the Minister's determination to keep the scale monopoly legislation intact, that is a powerful argument for making the scope of Clause 18 crystal clear.
As the Minister knows, in the European Community Articles 85 and 86 have a relationship, but we do not yet know—because the jurisprudence of the European Court still evolves—exactly what that relationship is. Jurisprudentially, that is a different world. In the Bill the Minister has the power to make clear the relationship between the two articles. We need to know what that relationship is. If the prohibition is the same, he must say so. If it is not, he must tell us to what extent the Chapter II prohibition differs from that of Chapter I.
Lord Simon of Highbury: My Lords, as we were reminded, we debated identical amendments during the Report stage. I explained on that occasion that the Government are at one with the noble Lord in terms of how we wish Clause 18 to operate in relation to the relevant geographic market. I entirely agree that there may well be circumstances in which the relevant market includes, but is wider than, the UK. Indeed, your Lordships' Committee accepted two amendments which I moved in order to ensure that Clause 18 is not read as limiting the relevant geographic market to the United Kingdom.
Clause 18(1) requires that there must be dominance in a market. Clause 18(3) provides that there must be dominance within the United Kingdom or any part of it.
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It is plainly right that both of those elements must be present. We are not interested in dominance which exists elsewhere but not in the United Kingdom, nor in dominance of any kind other than market dominance. What the clause does not do is require that the market must be entirely contained within the UK.
I believe it to be clear, but it is worth noting, as I did at Report stage, that your Lordships' House decided in the case of Pepper v. Hart that reference can be made to statements in Hansard in certain circumstances to clarify the meaning of legislation. That does not mean that the legislation is therefore unclear. I am merely saying that, if there is any doubt in anyone's mind as to the clarity of the legislation—I believe it to be clear, but others may not—that opportunity exists and the courts will be entitled to look at statements that I have made about the operation of the clause. That opportunity is largely for the court. In practice, I believe that people will understand the clause as written.
It may be that the noble Lord's amendments would achieve the same effect in a different way. I am not clear whether they would or would not; but that is not the point. The Government are clear that the amendments that I moved in Committee meet the concerns which the noble Lord has raised and which we debated at that time. It is for that reason that I invite the noble and learned Lord to withdraw his amendments.
Amendment No. 12 contains three different elements, which I shall address in turn.
The first element would introduce a test into the prohibition which is not present in Article 86. It is true that Article 86 is concerned with abuses which restrict or distort competition. However, the wording of the amendment does not reflect the fact that exploitative behaviour by dominant companies may also be an abuse. In any case we have made clear that we do not intend to depart from the fundamental principles of Articles 85 and 86. This amendment departs from the Article 86 model in a significant way and will therefore interfere with the application of the governing principles clause. For all the reasons that we have debated at length, we are not prepared to do that. Business is entitled to be able to look to Article 86 jurisprudence to help understand the interpretation of the new prohibition.
The second element of the amendment is rather circular. As I noted during Report (col. 956 on 9th February), EC jurisprudence shows that the director could not grant on agreement an exemption under the Chapter I prohibition if in doing so he would he exempting something that appears to be prohibited under the Chapter II prohibition. So, if an agreement involves conduct that breaches the Chapter II prohibition, it cannot meet the requirements for exemption under Chapter I. At the same time, firms who have obtained an individual exemption will have the benefit of knowing that the director has had to take account of the Chapter II prohibition in assessing their agreement.
The third element of the amendment provides that no conduct which is excluded from the Chapter II prohibition by virtue of Clause 20 may be caught as an

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abuse. This is clearly the effect of the Bill as it stands, although I am grateful for the opportunity to explain that position in terms.
The fact that we are excluding particular behaviour from the Chapter I prohibition does not automatically mean that it should be excluded from the prohibition of abuse of dominance. We are proposing to exclude some categories of behaviour from both prohibitions; for example, agreements or conduct engaged in in order to comply with a legal requirement, or to avoid conflict with international obligations. In other cases, however, competition issues may arise from certain sorts of behaviour only where there is dominance. Vertical agreements are the most obvious example. As I said, the Government are seeking to define an exclusion from the Chapter I prohibition for such agreements. But we are clear that the Chapter II prohibition should still apply.
I hope that, having heard those explanations, the noble and learned Lord will be prepared to withdraw his amendment.
Lord Kingsland: My Lords, before the Minister sits down, having given that no doubt well-intentioned but extremely unsatisfactory reply, perhaps I can return to the point that my noble and learned friend and I sought to make in our interventions under the amendment.
If the Minister wishes to give a wide interpretation to the second prohibition, how does he see the relationship between that prohibition and the scale monopoly powers being exercised by the other branch of the competition commission? Industry is entitled to know what it will have to face in terms of regulation. It flows from the Minister's unwillingness to restrict the second prohibition in the way that this amendment seeks to do, that he ought now to tell the House or make clear soon after, exactly how he sees the relationship between the exercise of this power by the Director-General of Fair Trading and the exercise of the scale monopoly power by that part of the competition commission which will be responsible for exercising it.
Lord Simon of Highbury: My Lords, as I tried to make clear in my previous answer, the application of the scale monopoly powers will be put into place only if an abuse has been found under the second prohibition. It will therefore be looked at as a remedial structural issue. The overriding issue will be whether the abuse has taken place. I shall reflect upon the question and if there is a further answer beyond that, I shall let the noble Lord know.
Lord Fraser of Carmyllie: My Lords, my noble friend Lord Kingsland made an extremely telling point. However, in view of what the Minister said, I do not propose to press any of these amendments, though they remain matters of concern.
As I said earlier, the amendments relate to parts of the Bill that seem to us to point to a lack of balance between ensuring that there is proper regulation of competition within the United Kingdom and providing certainty for business within the United Kingdom. It is
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an unsatisfactory basis on which to leave this most important of clauses in the Bill, but I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 11 to 14 not moved.]
6.15 p.m.
Clause 27 [Powers when conducting investigations]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 15:
Page 14, line 17, at end insert—
("() The power conferred by subsection (6) shall only be exercised after the person is afforded reasonable time to seek legal advice before complying with any such requirement").
The noble and learned Lord said: My Lords, at Report stage I acknowledged that the Government had been extremely helpful in drawing together a number of amendments which seemed to us to clarify the circumstances in which extensive powers of investigation would be permitted to the director. In many respects the major concerns that we had in relation to the powers of investigation—entering premises, asking questions of individuals and so forth—were allayed.
However, Amendments Nos. 15, 17, 18, 20 and 21 have a single common theme running through them. That is, in the circumstances where such powers are to be exercised, they are likely to be exercised in circumstances where those who are confronted with someone seeking to enter the premises to take documents away and requiring them to answer questions are likely to be people who are not familiar with the law. It is extremely unlikely that they come into that group of citizenry who have regularly, in the past, had contact with the police and know how they should answer or the extent to which they will be required to answer. In the main they will be perfectly law-abiding officers of companies who may have little or no idea what it is that is under investigation.
The common theme in all that is that if an individual has to respond to an exercise with powers under this part of the Bill—Chapter III—they should be given the opportunity to seek legal advice. That does not seem to me to be an excessive request, nor does it seem to me to be a proposal that, if the Government were prepared to accept it, would mean that the proper investigation that the director wished to undertake would in some way be impeded. In our view it would be a reasonable request to be made.
As the noble Lord will be aware, often in such circumstances, where an individual has the opportunity to take legal advice, far from there being difficulties caused in the furtherance of the investigation, once individuals understand what is required of them and once they appreciate what powers are vested in the investigating officer, there may be a greater willingness to co-operate and ensure that what is being sought is handed over.
I do not believe that, if these amendments or amendments along these lines were to be accepted, the powers of investigation which we all acknowledge must be there would be seriously damaged or restricted. I beg to move.
Lord Simon of Highbury: My Lords, this is an important area but I must express for the first time some disappointment that we are going to go over the ground again.
Amendments Nos. 15, 17, 18, 20 and 21 address the question of access to legal advice during investigations into suspected infringements of the prohibitions. We discussed this at length.
As noble Lords will be aware, I was grateful for their raising the point in previous discussions, particularly that notices should indicate the subject matter of an investigation and the nature of the offences created. The Bill has already been amended to deal with that. On access to legal advice, however, there is nothing I can usefully add to those discussions. My view remains that it is not appropriate to put this kind of provision on the face of the Bill.
I turn to the second part of Amendment No. 21. I am not absolutely clear why it was tabled. Amendments which the Government introduced at Report included the new Clause 30 dealing with matters supplementary to the entry of premises under a warrant. Subsection (3) makes specific provision for premises which are empty. Where that is the case, before the warrant is executed the investigator will have to take reasonable steps to inform the occupier that the premises are to be entered and afford him a reasonable opportunity to be present at the time.
Unless I have misunderstood the amendment, I hope that we have dealt with the key issues. We do not see the need for further amendment in this area, and therefore I urge the noble and learned Lord to withdraw these amendments.
Lord Fraser of Carmyllie: My Lords, I hope it will be apparent to the House from what I said in moving the first amendment that the issue of access to legal advice remains one which we consider to be important and to which we attach some significance. Having looked at Amendment No. 21 and what is said about Clause 30, I have little doubt that the Minister is correct on that. I must express my disappointment to the Minister that, even after this third attempt, it is proving to be so intransigent. But I recognise that I am not going to get anywhere with it this evening. I beg leave to withdraw.
Amendment, by leave, withdrawn.
Clause 28 [Power to enter premises without a warrant]:
Lord Haskel Lord Haskel moved Amendment No. 16:
Page 15, leave out lines 4 and 5 and insert—
("(ii) if the document is produced, to provide an explanation of it:").
The noble Lord said: My Lords, I beg to move Amendment No. 16 and also speak to Amendments Nos. 19, 22, 23 and 30. These amendments correct a
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number of points of detail in the investigations provisions of the Bill. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 17 and 18 not moved.]
Clause 29 [Power to enter premises under a warrant]:
Lord Simon of Highbury Lord Simon of Highbury moved Amendment No. 19:
Page 15, line 14, leave out ("appropriate person") and insert ("Director").
On Question, amendment agreed to.
[Amendments Nos. 20 and 21 not moved.]
Lord Haskel Lord Haskel moved Amendments Nos. 22 and 23:
Page 16, line 23, leave out ("(2)(b)") and insert ("(2)(c)").
Page 16, line 25, leave out subsection (8).
On Question, amendments agreed to.
Clause 35: [Enforcement of directions]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 24:
Page 18, line IS, leave out from ("default") to end of line 16.
The noble and learned Lord said: My Lords, I recollect that this is a matter we have considered on a previous occasion but I shall return to it briefly. Clause 33 enables the director-general, or a regulator, to apply to the court for an order to enforce a direction to end an infringement of a Chapter I or Chapter II prohibition under Clauses 31 or 32 where the undertaking to which that direction is addressed has failed to comply with its terms, in addition to imposing a liability on undertakings to comply with such a court order or else face the risk of being in contempt. To meet the costs of the application for that order, Clause 35 also provides for the order and the liability of costs to be directed at the offices of the undertaking personally. We do not have any difficulty with the appreciation that the undertaking itself should suffer these pains and penalties but we still are concerned that the individual should suffer a liability for costs. I would be grateful if the noble Lord would reconsider this matter. I beg to move.
Lord Simon of Highbury: My Lords, we discussed a similar amendment on Report. I said then that, in circumstances where the director has given directions involving some managerial or administrative action to be taken by officers of an undertaking and the director has had to obtain a court order because they have wilfully failed to take that action, we think it right that they should be liable for the costs of remedying their default. That is the position that we debated on Report and that is the position that we now wish to state again. I would ask the noble and learned Lord to consider withdrawing his amendment.
Lord Fraser of Carmyllie: My Lords, I have listened to what the noble Lord has to say. He will not be surprised if I express my disappointment, but I beg leave to withdraw.
Amendment, by leave, withdrawn.
Clause 36 [Interim measures]:
Lord Kingsland Lord Kingsland moved Amendment No. 25:
Page 18, line 28, leave out from ("person,") to end of line 30 and insert ("and
(b) of protecting competition, he may give such directions as are requisite for the purpose.
(2A) In determining whether to give directions in accordance with subsection (2) the Director shall have regard to—

(a) the seriousness of the alleged infringement;

(b) the likelihood that the infringement will be established at the completion of his investigation;

(c) whether the imposition of a fine under this Act or an award of damages would provide an adequate remedy for that alleged infringement; and

(d) the balance of convenience in giving or not giving such directions.").

The noble Lord said: My Lords, Clause 36 gives the Director-General of Fair Trading an immense power by allowing him to issue interim measures. That is particularly true when one considers that he is not acting in a judicial capacity. In my submission, therefore, we ought at least to subject him to the same principles of control as are applied by a judge when issuing an interim injunction in the High Court. That is the purpose of my amendment which I beg to move.
Lord Simon of Highbury: My Lords, we have discussed amendments on interim measures before. We are determined that interim measures should provide a way of tackling anti-competitive behaviour quickly before serious damage has been inflicted. We believe that that has been the great failing of our current system. Indeed my noble friend Lord Borrie made that point previously.
This amendment would shift the balance too far in one direction, making it difficult for the director to act in cases where we believe he ought to be able to act. There are already adequate safeguards in the clause as it stands. They are intended to ensure that the director hears the views of the alleged offender and will have to take into account any representations that are made to him about the harm that the offender says the measures will cause him when considering whether to take measures to protect the victim.
I believe that the noble Lord underestimates these safeguards. The director must have a reasonable suspicion that infringement of either prohibitions has taken place. He must consider it necessary for him to act:
"as a matter of urgency for the purpose—

(a) of preventing serious, irreparable damage to a particular person or a category of person, or

(b) of protecting the public interest".

The directions must be such as are reasonably necessary to deal with the matters in question. These safeguards, as I have tried to read them in an italicised sense in the clause, are very significant. We also think that they are appropriate. I therefore would invite the noble Lord to withdraw his amendment.
Lord Kingsland: My Lords, in a court of law when there is an award of an interim injunction you have to
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give to the other side what is called an undertaking in damages just in case you are wrong. Interim injunctions can often do irreparable harm to somebody who turns out to be entirely innocent. If the Minister intends to persist in his approach to the question of interim injunctions, will he agree that the director-general should apply a similar rule to that in the High Court: that is, if the director-general issues an interim injunction against a company, he must also give an undertaking in damages?
6.30 p.m.
Lord Simon of Highbury: My Lords, I am not prepared to respond to the position in which we would put the director-general. I have clearly stated that we believe the safeguards to be appropriate and significant. We must also wait for the rules which the director-general will be publishing on the issue of interim measures. As your Lordships will have seen from the letter placed in the Library, it is one of the areas in respect of which he must lay down rules. Therefore, I am not prepared to make any further commitments until we have considered the matter again.
Lord Kingsland: My Lords, in view of that interesting reply, will the Minister undertake to draw the attention of the director-general to this part of the debate so that the director-general can give due consideration to introducing such an undertaking in damages to benefit an enterprise which is under investigation as the subject of an interim measure?
Lord Simon of Highbury: My Lords, as I have said, I am making no further commitments at this stage. However, I am certain that after the debate the director-general will read Hansard very carefully.
Lord Kingsland: My Lords, that is some consolation. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 37 [Penalty for infringing Chapter I or Chapter II prohibition]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 26:
Page 19, line 21, leave out from ("undertaking") to end of line 22 and insert ("in the United Kingdom in the relevant goods or services").
The noble and learned Lord said: My Lords, I rise with some weariness to address the amendment. Earlier during Third Reading, I suggested that in view of the Minister's apparent agreement with the purpose of the amendments which we previously moved he might agree to these amendments. However, he appears to be content that the debate is recorded in Hansard. I imagine that I shall receive the same dusty answer in relation to this amendment.
During previous debates on the issue of penalties, the turnover of the offending business and how that is to be defined or restricted, the Minister has taken the view that those issues are sufficiently clear. I still regard that to be a somewhat cavalier approach. I am not clear what

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might be involved in a large company with separate businesses. It would be desirable to have in the Bill an amendment similar to Amendment No. 26 rather than the matter being left to secondary legislation or to comments by a Minister, however well intentioned, which may have been recorded in Hansard.
It could mean that some penalties will be disproportionately large or that the companies which might be confronted with such penalties will be left with a greater degree of uncertainty. I should prefer to see the provision on the face of the Bill and I hope that, after at least three exchanges on the subject, the Minister is moving closer to my argument. I hope that he is prepared to accept the amendment because, as I looked hack in Hansard, he did not appear to disagree with the Opposition that some limitation should be achieved in determining the level of penalty. I beg to move.
Lord Simon of Highbury: My Lords, for reasons that I shall explain, I wish that the noble and learned Lord had spoken to his Amendment No. 27. I shall deal, first, with Amendment No. 26. As he rightly said, we have discussed the matter previously. In case I failed to do so, I should like to make the Government's position on the definition of turnover for the imposition of a penalty as clear as I can.
It is the Government's firm and unambiguous policy that when we come to make the order specifying how turnover is to be defined, we shall confine it to turnover which arises in the UK. I therefore entirely concede the substance of this aspect of the noble and learned Lord's concerns and I hope that he will not question further my position on this matter. However, it is also, and has always been, our clear policy that these are not matters to be specified in the primary legislation. They should be provided in secondary legislation.
The other manner in which the noble and learned Lord seeks to restrict the definition of turnover is by confining it to "the relevant goods and services". As I said on Report, I do see the argument for that and it is something which we can consider. However, there are other points to take into account. A very large undertaking might have a dominant position in a small market which it abuses to the detriment of small competitors. In that case it might not be right that the penalty should be limited to the turnover of the company in that market, and not reflect wider considerations; for example, the size and sophistication of the undertaking committing the abuse. It is precisely because of detailed points like this that we believe the matter should be dealt with by secondary legislation and we should consult interested parties first.
Nevertheless, we do recognise the particular sensitivity of the scale of any penalty that may be imposed under the Bill. That is why the Bill provides that no order specifying how turnover is to be determined may be made unless a draft of it has been laid before Parliament and approved by a resolution of each House. Your Lordships will therefore have an opportunity to consider and discuss the detailed provisions we will propose, after consultation, for
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determining turnover. On that basis, there is no need for—and good arguments against—specifying these matters on the face of the Bill.
Turning to Amendment No. 27, I believe that the director should issue guidance on the criteria to be applied in deciding whether to impose a penalty, as well as on setting the appropriate amount of any penalty. As I told the House on Report, I am assured by the Office of Fair Trading that it intends to issue such guidance.
Our policy is that Clause 39 guidance should be capable of including the principle that, as under Community law, penalties should be applied only where there has been intent or negligence in breaching the prohibitions, and that the director, tribunal and court should be required to have regard to it. Since the discussion on Report, however, I have received further advice on this matter. I suggested then (19th February, col. 360) that no amendment of the Bill was necessary. I am now advised that the clause may well not have the effect intended and that an amendment may indeed be necessary. I am sorry if I have inadvertently misled your Lordships' House.
To put this right, the clause will clearly need to be reviewed in another place. On that basis, I hope that the noble and learned Lord, will kindly withdraw his Amendment No. 27.
Lord Fraser of Carmyllie: My Lords, I am grateful to the noble Lord for what he said about Amendment No. 27. He has succeeded in wearing me down. I did not hold out too much hope of a positive response and have learnt that on occasions the Minister is satisfyingly unpredictable. I am grateful to him for that answer.
As regards Amendment No. 26, I should like to see a wider definition of what is to be the subject of penalty. However, I recognise that there are a number of difficulties in securing a precise definition. I believe that if one imposes a penalty it is desirable to have as wide a definition as possible.
I shall not press the amendment, but urge the Minister to look at Clause 39, as he has indicated, and bear in mind our real reservations about Clause 37. I invite the Minister to contemplate amending that clause when the Bill reaches another place. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 27 not moved.]
Clause 40 [Limited immunity for small agreements]:
[Amendment Nos. 28 and 29 not moved.]
Clause 43 [Offences]:
Lord Simon of Highbury Lord Simon of Highbury moved Amendment No. 30:
Page 22, line 17, leave out ("show") and insert ("prove").
On Question, amendment agreed to.
Lord Kingsland Lord Kingsland moved Amendment No. 31:
After Clause 45, insert the following new clause—
DUE DILIGENCE
(" .—(1) It shall be a defence in any proceedings brought under or in connection with this Act for a person to show that he exercised due diligence.
(2) The Director shall not impose a penalty under section 37 on any person if that person shows that he exercised due diligence.
(3) For the purposes of this section a person has exercised due diligence if he shows that in all the circumstances he exercised all due diligence to avoid an infringement of the Chapter I or Chapter II prohibitions.").
The noble Lord said: My Lords, this is an amendment which provides protection to anyone if they have shown due diligence in seeking to avoid an offence under either prohibition I or II. It would give a complete defence to the imposition of a penalty. In other words, it goes to penalties and not to the contraventions themselves. I beg to move.
Lord Simon of Highbury: My Lords, we discussed at Report an amendment tabled by the noble and learned Lord, Lord Fraser, which would have introduced a similar defence in proceedings, one based on whether it was reasonably foreseeable that an agreement or conduct would constitute an infringement. Here the defence would be available where a person could show he had exercised all due diligence to avoid an infringement of either of the prohibitions.
Our view of this amendment is similar to our view of the earlier one. As my noble friend Lord Haskel said on that occasion,
"It is for the courts to determine whether an agreement or conduct breaches the prohibitions with all the consequences that that may have in civil law. It should not be a matter that depends on the parties foreseeing such an infringement".—[Official Report, 19/2/98; col. 364.]
Similarly, we consider that the decision whether there is an infringement should not depend on the parties having exercised due diligence to avoid an infringement.
The Bill itself provides amply for the opportunity for businesses to take precautions against infringing a prohibition. In particular—and this is especially relevant to the point made about penalties—firms may seek guidance or a formal decision from the director on whether agreements or conduct infringe the respective prohibition. The effect of such guidance or decision is that immunity from penalty is conferred in respect of the agreement or conduct concerned and that immunity cannot be removed except in very limited, justifiable circumstances.
Turning to the issue of penalties under Clause 37, the director must, under Clause 39, publish guidance on the appropriate level of penalty to be applied. We have already discussed that clause. As I have explained, we will examine how the degree of culpability is to be taken into account in decisions as to the imposition of penalties. Intent or negligence are a prerequisite under Regulation 17 in result of penalties for breach of Article 85 and we would expect to follow that practice.
Appeal may be made to the competition commission against a wide range of decisions by the director, including a decision whether there has been an
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infringement of a prohibition and the imposition and level of a penalty. Again, we expect the extent of any due diligence would be a factor to be taken into account. We see no need for a blanket provision, of the kind proposed, on the face of the Bill. The Bill itself already provides sufficient avenues by which account can be taken of a firm having exercised due diligence. I would therefore ask the noble Lord to withdraw his amendment.
Lord Kingsland: My Lords, I am not entirely happy with what the Minister has said. I believe that I see his point on the issue of contravention. However, as regards penalties, there is a very strong case, in circumstances where someone has shown all reasonable care to avoid committing an infringement under prohibition I or II for him not to be penalised. If the Minister is saying to me that, through the guidance on penalties, in effect, there will be a similar consequence, then I am grateful for that information. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 47 [Appealable decisions]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 32:
Page 24, line 29, at end insert—
("() as to whether a dominant position exists for the purposes of Chapter II,
() requiring the production of a specified document under section 27(1),
() as to whether the requirements of section 55(3) have been met in relation to the disclosure of information without the consent mentioned in section 55(2),
() on a Director's finding within the meaning of section 58,
() as to whether he has complied with the requirements of section 60,").
The noble and learned Lord said: My Lords, Clause 47, as it now is, deals with appealable decisions. While we would not wish to see opened up unnecessary sets of grounds on which a decision might be appealed, nevertheless we are concerned that, as the clause is laid out at present, it is too restrictive. This amendment suggests a number of additional circumstances in which,
"Any person in respect of whose conduct the Director has made a decision may appeal to the Competition Commission against, or with respect to, the decision".
Those circumstances are set out in Amendment No. 32. I am not sure that I attach equal weight to every one of the proposed additional bases on which an appeal might proceed, but they are clearly important. It would be of advantage if all of them were included within the clause as presently drafted.
Amendments Nos. 36 and 55 are grouped with this amendment. I have been helpfully corrected in that I understand that Amendment No. 55 deals with the meaning of Section 45 and reflects a previous stage of the Bill. It should be Section 47. My noble friend Lord Kingsland may wish to speak to that amendment. I beg to move.
Lord Kingsland: My Lords, Amendments Nos. 36 and 55 make a very simple point; namely, that decisions

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made by the director general as a consequence of alleged infringements under prohibitions I and II are likely to be decisions involving mixed fact and law issues. The purpose of these amendments is to ask the Minister to make it clear that this class of decision will be appealable to the Court of Appeal.
Lord Simon of Highbury: My Lords, this group of amendments concerns different aspects of appeals. I note that we debated a number of these amendments in Committee, but it is perhaps no bad thing to have another opportunity to discuss this complex area. It may be—who knows?—that another shaft of unpredictability may appear.
Amendment No. 32 seeks to add a number of items to the list of appealable decisions in Clause 47(3). Clause 47 enables appeals to the tribunal against decisions taken by the director or the sector regulators under the prohibitions. As I explained in Committee, it is our intention that substantive decisions should be appealable to the tribunal. I will go through the subsections in the amendment in turn. New subsection (1) deals with the question of whether a dominant position exists is not a substantive decision. We addressed this issue at an earlier stage, when the Committee discussed the proposal that the DGFT should be asked to give decisions on whether an undertaking held a dominant position. As my noble friend Lord Borne said on that occasion, this is an academic question. The substantive issue is whether there has been an infringement of the prohibition. The prohibition applies only where there has been both dominance and an abuse of that dominance.
We also debated in Committee the matter covered by the second paragraph in this amendment. The point about allowing appeals against substantive decisions is that it allows people and businesses to appeal against decisions which, if put into effect, will damage their interests; for example, a decision to impose a penalty, or a direction to stop engaging in a particular business practice.
Requests for documents by the director under his powers are not substantive decisions. An individual or business is not going to suffer any harm by producing a document, or explaining a document, to the director—not, of course, unless the document reveals that there has been wrongdoing, in which case the document is obviously relevant.
The third paragraph of the amendment proposes that there should be appeals to the tribunal on whether a disclosure of information under Clause 55(3) properly meets the requirements of that clause. There are two points here. First, this is not a substantive decision within the meaning of the Bill. Secondly, unlawful disclosure of information is a criminal offence by virtue of Clause 55(8). If the director disclosed information unlawfully he would be liable to criminal prosecution.
The fourth paragraph of the amendment returns to a point on which I promised in Committee to reflect further. This was a point raised by the noble Lord, Lord Kingsland (col. 450), speaking to a similar amendment, which he explained referred to the
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possibility of an appeal—after a final decision had been taken—in relation to the factual underpinning of that decision. He said that in his view it was important that there should be a right of appeal in those circumstances.
I have sought advice on the effect of the Bill in this respect. The advice that I received is that the wording in subsections (1) and (2) of Clause 47, and in particular the words "with respect to," ensure that a party may appeal in circumstances where he is happy with a decision, but not with the reasoning underpinning that decision. This is an important point, and I am grateful to the noble Lord for having raised it. I hope that this explanation meets his concerns.
Turning now to the final point in this amendment (the fifth paragraph), I explained in Committee (col. 447) that Clause 60 is no more and no less than an interpretation clause which feeds through into the rest of Part I of the Bill. Hence the fundamental principles of EC law feed through into the relevant provisions of the Bill. There is no separate obligation in relation to Clause 60. The question is therefore not whether an appeal lies under Clause 60, but to which other clauses in the Bill appeals apply. As I said in Committee, it will be possible to appeal against a decision of the director on the grounds that his decision was not in accordance with the requirements of Clause 60. I hope that these explanations meet the noble and learned Lord's concerns in relation to this amendment and that he will be prepared to withdraw it.
Turning to Amendment No. 36, the parties may of course appeal a decision of the tribunal that either or both of the prohibitions had been infringed, provided there is a point of law in issue. For example, a party will be able to appeal on the question of whether his refusal to supply was an abuse of a dominant position within the meaning of the Chapter II prohibition. EC jurisprudence on the point would of course be highly relevant.
However, in appealing an infringement decision to the Court of Appeal, it will not be possible to contest findings of fact. We have considered this point very carefully. We need to balance safeguards for the parties faced with a decision under the prohibition system, with the need to ensure the workability of the appeals system by making it sufficiently streamlined.
In striking this balance we felt it right that the Court of Appeal and this House should be able to rule on the interpretation of the prohibitions and on the level of penalty. However, we decided against allowing the director or the parties to contest every single finding of fact. The parties already have the guarantee that findings of fact made by the director can be challenged before an appeal tribunal headed by a lawyer of High Court standing. Allowing appeals on findings of fact beyond the tribunal could lead to serious clogging of the appeals system. For those reasons we are not persuaded that this is the right course and I would invite the noble and learned Lord to withdraw his amendment.
Turning finally to Amendment No. 55, this amendment would streamline paragraph 2(2)(c) in Schedule 8. Simplification of legislation is an attractive

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prospect in itself, but the matter needs further thought, and it will need to be considered in another place. We think that it is a positive suggestion and we should like to consider it. I hope that the noble and learned Lord will agree to withdraw the amendment on that basis.
Lord Fraser of Carmyllie: My Lords, I am grateful to the Minister for spelling out his reasoning for not accepting our additional grounds. It has been helpful to us. As I said in moving the amendment, we do not necessarily attach equal weight to each ground. However, I should like to reflect further on what the Minister has said about dominant position. There seems to be some force in that argument. Clearly, we shall not have an opportunity to return to this in your Lordships' House but if, on reflection, we are not satisfied, the matter can be raised in another place as the Bill continues its parliamentary progress. In the meantime, I beg leave to withdraw Amendment No. 32.
Amendment, by leave, withdrawn.
Clause 49 [Appeal tribunals]:
Lord Kingsland Lord Kingsland moved Amendment No. 33:
Page 25, line 22, at end insert—
("(1A) The members of the appeal tribunal shall be appointed by the Lord Chancellor in consultation with the Lord Advocate.
(1B) The Lord Chancellor shall not appoint a person as a member of the appeal tribunal unless that person—

(a) holds an appropriate judicial office:

(b) has a ten year general qualification within the meaning of section 71 of the Courts and Legal Services Act 1990;

(c) is an advocate or solicitor in Scotland of at least ten years' standing: or

(d) is—

(i) a member of the Bar of Northern Ireland, or

(ii) a solicitor of the Supreme Court of Northern Ireland, of at least ten years' standing, and appears to the Lord Chancellor to have appropriate experience and knowledge of competition law and practice.

(1C) A person holds an appropriate judicial office for the purposes of subsection (1B)(a) if he is—

(a) a puisne judge of the High Court:

(b) a judge of the Court of Session: or

(c) a judge of the Supreme Court of Northern Ireland.

(1D) Before appointing as a member of the appeal tribunal any person who holds the judicial office mentioned in subsection (1C)(b) or (c), the Lord Chancellor shall consult the President of the Court of Session or the Lord Chief Justice of Northern Ireland, as appropriate.
(1E) A person appointed in accordance with this section shall not exercise any functions of the Competition Commission other than in relation to appeals.
(1F) For the hearing of any proceedings the appeal tribunal may consist of a single member.
(1G) The appeal tribunal may, at any stage in any proceedings before it, refer to a person or persons appointed by the tribunal for the purpose of any question arising in the proceedings, other than a question which in the tribunal's opinion is primarily one of law, for inquiry or report: and the report of any such person or persons may be adopted wholly or partly by the tribunal and, if so adopted, may be incorporated in an order of the tribunal.").
The noble Lord said: My Lords, Her Majesty's loyal Opposition place great importance on this amendment. I realise that in moving it I might once again render the
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noble Lord, Lord Borrie, incandescent. The amendment is designed to provide the system with a credible appeal tribunal. In my submission, the appeal tribunal set out in the Bill is not credible. I say that particularly in the light of the Minister's reply to my noble and learned friend Lord Fraser of Carmyllie and myself on the relationship between scale monopolies and the prohibition under Chapter II.
The problem with the competition commission and its component appeals committee, as set out in the Bill, is that there is no clear distinction between those individuals who will be looking at scale monopolies and structural monopolies, and those individuals who will be hearing appeals. Perhaps I may give one example of how a conflict of interest might occur. Let us suppose that a company is under investigation by the Director General of Fair Trading for a Chapter II prohibition infringement and that at the same time the competition commission is considering whether to unleash a scale monopoly investigation. In those circumstances, it would be difficult for the company appealing to the competition appeal tribunal to feel that it was getting a fair hearing; because what the investigatory arm of the competition commission would be doing would be seen to be contaminating what the appeal branch of the competition commission was doing. It is important that in this system justice should be seen to be done.
My recommendation is that the appeal tribunal should be a completely separate institution from that part of the competition commission which still deals with structural and scale monopolies and merger investigations, and that it should have, as its president, a High Court judge or somebody of equivalent status selected by the Lord Chancellor. The tribunal could, if necessary—as can the European Court of Justice—invite experts to produce reports and to submit them to the tribunal as part of the decision-making process. But it would wholly exclude any members from that part of the commission investigating monopolistic practices from sitting on the tribunal.
That would reflect the change in culture that the Bill is bringing to competition matters in this country. The old system was 90 per cent. discretion and 10 per cent. law We are now on the threshold of a system which is 90 per cent. law and 10 per cent. discretion; and that must be reflected in the institutional way in which it is treated all the way up the ladder.
The European Community has precisely such an institution interposed between the Commission, which is the equivalent of the Director General of Fair Trading, and the European Court of Justice. That is the court of first instance whose task it is to deal with fact and law. In a very short time that institution has acquired great prestige and the commercial world has much confidence in its jurisprudence. I should like to see the same kind of institution built up between the Director General of Fair Trading and the High Court and the Court of Appeal. The issues with which this tribunal must deal will be extremely complex. If it is successful companies that wish to appeal from decisions of the Director General of Fair Trading will have confidence in it and therefore will not seek to go for the alternative remedy

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of judicial review or an appeal to the Court of Appeal. I believe that the Minister has a great interest in making this tribunal as credible as possible.
At Report stage I cast these ideas in the form of a competition court. I sensed that the Minister was not prepared to accept a competition court as a branch of the High Court. I am now more flexible in the institution that I propose, but the principle underlying my amendment is exactly the same. I beg to move.
7 p.m.
Lord Borrie: My Lords, the noble Lord expected me to make a comment, and indeed I do. I share his admiration for all senior lawyers and judges—the kind of people he wants exclusively to man the appeal tribunal to deal with appeals from the Director General of Fair Trading. He made a comparison with the court of first instance and said how well regarded it was. I am a member of the sub-committee of the European Communities Select Committee of this House that is about to conduct an inquiry into that tribunal because of the great dissatisfaction on the part of lawyers throughout the Community with the way it is proceeding, in particular the delays and the proposal by the Commission whereby the court of first instance will no longer he constituted by a panel of judges but decisions will he made by only one person in order to speed up the process. That situation worries a large number of lawyers who practise before that court.
I draw an analogy, not with the court of first instance, on some of whose current difficulties I have pronounced, but our own Restrictive Practices Court which has existed for 40 years. In relation to an earlier amendment I suggested that because we were embarking on a new Bill which largely followed European jurisprudence the noble Lord and his noble and learned friend Lord Fraser of Carmyllie should not ignore experience within the United Kingdom. The constitution of the Restrictive Practices Court combines legal talent in its chairman, who is a High Court judge, with the experience of others who are able to bring to bear their knowledge of business and commercial life. The Bill as it stands at the moment—the detail is largely in the appropriate schedule—combines the president of the tribunal who is to be of High Court calibre and no doubt other senior lawyers who will preside over particular panels hearing particular cases. They will do so in combination with others of relevant experience. That is of great value as the Restrictive Practices Court and the membership of the Monopolies and Mergers Commission over the years demonstrated. The kinds of cases that will fall within function of that commission will in large part involve matters of commercial and economic concern from which lawyers may learn something but for which they are not normally trained. Therefore, while lawyers have a valuable part to play—certainly in terms of the chairman of any particular panel—to suggest that the tribunal should be constituted wholly of senior lawyers is unfortunate. I believe that the present suggested composition is a good one.
I completely turn around the argument advanced by the noble Lord at an earlier stage. He referred to the reporting and appeal function. The membership of the
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commission will include people who will perhaps deal frequently with merger and complex monopoly references—hardly, if at all, with scale monopoly references—and there will be a very useful cross-fertilisation if the experience of those people is also available in the new role of an appeal tribunal with a senior lawyer as its chairman. Their experience of dealing with other matters of competition policy should not be cast aside or regarded as negative rather than positive. I hope that my noble friend will resist as strongly as he has on previous occasions the amendment that has been moved by a member of Her Majesty's loyal Opposition. I noted that phrase. I remind the noble Lord that only a few years ago his party when in government made proposals for membership of a very similar kind to those contained in the present Bill.
Lord Haskel: My Lords, the noble Lord, Lord Kingsland, has developed his ideas a good deal further since they were discussed at Report. He said that he was moving towards a court of first instance. My noble friend Lord Borrie has replied in a manner that is far better than I could manage myself.
The noble Lord, Lord Kingsland, has been consistent in his thesis. He has proposed a tribunal that would much more closely resemble a division of the High Court than the specialised tribunal that we intend. I too shall be consistent. There is a difference of principle between us. We propose a tribunal to deal with complex commercial issues relating to specialised areas of economics, competition and the law. As my noble friend Lord Borrie said, it is crucial to the success of the new regime that that tribunal is able to deal with such cases with expertise, fairness and efficiency so that it is credible. This means that the tribunal panel must include lay members with particular areas of expertise and experience as well as legally qualified members of appropriate standing. The tribunal that we envisage will have both. We believe that lay members will be able to add tremendously to the resources and expertise of the tribunal. It would be most unfortunate to dispense with that expertise, as the amendment seeks to do.
Our arrangements for appointments will open up a much wider pool of expertise. We believe that this will be extremely valuable both for the legally qualified president and chairman and for the lay members. We also believe that the Secretary of State for Trade and Industry will be well placed to identify and select candidates with the necessary blend and breadth of experience to lead the tribunal. At the same time it is important that the president and chairman have considerable legal experience and standing. This is obviously crucial to confidence in the new regime. We intend that whoever is appointed would have a standing at least equivalent to that of a High Court judge. The Bill requires the Secretary of State to consult the Lord Chancellor on legal appointments to the tribunal.
The noble Lord, Lord Kingsland, spoke of separation between appeal and investigatory functions. It is crucial to have this separation. We have done this in our arrangements by clearly separating the tribunal from the director who is responsible for investigation and enforcement under the prohibitions. The reporting side

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of the competition commission will not be dealing with cases under the prohibitions. I hope that this explanation satisfies the noble Lord.
We envisage a rather user-friendly specialised tribunal; the noble Lord's proposals would be much closer to a division of the High Court. There is a difference of principle between us, but our proposals will satisfy the needs in the end. I hope that the noble Lord will withdraw his amendment.
Lord Kingsland: My Lords, I am deeply disappointed at what the Minister has said. The only thing I got right in my intervention was the reaction of the noble Lord, Lord Borrie, to what I said.
I hope the Minister will think again about what he has said. It is crucial that justice is seen to be done by the business community that the appeals tribunal will serve. If people who sit on the appeal tribunal play an investigatory role in the other part of the competition commission, it will not be credible. It is unacceptable that there should be a cross-fertilisation of individuals who are capable of playing both roles. Whatever else the Minister reflects upon as a result of these exchanges, I hope he will reflect upon that point. It is not inappropriate that complex economic matters should be heard by a third party, arbitral system supervised by a High Court judge. Quite often the only way these complex matters can be sorted out is by applying the legal process.
If the tribunal is not credible, then the ordinary courts of the land—either in judicial reviews or appeals to the High Court—will become over-burdened with complex issues which ought to be dealt with by a specialised court of a kind that the Minister refuses to contemplate. I am most disappointed, but I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 34 and 35 not moved.]
Clause 50 [Appeals on point of law, etc.]:
[Amendment No. 36 not moved.]
7.15 p.m.
Clause 54 [Regulators]:
Lord Sempill Lord Sempill moved Amendment No. 37:
Page 28, line 5, after ("Part") insert (", subject to subsections (4) to (9).").
The noble Lord said: My Lords, I rise to speak to Amendments Nos. 37 and 38. Before doing so, I apologise to the Minister for my intervention at this late stage. Unfortunately my noble friend and colleague Lord St. John is unable to be with us and I feel as if I have been plucked off the substitute's bench with five minutes to go. I may have a pair of fresh legs but I do not have his expertise in confronting such a formidable defence.
These amendments have been altered in order to address some of the Minister's previous reservations. We maintain that the issue remains the same—an issue of clarity over who does what. These amendments will ensure that certain tasks are dealt with by the Office of
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Fair Trading. The amendments identify certain circumstances where the Office of Fair Trading is the right body to deal with a matter. The amendments also allow the Secretary of State to add to the circumstances where the Office of Fair Trading should be the body to deal with further matters.
The Bill would be strengthened and the key objectives of certainty and consistency would be promoted if the Bill prescribed who should do what. I beg to move.
Lord Kingsland: My Lords, we are speaking to Amendments Nos. 37 and 39 and also to Amendments Nos. 58 and 59. Amendments Nos. 37 and 39 apply to the relationship between the Director General of Fair Trading or regulators, and the latter amendments are specific to British Telecommunications.
The Minister is familiar with this matter. Although I have not seen any written evidence, I understand that on the crucial subject of what has come to be known in the jargon as "the bridge" he has made a very substantial concession. If that is so, I am extremely grateful to him.
This amendment concerns the second central problem of concurrency. The intention of Amendment No. 39 is to meet some of the objections that the Minister had to the previous amendment. I draw his attention to three parts of it. Subsection (5) reads,
"For the purposes of this section a 'reserved matter' means which a matter which …
(e) affects or may affect an industrial or commercial project or scheme of substantial importance to the national economy".
On Report the Minister described those words as being too vague. They are, in fact, an expression contained in the Restrictive Trade Practices Act. It may be that experience has shown them to be too vague but there is at least a respectable precedent for them.
I also draw attention to subsections (6) and (7). These give the Minister the best of both worlds. On one hand, on the face of the Bill, he has a clear set of criteria upon which to establish who is responsible for what. If he wishes to alter the criteria he has, in subsection (6), the power of the Secretary of State, by order, to amend subsection (5) by providing one or more additional categories of reserved matters. So the range of reserved matters is unlimited at the Secretary of State's discretion.
Even more importantly, subsection (7) provides that,
"Any question as to whether a matter is a reserved matter for the purposes of this section shall be determined by the Secretary of State".
So the Secretary of State will have complete discretion in this matter.
Thus, on the one hand you have the merit of clarity for the clients, if I may put it that way—that is the enterprises likely to be subject to investigation either by the director-general or the regulator—and, on the other hand, the merit of flexibility, because the Secretary of State can alter the position at any time he wants. This would be infinitely preferable to the kind of old boy network which has been described at various stages throughout the debate on this Bill. That is not a satisfactory way of providing the kind of certainty

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required by the client, who needs to know not only the case he must meet but the individual or the institution to whom he must answer.
Lord Simon of Highbury: My Lords, on Report I set out once again why we believe the principle of concurrency is right. This is a Bill about competition. Regulators need to have powers in order to apply competition law in their sectors and to co-ordinate their use of sector-specific regulation with those powers. We have said that we do not believe that a "bright line" of jurisdiction between the DGFT and each of the regulators is practical. We do not want gaps or litigation about whether the DGFT or a regulator has jurisdiction. Hence, powers have to be exercisable concurrently by the regulator and the Director General of Fair Trading.
The marketplace is dynamic, as we have repeated many times. The legal scope of a regulator's remit needs to be kept under review. It must be clear, but it must be wide enough and it must be up to date. That links to the utilities review, and it is one of the reasons why we are committed to keeping the regulation of telecommunications and broadcasting up to date and expect to launch a consultation document on that in the spring. That is where the wider review of scope is taking place. It is right that this Bill should limit itself to providing concurrent powers on a similar basis to the concurrent powers regulators already have under existing competition law.
We have said clearly that flexible rules need to be drawn up covering the procedures that will apply where concurrent jurisdiction exists. Rules need to change and adapt as necessary. Let us define the rules that we need now, and make clear as part of the rules how notification should be made. That is a matter for the Director General of Fair Trading, consulting regulators and appropriate persons, to decide in the first instance, under Clause 51 of the Bill. Rules are, however, to be subject to consultation, approval by the Secretary of State and the parliamentary process, so that there will be ample opportunity to make sure that they are clear and adequate. There is further scope for clarification of the role of individual regulators in the advice and information to be prepared under Clause 52.
However, I accepted that there was a need to reflect further on the provision in utility statutes that requires a regulator and the DGFT to consult before either takes action; and for one to be barred from taking action once the other has done so. We will continue to reflect on that point.
I emphasised that we regard consistency in the basis for applying the Chapter I and II prohibitions as paramount, and accepted that we need to bring forward amendments to ensure that that is achieved. We have done so, and we will be considering those amendments a little later. They represent a significant response to concerns expressed by noble Lords, as the noble Lord, Lord Kingsland, gratifyingly noted.
However, where there would clearly be an unsatisfactory interaction between the prohibitions and the licence regime, as the noble Lord, Lord Kingsland, raised on enforcement, we have said that we will come
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forward with amendments. We will be considering those amendments shortly. Again, they represent a significant response to concerns expressed by noble Lords.
In all of that I was seeking to describe and develop a framework in which, in a dynamic marketplace, sensible people will speak and work together under a format of rules which will be flexible and capable of taking into account the dynamism of the marketplace, which we all wish to encourage and make more competitive.
I have made that general statement because I hope that, on reflection, noble Lords will be pleased and take pride in the amendments that they have encouraged us to bring forward to refine that part of the Bill, and that they will also support us in providing concurrent powers, on the appropriate basis, to sector regulators.
We do not want those powers hamstrung by constraints and rigidities. We do want them implemented with the co-operative approach we are already seeing from the DGFT's working party with regulators, and noble Lords are aware of progress made from the letter in the Library.
The amendments in the present group do not follow that sensible approach. They would cut across the consultation between a regulator and the DGFT as to which of them should exercise concurrent functions in a particular case. They would claw back a large part of a regulator's concurrent functions. As I made clear on Report, I do not believe that that would be right. The criteria by which they would do so are, in some cases, subjective. In other cases they would make almost impossible the application of the prohibitions by a regulator. For example, the criteria would mean that a regulator would be prevented from taking action in respect of a matter which mainly but not exclusively falls within the scope of his jurisdiction; many of the matters within the scope of a regulator's jurisdiction would affect commercial projects; and how could a regulator apply the prohibitions if he is prevented from being able to interpret them? Moreover, they leave the determination of what would fall within the criteria, as was pointed out by the noble Lord, Lord Kingsland, to the Secretary of State. I indicated at Report, in relation to the exclusion for services of general economic interest, that the Government did not wish the Secretary of State to have a role in case-by-case determinations (col. 968 on 9th February). I do not believe it would he right for the Secretary of State to have a role in making determinations against unsatisfactory criteria such as those.
We have stated our case in depth and broadly, and tried to set out the principles which lie behind our approach on concurrency. As I said, we are bringing forward further amendments in the light of previous debates. Therefore, I urge the noble Lord to withdraw the amendment.
Lord McNally: My Lords, as the Minister will be aware, my noble friend Lord Ezra, who cannot be with us this evening, is the guru of these Benches on concurrence. It seems that Ministers are trying to meet real concerns while dealing with practicalities. One easy way of avoiding any regulator is to behave oneself. That might be a good rule for some companies.

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Did I understand the Minister to say—we will all be aware how thoroughly British Telecom has briefed on this matter—that the whole question of telecoms regulation is, as it were, in the melting pot as technologies converge?
Lord Desai: My Lords, is the noble Lord in order? We are on Third Reading.
Lord McNally: My Lords, I am asking the Minister a question, but I defer to the greater knowledge of procedure of the noble Lord, Lord Desai. I rest my point there.
Lord Sempill: My Lords, I am grateful to the Minister for his reply. I am disappointed that he is unable to support the amendment. I mentioned earlier that I arrived on the scene very late. My knowledge of the issues is limited to this specific area. The issue of concurrency is complex. My colleagues and I have looked carefully at the amendment, and we feel that it clears up some of the areas of potential conflict. Therefore, we maintain that where there are circumstances which are easily identifiable now, with which the OFT should deal, they should be clearly identifiable in the Bill. Therefore I wish to test the opinion of the House on this amendment.
7.30 p.m.
On Question, Whether the said amendment (No. 37) shall be agreed to?
7.33 p.m.
The Deputy Speaker (Lord Ampthill): My Lords, Tellers for the Contents have not been appointed, pursuant to Standing Order No. 51. The Division therefore cannot take place and I declare that the Not-Contents have it.
Resolved in the negative, and amendment disagreed to accordingly.
Lord Kingsland Lord Kingsland moved Amendment No. 38:
Page 28, line 5, at end insert—
("() Where it appears to a regulator that a matter is—

(a) an agreement, decision or concerted practice of the kind mentioned in section 2(1); or

(b) conduct of the kind mentioned in section 18(1),

he shall regard the most appropriate way of proceeding in respect of that matter to be by exercising the functions assigned to him by subsection (2) and Schedule 10 and not by exercising any functions provided by or under a sectoral enactment or any licence issued under such an enactment.
() Where a regulator exercises any of the functions assigned to him by subsection (2) and Schedule 10 in respect of a matter, any duty imposed upon him by or under any provision of a sectoral enactment to take enforcement action in respect of that matter shall not apply.
() In this section "sectoral enactment" means, in relation to the relevant regulator under that enactment—

(a) the Telecommunications Act 1984;

(b) the Gas Act 1986;

(c) the Electricity Act 1989;

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(d) the Water Industry Act 1991;

(e) the Railways Act 1993;

(f) the Electricity (Northern Ireland) Order 1992;

(g) the Gas (Northern Ireland) Order 1996.").

The noble Lord said: My Lords, this is another amendment which deals with concurrency. It is also an aspect of concurrency which has been much worked-over in your Lordships' House. It refers to the circumstances in which a regulator who can apply either his powers under the relevant regulatory Act or his powers under the Competition Bill has the discretion to pick and choose between both those sets of powers.
The amendment seeks to provide that where a sectoral regulator considers that a matter is more properly the subject of the Bill rather than of his regulatory Act, in pursuing his objectives under the Bill he must use the powers and procedures set out in the Bill—and those powers and procedures alone.
If at some stage he takes the view that his initial decision was wrong, and that he should have pursued the matter under the relevant regulatory Act, he is entitled to switch to pursue matters under that Act; but in those circumstances he must abandon the use of the powers under the Bill and revert to the use of the powers under the Act. That will prevent the regulator in question switching between the two sets of powers.
In my submission, it is inconsistent with the Government's position—that the powers under the Bill are necessary to further the objectives of the Bill—to allow a regulator to use the powers under his Act to pursue the objectives of this Bill. It is in those circumstances and in that spirit that this amendment is tabled. I beg to move.
Lord Simon of Highbury: My Lords, in dealing with this amendment, I should like to speak also to government Amendments Nos. 57, 66 to 72 and 82 to 86. I should like to deal first with the government amendments and I hope that that will follow sequentially when I reflect on the intervention of the noble Lord, Lord Kingsland, on Amendment No. 38.
The amendments to which I am speaking remove the obligation on the regulator to take licence enforcement action where he is satisfied that it is more appropriate to deal with the matter under the prohibitions.
In Committee I said that an amendment moved by the noble Lord, Lord Kingsland, seemed to make a valid point about the interaction between Section 25 of the Electricity Act and the enforcement of the prohibitions. I promised to reflect on the issue raised in relation to all the utility statutes.
On Report, I said, at col. 495 of Hansard of 23rd February, that we had concluded that, in the light of that reflection, it would be right to bring forward government amendments in respect of each of the utility statutes. Amendments Nos. 66 to 72 make the substantive changes. Amendments Nos. 82 to 86 are consequential.
As for transparency, where a regulator is satisfied of the facts which displace his obligation to enforce licence obligations he is required to serve a notice on the licence holder and to publish a notice for the attention of those affected, informing them of that fact.

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I am grateful to the noble Lord for raising that matter in Committee and on Report. I am also pleased to have been able to respond with amendments to deal with the problem that he identified.
The noble Lord, Lord Kingsland, spoke to Amendment No. 38. I suspect that that also takes in Amendment No. 57. Indeed, both amendments fall in the area we are now discussing. One purpose of the amendments is to remove any duty imposed on a regulator by virtue of a utility enactment to take enforcement action when he is exercising functions under the Bill. The government amendments would already have the effect of removing the duty to take licence enforcement action where the regulator is satisfied that the most appropriate way of proceeding is under this Bill.
The other purpose of the noble Lord's amendments appears to be to require a regulator to regard action under the Bill as the most appropriate way to proceed whenever something falls within the scope of the prohibitions, by implication even when it is not the most appropriate way to proceed. The term "appropriate" requires judgment. In this case, it rightly should be the regulator's judgment and not a requirement imposed on him just because a matter falls within the scope of the Chapter I or Chapter II prohibition. Moreover, in certain cases a regulator has a Community law obligation to enforce licence conditions, which the noble Lord's amendments might preclude.
I am therefore convinced that the amendments tabled by the Government provide the right approach to cover the direction of the discussion that we have been taking forward. In those circumstances, I urge the noble Lord to withdraw Amendment No. 38. I should point out again that I have also been speaking to Amendment No. 57 in the same light.
Lord Kingsland: My Lords, I should like, first, to acknowledge and thank the Minister for the amendments that he has tabled in response to a number of issues raised in Committee and on Report. In particular, I should like to thank him for tabling Amendment No. 66 which demonstrates a particularly constructive approach to the problem outlined.
However, I am disappointed by the Minister's response to Amendment No. 38, and a little surprised. I say that because the amendment does not really ask him to go much further than he has already gone. All it requires is that if a regulator considers that the Bill is the more appropriate approach for dealing with an issue, then he ought to be limited to using the powers under that Bill.
It flows from everything that the Government said about the philosophy that the objectives of the Bill, and the procedures laid down in it, are indivisible. Why, therefore, when the Minister comes to the issue of concurrency, does he abandon that indivisibility and give the regulator the option to choose a regulatory route to approach his obligations under the Bill?
The amendment would not tie the regulator down to pursing the matter under the Bill. Indeed, if a regulator at any stage thinks that a regulatory approach is better,
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he can switch to it. All the amendment does is to say that, while he is pursuing his objectives under the Bill, he ought to be obliged to use the procedures, powers and remedies under that legislation. That seems to me to be consistent with what the Government are trying to do under the Bill and not in contravention of it.
Of course, the exercise of discretionary powers inevitably injects an element of uncertainty into the mind of the "regulatee"; indeed, that is unavoidable. However, all things being equal, the Minister ought to be aiming for the maximum amount of certainty and predictability possible. In my view, Amendment No. 38 provides that, without in any way interfering with the discretion of the regulator to switch to the relevant regulatory Act if he changes his mind about the nature of the fundamental problem that he faces. Nevertheless, as the Minister does not appear to wish to speak again, I have no option but to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 39 not moved.]
7.45 p.m.
Clause 55 [General restrictions on disclosure of information]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 40:
Page 28, line 43, leave out subsections (5) and (6).
The noble and learned Lord said: My Lords, this amendment and Amendment No. 41 relate to issues of confidentiality and immunity from defamation. They propose the deletion of subsections (5) and (6) and suggest an express provision which states:
"Information disclosed pursuant to subsection (3) or (5) is subject to an obligation of confidentiality and shall not be disclosed by the recipient".
The concern behind the amendments is that the Bill as framed allows the information to be passed on to a large number of other authorities. We recognise that there is a need for that. However, the concern is that the power could be used to allow the exchange of confidential information between the UK competition authority and a foreign competition authority, and—dare I say it?—in the spirit of friendship, to Washington and the United States of America for whom I have the highest regard. The Minister will be well aware that, in regulatory and competition matters, if in other areas an unacceptable degree of extraterritoriality has been exercised, in this sphere the appetite for extension of power is almost limitless.
It is possible that the Minister can give a simple assurance that the powers allowed under the Bill would not extend to allowing disclosure of information in the circumstances I have outlined. However, with his extensive knowledge of matters both industrial and commercial, I am sure that the Minister will appreciate that there is a very real concern that there should not be a kind of disclosure at large. Indeed, that could cause huge damage and might involve all manner of British companies in ranges of actions or huge requirements for justification of their actions which, in other

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circumstances, no UK government or department would consider was correctly within the purview of the United States authority. I should not over-emphasise the United States because there may be others. However, I am sure that the Minister will understand where the concern lies. I beg to move.
Lord Simon of Highbury: My Lords, we debated the important issue of confidentiality at great length both in Committee and on Report. I shall speak briefly to Amendment No. 40. As I explained on Report, subsections (5) and (6) of Clause 55 enable the Secretary of State to specify additional persons and purposes to whom, and for which, disclosure is to be permitted. That power is exercisable by order subject to annulment by either House. The purpose of this power is to ensure that there is sufficient flexibility in the Bill to respond to developments in regulatory and competition policy without need for fresh primary legislation.
The noble and learned Lord, Lord Fraser, asked specifically about disclosure to foreign competition authorities. I wish to make it clear that the power was not designed for this purpose and the Government's view is that the powers conferred by this provision would not enable a foreign competition authority to be designated as a person to whom a disclosure could be made. I am grateful for the opportunity to clarify that point. Under those circumstances, I hope that the noble and learned Lord will withdraw the amendment.
Lord Fraser of Carmyllie: My Lords, that was a short but extremely satisfactory answer. That is exactly the concern we had. I express my thanks to the Minister. With the reassurance he has given, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 41 not moved.]
Clause 59 [Interpretation]:
[Amendments Nos. 42 and 43 not moved.]
Clause 60 [Principles to be applied in determining questions]:
Lord Kingsland Lord Kingsland moved Amendment No. 44:
Leave out Clause 60 and insert the following new Clause—
PRINCIPLES TO RE APPLIED IN DETERMINING QUESTIONS
(" .—(1) Subject to subsection (2)—

(a) a person exercising functions under this Part in relation to a matter; or

(b) the court in determining a question arising under this Part in relation to a matter,

shall ensure that the matter is dealt with and determined in the same manner as the European Court or the Commission would deal with and determine that matter in accordance with Title V of the Treaty, if that matter affected trade between Member States.
(2) The Secretary of State may by order provide that subsection (1) shall not apply to any provision of this Act where he is satisfied that it is necessary to do so.
(3) Any order under subsection (2) shall be made by statutory instrument which shall be laid in draft before Parliament for approval by resolution of each House.
(4) In subsection (1) "court" means any court or tribunal.").
The noble Lord said: My Lords, Amendment No. 44 seeks to leave out Clause 60, which used to be Clause 58—we all became used to calling it Clause 58 so it is now rather strange to have to call it Clause 60—and replace it with this concise but at the same time comprehensive amendment, which does everything the Government's clause does but in half the space. However, I suspect that the Minister will not agree with that judgment.
The purpose of the amendment is to clarify a number of issues that have been in doubt about the extent to which the law of the European Community governs the clauses of the Bill. The confusion has arisen for two reasons. First, there are some places in the Bill where the Government have quite deliberately decided to stray from the path taken by the European institutions. In those areas where the Government have made that expressly the case, there has been no problem. But there are many other areas where it seems by implication to be the case but is not absolutely clear.
The second problem is that it is not clear on the face of the Government's text to what extent it extends beyond the substantive law to the procedural and remedial law. Leaving that question uncertain is damaging. It is unnecessary to leave it uncertain. In any case, the Government are going to be hedged about as a consequence of the incorporation of the European Convention on Human Rights, whose standards, if anything, will prove more demanding than those of the European Court of Justice. The Government have every interest in getting this matter as right as they can before the Bill becomes an Act of Parliament.
What the amendment does, in, I suggest, a very helpful way for the Minister, is to state clearly what aspects of European Community law apply. That is done in subsection (1). Subsection (2) gives the Secretary of State a complete way out by enabling him, by order, to say that subsection (1) shall not apply to any provision of this Act where he is satisfied that it is necessary to so provide. The approach is not dissimilar, I recognise, from the one adopted in Amendment No. 39, where the reserve powers of the Director General of Fair Trading are set out, subject to the discretion of the Secretary of State, to add to them or vary them. Here, the effect of European Community law—substantive, procedural and remedial—is crystal clear under subsection (1); but under subsection (2) the Secretary of State in any particular case, either all at once at the beginning or at some stage later on, can resile from that position. That is an infinitely better approach than the one laid down in the Bill.
I accept that this approach was not taken on day one. This approach has evolved as the Minister has reacted to our amendments. We have incorporated the Minister's concerns in our amendments. By this process of successive approximation I hope that we have now arrived at an amendment which the Minister can accept. I beg to move.
Lord Fraser of Carmyllie: My Lords, before the Minister responds, he will appreciate that my name is also attached to the amendment. Whether or not the amendment is in precisely the right form is, in a sense,

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not the most important matter. What I hope we impressed on the Minister at Report stage is the importance we attach to Clause 60, as it now is. I appreciate that the Minister has kindly indicated to me that he has reflected on what we have had to say. While I became excited at Report stage about the way the clause would appear to operate, I shall say nothing more at this stage until I hear what the Minister has to say.
Lord Simon of Highbury: My Lords, I am pleased that we have the opportunity to debate the governing principles clause. It is an important clause and the amendment gives me the opportunity to respond to the questions raised by the noble Lord, Lord Kingsland, and the noble and learned Lord, Lord Fraser. It may be helpful if I explain how the governing principles clause is to operate.
Perhaps I may deal, first, with what is imported under the clause. The noble and learned Lord, Lord Fraser, raised at Report a particular query on the extent to which EC procedural safeguards are imported. The primary purpose of the governing principles clause is to secure that, subject to single market considerations, the prohibitions apply to business in the same way under the Bill as under the EC Treaty. As far as possible, we want to achieve a seamless web so that agreements and practices which are prohibited under one regime are prohibited under the other and those that are permitted are permitted under both. The EC prohibitions are propositions of law which, over time, have acquired an internal dynamic in the Community system, in exactly the same way as purely domestic law propositions do in our own system. It is therefore not just a question of borrowing definitions. It is the propositions of law as a whole that we want to mirror.
The same considerations do not apply to purely procedural matters. Different procedural arrangements can apply for consideration of the same substantive issues. There is a strong argument of convenience, in terms of minimising burdens, for keeping in line wherever it makes sense to do so, but it is an argument of practicality rather than legal substance.
However, it is not always possible completely to separate substance and procedure. Issues such as the margin of discretion and what is to be treated as a question of fact rather than law fall on the borderline between them and involve elements of both. The very fact that Articles 85 and 86 now have an internal dynamic means that they have to be understood in the context of the general principles which apply to them as part of Community law. These, which one might call high level principles, may impinge on the meaning and effect of the prohibitions as a question of law. They range from the principle of legal certainty, which carries with it the proposition that contracts should not lightly be set aside, to the principle of fairness in administrative action. They can perhaps best be summarised as the necessary underpinning of the rule of law and, in this context, law means the whole system of Community law.
For this reason, we did not feel that it was right to attempt to confine the effect of Clause 60 to issues relating purely to the meaning of Articles 85 and 86 in isolation.
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Legally, I am advised, there would be great doubt whether it would have worked and it might well have created greater uncertainty.
As I have said, purely procedural rules are not at all the same thing. The EC Commission could change its procedure, and has done, without affecting the substance of Articles 85 and 86. Different procedures apply in different sectors. It is true that some procedures, for example "Access to the File", are derived from ECJ/CFI judgments drawing on the high level principles, but these judgments were given in the context of the particular procedures adopted by the Commission. This is shown by the fact that they are not applied in the same way in other areas of Community administrative action. The same will be true of the director's rules.
At the Community level, much of the detailed procedure for the administration of the EC prohibition system is set out in Commission or Council regulations. The governing principles clause will not import any of these detailed procedures. This is especially so since the Commission is made up of a college of Commissioners and many of its procedures would simply not be appropriate for the director.
The Bill provides that the detailed procedure for the administration of the domestic system is to be set out in the director's rules. Clause 51 sets out the procedure for making the director's rules. These are the rules to which business will look to find out how the detail of the administration of the prohibition system will operate. In practice of course many of the detailed procedures adopted by the director may be very similar to the procedure set out in EC regulations. Parliament of course will also have the opportunity to object to the rules since they cannot come into operation until made by order.
There is some precedent for our approach. The noble Lord may have recognised that the wording of Clause 60 reflects, to some extent, the wording of Section 3(1) of the European Communities Act. In particular, there is the reference to determining questions in accordance with the principles laid down by and any relevant decision of the European Court of Justice and court of first instance. It is this which causes our courts to follow Community law when applying Article 85. Member states retain responsibility for applying Article 85 in the field of aviation transport beyond the Community frontier. However, nobody would suggest that it meant that the procedures which have been adopted by the UK authorities for the application of Article 85 had to be the same as the ones adopted by the Commission in those fields where it is they who have power to apply Article 85.
I hope the noble Lord will see from my explanation that we have given serious and detailed consideration to the suggestion that we should seek to ensure that European jurisprudence on procedural matters does not apply under Clause 60. This is the approach which the noble and learned Lord, Lord Fraser, indicated in debate on 23rd February (Hansard col. 517) that he hoped we would confirm. As I have said, in certain respects, procedural and substantive aspects of Community law are closely inter-related and in fact would be very difficult to separate. Any attempt to make such a separation could create greater uncertainty. The approach in Clause 60

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which we have adopted in our view avoids this problem. I hope this clarifies the position on the question of the extent of procedural safeguards imported by the governing principles clause.
I turn briefly to divergences from the EC system. As for the question of divergences, we are not importing it "lock, stock and barrel". Divergences are possible in three respects. First, I have just explained that the director will be setting out his own rules for the detailed procedural administration of the new prohibition system. Secondly, it is apparent from the face of the Bill where we have departed. A wider exclusion for mergers than exists under EC law is but one example. We have also previously debated the Government's position on penalties and interim measures. Thirdly, I explained at Committee that single market objectives would not be relevant to the domestic prohibition system.
We have debated these issues before and therefore I do not want to discuss them in any detail or pursue the issue of all the procedural approaches that are separate from the import of the high principle through Clause 60. However, I would be happy to write further on this subject to the noble Lord outlining our thinking in this area.
In conclusion, I believe that the governing principles clause will operate well in practice. However, I agree that it is important for business that the clause is made as certain as possible. I take very seriously the comments that the clarity of provisions, especially critical provisions such as the governing principles clause, could be improved. The department will have further dicussions with the CBI as the Bill progresses through the parliamentary process. If a suggestion is made which would improve the operation of the Bill we will make every effort to secure that improvement. However, for the reasons I have explained, I am not persuaded that the governing principles clause as drafted needs to be changed. With those general reflections I hope that the noble Lord will be prepared to withdraw the amendment.
8 p.m.
Lord Kingsland: My Lords, despite the attachment I have to the text of the amendment, I appreciate the full and thoughtful way in which the Minister has reacted to the amendment. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 45:
After Clause 60, insert the following new clause—
APPLICATION TO PROPERTY OWNERSHIP
(". Nothing in this Act shall affect the law and practice governing the system of property ownership.").
The noble and learned Lord said: My Lords, this amendment is grouped with Amendment No. 44 that we have just discussed. I welcome the approach that the Minister has taken. I know the importance that he attaches to giving an undertaking and I hope that that undertaking will be fulfilled. If Clause 60 is to be the subject of further and continuing discussions with the CBI, that is a satisfactory way forward. I do not think the noble Lord expressly addressed Amendment No. 45. I believe that
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amendment should be included on the face of the Bill. However, if he tells me that it will also form part of the discussions that he and his officials will undertake once the Bill leaves this House, I shall be satisfied with that. I beg to move.
Lord Brightman: My Lords. I beg your Lordships' pardon. I did not hear Amendment No. 47 called—
Lord Fraser of Carmyllie: My Lords, I hope I may clarify the position. My Amendment No. 45 was grouped with Amendment No. 44. Amendment No. 45 states that this Act shall in no way prejudice the rules in the United Kingdom,
"governing the system of property ownership".
This is in our view an important amendment. I had hoped to indicate to the Minister that if he will simply tell me that there will be continuing discussions on this matter, as he has done in relation to Clause 60, that will be sufficient for my purposes and I shall be happy to withdraw the amendment once I have that assurance.
Lord Simon of Highbury: My Lords, subsection (2) of the governing principles clause also refers to principles laid down by the EC Treaty. This is relevant to Amendment No. 45. This provides an express equivalent to Article 222 of the EC Treaty. This treaty article provides that nothing in the treaty is to affect the law and practice governing the system of property ownership. There is no need for such an express provision. Subsection (2) of Clause 60 expressly refers to the,
"principles laid down by the Treaty"
as being part of the EC jurisprudence which is imported. Since Articles 85 and 86 must be applied within the limits of Article 222, then so must the UK prohibitions. If we were to include an express equivalent to Article 222, then we would cast doubt on the importation of principles from other treaty articles. For example, as I said in Committee, the objective to promote the environment in Article 130 may be relevant in considering whether exemption can be granted. I believe that under these circumstances the noble and learned Lord has the assurance that he requires.
Lord Fraser of Carmyllie: My Lords, I compliment the noble Lord in stopping the ball just before it rolled over the boundary. That is the assurance I want. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Speaker: My Lords, I have to announce corrections to the voting figures for Division No. 2. The correct figures are as follows: Content 22; Not-Content, 92.
Clause 70 [Regulations, orders and rules]:
Lord Kingsland Lord Kingsland moved Amendment No. 46:
Page 39, line 4, after ("37(7),") insert—
("() section 51,").
The noble Lord said: My Lords, the amendment seeks to require that the rules and guidance made by the director under Clause 51 of the Bill shall be subject to an affirmative resolution of each House of Parliament.

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This is important statutory guidance. We believe that the House should have an opportunity to consider it and, if necessary, speak to it before it becomes binding. I beg to move.
Lord Haskel: My Lords, I cannot accept that the director's rules should be subject to the affirmative resolution procedure.
Perhaps I may refer your Lordships to the Select Committee on Delegated Powers and Deregulation which reported on the powers in the Bill on 5th November 1997. It expressed no concern that the powers in what is now Clause 51 should be subject to negative resolution procedure. Perhaps I may pray in aid the wisdom of your Lordships' Select Committee and ask the noble Lord, Lord Kingsland, to join me in doing the same.
Lord Kingsland: My Lords, on 99.9 per cent. of occasions I find the decisions of the committee to be extremely satisfactory. However, this is the one occasion when, with the utmost respect, I disagree.
The rules are absolutely fundamental to the individual human rights of the person to be regulated. This is the most important statutory guidance that will be made under the Bill. Yet unlike other parts of the Bill which are accorded affirmative resolution support, these are not.
I deplore the situation, but I recognise that the Minister's expression intimated deep intransigence on his behalf. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.15 p.m.
Lord Brightman Lord Brightman moved Amendment No. 47:
After Clause 74, insert the following new clause—
INDEX OF DEFINED EXPRESSIONS
(". In this Act the expressions listed below are defined by or otherwise fall to be construed in accordance with the provisions indicated—

appeal tribunal

section 59(1)

appropriate court

sections 39(10) and 50(5)

Article 85

sections 59(1) and 61(1)

Article 86

sections 59(1) and 61(1)

authorisation

section 61(3)

authorised officer

section 61(1)

block exemption

sections 6(4) and 59(1)

block exemption order

sections 6(2) and 59(1)

the Chapter I prohibition

sections 2(8) and 59(1)

the Chapter II prohibition

sections 18(4) and 59(1)

the Commission

sections 59(1) and 61(1)

Commission investigation

section 61(1)

Commission official

sections 62(2) and 62(4)

Community prohibition

section 10(10)

conduct of minor significance

section 41(1)

costs

section 35(3)

the Council

section 59(1)

the court

sections 59(1) and 60(5)

decision

sections 42(3) and 60(6)

designated person

section 55(4)

the Director

sections 59(1) and 61(1)

Director's finding

section 58(2)

Director's investigation

section 61(1)

Director's special investigation

section 61(1)

document

section 59(1)

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dominant position

sections 18(3) and 19(3)

EEA agreement

section 59(1)

the European Court

section 59(1)

the High Court

section 31(3)

individual exemption

sections 4(2) and 59(1)

information

section 59(1)

infringement

section 72(7)

investigating officer

sections 28(1) and 59(1)

leave

section 50(5)

legal professional privilege

section 31(3)

Minister of the Crown

section 59(1)

named officer

sections 30(5) and 64(5)

notice period

section 7(4)

occupier

sections 30(5) and 64(5)

officer

sections 59(1) and 71(3)

parallel exemption

sections 10(3) and 59(1)

partner

section 71(6)

Part I proceedings

section 58(2)

party

section 50(5)

penalty notice

section 38(2)

person

section 59(1)

premises

sections 59(1) and 61 (1)

prescribed

sections 59(1) and 61(1)

press diversity prohibition

section 19(4)

price fixing agreement

section 40(9)

privileged communication

section 31(2)

provisional immunity from penalties

section 42(5)

Regulation

section 10(10)

regulator

sections 54(1) and 59(1)

relevant decision

section 48(1)

relevant functions

section 55(4)

relevant party

section 58(2)

rules

section 53(1)

section 11 exemption

sections 11(3) and 59(1)

small agreement

section 40(1)

specified

sections 6(8), 53(3) and 55(6)

specified date

section 38(2)

specified document

section 27(4)

the Treaty

section 59(1)

the United Kingdom

sections 2(7) and 18(3)

withdrawal date

sections 40(6) and 41(6).")

The noble and learned Lord said: My Lords, my purpose in moving the amendment is to suggest that this important Bill would be more user friendly if it contained at the end a simple index of the words and phrases which are given a special meaning.
I raised this point with the Minister last December. In a letter to me he indicated that it was an interesting issue relevant to legislation in general and worthy of debate. I suggested that the best time for me to move the amendment might be at Third Reading when most of the major issues might be out of the way.
An index has two advantages. First, it tells the reader at a glance whether a particular expression used in an Act has a special meaning. Secondly, it tells the reader at a glance where in the Act that special meaning is to be found. Let me give an example. Clause 27 of the Bill empowers the director general, when conducting an investigation, to require a person to produce a document that he specifies. That is no problem. We all know what the word "document" means—or do we? Perhaps a "document" has some special meaning in the Bill. The reader can turn to the index to find out. He immediately discovers that it has a special meaning because the word is listed in the left-hand column of the index. Where can he find that special meaning? The right-hand column of the index immediately tells him: Clause 59. He sees there that "document" includes not only written matter

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but also, for example, a tape recording or a floppy disk, neither of which is within the dictionary definition of document.
Another useful function performed by an index arises when the same word is given different meanings in different clauses of the Act. For example, Clause 35 empowers the court to make an order for costs against an "officer" of a company. Clause 59 defines an "officer" for the purposes of this clause as including a director, manager or secretary.
But let us suppose that someone who is not really the secretary of the company purports to act as secretary. Let us say that he signs letters and so forth as though he were the secretary. Can an order for costs be made against a person who purports to act as secretary? It would not be in the least surprising if it could. It seems a rather difficult point.
If the Act contains an index of defined expressions, the answer is easy. The index shows that "officer" of a company is defined in two different sections, with different meanings. One definition is to be found in Clause 59 in relation to a costs order under Clause 35. That is, it includes a director, manager or secretary. The other definition is in Clause 71 which defines "officer" in relation to certain criminal liability clauses as meaning director, manager or secretary or a person who purports to act as such. It therefore becomes clear that no costs order can be made against a person who purports to act as a director, manager or secretary because the second definition makes it abundantly clear that when "officer" is meant to include a person purporting to act as an officer, the Act says so.
In the absence of an index of defined expressions, I simply do not know how the reader of the costs clause can be expected to appreciate that "officer" in that clause does not include a person who merely purports to act as an officer, unless he reads through the whole Act down to Section 71. If a word or expression is used in an Act with different meanings, it may be essential for the reader to study and compare both definitions to be certain what each means. Only an index can alert the reader to the fact that there are two different definitions.
The idea of including in an Act an index of defined expressions is not new. It has been used on a number of occasions over the past 23 years. It is obvious that it is not appropriate for all Acts of Parliament. It depends on the Act, notably how complicated the Act is, and how many defined words and expressions it contains. The matter must clearly be judged on a case-by-case basis. However, in my respectful submission, the question must always be this: will an index be useful to the reader, and sufficiently useful to justify its incorporation in the Act?
I wish to deal with one objection to an index which is sometimes raised. I have heard it suggested that an Act of Parliament ought not to contain matter which has no legislative effect. One can see the logic of that objection. But does it really stand up to examination? Every Act contains marginal notes against sections. A
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marginal note has no legislative effect. It is inserted for the convenience of the reader. If a marginal note is permissible, why not an index?
An index of defined expressions is coming into increasing use in heavy Bills. There are no fewer than three Bills now going through the other place which have just such an index as I am proposing for the Competition Bill. They are: the Government of Wales Bill, with 35 defined expressions; the Scotland Bill, with 44; and the school standards Bill, with 58. Each of those Bills contains an index of defined expressions similar to that which I propose for the Competition Bill. The Competition Bill has, in fact, 59 defined expressions.
There is also a fourth Bill, the Data Protection Bill, which is at this very moment being taken through this House by the noble Lord, Lord Williams of Mostyn. That has 38 defined expressions, which are collected together in an index. I ask myself: why should the reader of the Data Protection Act have the advantage of an index of defined expressions, while the reader of the Competition Bill, with more sections and more defined expressions, is denied that advantage? Is it right, in the case of a long and complicated Bill, that we should sometimes help the reader and sometimes we should not? If an index is appropriate for the Data Protection Act, why is it not appropriate for the Competition Act? I beg to move.
Lord Kingsland: My Lords, I warmly support this imaginative and constructive initiative by the noble and learned Lord, Lord Brightman. He has in effect already done the work for the Government. I earnestly hope that the Government will respond in a most positive way.
Lord Haskel: My Lords, the Government always have an open ear to suggestions which would make legislation easier to read and more user-friendly. We have taken advice from the appropriate authorities on whether we should include an index of defined expressions in the Competition Bill. The clear advice we have received is that it would not be appropriate to include such an index in the Bill.
However, in view of what the noble and learned Lord has said, perhaps we should ask the legal draftsman to read his remarks very carefully and to reconsider that advice. In view of that, perhaps the noble and learned Lord will withdraw his amendment.
Lord Brightman: My Lords, I am delighted to hear what the Government have said and I gratefully accept what is suggested. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 2 [Exclusions: Other Competition Scrutiny]:
Lord Simon of Highbury Lord Simon of Highbury moved Amendment No. 48:
Page 50, line 18, leave out from beginning to ("that") and insert ("and").
The noble Lord said: My Lords, I shall also speak to Amendments Nos. 49, 50 and 51.
I mentioned in Committee on 13th November that we should need to refine some of the provisions in Schedule 2. These amendments refine the provisions which deal with agreements relating to Channel 3 news provision and networking arrangements, which are subject to competition scrutiny under the Broadcasting Act. They also provide a power to exclude or modify provisions in the Bill in respect of producer responsibility schemes and certain agreements. At present, the Environment Act provides a power to make regulations which provide for competition scrutiny and for the RTPA to be excluded or modified in respect of producer responsibility schemes and certain agreements.
Amendments Nos. 48 and 49 are technical amendments. Amendments Nos. 50 and 51 are subsidiary and relevant to the same provisions. I beg to move.
On Question, amendment agreed to.
Lord Simon of Highbury Lord Simon of Highbury moved Amendments Nos. 49 to 51:
Page 50, line 36, at end insert
("and expressions used in this section which are also used in Part I of the Competition Act 1998 are to be interpreted in the same way as for the purposes of that Part of that Act.").
Page 50, line 44, leave out from ("arrangements") to end of line 48 and insert ("to the extent to which they—

(a) are subject to Schedule 4 to the Broadcasting Act 1990 (competition references with respect to networking arrangements); or

(b) contain provisions which have been considered under that Schedule.

(2) The Independent Television Commission ("ITC") must publish a list of the networking arrangements which in their opinion are excluded from the Chapter I prohibition by virtue of sub-paragraph (1).
(3) The ITC must—

(a) consult the Director before publishing the list, and

(b) publish the list in such a way as they think most suitable for bringing it to the attention of persons who, in their opinion, would be affected by, or likely to have an interest in it.

(4) In this paragraph "networking arrangements" means—

(a) any arrangements entered into as mentioned in section 39(4) or (7)(b) of the Broadcasting Act 1990, or

(b) any agreements—

(i) which do not constitute arrangements of the kind mentioned in paragraph (a), but

(ii) which are made for the purpose mentioned in section 39(1) of that Act, or

(c) any modification of the arrangements or agreements mentioned in paragraph (a) or (b).").

Page 50, line 48, at end insert—
("Environmental protection: producer responsibility obligations
.—(1) The Environment Act 1995 is amended as follows.
(2) In section 94(1) (supplementary provisions about regulations imposing producer responsibility obligations on prescribed persons), after paragraph (o), insert—
"(oa) the exclusion or modification of any provision of Part 1 of the Competition Act 1998 in relation to exemption schemes or in relation to any agreement, decision or concerted practice at least one of the parties to which is an operator of an exemption scheme;".
(3) After section 94(6), insert—
"(6A) Expressions used in paragraph (oa) of subsection (1) above which are also used in Part I of the Competition Act 1998 are to be interpreted in the same way as for the purposes of that Part of that Act."
(4) After section 94, insert—
"Producer responsibility: competition matters.
94A.—(1) For the purposes of this section, the relevant paragraphs are paragraphs (n), (o), (oa) and (ya) of section 94(1) above.
(2) Regulations made by virtue of any of the relevant paragraphs may include transitional provision in respect of agreements or exemption schemes—

(a) in respect of which information has been required for the purposes of competition scrutiny under any regulation made by virtue of paragraph (ya);

(b) which are being, or have been, considered for the purposes of competition scrutiny under any regulation made by virtue of paragraph (n) or (ya); or

(c) in respect of which provisions of the Restrictive Trade Practices Acts 1976 and 1977 have been modified or excluded in accordance with any regulation made by virtue of paragraph (o).

(3) Subsections (2), (3), (5) to (7) and (10) of section 93 above do not apply to a statutory instrument which contains only regulations made by virtue of any of the relevant paragraphs or subsection (2) above.
(4) Such a statutory instrument shall be subject to annulment in pursuance of a resolution of either House of Parliament." ").
On Question, amendments agreed to.
Schedule 4 [Professional Rules]:
Lord Howie of Troon Lord Howie of Troon moved Amendment No. 52:
Page 58, leave out lines 10 to 13 and insert—
("17. The services of chartered engineers, incorporated engineers and engineering technicians.
Technology
17A. The services of persons practising or employed as consultants in the field of—").
The noble Lord said: My Lords, I am sorry to detain the House at this late hour, but this amendment, though short, is important. We discussed it previously on Report. Unfortunately, the amendment that I tabled then was imperfect—as is often the case with amendments that I table. Owing to its imperfection, it received a somewhat perfunctory reply. In fact, it received no reply at all—it was merely swatted to one side like an interfering fly. I later wrote to the Minister, suggesting a better way of dealing with this specific problem. He is therefore aware of what I am about to say—although I shall say it at greater length than I did in the letter.
The amendment that I proposed for this stage was changed by the Committee Clerks into the series of three amendments that appear on the Marshalled List. I shall speak to all three together. The effect that I had, and still have, in mind is to split paragraph 17 of Schedule 4 into two parts, so that it demonstrates clearly that engineering is a discrete discipline, quite separate from science, technology, architecture or any other discipline. The effect of these amendments would be to leave sub-paragraphs (a) and (b) of paragraph 17 under the general heading, Engineering, and the remaining sub-paragraph would come under the heading, Technology, making quite clear the distinction between these matters.
On Report, we were told that the headings in italics carried no weight, just as marginal notes, referred to by the noble and learned Lord, Lord Brightman, have no weight. That led me to two thoughts. If they have no weight, why are they there at all? Or, if they are there in order to help the reader, as the noble and learned Lord, Lord Brightman, suggested, they should be helpful rather than misleading.
As paragraph 17 presently stands, it is misleading. Under the general heading, Engineering, it includes a large number of matters which are clearly not engineering matters at all. I went into this point at some length on Report and shall not delay the House unduly, except to say that nobody with any respect for language would regard geology, agronomy, forestry, livestock rearing in particular, ecology, chemistry or biochemistry as engineering. They may well be described as technology, but there is no way in which they can be described as engineering. It is absurd so to describe them.
I have spent the 20 years that I have been in this place trying to get Whitehall to recognise engineering as a separate discipline. I have had modest success—but it has been extremely modest. I am hoping to add another modest success to my rather dismal record in this respect.
There is more to it than merely that. Sub-paragraphs (a) and (b) refer to engineering, but they contain a serious flaw. The Bill excludes professional people working under designated professional rules from some of the strictures of the Bill. In the case of engineering, the rules are those of the Engineering Council and the various institutions of engineering, of which there are a number—some may say an unreasonable number. It is possible to practise as a consultant and to do engineering work without being a member of any engineering institution or of the Engineering Council. Thus a person who was not working under the rules of a professional body would be excluded under the Bill as it stands. I cannot believe that that is what the Minister wishes to provide.
Let me illustrate the point by reference to the paragraph referring to architects. That merely says "architects", which is all right because architects are registered. Although one can do architectural work without being registered, as I have myself as a civil engineer, one cannot then describe oneself as an architect and therefore would not be subject to the exclusion in the Bill. Engineering does not have the advantage of registration. Therefore people who are not registered engineers, in the usual sense of the term, and are not subject to professional rules of any kind would be unreasonably excluded.
I tried earlier, and will try again, to show that paragraph 17 is flawed, though not fatally so, and can be remedied. I have suggested one means by which it can be improved. I sincerely hope that the Minister will pay attention to what I have said. I beg to move.
8.30 p.m.
Lord Haskel: My Lords, as I explained in Committee and on Report, the Government's intention in Schedule 4 is simply to carry forward into the Bill an exclusion for the professional rules of those professions which are presently excluded from the Restrictive Trade Practices Act 1976. The present definition can be found there, and I am not aware that it has caused any problems since. As we wish to carry forward an exclusion, we have no wish to depart from the wording now used in Schedule 4.
The specified professional services are the ones for which, if there is a professional body which regulates the service or the persons providing or wishing to provide that service, that body may apply to the Secretary of State to have its professional rules designated and hence excluded from the Chapter I prohibition. This applies equally to engineers and engineering consultants. Therefore the purpose of the definitions is to define which professional bodies may—and by omission may not—have their professional rules designated. It is a matter of regulating professional bodies and their members. I should perhaps emphasise that it is only professional rules that we are talking about here. Other agreements between members of the relevant professions could not be excluded under the schedule.
The noble Lord is concerned that the definition does not match his own definition and that it includes some persons whom he would rather have included in a separate category. That can apply to all parts of Schedule 4.
If there are no such professional rules, there will be none to be designated and hence excluded under the Bill. As the only purpose of the clause is to list those professions which are presently excluded from the Restrictive Trade Practices Act 1976, it seems sensible to carry forward the wording of that Act. It may well be out of date, but it serves for the purpose of the Bill.
I know that the noble Lord is a champion of engineering and engineers and has spoken up for them many times in this House, but I do not believe that the Bill is a proper place for him to try to further the profession. In view of that, I hope that he will be able to withdraw his amendment.
Lord Howie of Troon: My Lords, that is the miserable kind of reply that I expected. I have not heard such nonsense since my noble friend replied to me at Report stage. it must be possible for him, even so late in the evening, to grasp the simple fact that there are groups of persons included in paragraph 17 who are not engineers at all, who are livestock stockbreeders and agronomists, for goodness sake! I greatly admire those people, but they are not engineers. It would be a simple matter for my noble friend to do what I asked.
I know there is a problem, which I have come across in earlier legislation. Someone, beavering through previous legislation, found this part, took his scissors, cut it out and pasted it into the draft of the Bill. It is done all the time; but it should be done with thought. To change this provision and improve the Bill would be

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a very simple matter. I do not imagine that there is any way of knocking sense into my noble friend's head, other than with a sharp instrument. I do not have one of those, and it would be impolite of me, in any case, because he and I have been friends for many years. He really must get a grip of this. I can assure him that there is every likelihood that the matter will be raised in another place.
Perhaps it would be a good idea if he were to take up the suggestion I made in the letter to which I referred that we should have a brief meeting, perhaps over a glass or two of Scotch, and sort the matter out. It is not difficult. That would not only redound to my noble friend's reputation but please something like a quarter of a million engineers. Under the paragraph as it stands, it is possible to act as a consultant without being subject to the rules, and that is a flaw. In view of the extremely unsatisfactory reply, the kind of reply that I am used to, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 53 and 54 not moved.]
Schedule 8 [Appeals]:
[Amendment No. 55 not moved.]
Schedule 10 [Regulators]:
Lord Simon of Highbury Lord Simon of Highbury moved Amendment No. 56:
Page 76, leave out lines 16 to 19 and insert—
(""(3B) Subsections (1) and (2) above do not apply in relation to anything done by the Director in the exercise of functions assigned to him by section 50(3) below ("Competition Act functions").
(3C) The Director may nevertheless, when exercising any Competition Act function, have regard to any matter in respect of which a duty is imposed by subsection (1) or (2) above, if it is a matter to which the Director General of Fair Trading could have regard when exercising that function."").
The noble Lord said: My Lords, in moving Amendment No. 56, I shall speak also to Amendments Nos. 60 to 65.
At Report, the noble Lords, Lord St. John of Bletso and Lord Kingsland, and the noble Viscount, Lord Trenchard, spoke to amendments concerning the duties of regulators under their utility statutes. I was grateful to the noble Lords for raising the matter.
In response I said that the position that we wished to achieve was that a regulator applying the prohibitions was to do so on precisely the same legal basis as the DGFT; that we wished to make that clear on the face of the Bill, and that we would bring forward amendments in order to achieve it (23rd February; col. 476). These amendments fulfil that commitment.
The amendments provide that the statutory duties contained in utility legislation do not apply in relation to the regulators' concurrent functions under the Bill. The amendments also make clear that, when exercising a concurrent function, a regulator may have regard to the matters which are the subject of the statutory duties if the DGFT could have regard to those matters if he were exercising that function. I said at Report that we were concerned that simply to disapply the duties might lead to uncertainty as to the effect of the "disapplication". The amendments put the effect beyond doubt.
Two of the amendments also contain a further clarificatory provision to ensure that, in dealing with the last point, we do not raise doubts about the effect of disapplication provisions already in the legislation. This further clarification is in Amendment No. 61 relating to the Electricity Act 1989, and Amendment No. 64 relating to the Electricity (Northern Ireland) Order 1992. It is possible that we may wish to provide similar clarification in relation to the Telecommunications Act 1984 and the Water Industry Act 1991. If so, amendments would need to be brought forward in another place. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 57 to 59 not moved.]
Lord Haskel Lord Haskel moved Amendments Nos. 60 to 72:
Page 77, leave out lines 3 to 6 and insert—
(""(3A) Subsections (1) to (3) above and section 4A below do not apply in relation to anything done by the Director in the exercise of functions assigned to him by section 36A below ("Competition Act functions").
(3B) The Director may nevertheless, when exercising any Competition Act function, have regard to any matter in respect of which a duty is imposed by any of subsections (1) to (3) above or section 4A below, if it is a matter to which the Director General of Fair Trading could have regard when exercising that function."").
Page 77, leave out lines 44 to 47 and insert—
(""(6A) Subsections (1) to (5) above do not apply in relation to anything done by the Director in the exercise of functions assigned to him by section 43(3) below ("Competition Act functions").
(6B) The Director may nevertheless, when exercising any Competition Act function, have regard to any matter in respect of which a duty is imposed by any of subsections (1) to (5) above ("a general matter"), if it is a matter to which the Director General of Fair Trading could have regard when exercising that function: but that is not to be taken as implying that, in the exercise of any function mentioned in subsection (6) above, regard may not be had to any general matter."").
Page 78, leave out lines 31 to 34 and insert—
(""(6A) Subsections (2) to (4) above do not apply in relation to anything done by the Director in the exercise of functions assigned to him by section 31(3) below ("Competition Act functions").
(6B) The Director may nevertheless, when exercising any Competition Act function, have regard to any matter in respect of which a duty is imposed by any of subsections (2) to (4) above, if it is a matter to which the Director General of Fair Trading could have regard when exercising that function."").
Page 79, leave out lines 22 to 25 and insert—
(""(7A) Subsections (1) to (6) above do not apply in relation to anything done by the Regulator in the exercise of functions assigned to him by section 67(3) below ("Competition Act functions").
(7B) The Regulator may nevertheless, when exercising any Competition Act function, have regard to any matter in respect of which a duty is imposed by any of subsections (1) to (6) above, if it is a matter to which the Director General of Fair Trading could have regard when exercising that function.").
Page 80, leave out lines 11 to 14 and insert—
(""(3) Paragraph (1) does not apply in relation to anything done by the Director in the exercise of functions assigned to him by Article 46(3) ("Competition Act functions").
(4) The Director may nevertheless, when exercising any Competition Act function, have regard to any matter in respect of which a duty is imposed by paragraph (1) ("a general matter"), if it is a matter to which the Director General of Fair Trading could have regard when exercising that function; but that is not to be taken as implying that, in the exercise of any function mentioned in Article 4(7) or paragraph (2), regard may not be had to any general matter."").
Page 80, leave out lines 45 to 48 and insert—
(""(3A) Paragraphs (2) to (4) do not apply in relation to anything done by the Director in the exercise of functions assigned to him by Article 23(3) ("Competition Act functions").
(3B) The Director may nevertheless, when exercising any Competition Act function, have regard to any matter in respect of which a duty is imposed by any of paragraphs (2) to (4), if it is a matter to which the Director General of Fair Trading could have regard when exercising that function."").
Page 82, line 16, at end insert—
("() In section 16 (securing compliance with licence conditions), in subsection (5), after paragraph (a), omit "or" and after paragraph
(b), insert "or
(c) that the most appropriate way of proceeding is under the Competition Act 1998."").
Page 83, line 16, at end insert—
("() In section 28 (orders for securing compliance with certain provisions), in subsection (5), after paragraph (aa), omit "or" and after paragraph (b), insert "or
(c) that the most appropriate way of proceeding is under the Competition Act 1998."").
Page 84, line 23, at end insert—
("() In section 25 (orders for securing compliance), in subsection (5), after paragraph (b), omit "or" and after paragraph (c), insert "or
(d) that the most appropriate way of proceeding is under the Competition Act 1998."").
Page 85, line 35, at end insert—
("() In section 19 (exceptions to duty to enforce), after subsection (1), insert—
"(1A) The Director shall not be required to make an enforcement order, or to confirm a provisional enforcement order, if he is satisfied that the most appropriate way of proceeding is under the Competition Act 1998."
() In section 19(3), after "subsection (1) above", insert "or, in the case of the Director, is satisfied as mentioned in subsection (1A) above.".").
Page 87, line 14, at end insert—
("() In section 55 (orders for securing compliance), after subsection (5), insert—
"(5A) The Regulator shall not make a final order, or make or confirm a provisional order, in relation to a licence holder or person under closure restrictions if he is satisfied that the most appropriate way of proceeding is under the Competition Act 1998."
() In section 55—

(a) in subsection (6), after "subsection (5)" insert "or (5A)";

(b) in subsection (11), for "subsection (10)" substitute "subsections (5A) and (10)".").

Page 88, line 30, at end insert—
("() In Article 28 (orders for securing compliance), in paragraph (5), after sub-paragraph (b), omit "or" and after sub-paragraph (c), insert "or
(d) that the most appropriate way of proceeding is under the Competition Act 1998."").
Page 89, line 31, at end insert—
("() In Article 19 (orders for securing compliance), in paragraph (5), after sub-paragraph (b), omit -or" and after sub-paragraph (c). insert "or
(d) that the most appropriate way of proceeding is under the Competition Act 1998."").
The noble Lord said: My Lords, with the leave of the House, I shall move Amendments Nos. 66 to 72 en bloc. I beg to move.
On Question, amendments agreed to.
Schedule 11 [Interpretation of Section 55]:
Lord Kingsland Lord Kingsland moved Amendment No. 73:
Page 90, leave out lines 6 to 25.
The noble Lord said: My Lords, Amendments Nos. 73 to 76 are in a group of amendments which seek to change parts of Schedule 11 in the context of Clauses 53 and 54 of the Bill. This is a matter that was covered both at Committee and Report stages when we sought to use a different approach.
At Committee stage we promoted the idea of a complete exclusion of these categories from the Bill and received an unfavourable reaction from the government Benches. At Report stage we promoted the idea of a 14-day notice before information was transferred from one designated person fulfilling a relevant function to another. Our final approach is to seek to amend Schedule 11 by narrowing down the range of delegated persons and relevant functions.
The amendment invokes an important principle; that is, that information acquired for one purpose by one regulator or the director-general should not be used for another purpose; otherwise, any one of the parties who is a designated person can go fishing in this pool to extract information to which he or she is not entitled. I beg to move.
Lord Simon of Highbury: My Lords, we have indeed covered this ground before and I noticed the slowing of the approach marks but no lacking in the keenness with which the amendments are put forward.
These amendments would prevent disclosure of information for any of the statutory functions listed in Schedule 11 other than for Bill purposes. I understand that noble Lords opposite believe that that should be the position. They have put their cases. However, we believe that we have answered them and shall do so one more time.
In brief, our view is that if the director or one of the sector regulators has information that he thinks will assist one of the other regulators to perform his statutory functions under another Act, he should be able to give him that information. This is entirely in line with many other UK regulatory statutes. There are similar provisions for disclosure for specified purposes in the Fair Trading Act, the Competition Act, the Restrictive Trade Practices Act, utilities statutes, the Financial Services Act and the Companies Act to name just a few.
The noble Lord has in the past—I am sorry that I did not catch everything he said--referred to the common pool of information available to the regulators in which to fish. I heard the mention of "fishing", but I did not know whether it was a reference again to the common pool. It is important to get that issue into perspective. Under Clause 55 the director or a sector regulator can only pass information to another regulator for a specific purpose; that is, to assist him with a specific statutory function.
I understand why noble Lords opposite wish to ensure that the House gives close attention to this issue. As I have said on a number of occasions, it is one that we believe to be important and sensitive. But we responded

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carefully and fully to the points raised in debates and I therefore invite the noble Lord, Lord Kingsland, to withdraw his amendment.
Lord Kingsland: My Lords, I thank the Minister for the patient way in which he yet again responded to another approach to try and achieve a similar or the same result. The issue concerns the status of the information which is put into the pool. It is put in for a specific purpose. Another regulator may seek to extract it from the pool for his own purpose, a different purpose from the purpose for which it was originally put in.
That is the point I was trying to make. I see that have made no headway tonight. Nevertheless, I appreciate the calm way in which the Minister responded. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 74 to 77 not moved.]
7.45 p.m.
Schedule 13 [Transitional Provisions and Savings]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 78:
Page 98, line 26, after ("determined") insert—

("(a) in the case of proceedings under the RPA, before the date of enactment; and

(b) in the case of proceedings under the RTPA").

On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 79:
Page 98, line 26, at end insert—
("(1A) On the date of enactment, continuing proceedings under the RPA shall automatically be stayed for a period of two years from that date or until such earlier time as they are discontinued under sub-paragraph (1B) or (5).
(1B) On the commencement date, continuing proceedings under the RPA which are stayed by virtue of sub-paragraph (1A) shall automatically be discontinued.").
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 80:
Page 99, line 22, at end insert (" or
(c) it is an agreement—

(i) where resale price maintenance has been approved,

(ii) particulars of which have been furnished under section 24(1) of the RTPA and which has not been referred to the Restrictive Practices Court,

(iii) which has been determined under section 21(2) of the RTPA to contain no significant restrictions or which has been found to contain no significant restrictions or which has been found not to be contrary to the public interest, or

(iv) specifically exempted or excluded from the RTPA.

() Sub-paragraph (1)(c) shall apply for the full life of the agreement or for as long as the agreement fulfils the relevant conditions for exclusion or exemption from the RTPA.").
The noble and learned Lord said: My Lords, I can deal with this matter briefly. The concern is that appropriate additional arrangements will be vital to keeping the compliance costs of the new legislation manageable. Once again the focus that we want to give to this legislation is not that there should just be an appropriate competition law regime in place, but that it should not be unnecessarily burdensome.
In our view the present provisions are inadequate. For example, under the Bill as currently drafted it will be possible for legislation to come into force before guidance on the interpretation of prohibition is agreed. That will cause confusion; force industry to make lots of potential unnecessary failsafe notifications: and will overburden the OFT.
I anticipate that the response from the Minister will be that, although it is theoretically possible, he will offer me an assurance that in practice it will not happen. If he offers that assurance, I can indicate that he can respond briefly, and I shall withdraw the amendment with even greater alacrity. I beg to move.
Lord Simon of Highbury: My Lords, we shall certainly do everything in our power to ensure that there is a minimum of bureaucracy in any way in which the Office of Fair Trading behaves. Beyond that, if that answer is satisfactory, I shall not go into the detail of Amendments Nos. 80 and 81.
Lord Fraser of Carmyllie: My Lords, I think that the noble Lord might have given me a little more than that, but at this time of night, given my high regard for the Department of Trade and Industry, I will assume that nothing irrational will be done. I will give credit for that, but the noble Lord might write to me giving the assurance that there will be no risk of the type I mentioned. I do not ask for any further comment from him. I am sure, knowing his reaction to other matters in the Bill, he will do as I request. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 81 not moved.]
Schedule 14 [Repeals and Revocations]
Lord Haskel Lord Haskel moved Amendments No. 82 to 86:
Page 104, line 17, column 3, at end insert—

("In section 16(5), the "or" immediately after paragraph (a).")

Page 104, line 40, column 3, at end insert—

("In section 28(5), the "or" immediately after paragraph (aa).")

Page 105, line 17, column 3, at end insert—

("In section 25(5), the "or" immediately after paragraph (b).")

Page 107. line 21, column 3, at end insert—

("In Article 28(5), the "or" immediately after sub-paragraph (b).")

Page 107, line 54, column 3, at end insert—

("In Article 19(5), the "or" immediately after sub-paragraph (b).")

The noble Lord said My Lords, we have already spoken to these amendments. I beg to move Amendments Nos. 82 to 86 en bloc.
On Question, amendments agreed to.
An amendment (privilege) made.
8.53 p.m.
Lord Simon of Highbury: My Lords, I beg to move that the Bill do now pass. We shall send this Bill to another place having made a number of important changes. In particular I refer to the 26 changes we made prior to today in response to points and concerns raised in the House. There are a number of other amendments consequential upon those changes.
There were two matters on which the House did not accept the Government's position. We shall have to reflect carefully on both. But the fairly numerous changes made to what I think all of us believe is an important and quite complex Bill are indicative of a very effective opposition and, I hope, a responsive government.
As a personal experience, I have very much enjoyed and appreciated the way the House has gone about its business. I pay tribute to the Opposition spokesmen and to other noble Lords whose experience we have greatly benefited from. All speeches were well argued, constructive and, sometimes, short. I am pleased that we have been able to work together in a spirit of consultation in order to bring about some real improvements.
I thank also my own Bill team and my noble friend on my left for all his help. I thank too the officers of the House and the staff—because we have been late on occasions—and parliamentary counsel, despite his views on indexes, for the unstinting support they have given. I thank all concerned and commend the Bill to the House.
Moved, That the Bill do now pass.—(Lord Simon of Highbury.)
Lord Fraser of Carmyllie: My Lords, I am grateful to the noble Lord for what he said. This has been a relatively long Bill. It has been extremely technical, and interesting for those of us who have participated in it. It has not quite drawn the houses that the "Titanic" has been achieving in recent weeks: nevertheless, for those of us who have participated, particularly in the presence of some of the most extraordinarily skilled and knowledgeable people in competition law, it has been a very worthwhile experience.
I cannot say the Bill leaves your Lordships' House in quite the shape we would like. There are a number of respects in which we would still like to see progress and improvement but we note with appreciation the undertakings that the Minister gave at earlier stages and also today. The legislation does not yet have quite the right balance that is required of an enforceable
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competition regime operating in the best interests of British industry, but I do not think that the differences between us are so large that the appropriate balance cannot be struck before the Bill completes its legislative procedure.
I thank the noble Lord, Lord Haskel, for dealing with amendments in his usual courteous fashion and for the receptive way in which he understood our concerns. I say particularly to the noble Lord, Lord Simon, that his reputation in your Lordships' House is very considerably enhanced. The Bill is extremely complicated. Not only has he dealt with it with great courtesy, but we have all appreciated his deep and profound understanding of competition matters. for some of us it is reassuring that in this government there is at least one significant intellect that will shape competition policy in the future.
I hope that the noble Lord appreciates that there is one aspect in which we have improved him. When he first began on the Bill he seemed irresistibly drawn to using the second person plural. As the Bill leaves this House, he is firmly thirled to the third person plural. I compliment him on that improvement. It is unfortunate that he has not been able to provide greater satisfaction as regards the voting ambitions of the engineers. I doubt, however, that the matter will preoccupy those in another place. Very sincerely, I compliment the Minister on the way he has handled the Bill. Our appreciation extends, of course, to those who stand behind him in the Bill team. The Bill is technical and they have done an exceptionally good job in complicated circumstances.
Lord McNally: My Lords, may I associate myself with those sentiments, particularly the compliments to the noble Lords, Lord Simon and to Lord Haskel, who have throughout shown courtesy and good humour. I thank also the noble and learned Lord, Lord Fraser of Carmyllie, who probably took chestnuts out of the fire for me more times than was entirely within his job description during the passage of the Bill. I am still a relative newcomer to the House and I am grateful to him, as I am to my colleague, my noble friend Lord Ezra, whose wisdom and experience has often contributed to our debates. I am also grateful to the noble Lord, Lord Borrie, who has been a kind of uncle to the debates.
I should make clear to the Minister and the ministerial team that it is not their Bill now; it is our Bill. It goes to another place with two significant amendments which I had the pleasure of carrying. I appreciate that the Minister said that the Government were still pondering on those issues. The most significant debate was that on predatory pricing. Whatever else emerged from that debate we found that there are almost as many directors of The Times in this House as there are bishops. So that was an advancement. Since that famous night we have come to realise, if we did not know before, that Mr. Murdoch is not by nature a self-regulator. Nor does he seem over-zealous in keeping to undertakings about ownership and editorial independence. I hope that the Government will look on the amendment, to quote the Minister, as "a real improvement." Parliament, I submit, will have to draw

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a line in the sand at some time on these matters. I think the time is now but the decision is for another place. In the meantime it has been a tremendous experience working on the Bill and it has been made all the better by the courtesy, good humour and great skill of the Minister and his team.
9 p.m.
Lord Cocks of Hartcliffe: My Lords, when I spoke on Second Reading on 30th October, I declared a registered interest in British Telecommunications plc, and I do so again. I spoke about the convergence of the telecommunications, computing and media industries and the conclusions of Oftel that:
"telecommunications is now but part of the new digital communications market".
I also raised questions about the responsibilities of the OFT and the interrelationships between that body and the industry-specific regulators. My position as vice chairman of the BBC makes me even more concerned about the issue of convergence. I also raised a question about Microsoft and its alleged packaging of Internet software and asked who would conduct an inquiry into that.
I wish to emphasise what has been said about the quality of the debates that have taken place on the Bill. I hope that those considering the future of this House have taken note of them. The House is of immense value, and whatever replaces it must be of an extremely high standard in order to match it. I also hope that notice has been taken of the Government's readiness to listen. That is in keeping with the Government's willingness to listen and to "get it right" in the national interest.
There have been a number of changes which we welcome. On studying the debates, it is clear that Clause 60 is the key to the Bill. The Government have stated their intention to align the UK system more closely with the European system. Among the benefits to both industry and consumers will be increased simplicity and certainty in the application of the law throughout Europe. Alignment does not mean that UK competition law will incorporate European law "warts and all". It does mean that we will align the system of law and jurisprudence to create greater certainty and clarity.
Perhaps Clause 60 can be tidied up a little more, but where we make improvements it should be clear that we have done so. That enables us clearly and proudly to set the pace in Europe rather than appearing to be out of step with Europe.
Although we have had very good debates, the issue has been complex and the key issues have emerged clearly. They are the role of regulation, the role of competition policy, and the relationships between the relevant authorities. The debate over the plurality of the media and its consequent implications for the limits on competition policy generally have brought the House alive to overreliance on competition policy alone. Today we have debated the pharmacies, which is another example of the conflict between a wider social policy and the consequences of applying purist competition policy without reconciling that with other aspects of the
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wider public interest. It is no exaggeration to say that we have been dealing with the limits on the free market and ultimately we have been debating the role of the state in a market economy. Those are matters of heavy importance.
I return to the Microsoft question. It was answered on 24th February in the Financial Times by the outgoing Director-General of Oftel, Mr. Cruickshank. After a visit to Microsoft, he is reported to have said that:
"anti-competitive behaviour by companies such as Microsoft and British Sky Broadcasting should be checked by tough, new regulation".
The article goes on to record that Mr. Cruickshank wants more regulation to deal with the problems he sees. Following my Second Reading speech, Mr. Cruickshank had the courtesy to write to me and I have read those letters with care. My response is that, in relation to the information technology sector, these matters do not arise in one area of the economy alone and are of such importance to the economy generally that they should be dealt with by the authority best able to pursue them in the national interest.
The Government have indicated that they wish to see a system of competition law modelled on Europe. Ensuring that the right policeman has the ability to call on the right resources at the right time is now the important task. I suggest that there remains a substantial role for the Government. Where there are instances of market failure, where the nation believes that there ought to be a diverse media ownership, or where we consider the continued existence of community pharmacies to be more important than economic efficiency, there needs to be a clear mechanism in the Bill to enable this to take place. To an extent, such mechanisms exist in Schedule 3, but are not well developed in European law.
This area may also need to be revisited in the light of the convergence between markets which has taken place in the information technology sector in order to deal with our European obligations. I welcome the Green Paper recently issued by the European Commission.
I apologise for taking up your Lordships' time at this hour of night, but I shall suffer because I am on the Woolsack for the rest of the evening.
On Question, Bill passed, and sent to the Commons.

Northern Ireland (Emergency Provisions) Bill
9.5 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Dubs): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Dubs.)
On Question, Motion agreed to.
House in Committee accordingly.
[The DEPUTY CHAIRMAN OF COMMITTEES (Lord Cocks of Hartcliffe) in the Chair.]
Clause 1 agreed to.
Clause 2 [Scheduled offences]:
Lord Cope of Berkeley Lord Cope of Berkeley moved Amendment No. 1:
Page 1, line 22, leave out subsection (2).
The noble Lord said: It is late in the day to be starting our detailed consideration of this important Bill, but that is the way it has turned out. The noble Lord, Lord Monson, apologised that after having put his name to some of the amendments he has been obliged to leave before we deal with them.
I rise to move Amendment No. 1. The Committee will know that some offences in Northern Ireland are called "scheduled offences" and special provisions apply. In particular, the trial for such offences takes place without a jury, but with extra safeguards such as automatic appeal. Such provisions are considered by everyone to be necessary in order to protect the public and to secure convictions.
Schedule 1 of the Northern Ireland (Emergency Provisions) Act 1996 lists the scheduled offences. They are of two types. They are what one might call the automatic scheduled offences, which are always automatically dealt with as terrorist offences with no jury, and presumed scheduled offences covered by note 1 of the schedule. These can be certified out by the Attorney-General and instead be dealt with by trial by jury.
This clause will give the Attorney-General the power to certify out more types of offences as not being terrorist offences. My amendment seeks to leave some of those offences as automatic scheduled offences. I am sure that we are all agreed that some offences should be automatically scheduled and some should be certified out. The question is which should be in the latter category.
These amendments propose that the following offences should continue to be treated as automatically scheduled offences. I shall not use legal language; in layman's language the offences are: causing an explosion or sending an explosive substance—that is to say, bombs and parcel bombs; making, possessing or throwing a petrol bomb; possessing or carrying a firearm with intent to endanger life; using or carrying a firearm to resist arrest; possessing a firearm in suspicious circumstances; causing, or conspiring to cause, an explosion likely to kill; and making or possessing explosives in suspicious circumstances.
I do not believe that those offences are ever likely to be committed in Northern Ireland in current circumstances except by terrorists. If the Minister is to justify the clause as it stands, he needs to tell us of offences falling into these categories which have been committed in Northern Ireland by what are politely known as "ordinary, decent criminals", in the jargon of the Province—that is, not by terrorists. I do not know how many petrol bombs have been thrown by people outside the terrorist context, but, in order to justify the clause, that is what the Minister needs to explain.
The importance of a particular terrorist offence being in the automatic category as a scheduled offence is that no specific action taken by a politician in a particular
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case causes that offence to be tried without a jury. I realise, of course, that the Attorney-General acts in a legal capacity, but he is a politician. That fact and the fact that he, as a politician, is the one who decides whether it is tried in a Diplock court, can lead to misunderstanding and certainly from time to time leads to misrepresentation. If there are extra offences of that kind it also leads to extra work in the Attorney-General's office as more cases will need to be considered for possible certifying out, although that fact does not seem to have been provided for in the Financial Memorandum to the Bill.
Some argue that there should be the minimum of automatic scheduled offences in the interests of natural justice and the normality of the judicial process. But the situation is not normal in Northern Ireland; if it were we would not need any of the emergency provisions. I want the minimum of political decision in settling which cases are tried without juries and the maximum of certainty. That is why I commend these amendments to the House. I beg to move.
Lord Dubs: The effect of these amendments would be that there would be no facility in any circumstances for the following offences to be certified out of the list of scheduled offences: Section 29 of the Offences Against the Person Act (NI)1861; that is: causing an explosion or sending an explosive substance or throwing corrosive liquid with intent to cause grievous bodily harm. Offences under Section 2 and Section 3 of the Protection of the Person and Property Act (NI) 1969; that is: making or possessing a petrol bomb etc., in suspicious circumstances; or throwing or using a petrol bomb, etc.
Offences under Articles 17, 18, 19 and 23 of the Firearms (Northern Ireland) Order 1981; that is: possessing a firearm or ammunition with intent to endanger life or to cause serious damage to property; use or the attempted use of firearm or imitation firearm to prevent arrest of self or another, etc.; carrying a firearm or imitation firearm with intent to commit an indictable offence or to prevent arrest of self or another; and possessing a firearm or ammunition in suspicious circumstances.
Offences under Sections 2, 3 and 4 of the Explosives Substances Act 1883; that is: causing an explosion likely to endanger life or damage property; intending or conspiring to cause any such explosion, and making or possessing an explosive with intent to endanger life or cause serious damage to property; and making or possessing explosives in suspicious circumstances.
In tabling these amendments, the noble Lord seeks to ensure that the offences I have listed are invariably treated as scheduled offences and subject to Diplock trial. The Bill, as presently worded, has the effect that the offences I have listed, among others, may be certified out in individual cases at the Attorney-General's discretion.
The Government's purpose in framing the Bill in this way is to seek to ensure that, where appropriate, a case which would otherwise be treated as a scheduled offence can be treated in the ordinary way. In order for that to

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happen, the Attorney-General would have to certify that it was to be so treated—in other words, that in his opinion it was not connected with the emergency.
A number of offences listed at Schedule 1 to the 1996 Act already are capable of being certified out: the Government's proposal is to extend that category.
The effect of the amendment would be to confine automatically to a Diplock court an offence involving an unprovoked attack in the street on a member of the public by criminal elements not connected with terrorism; for example, by the spraying of an individual with lighter fuel in order to steal his or her possessions. Similarly, a domestic crime involving possession of a firearm with intent to endanger life would automatically he tried by a Diplock court, as would the use of explosives by ordinary criminal elements to gain entry to, for example, a safe.
The Government are aware of the strength of feeling aroused following a recent case involving a number of defendants charged with robbery. The case was certified out as the law provides, but it was later shown to have a terrorist connection. I should say that over the considerable period of time the present system has been operating, this, to my knowledge, is the one and only example of a case having been certified out which ought, on reflection, to have come before a Diplock court. The Government's view is unaltered by the experience of this isolated case. They remain firmly of the view that it is fundamentally wrong not to make provision for an offence which has no terrorist connection to be subject to normal criminal procedures. The Government have examined carefully the category of offences they propose, by virtue of the Bill, to render capable of being certified out. They are satisfied that there could he circumstances in which offences in that category might be committed in a non-emergency context. In the interests of fairness and integrity of the system of scheduled offences, I ask the Committee to join me in rejecting these amendments.
9.15 p.m.
Lord Alderdice: Perhaps I may make a few brief comments. It seems to me that in the fight against terrorism, it is important to ensure that there is as much normality as possible because if we deal with every matter as if it were a terrorist matter, we have effectively handed over to the terrorists and they will, in effect, be deciding how the community should be run.
In the Bill, as drafted, it is clear that in so far as a terrorist component is apparent, it can be dealt with appropriately through the Diplock courts which unfortunately in the current context we have to have. That has been the case for some time. However, where it is clear that there is no terrorist component, it seems appropriate that the normal procedures should apply.
Northern Ireland 20 or 30 years' ago was an extraordinarily law-abiding community. I refer to the notion that there might be "ordinary" criminals. I noted that the noble Lord, Lord Cope, introduced the word "decent", entirely in line with conventional speech in Northern Ireland at the moment. It would have been almost incomprehensible then that a "normal" criminal
1388
in Northern Ireland would have, for example, tossed corrosive liquid in the eyes of his victim. The use of fire-arms, too, would have been remarkable. It would have been unusual to use explosives in respect of a safe. It is a sad fact that, on our own side of the water as, indeed, on this side of the water, such behaviour has more and more become the normal pattern of behaviour for criminals, even those who are not involved in terrorist activity. It therefore seems unwise to assume that every time fire-arms, explosives, corrosive liquids and so on are used, there is terrorist intent. In parenthesis, I accept that there may be a slight difference with regard to petrol bombs. The amendments, however, are fairly wide-ranging and it seems inappropriate that we should insist that whenever such behaviour occurs, it is regarded as terrorist-related. That seems ill advised.
Indeed, during the past week there have been a number of explosions in telephone kiosks in south-east London. The general assumption is that young people are playing with chemicals. I have to say that the young people in Northern Ireland are no more immune to that form of experimentation than young people in south-east London. We would be ill advised to insist that all such young people will find themselves enclosed under the rubric of "terrorist".
Therefore, the Government's approach does not seem unreasonable. Although I understand the context in which the amendments have been tabled and the appropriateness of the thinking of those proposing them, I believe that it would be wise to stick with the proposition announced by the Government. We certainly find ourselves unable to support the amendments.
Lord Cope of Berkeley: The Minister has not attempted to give examples of cases covered by the categories of offences committed by ordinary criminals, if I may adjust my phraseology in response to the comment of the noble Lord, Lord Alderdice. The Minister has not made out the case for the involvement of the Attorney-General as well as I would have hoped. However, at this hour of the night I shall not press the matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 2 not moved.]
Clause 2 agreed to.
On Question, Whether Clause 3 shall stand part of the Bill?
Lord Cope of Berkeley: I believe that this is the most important debate of the evening. We seek to delete Clause 3 and retain the possibility of internment. If the clause as it appears in the Bill were approved internment would no longer be possible in any circumstances. Surprise is essential for the effectiveness of internment, and if those powers are not on the statute book the Government are deprived of that weapon.
We all accept that internment was not effective and had some very damaging effects last time it was tried in the early 1970s. We can argue about the reasons for that, although I believe it to be generally accepted that the principal cause was that the intelligence on which arrests were made was very poor. However, that it did not work

1389
in that particular case should not blind us to the fact that internment has been used effectively both in the Republic of Ireland and in Northern Ireland, notably in response to the IRA border campaign in 1956. It is highly significant that the Republic of Ireland retains the power to introduce internment. Today's news from the talks is optimistic. We all hope that there will be a settlement and that there will be a great improvement in the security situation. But the news of the killings at Poyntzpass amply demonstrates that not everyone will accept whatever settlement can be reached. Irish history tells us that even if the main Sinn Fein/IRA leadership and the loyalist representatives agree to a settlement probably small groups at both ends of the spectrum will continue their struggle.
The Irish Government are perfectly well aware of that. They probably have more experience than us of fighting the IRA, and they have just as much reason to take tough measures for the protection of their society. Internment was used even in de Valera's time during the war when in the rather unusual circumstances existing at the Curragh there were IRA, German and British internees in pursuit of the neutrality of the Irish state. It would be a great irony if, following a settlement, the Irish Government wanted to reinforce that settlement by internment but the British Government had dispensed with the power by this clause in the Bill and took very high risks for their citizens and the settlement itself. For that reason, I believe that it is unwise to include Clause 3 in the Bill.
Lord Molyneaux of Killead: I too support the retention of the power to intern for the following reasons. I believe that internment should be selective and should be a clinical operation designed to break up the command and control structure of any terrorist organisation. That is the key to success at any time in the future. It will probably be exercised in future by an Irish government, as opposed to the rather hamfisted way that it was introduced under the Stormont regime. It is for that reason that successive Irish governments have retained the power to intern. It was said that when Irish governments exercised that power, their methods were excessively ruthless. Maybe it is because of that that they were effective. Despite that, they had public and universal support.
As the noble Lord, Lord Cope of Berkeley, has said, there is a general perception that Her Majesty's Government have parted company with the Irish Government and decided as a—and I quote the two fatal words—"confidence-building measure" to coincide with the major objective of militant republicanism. Considering that the two governments are co-operating in the so-called peace process, I find it very odd that the Irish Government did not feel that they too had to make a confidence -building concession.
If the Government contend that this move is not a so-called confidence-building measure, then the decision becomes even more baffling. It comes at a stage in the talks when there is a near farce being played out in the form of a little gentle tap on the wrist to those terrorist bodies who break the ceasefire. They find
1390
themselves suspended for a few days and then reinstated. This ludicrous practice has been labelled a revolving-door operation. It, more than anything, has damaged what I call the high-wire act, with which it has become the most entertaining feature. So much for the permanency of ceasefires.
There is a far more serious question. If, by a miracle, the whole apparatus provides some kind of agreement—and they all hope earnestly, against past experience, that some form of agreement can be reached—no matter how deviously worded an agreement were drafted, it would not be accepted by militant republicans, possibly not even by the main body, the IRA, and certainly not by the rapidly increasing number of sub-contractors to the IRA who will immediately return to full-scale murder.
The revolving door will then have been jammed and whatever sanctions the Government have at the moment to protect the trusting general public will have been removed. Do the Government then fall back on the discredited clap trap about bringing the murderers before the court—and how often have we heard that over all the years? If so, how long will it take, first of all, to find the guilty, and how many will they murder in the meantime?
In such a situation the two governments may consider isolating the godfathers, some of whom are posing as political leaders. The two governments might conclude that swift, selective internment might be necessary. We will then have a curious situation where the Irish Government can act, as the noble Lord, Lord Cope, has said, within a matter of hours; the British Government will have to introduce legislation and, while the parliamentary machine grinds slowly, terrorists could flee into the United Kingdom from the Irish Republic until the "Today in Parliament" programme informs them that it is no longer safe to stay in the North and they will have to go to a third country.
If that situation appears ludicrous and ridiculous, it will match the derision with which it will be viewed by the long-suffering public, not just in Northern Ireland but in the rest of the United Kingdom. Sad to say, they too will suffer from this lack of resolve.
In the light of that, I beg Her Majesty's Government to keep their options open during the period of the next few months because of dangers impending—words which are familiar to us as Peers.
9.30 p.m.
Lord McConnell: It seems extraordinary to me that, in the face of what is happening and what may well happen in the future, the Irish Republic should retain its right to intern and the UK should abandon its right. It is, as has already been said. an essential part of internment that it be a surprise to those who are to be interned. One reason—it may not be the only reason—that it failed the last time it was put into effect was that the news leaked out, and the main people to be interned quickly left the jurisdiction before they could be collected.
To say, "Oh, if we ever need it, we will introduce legislation", is ridiculous. It would give months more notice that there was going to be a swoop to try to lift

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the people and intern them. They would not stay there. They would not sit there and wait to be interned. As soon as there was any word of legislation, they would take to their heels and depart. I hope that it will never be needed, but that does not mean to say that our protection should be taken away. In fact, it is much less likely to be needed if it is there than if there is no protection. I strongly support the Motion.
Lord Mayhew of Twysden: I can be brief because I agree with what has been said, and much of what has been said comprises all that can be said in support of the Motion. We all agree that the best hope for the future of the people in Northern Ireland and, indeed, in the whole of that island, lies in a fair political settlement, founded upon consent. All our hopes, and no doubt the prayers of many of us, are directed to that end.
But one would be rash to suppose, even if that long-desired outcome came about, that there would be an end thereafter to politically motivated violence in Northern Ireland. Terrorist crimes will surely be seen again. If there is no such settlement, one may suppose that the probability of that happening increases.
To retain the power to detain without trial is a legitimate weapon in the legislative armoury of any democratic state that is confronted with what confronts us in this country and in that part of this country which is Northern Ireland, because the ruthless terrorist, with ever-increasing destructive powers at his or her command, is always going to be at an advantage in any state which applies the rule of law to itself—an advantage which the terrorist can and does exploit with catastrophic consequences. No state should have to subject its citizens, year in and year out, to that.
If lawful detention without trial as a last resort can bring relief from that danger, then it should be retained as part of the armoury. I believe that it can bring relief, for it has long been more feared by terrorists than any other measure at Her Majesty's Government's disposal. I believe that Her Majesty's Government knows that. It is, at any rate, not established that it could not bring relief. If that is the case, any responsible government should retain that power.
However, as has been said already this evening, how significant it is that the Irish Government, who have had longer experience of the IRA even than ourselves, should be retaining that power. I am aware of no declaration that they, in their turn, wish or propose to get rid of it. They have had more experience of the IRA even than we have. We speak not only of the IRA, because it should not be forgotten that the largest single mass murder of a terrorist nature committed in the island of Ireland, at least in recent times, was at Loyalist hands near Dublin some 20 years or so ago.
I believe that the Irish Government have made more and better use of that power to detain than we have. They have given no indication that they will give it up. As has already been said, when it was last used in Northern Ireland, a mess was made of it. But that should not blind us to its value as a last and efficiently applied resort against intractable terrorists with increasing power to wreak terrible evil.
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If a political decision and settlement had been reached, then one could visualise more readily the Irish and British Governments wishing to make common cause of that last resort to pick out the command and control structures of those who would by then have shown themselves unwilling and, indeed, refusing to accept a democratic outcome and thus to have deprived themselves of what little support they have in this democracy at present. Unfortunately, the Bill deprives the British Government of that ability. That is why I support the Motion: it will keep open that option. I hope that the Government will consider this matter very carefully.
Viscount Brookeborough: After all those speeches, I merely wish to make one or two points. First, it is an inopportune moment to take this action, not only for the reasons we have heard but also because of the risk of terrorism. That is a threat to the peace process. That is quite the wrong signal to send.
It is true that internment failed when it was used previously. It is true also that the Irish Republic retains it. I am quite sure that there are many in the Government there who would prefer not to have it. That is a common feeling among all normal people. However, they do have it.
The circumstances which exist now are very different from when internment was used before, when it amounted to mass arrests. The intelligence was extremely difficult. It was amazing that the whole operation took place as calmly as it did, even though it may not have seemed that way. However, it was a very difficult operation to undertake, even if the information had been correct.
However, the fact is that internment could be used to give a breathing space at this important time. Everybody agrees that if the talks come to a conclusion that is what is required—a breathing space. But the threat to that is no longer mass terrorism. It is the LVF (the Loyalist Volunteer Force), which probably committed the two murders perpetrated yesterday or the day before, Continuity IRA or the Continuity Army Council (CAC), which seems to have two names and is a splinter group, and INLA. Those are sections of terrorist movements. They are break-away factions. Those movements are a threat to the process.
It is interesting also that Gerry Adams talks about them being a threat. Therefore, that is not only my point of view, which may be thought to be a Unionist point of view, or an SDLP point of view. It happens to be Gerry Adams' point of view and a PUP point of view that those factions are setting out to destroy the process. That is why the leaders of those groups have appealed to those factions to stop and for everybody else to stay in the talks. If the talks succeed, we want that breathing space. This is the one occasion where internment of a relatively small number of people, requiring less intensive intelligence, would work. Indeed, it would work if it was used. I am not advocating its immediate use. If the intelligence were correct, and if the time were deemed correct to do so, it would be possible to take these people out of circulation for a limited space of time. It would work, if you had the right people.

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However, even if you did not get all the right people, there would be so much disruption and much confusion with people not knowing who was talking about what or who gave the information in the first place, that you could almost guarantee that a breathing space would be given. I believe that to deprive ourselves of that power at present would be a very great folly.
I believe that I am right in saying that the Labour Government opposed, or did not support, the emergency provisions for so many years in the Commons, while we rarely had a vote here. They did not support it and they used internment as a basis for that lack of support. I sincerely hope that they are not proposing to take internment out purely on the basis that, for so many years, they used it as an excuse not to support the provisions. That would be folly for us in Northern Ireland.
Lord Alderdice: This is a serious debate at a crucial time in Northern Ireland. I almost hesitate to rise to my feet when we have already heard from speakers like the noble Lord, Lord Molyneaux, and the noble Lord, Lord McConnell, whose party was the one which shouldered the burden of internment in 1971. We have also heard from the noble Lord, Lord Cope, who of course was a Security Minister in Northern Ireland for a period of time and not least from the noble and learned Lord, Lord Mayhew, whose position and work in Northern Ireland remains one of profound respect and admiration from the community at large and, as he well knows, from me as an individual.
We must look carefully at some of the arguments that have been adduced. First, it has been suggested that the threat of internment is something that terrorists fear greatly. For those of us who are law-abiding citizens, so it may appear to be. But the threat of internment was available during the time not only of the current Secretary of State and the current Government but also during the time of the previous Secretary of State—the much admired noble and learned Lord, Lord Mayhew—and his predecessor; and, indeed his predecessor's predecessor, and before that.
All through those years, since there have been Secretaries of State, the power of internment has been available. I have to say that I have not noticed that that threat has in any way intimidated the terrorists. They have carried on with their nefarious business entirely setting to the side the threat that internment might be introduced. Therefore, while we as law-abiding citizens might regard the threat of internment as a serious intimidation, it has not been so in fact for terrorists for the past quarter of a century.
The question has been raised as to whether, in the current climate, it is foolhardy to set the matter aside. I should tell noble Lords—and some will know me as something of a cautious pessimist over the past few years about the prospects for political settlement—that I believe that there is now a real possibility that, not within years or months but within weeks, possibly even before Easter, we may be in a situation where the major
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parties of the broad centre, as I would describe them, and the two governments will be prepared to reach a political settlement. That is an extraordinary possibility.
In that context, as other noble Lords have said, might it not be possible that internment might be necessary? It is suggested that while the parties of the broad centre—the Unionists, the Alliance, the SDLP and perhaps even some others—and the two governments might agree, surely it is the case that those on the extremes will not agree. I am sure that that is true. I very much doubt that we shall find Dr. Ian Paisley and his colleagues saying yes. After all, they have never said yes to anything, not even sometimes to things that they have proposed themselves.
As regards whether the Republican movement will say yes, I have to say that I doubt it; indeed, I doubt it very much. The very best that we can hope for is a degree of acquiesence by Mr. Adams and his colleagues because perhaps it is the case that they would like to move into democratic politics. But I entirely subscribe to the view expressed by other noble Lords that on the republican side—whether it is the Continuity Army Council, or others—and on the loyalist side, there will be those so infected by the virus of terrorism that they will not give up.
There is then the question of how that may be dealt with. But surely we have learnt after all these years that it is not merely a matter of security operations; it is a matter of hearts and minds. If we can get a settlement that incorporates the overwhelming majority of people on both sides of the community and in the centre, that will be a tremendous weapon against those who wish to win the hearts and minds of people to the extremes.
It is said that what will be crucial is that suddenly and with surgical skill it will be possible to move in and deal with the command and control mechanisms of the terrorist organisations. Let me remind the House of what actually happened in 1971. When the Ulster Unionist Party was governing Northern Ireland and had full control of the security operation, there was no surgical strike. Those of us who recall even more recent events in respect of the Gulf only a few years ago and all the talk of high technology surgical strikes will be aware of how ineffectual that was. But let us go back to 1971.
I can recall that at the conference of my own party, the Alliance Party, in April 1971 my predecessor, Sir Oliver Napier, warned that the government of the day—the Ulster Unionist Party government—should not move to internment. Was he speaking about this because there was a total unawareness of what might arise? Of course not. It was the talk of everyone in the streets. By July, some three or four months later, he was consulting the Secretary of State, the noble Viscount, Lord Whitelaw, and advising him not just privately but publicly not to move to internment.
Why? There were two reasons. First, because there was a real issue of human rights. That could not easily be tossed aside. But, secondly, because in the context of Northern Ireland it would have been utterly counterproductive. Those noble Lords in the House who know Northern Ireland well and come from Northern Ireland may appreciate when I say that there is a degree

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of perversity in our fellow countrymen. They will understand that I am not being unflattering. Everyone on this side of the water knew that when it came to a requirement for soldiers from Ulster the worst thing that could have been done was to institute conscription. To say to people, "volunteer if you wish", would have ensured far more soldiers from Ulster than ever would have come from conscription. Similarly, to insist perforce that matters be done in Northern Ireland is to ensure a backlash. One of the reasons why my colleague insisted that internment would be counterproductive was that he believed, and rightly so, that it would be a recruiting sergeant for the IRA. Just look at what happened. In 1971 the IRA took off and violence erupted—not before internment. If we thought there was trouble before internment, look at what happened after it.
We must be extraordinarily careful that we learn the lesson of that. It is rather different in the Republic, and so when noble Lords refer to the situation in the Republic and to the fact that the government there have retained the power of internment, we know of the situation there. We know that the IRA regards the Dublin Government somewhat differently from how it regards the British Government, not altogether in unflattering terms, it has to be said, but nevertheless in different terms. If we look at the situation we have, I suggest it is crucial that we try to win hearts and minds. If we set to the side the power of internment at this point, we are saying to the people of Northern Ireland and to the world at large, "We are not trying to impose something on anyone". If it is the case that there is a settlement and there are those, as other noble Lords have said, who insist on resorting to violence, there will not be a question in any case of a sudden overnight administrative action of internment. Everyone will know in advance that it will happen. That is reality.
Her Majesty's Government—I submit, in this context there would be a powerful silence and no criticism from the Irish Government—will move through this Parliament to put in place the possibility of this or another administrative action which would deal with the problem. That would be a warning and a clear marker. Then, if it is necessary to move in some robust way to insist that the wishes of the people of Northern Ireland and of the island as a whole be respected, that matter will need to be faced when the time comes.
But we must appreciate the fact that here we are not simply discussing retaining a security power. We need to win the hearts and minds of those in Northern Ireland who are not unionists, not even pro-union people, but who also want to see peace and who do not in their hearts support violence. We are in the business of winning as many of those hearts and minds as is possible and not colluding inadvertently with any "recruiting sergeant" operation for the IRA or indeed for loyalists.
I plead with noble Lords to reject this provision, not because I believe it comes from malign motives and not because it comes from people who have no experience of the matter, but because I believe that like the internment of 1971 it is misconceived, ill advised,
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counter-productive and not likely to achieve the result that the Committee and those who wish Northern Ireland well sorely desire.
Baroness Denton of Wakefield: I shall be brief. The noble Lord, Lord Alderdice, has probably forgotten more about Northern Ireland than I will ever know and I have enormous respect for his views. We who base ourselves in London can never understand all about this matter. However, I believe there were matters of non-consequence in the noble Lord's speech. He said that internment was counter-productive as regards terrorism. How do we know how many terrorists were put off by the threat of detention? How do we know that the eruption into violence was because of detention and not because of a million other factors? There are always a million other factors in Northern Ireland. There is often an impression that human rights are a matter for terrorists. Human rights are a matter for innocent people too and they have a right to be protected. Those people in Northern Ireland who are innocent and wish to have peace and who are at risk—as we have seen again this week—have a right to be protected. At this stage I support the provision of my noble friend.
Lord Dubs: I acknowledge the emotions the issue of internment arouses. We have heard some powerful speeches this evening on both sides of the argument which clearly reflect the strength of emotion that the issue arouses. Those emotions are a reflection of the community divisions and the fears which exist in Northern Ireland. I have listened carefully to the arguments put forward passionately by those Members of the Committee who are in favour of retaining the provision. While the Government acknowledge the very real concerns of those who argue in favour of retaining the provision, we are not convinced that the case for retention is made. I have not been persuaded by the arguments we have heard this evening in favour of retention.
Clause 3 repeals the powers in Section 36 of, and Schedule 3 to, the 1996 Act to detain without trial persons suspected of being terrorists. The powers have existed in lapsed state since 1980 and have not been used since 1975. They involve a decision by government to deprive individuals of their liberty without trial and without the normal safeguards which the law provides for the protection of the accused. Their use would only ever have been justified as a last resort. The ability to detain people without trial has never been seen as a means of achieving stability within the community. The effect of using the powers would, I believe, be quite the reverse. It would increase community tension, and cause serious damage to respect for the rule of law. I believe that it would strengthen the terrorist organisations, as was said so elegantly by the noble Lord, Lord Alderdice. It would create in the minds of terrorists political prisoners. Ultimately I fear that it would prolong the very violence which it was intended to prevent or to lessen.
I have listened very hard. Let me refer to one or two of the comments made in the debate. I always listen to the noble and learned Lord, Lord Mayhew, with

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enormous respect because of the powerful reputation he has in Northern Ireland. He was Secretary of State for a number of years and has enormous knowledge of Northern Ireland. However, I take issue with him this evening. He suggested that the power to have detention has long been feared by terrorists. I suggest to the noble and learned Lord that there is little evidence to support that contention. Quite the reverse. I remember when internment was last used. In the newspapers over here and on television there were references to the way in which supporters of the IRA used metal dustbin lids to signal to the community that internment had started. I remember, like the noble Lord, Lord Alderdice, how the whole issue became a recruiting sergeant for the IRA.
I fear that if we were to use detention in the circumstances of Northern Ireland it would enormously strengthen the terrorist organisations which would depict themselves as martyrs. I doubt very much whether any democratic society can implement internment in such a way that it can be kept secret until the last minute, and that we can then somehow catch all the people that it is intended to catch. On pragmatic grounds I do not believe, frankly, that it has the potential to be effective.
There is the important argument that we are trying to set standards of human rights, standards of the rule of law, which would be negated if we went down that particular path. I fear very much that we would be helping the terrorists both on the republican and the loyalist side if we were to do that.
The noble Viscount, Lord Brookeborough, said that we might need some breathing space and might use internment during that breathing space. I find it hard to follow that argument. I fervently hope that the talks process will be successful. Yes, there are some terrorists in Northern Ireland who do not want an outcome and who use terrorism as a threat to the talks. Of course, it is a threat to the talks. But I do not believe that in the circumstances of a successful outcome to the talks, supported by the majority of people in Northern Ireland and. I hope, in the Republic, we would then consider using internment to catch the minority of those who were formerly terrorists and who still want to practise terrorism. I do not believe that that is the way we would go forward.
The noble Lord, Lord Molyneaux, referred to how long it would take to find the guilty. I do not think that he meant in the context of internment but in dealing with any possible resurgence of terrorism. If, in a system of the rule of law, it is hard to find the guilty, it is even harder to find the guilty in a swoop on people's homes at five o'clock in the morning in the hope of catching those people in bed. I fear for the effects it would have. I do not believe that it would protect us or the people of Northern Ireland in any sense. I believe that the minority of people there who support terrorism would take comfort from government measures such as that.
Viscount Brookeborough: My Lords, perhaps the Minister will give way. After the eloquent speech by the noble Lord, Lord Alderdice, and the points made by
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the noble Lord, it seems that a number of us are being labelled as advocating internment, whatever happens. The Minister could see no reason why the provision should remain. He could not justify that it should. Most of us feel that we cannot justify the reason for the change. I am sure that I speak for the remainder of those from Northern Ireland. We do not advocate using the provision and getting it going. The noble Lord himself said, "I believe", which in itself leaves a minor amount of doubt. He also used the phrase, "last resort". I say to him: please do not label any of us as having feelings for use of the provision, except as a last resort under certain circumstances.
The noble Lord, Lord Alderdice, gave the House a very good history lesson about how it all went wrong. Do we not all know that? But, as I said, the circumstances are different. The Minister finds the existing provision hard to justify. We cannot think what is the justification for removing it. As the noble Lord, Lord Alderdice, said, it did not stop terrorism over the past few years. If the threat of internment meant so little, it definitely did not increase terrorism. Therefore to keep the provision may not be to increase it. I merely want to make that point clear after what has been said.
10 p.m.
Lord Dubs: I understand what the noble Viscount says. If I follow him accurately, he suggests that he does not advocate the use of internment but wishes to keep the power as a last resort. The point is that the Government believe very clearly that there are no circumstances in which we would wish to use the power of internment. Therefore no purpose is to be gained by keeping it on the statute book. It is a power that denies many of the traditions which characterise this country—the tradition of the rule of law, of a proper judicial system whereby people are found guilty through a process in the courts. It suggests that an arbitrary system can somehow achieve good. I repeat that the Government can see no circumstances in which we would wish to use these powers.
Lord Molyneaux of Killead: I apologise for interrupting the proceedings again. The noble Lord said that in no circumstances would the Government contemplate using this power. Does that mean that they would not contemplate coming back to Parliament for a restoration of the power?
Lord Dubs: That is rather a hypothetical question. It relates to what might happen in certain unforeseen circumstances. I prefer to consider the situation in Northern Ireland as it is now, and as it is likely to be in the near future. Let us leave the distant future to look after itself.
Yes, there have been some very tragic murders and bombings in recent weeks. They are to be absolutely condemned. But even in those circumstances, no one has seriously suggested that we should use the power of internment. I am absolutely certain, as are the

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Government as a whole, that internment is not the answer, and never will be. I urge the Committee to support Clause 3 and to allow it to stand part of the Bill.
Lord Cope of Berkeley: Our debate has been relatively brief, given the importance of the subject. However, it has shown the strength of feeling on this matter and the strength of the arguments against the clause.
In response to the noble Lord, Lord Alderdice, I did not, and would not, rely on the example of the 1970s. The example that I mentioned of the border campaign of 1956 is a much better example; but there are other, earlier examples, particularly from the Republic of Ireland. Those examples teach us, among other things, that one of the keys to the success of internment as a measure is the overwhelming support of public opinion. That is one of the key lessons to be learnt from the cases where it has been used successfully. That is why it was important that the loyalist terrorists were mentioned during the course of the debate. That would be a key in the sort of circumstances that we were outlining.
It was argued that the threat of internment has existed, but nevertheless terrorism has continued. Both those statements are correct. I do not think that any of us can say what the situation would have been like in relation to terrorism or how it would have been different had particular measures, including this one, not been on the statute book over the past few years. It is my firm belief that, particularly at times when internment has been one of the measures suggested for immediate use and when it has seemed at least possible that the Government might use it, it has disrupted the command and control of terrorism to a great degree, if only for a few weeks until the threat recedes. It certainly leads to terrorist commanders having to take measures, such as moving constantly and never sleeping in the same bed, which are extremely disruptive to their efforts.
As the debate has taken place so much later than was anticipated, I believe that we should not press the matter to a vote at this time. It may be that other Members of the Committee who cannot be here this evening may wish to join in the debate at a later stage of the Bill. I believe that it is premature to remove this power from the statute book.
Clause 3 agreed to.
Clause 4 agreed to.
Clause 5 [Audio recording of police interviews]:
Lord Cope of Berkeley Lord Cope of Berkeley moved Amendment No. 3:
Page 2, leave out lines 31 to 35.
The noble Lord said: In moving Amendment No. 3, I shall speak also to Amendments Nos. 4 and 5. Clause 5 provides for the audio recording of all terrorist and some other interrogations conducted by the police.
My reservations with regard to the clause stem from a concern for intelligence gathering. My experience of Northern Ireland—which is much less than that of many others in the House and elsewhere—and everything I have read about combating terrorism convinces me that intelligence gathering is the absolute core of anti-terrorist operations if they are to be successful. No
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one can be sure how much intelligence is likely to be deterred and will not come into the hands of the police if this provision for audio recording is put into effect. However, it is obvious that if a suspect thinks that at some stage in the future what he says to the police may be played back to the terrorist godfathers, he will shut up.
There is no doubt that members of terrorist gangs in Northern Ireland are comprehensively threatened by experts about what will happen to them if they leak. The godfathers ensure that there are exemplary and salutary cases of murder and maiming when anyone breaks their twisted faith. No one who is interrogated has any doubt about what will happen to him if the godfathers discover that he has leaked. He will also be aware of their great ability to discover all kinds of information which is supposed to be kept secret; they use intelligence, too.
We used to be told that the police were against audio recording, for the reasons I have set out. We are now told that the police favour it because of the protection which it undoubtedly would give, or could give, to police officers accused of falsifying evidence and because audio-taped evidence could not be argued against in court. I suppose the fact is that different police officers will make different judgments on these matters. I accept that both sides of the argument have force, but intelligence seems to me to be the priority.
Controls on what is allowed to happen to the tapes could give me some reassurance on the matter, provided those controls were believed and trusted by the potential informers. I understand that Mr. Louis Blom-Cooper has done some useful work on this, which Ministers may wish to draw on. If we are to go ahead with this provision, it is important that the Minister explains to us how the tapes will be controlled and whether parties acting for accused people may be able to get their hands on them, through discovery or some other legal means, and at what stage the tapes will be destroyed when no longer required.
To make clear that our amendments in this case are directed specifically at terrorist interrogations, we provided in Amendment No. 5 that the provision for audio recording could be triggered after 12 months of terrorist peace. If that were to be adopted, it could give those who make war on society a small additional encouragement to make peace. However, my main point is the argument I put forward in moving the amendment at the start of my remarks. I beg to move.
Lord Molyneaux of Killead: Whatever may be said for this practice in criminal cases, in the case of the interrogation of terrorists it is a highly dangerous suggestion—not least for the interviewee and his family.
When a terrorist subject is arrested and questioned, the first step taken by his terrorist associates is to find out exactly what he said and all that he said during the audio or video recorded interrogation. It is misleading to say that the recording would not become available. Normally a recording should be disclosed in discovery, and without a shadow of doubt it will become available to terrorists, and even sometimes to terrorists from opposing sides.

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As I said, the terrorists will not hesitate to eliminate an associate who is seen—and in this case heard as well—to have endangered the movement concerned. In another place my colleague sought to limit the danger by amending the legislation, and not merely amending the code of practice, to ensure that a copy of the recording was furnished by the police to the trial judge and to no one else. Amending the code of practice alone would not be a safeguard because it would not prevent the recording being discoverable.
If that legislative step is not taken, not only will the lives of those questioned be placed in jeopardy, but also their families, friends and associates will be attacked without mercy. It follows, therefore, that suspects—and this is the truth of the matter—will be prevented from giving even minimum assistance to the police.
Lord Alderdice: Let me say from the outset that I am unhappy about the amendments. I and my colleagues have for some time maintained the view that video and audio recording of such interviews is a positive and constructive contribution to the fight against terrorism.
Members of the Committee who spoke for the amendment indicated their concerns about the matter. It is said, first, that the crucial element is that of intelligence. Let me repeat in another form what I said at a previous intervention; that is, that the security component of the fight against terrorism is a crucial component, but it is only one of two. The other side is the question of hearts and minds or, if I might put it more crudely, the propaganda war.
There is no doubt that claims—some of them justified and others most certainly not—of certain activities by police officers in the course of interrogation have been extremely damaging in the fight against terrorism. When I look at the question of video and audio recording, therefore, I am looking not a little at the question of protecting the good name of those police officers who are involved in interrogations. Therefore, when claims are made that all sorts of dreadful things have happened, if they have happened then police officers should fall victim to the due process. But if they have not happened, there is currently no way of demonstrating that the claims made—some of them strident, outlandish and widely reported not only in Northern Ireland and this side of the water, but much more widely—are untrue; there is no way of effectively defending against them. Those Members of your Lordships' House who have travelled, not least on the other side of the Atlantic and in certain parts of the eastern and western seaboards, will know how significant such claims are in undermining the good name, and the rightfully good name, of the Royal Ulster Constabulary.
When I look at the matter my first concern is what this does to the propaganda campaign against terrorism, albeit an honest propaganda campaign. When it is clear that events have been recorded on video and, if necessary, on audio, it can be demonstrated whether or not there has been bad behaviour on the part of the
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police. If so, they should suffer. If there has not, adverse and ill-founded claims against them should not stand, and they can be demonstrated as such.
I entirely accept that there is another arm to the campaign against terrorism and that is the security arm. Intelligence plays a vital part in that. It is claimed that those who wish to speak need to be protected. I do not doubt that. However, I am not at all sure that, in the kangaroo courts operated by the Provisional IRA and indeed the loyalists, they calmly sit down, sift the evidence and require the proof that is available by due process and by audio recordings before they decide to inflict their own perverse form of judgment on those they deem to be the accused. It seems to me that they make their own decisions, often on the basis of nasty suspicion—and sometimes when there is barely even that—in order to enforce their own form of discipline in their own communities.
Of those who come forward with real information, the overwhelming majority, as I understand it, are rather well trained in order to ensure that they divulge nothing whatever during interrogations. They have made themselves familiar with a discipline before they are arrested and they carry themselves with appropriate imperviousness to any form of questioning.
The chief constable does not believe that this would have an adverse effect on the obtaining of intelligence material. The Minister in another place, Mr. Ingram, on 11th December 1997 at col. 1223, quoted him accurately. Indeed, interrogations have not been the route of most of the intelligence material. I rather suspect—and here I do not have the benefit of the experience of other noble Lords—that when really useful intelligence comes forward, it does not come forward in interrogation rooms; it is coming forward because it is being passed in other contexts and with other motives and perhaps sometimes with other rewards. I believe that the intelligence operation is important. but I suspect it is not in interrogation rooms that it finds its best base.
I would urge your Lordships to set aside these amendments because it seems to me that they are misguided. They judge the war against terrorism only from the pillar of security operations and even then I believe they are making a judgment on the basis of perhaps how things were when there was less sophistication from the terrorists and, thankfully, from our own intelligence operations. Therefore, they are a rather dated, if understandable, proposal for amendment. I find myself in agreement with the Bill as it stands.
10.15 p.m.
Lord Dubs: My Lords, yet again, for the third time this evening, I am grateful to the noble Lord, Lord Alderdice, for putting the arguments so clearly, arguments with which I am in a very large measure of agreement.
The combined effect of these amendments is to defer the implementation of audio recording until a period of 12 months has elapsed during which no terrorist incidents have come to the notice of the RUC.

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Successive governments have consistently aimed to ensure that such emergency provisions that exist strike the appropriate balance between providing those counter terrorism measures which are necessary for the protection of the community and ensuring the protection of the rights of individuals against whom the measures are used. Where it is possible to normalise policy, practices and procedures, this Government will strive to achieve normalisation.
The question of audio recording in the police holding centres has a long history. It was previously resisted because of concerns on two counts: that it would inhibit interviewees from responding to questions and thus hinder the pursuit of terrorist crime; and that it could put lives at risk if tapes were later disclosed in court, as they invariably would be if a prosecution ensued.
The Government's view has consistently been that the many benefits attached to electronic recording, in particular audio recording, outweighed the potential difficulties. Audio recordings would provide the best available evidence in any proceedings. Their availability could also reduce the length of contested trials emerging from confessions in the holding centres and they would provide evidence to prove or disprove allegations of psychological abuse, as well as physical abuse. The Government's move to introduce audio recording therefore carries the full support of the chief constable.
The noble Lords seek to defer implementation of the change until terrorism has been non-existent for a full year. The Government's response to this is that there is absolutely no case for delaying the initiative. To defer introduction until there had been no terrorist incidents for 12 months would negate completely the purpose of this safeguard, since the holding centres themselves would not be being used in such circumstances. There is no reason to defer introducing audio recording and there are many sound reasons for pressing ahead. The noble Lord. Lord Molyneaux, asked a number of questions and I shall try to supply specific answers. As regards disclosure, audio tapes will be disclosable in the ordinary way as they will represent best evidence. They will not he disclosed otherwise. The codes of practice which will govern audio recording have not yet been prepared. The House will have the opportunity to consider the codes in the not-too-distant future. We may have a further debate on the detail of the proposal—
Lord Molyneaux of Killead: I ask the Minister's indulgence. When he refers to disclosure, does he include the existing situation as proposed; that there would be disclosure to the defence as well as to the judge?
Lord Dubs: I believe that the answer to that question is yes. However, much of the detail will be covered by the codes which we shall be debating at a later date. Therefore, I urge the noble Lord to keep some of his powder dry for that occasion. To repeat the answer to the question, my understanding is yes.
The noble Lord, Lord Alderdice, referred to the good name of the RUC. That is vitally important because we all know of too many occasions when a terrorist who has been arrested and interviewed claims that he was
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intimidated, harassed and not treated fairly and properly by the RUC. As the noble Lord said, such allegations are difficult to disprove. However, we would be in a better position to enable the RUC to retain its good name and to disprove such allegations made against it.
I urge the Committee to resist the amendments.
Lord Cope of Berkeley: At this stage, I shall not pursue the amendment. I entirely agree that the "hearts and minds" aspect of the struggle is of the greatest importance, as, obviously, are security measures. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 4 and 5 not moved.]
Clause 5 agreed to.
Clause 6 agreed to.
Lord Cope of Berkeley Lord Cope of Berkeley moved Amendment No. 6:
After Clause 6, insert the following new clause—
EXCLUSION OF EVIDENCE
(" . In subsection (4) of section 9 of the Interception of Communications Act 1985, after paragraph (b) there shall be inserted—
"(bb) an offence under the Northern Ireland (Emergency Provisions) Act 1996 including a scheduled offence within the meaning of section 1 of that Act;"").
The noble Lord said: This new clause is about telephone tapping. We have not had much success with the Minister so far this evening, but I hope that we shall have a little more success with this particular amendment judging by what was said in another place on a similar amendment.
The clause seeks to make evidence obtained by telephone intercepts admissible as evidence in court in a terrorist case. It seems to me now that a rather odd situation exists that evidence obtained from a bug hidden in a room or elsewhere can be used in court, but not evidence obtained from telephone tapping. Curiously, this restriction seems to be almost exclusive to the British jurisdiction. Other jurisdictions in the world rely on it heavily, as the noble and learned Lord, Lord Lloyd of Berwick, pointed out in his report. He recommended a clause on these lines. He could find no other jurisdiction in which there was such an exclusion.
We hear a lot about confidence-building in the course of these debates, by which is normally meant building up the confidence of the terrorist at the expense of the confidence of the law-abiding. I urge Members of the Committee to think what it does to the confidence and morale of an RUC officer to know from a telephone tap that a crime has been committed and who has committed it, but to be unable to tell the court of the evidence, which every other policeman in the world could do. One should also imagine an RUC policeman, perhaps visiting the other side of the Atlantic, as the noble Lord, Lord Alderdice, said earlier, or hearing, on the radio, British justice being criticised by an Irish American politician when the officer knows who committed an atrocity, but could not tell the court. He would also know that in the United States the FBI frequently relies on such evidence and sometimes,

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according to the noble and learned Lord, achieves guilty pleas in cases where convictions would otherwise have been unobtainable, because of the firmness of that particular type of evidence.
Of course, prosecutors will not always want to use the information obtained in this way because they wish to protect intelligence methods. But that is their choice in the course of pursuing a case in court. It is the kind of choice which they frequently have to make. So I do not believe that there is any specific danger from that.
Three months ago we were told by the Minister in another place that the Government were considering this matter: indeed, the Home Secretary said so in October. I hope that by now the Government have considered it further and will be able to tell us this evening that they are prepared to adopt this new clause or at least the thoughts that lie behind it. I beg to move.
Lord Molyneaux of Killead: I join with the noble Lord, Lord Cope, in expressing the hope that the Government will look favourably on this new clause in the light of the earlier announcement that there will be unified emergency legislation and acceptance that there will be a continuing need for emergency legislation throughout the whole of the United Kingdom. I gather that some thoughts were being directed to that end in the other place this afternoon.
The new clause would provide for the admissibility of wire tap evidence, and that proposal is based solidly on the conclusion of the inquiry of the noble and learned Lord, Lord Lloyd, that wire tap evidence is admissible in every country he had visited. He concluded with a one-liner, which I believe the noble Lord, Lord Cope, had in mind, when he said,
"The United Kingdom stands alone in excluding such material".
I confess that I am somewhat confused by present attitudes, which are greatly at variance with what is happening here in the capital city, London. Very recently a learned judge in a London trial commended the police on their expertise in tapping telephones. He said, as regards the accused, that such valuable evidence could not have been obtained so accurately in any other way. Mainly as a result of that wire-tap evidence, all the accused were convicted.
The very fact that interception is accepted in so many cases makes the present situation unsustainable. I share the optimism of the noble Lord, Lord Cope, that the Government will see the wisdom of the new clause, especially as there appeared to be some flexibility in the Government's thinking before the Bill left another place.
10.30 p.m.
Lord Mayhew of Twysden: I hope that the Government will accede to this amendment on this occasion. The power of intimidation is very well known—or at least, it should be—and that is why in so many cases of a terrorist character it is impossible to obtain witnesses who are prepared to go into court and say what they know so that the adducible evidence depends exclusively on, and is limited exclusively to, that of police officers and forensic experts. That is not
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to disparage them, but in many cases they simply are not in a position to say what actually happened whereas other witnesses are but are too frightened to do so. A civilian witness who gave truthful evidence for the prosecution in such a case would fear, reasonably, that in a very short space of time he would be dead.
It is worth making the point that telephone communications are intercepted only in accordance with a strict statutory code. The operation of the statute is supervised by an independent commissioner, one normally holding high judicial office. He reports annually to Parliament and the utmost care is taken, as I know, to observe the statutory rules. Any breaches that come to light are reported at once to the commissioner and by the commissioner ultimately in a report to Parliament.
It may very often be the case that evidence of a telephone conversation would be of critical importance to a prosecution and to the decision whether or not to prosecute. The Director of Public Prosecutions has to apply the ordinary test of whether there is a reasonable prospect of a conviction. Is it more likely than not that a conviction will follow? If it were possible to give evidence of what has been heard under lawful conditions in a telephone conversation, in many cases the director would find it his duty to direct a prosecution. In many cases, because that evidence is not admissible in court, he will have to direct that no prosecution shall ensue. That cannot be in the interests of justice.
I am glad that I was instrumental in the appointment of the noble and learned Lord, Lord Lloyd of Berwick, to his inquiry. His report has been widely acclaimed and notwithstanding that he was invited to report on the assumption that the ceasefires would continue, he nevertheless advised, quite uncompromisingly, that such intercepts should be admissible in evidence.
Let us suppose that the hideous events of three days ago at Poyntzpass had been preceded or followed by a telephone conversation of a significant character, properly known to the police—by which I mean, in accordance with the statutory code—and that the contents of that telephone conversation signified complicity on the part of one or all who took part in it, whose interests are served by keeping that conversation inadmissible and therefore keeping, as it may well be. a guilty person out of court and probably out of prison? Whose interests would be served, save those of the terrorists? I support the amendment.
Lord Alderdice: I believe that the arguments on this amendment are much more finely balanced than on some others and need to be sifted most carefully. Undoubtedly this is the only country where the position is as it is now, but I am sufficiently loyal to my country to maintain that there can be situations in which we may well be right and others wrong. While the position of other countries merits consideration it is not of itself a sufficient argument for changing our practice. When the question of wire-tapping and its use in other countries has been raised views have been divided. Those who are likely to be susceptible to the practice or who are breaking the law by doing it are unhappy about it but

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there has been a profound concern within the community as a whole. I think of the debate in Germany on this subject relatively recently. In this country the notion of telephone bugging or wire-tapping has not had an altogether happy reportage, not just in cases where the police may be using it under supervision but where all kinds of others are using it for other reasons.
It is somewhat dangerous at times to deal with hypothetical situations like that described by the noble and learned Lord, Lord Mayhew of Twysden. He asked whether, if prior to or just after the recent atrocity, there had been helpful material from a telephone tapping it would have been good to use it. If one follows his argument it is difficult to refute, except for one matter: it is entirely hypothetical. As far as we know, there is not material available from a telephone tapping that would convict in those circumstances. It is always dangerous to move from the particular that is hypothetical to the general that is not hypothetical.
Having said that, I am not aware that the Lloyd Report concluded that there was widespread scope for its use. I believe it concluded that there were limited contexts in which it would be a possibility. But if there was reason to believe that there would be real advantages to the police authorities in blocking the operations of terrorists or, if not blocking, at least bringing to justice those involved, that would merit serious consideration. But this is a serious development which merits full consideration.
I am not sure whether at this time of night, when even noble Lords have difficulty finding the time to debate all these amendments in their fullness, we can take a decision, although, if the Minister has given it full consideration and can respond positively, that may be an entirely different matter. However, if we are to move to a more thought-through, consolidated piece of legislation to deal with the terrorist threat which will unfortunately continue, even if we have peace in Northern Ireland, in the whole of the United Kingdom in respect of other terrorists, as well as those who remain in Ireland, then proper and due consideration of this matter should take place.
It is my view and, I believe, that of a number of my noble friends that this is a finely balanced argument that may come down on one side or the other. It is persuasive that in these days of telecommunication this facility should be available to the security services, but there is also the argument that at a time when people are becoming more and more concerned about the power of the state their due concerns merit consideration. It is a finely balanced argument, and I and my noble friends are not unwilling to explore the arguments to the point of being persuaded if they are powerful enough.
Viscount Brookeborough: I find it extraordinary that reasons can be found for not using bugging for evidence when clearly the telephone has been used a great deal by terrorists in Northern Ireland for conveying information. In many cases they use telephones rather than radios because of the technology available to pick up radio signals.
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In some of the other amendments this evening we have heard of different concerns for the welfare of the interviewers and the terrorists, and so on. In this case the allowing of the bugging of telephones or the use of what is found when the telephones are bugged is not a threat to anyone's welfare. By not using it we leave the innocent people that the terrorists prey on open to a very extensive terrorist threat of bombing and killing as they carry out their acts. It amazes me that even the noble Lord, Lord Alderdice, can say that there is no proof that this sort of evidence has helped within a prosecution.
Nobody in your Lordships' Chamber—apart from the noble Lord, Lord Mayhew, when he was Secretary of State—would be told whether there was information such as that as a result of bugging. Therefore we have to go to the experience of other people. We know that we are dealing with a Mafia-type organisation within the terrorist groups in Northern Ireland. It does not extend only to killing people, but money laundering, intimidation and all the other crimes that go on—the lot.
There are experts in this field, in America, Italy and many other countries. What is their experience? It is that the use of information gathered by bugging is of vital importance in combating organised crime. The sooner we live up to the fact that the terrorist campaign, in all the ways that it manifests itself, is not over, the sooner we will get to the bottom of it and use various methods which are no threat to anybody's civil liberties.
Lord Alderdice: Is the noble Lord saying that we should follow the examples of the successes of the United States and Italy in dealing with organised crime, as distinct from our own? Is he seriously suggesting that?
Viscount Brookeborough: I am suggesting that they do fight organised crime. Whether we think they are successful or not, they do have limited success from time to time. I do not know the details, but other countries use it and they find it extraordinary that we do not. For that reason, I support the amendment.
Lord Dubs: This new clause, if enacted, would have the effect of allowing evidence from intercepted material, acquired by virtue of a warrant issued under the Interception of Communications Act, to be adduced in court if it is related to an offence under the Northern Ireland Emergency Provisions Act 1996 including any scheduled offence within the terms of the 1996 Act.
The question of amending Section 9 of the Interception of Communications Act was raised by the noble Lord, Lord Molyneaux at Second Reading. I responded at that time by referring to comments made in another place in October last year by my right honourable friend the Home Secretary. He said on that occasion that there was much to be said on both sides of the argument about whether intercept evidence should be adduceable in court. That point was also made by the noble Lord, Lord Alderdice, when he said that the arguments were finely balanced.

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On the one hand, considerable difficulties exist in obtaining evidence on which to charge and convict terrorists, as many noble Lords have indicated. Many other countries use intercept material to prove guilt and to secure convictions otherwise unobtainable.
Eavesdropping evidence is admissible as evidence in criminal proceedings and this sits awkwardly against the fact that intercept material is not. On the other hand, if intercept material were used in court the interception capability would become exposed and, as a result, criminals—in this case terrorist criminals—would find ways to circumvent the interception methods. Also the use of intercept material would result in pressure for increased disclosure by the defence.
As I said at Second Reading, the Home Secretary has confirmed that the Government are considering the issue and I have explained that a review is under way. That remains the position. It would be premature to proceed with the proposals in this amendment given that the Home Secretary is considering the matter of the interception regime as it applies to the United Kingdom as a whole. That is necessarily a complex and comprehensive study. I am sure that the Committee would agree that it is not something that should be rushed. I hope therefore that the Committee can accept my assurance on that point, and that, in the circumstances, the noble Lord will agree to withdraw the amendment.
Lord Cope of Berkeley: We are asked to give more time for consideration. This was recommended after careful consideration by the noble and learned Lord, Lord Lloyd, in 1996, I think it was. It was considered initially by the previous government and subsequently by the present Government. The Home Secretary spoke about it in October. Three months ago we were told that the matter was still under consideration. Now we are told that it is still under consideration. That is better than being told it will not be done. For the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Remaining clauses and schedules agreed to.
House resumed.
Bill reported without amendment.

Appropriation (Northern Ireland) Order 1998
10.46 p.m.
Lord Dubs Lord Dubs rose to move, That the draft order laid before the House on 12th February be approved.
The noble Lord said: My Lords, the draft order before us today authorises expenditure of £148 million for Northern Ireland departments for the current financial year. That is in addition to the £6,573 million voted by the House last July. The order also authorises the Vote on Account of £3,026 million for 1998–99 to enable the
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services of Northern Ireland departments to continue until the 1998–99 main estimates are brought before your Lordships later this year.
I would remind your Lordships that the order does not cover the estimates for the Northern Ireland Office on law and order services. As a Whitehall department, the estimates for the Northern Ireland Office are dealt with separately. However, the public expenditure decisions underlying the estimates for the Northern Ireland departments and the Northern Ireland Office form part of the Northern Ireland block allocation. The Secretary of State has flexibility to reallocate resources within the block.
I know that your Lordships continue to take a close interest in the prospects for economic development in Northern Ireland, and I should like to say a few words about the local economic situation before turning to the contents of the estimates. The latest available official statistics and survey data show that the Northern Ireland economy remains in good health in almost every area. The main economic indicators have, once again, shown very positive results for the Province.
The output of manufacturing and production industries continues to rise at a rate well above that achieved nationally. Over the past five years Northern Ireland's manufacturing sector has increased its output by almost 21 per cent., twice the rate of growth achieved nationally. There has also been a significant improvement in the Province's gross domestic product relative to the United Kingdom, with GDP per head in Northern Ireland increasing from 78.2 per cent. of the UK average in 1990 to 81.2 per cent. by 1996.
Record employment levels have also been achieved. At September 1997 the number of employees in employment in Northern Ireland stood at 585,020: the highest September figure on record. That is coupled with a seasonally adjusted unemployment rate of 7.9 per cent. That represents a fall of 63,500 on the peak October 1986 figure, when 17.2 per cent. of the workforce was unemployed. In addition, significant falls in the numbers of both long-term and youth unemployment are particularly encouraging.
The financial year 1996–97 has also been a record year for investment in the Province, with a total of £630 million invested by IDB client companies over the course of the year. Inward investment has also been forthcoming, with 35 inward investment projects contributing an anticipated investment of some £490 million, and creating 4,641 new jobs, while safeguarding a further 3,345 jobs.
Allied to that are the recent survey results from the local business community. Indeed, many of the forecasts for the coming year predict further employment growth, reductions in unemployment and strong rises in output.
All of this clearly demonstrates the impressive achievements of the Northern Ireland economy, and I am confident that this performance will continue to be sustained. However, continued violence could compromise the Province's bright economic future.
Your Lordships will be aware of the strain placed on the public purse by way of compensation payments resulting from, for example, the recent bombings in

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Moira and Portadown. Incidents such as those mean that millions of pounds which should otherwise have been available to spend on important areas such as hospitals, schools, roads and jobs have to be diverted to pay for the mindless destruction inflicted on our town centres. It is certainly the wish of the vast majority of the people of Northern Ireland that there will be no recurrence of the destruction which we have witnessed in the past few weeks and that the Province can enjoy the peace and prosperity for which we are working.
I now turn to the main items in the Estimates, starting with the Department of Agriculture. In Vote 2, covering local agriculture support measures, a net increase of £17.6 million is sought. This includes some £5.4 million in respect of controlling outbreaks of animal diseases, including brucellosis, salmonella, Newcastle disease and BSE, £1.5 million for processing and marketing grants, £1.4 million for rural development and £2.4 million for the EU Peace and Reconciliation Programme. Within this vote £5 million has also been made available to bring forward to the 1997–98 financial year the payment of some 1,250 capital grant claims relating to the sub-programme for agriculture and rural development which would otherwise have been held over for payment in the 1998–99 financial year. Increases within this Vote are partially offset by increased receipts.
I now turn to the Department of Economic Development, where token increases of £1,000 are sought in Votes 2 and 3. In Vote 2, an addition of some £0.5 million is for the Northern Ireland Tourist Board, to assist the development of tourism in Northern Ireland. Tourism plays an important role in economic development in Northern Ireland, where it is estimated that spending by holiday visitors and domestic holiday makers accounts for approximately 2 per cent. of Northern Ireland's GDP, sustaining in the region of 12,500 jobs. This and other increases are offset by reduced requirements and increased receipts elsewhere within the Vote.
In Vote 3, a token increase of £1,000 is also sought by the Training and Employment Agency. An increase of £3.6 million is sought for the Jobskills programme, to meet increased demand and for the training centre network for payment of training allowances. Also in this vote an additional £1.5 million is sought for the Government's new welfare to work initiative. This is to fund preliminary work, including demonstration models, prior to the Province-wide introduction of the New Deal in April. At present there are approximately 3,000 18 to 24 year-olds currently participating in agency employment and training programmes. From 6th April the agency will provide for approximately 10,000 young people in total, on a New Deal option financed through either the New Deal allocation of £140 million or transfers from existing provision.
Unemployment is a huge waste of our economic potential and a major cause of poverty. A priority of the Government is to tackle the root causes of unemployment and provide new opportunities for work. Welfare to work is a major and innovative initiative targeted directly at tackling unemployment.
The New Deal for the unemployed is aimed at getting the young and long-term unemployed into jobs and helping them to stay in employment. This will be achieved through increasing the long-term employability of the unemployed by improving their self respect, skills, experience and motivation.
I turn now to the Department of the Environment. A net increase of £5.5 million is sought in Vote 1. The main increases include £4.1 million for roads maintenance, £1.6 million for the operation of ferry services, £2 million for compensation payments to Northern Ireland Railways and £1.8 million to meet the cost of concessionary bus and rail fares for the elderly, disabled people and children of school age. These increases are partially offset by increased receipts and reduced requirements elsewhere within the Vote.
In Vote 2, covering housing, a net increase of £17.2 million is sought. Some £7.5 million is for assistance to the voluntary housing movement and includes a transfer of funds from the Northern Ireland Housing Executive to housing associations to enable an additional 400 new dwellings to be started in 1997–98. It is important to recognise that the housing success story is continuing. Preliminary results of the 1996 house conditions survey show a significant reduction in unfitness levels. An additional £10 million, including £3.7 million from the capital receipts initiative, is being provided to the Northern Ireland Housing Executive. Gross housing expenditure in Northern Ireland this year is now expected to be £615 million, an increase of some £7 million over 1996–97.
In Vote 4, which covers environmental and other services, a net increase of some £6.2 million is sought. Some £7 million is for regeneration-related matters and £8.4 million represents the carry forward of running cost and capital underspends from previous years. Other increases within this vote include £2.4 million for planning compensation, some £0.8 million representing a transfer from the Department of Economic Development to cover grants to district councils for energy efficiency measures and £3 million to meet a variety of increased costs in the Environment and Heritage Service, the Construction Service and other agencies. These increases are offset by increased receipts and reduced requirements elsewhere within the Vote.
I now turn to the Department of Education, where a net increase of £29.1 million is sought in Vote 1. That includes some £12.5 million for grants to education and library boards. This is mainly for schools maintenance, home to school transport, energy efficiency measures, special educational needs, library stock, the harmonisation of pay and conditions of manual and white collar staff and redundancy costs. In addition £0.8 million is for universities, mainly for research projects, while £16 million is for student loans due to a reduction in expected receipts from the national sale of the student loans debt book as a result of a re-phasing of the sale. An increase of some £2.8 million under the Government's New Deal initiative is also sought in this Vote for schools and institutions of further education. Increases within the Vote are partially offset by savings elsewhere.
In Vote 2, an increase of some £4.8 million is required for the teachers' superannuation scheme.
I move on to the Department of Health and Social Services, a net increase of some £48 million is required in Vote 1. This is for expenditure on hospital, community health and personal social services, health and social services trusts, family health services and certain other services.
In Vote 4, a net increase of £11 million is required. In addition to capital and administration pressures within the department, this includes some £0.7 million in respect of administering the welfare-to-work initiatives.
Finally, in Vote 6, which covers social security centrally administered by the Department of Health and Social Services, a net increase of some £2.4 million is sought. This increase is required to reimburse the Social Fund for expenditure on cold weather payments in 1996–97, winter fuel payments to pensioners in 1997–98 and increased payments into the Northern Ireland National Insurance Fund in respect of statutory sick and statutory maternity payments. These increased requirements are offset by savings elsewhere within the Vote.
I hope that this short summary of the main components of the Estimates is helpful. I beg to move.
Moved, That the draft order laid before the House on 12th February be approved.—(Lord Dubs.)
10.58 p.m.
Lord Alderdice: My Lords, even at this late hour we are all grateful for the Minister's careful and conscientious description of the purposes for which these moneys are to be voted. He has certainly added considerably to the material contained in the schedule. In passing, I should simply like to make the comment that, by this time next year, I hope that your Lordships' House will be addressing a greater expenditure in respect of the Northern Ireland Assembly; and that thus, rather than the scrutiny of these matters solely being the prerogative of the small club which gathers at these late and quite extraordinary hours in this House, it will be a matter for the elected representatives of Northern Ireland in another place on the other side of the water to scrutinise and deal with these matters.
Perhaps I may very briefly make one or two comments on the schedule and on the material referred to. In respect of agriculture, it is certainly welcome that in the past couple of days there have been some indications that there may be respite at least for our farmers in Northern Ireland over the BSE crisis. Even if that is followed through—and we earnestly hope that it will be—it will be a difficult matter for our farmers to regain their markets. Can the Minister give any indication whether the Government intend to set aside moneys and facilities to enable our farmers, if and when they gain access to the international marketplace, to regain their markets? They will need assistance and encouragement of all kinds. I should be grateful if the Minister could indicate whether there will be a positive response from government to that requirement and also
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whether there will be some assistance for the much smaller number of beleaguered owners of flagged herds or at least some recognition of their plight.
I turn to economic development. The Minister indicated the encouraging news—at least in some areas—of inward investment and the growth of the Northern Ireland economy. Inward investment is important. While in the past there has been a quite understandable and appropriate tendency to look to the larger international companies to invest in Northern Ireland, there may now be a case for trying to explore with some of the smaller companies—I am thinking of companies in the United States with perhaps 50 or 100 workers—whether they might find it worth while to set up business in Northern Ireland as an English-speaking foothold in the European Union.
At present, the financial risks and investments that would be necessary for them to explore that possibility may be too great for such small companies to cope with. The larger companies to which we give assistance are perhaps much less in need than some of the smaller companies, which, without some assistance, may not be able to make that step. Perhaps the Minister and his colleagues might consider whether concessionary rates could be provided for two or three months or perhaps a little longer to enable companies to put in some of their best people and just dip a toe in the water. If he does not feel able to reply tonight, as I am sure he will not, perhaps he will reply in writing.
Whatever we do about inward investment, whether from the bigger companies or from the smaller ones, surely it is our own indigenous companies. particularly the small and medium-sized enterprises, that are the key to the Northern Ireland economy. I do not say that in any adverse way against our large companies, on which we depend so much. However, it seems to me that there is still a degree of entanglement with red tape and bureaucracy. It is not as bad as it might be, or indeed at times has been, but I wonder how much consideration the Government are giving to whether there are other steps which might be taken on deregulation. It is not long since we considered some such measures in your Lordships' House. I wonder whether any other measures are being considered by the Government to give encouragement and assistance to our smaller businesses.
On the question of transport and the Department of the Environment, it seems to me that, despite recent comments by Ministers about the importance of public transport—indeed, there was recently a debate in your Lordships' House on the railways in which the question of rail transport and an integrated public transport system was discussed—there seems to be a hold-up in respect of finance of a number of rail projects. There have been recent indications and a helpful response from the Government in regard to the Antrim to Bleach Green railway line. Money is the key issue and I believe that some exploratory projects are being held up because of finance. If we are to address public transport in a serious way and if we are to have an integrated system, some resources need to be put into research, and there needs to be some encouragement in terms of funding projects.

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On education and health there is a great deal that could be said. I ask the Minister to write to me on my next point because I am sure he will not have this information to hand. As we look—as I hope we do—towards a Northern Ireland assembly and the democratising of our governmental structures in Northern Ireland, some of those structures which were established specifically to deal with the democratic deficit (I refer to education and library boards and health and social services boards) will surely no longer be necessary. I would be grateful if the Minister could obtain for me some indication of the costs of running and administering the education and library boards and the health and social services boards at present. For those of us who would hope to be involved in these matters it would be encouraging to know whether from that rationalisation of the management structure some resources could be obtained to put into the front line care of patients with more nurses on the wards and into the education of our children with more books in their libraries.
I welcome some of the developments that are outlined here, not least the indication that more resources will be available for concessionary fares for the elderly and for the disabled. I welcome the fact that there have recently been announcements from the Government of significant funding—it is never enough of course—to be injected into health and education. I should be grateful for some response on those issues, possibly not this evening but in writing.
11.6 p.m.
Lord Rathcavan: My Lords, I thank the Minister for presenting this order with his usual clarity. I particularly welcome the increased support for tourism to which he referred.
We all hope and pray that within the next few months there will he an agreed political package to put to a referendum and a return to a real and lasting peace. If I may speculate on that event, I hope that we can expect from the Government economic measures which will reinforce and underpin any peace deal. The Secretary of State said in a press release only this week,
"we have to start thinking about these issues".
She was referring to economic issues after a peace deal. Is the Minister considering what proposals could be introduced? I hope I may hazard some suggestions.
First, the subsidised loan scheme operated through the Northern Ireland banks for the European Investment Bank was a huge success but the available funds were exhausted a year ago. Will the Government have in place agreement with the European Investment Bank to have this scheme restored and replenished in the event of an agreed political package?
Secondly, can something be done to bring the vastly different corporate tax regimes in the north and south of Ireland into line? Previous administrations have always maintained that there can never be direct tax variations in the UK. But this principle has now been conceded in the proposals for devolution in Scotland. A reduction in corporation tax in Northern Ireland must now be in the gift of the Government. Corporation tax of 31 per
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cent. in the United Kingdom compares with a rate of 10 per cent. for manufacturing industry, and some other areas, in the Republic of Ireland. That huge difference is sometimes the straw which swings a decision on inward investment from north to south.
A reduction in corporation tax would do much to stimulate industrial development and inward investment in Northern Ireland. It does not involve a north/south structure or body, which is politically controversial, and it will be seen as a practical measure of co-operation. There will never be a better time for this than on the back of, and on the occasion of, new political opportunities that might occur. It could be flagged up as a future option, incentive and intention.
Thirdly, I had intended to speak in some detail—but I shall not do so at this late hour—about electricity prices which were examined by the Monopolies and Mergers Commission. It identified that generating costs in Northern Ireland are 30 per cent. higher than in comparable areas of Great Britain and that therefore costs of electricity to industry in Northern Ireland are up to 25 per cent. higher than in comparable regions of Great Britain.
Some two years ago—no doubt the noble Baroness, Lady Denton, will remember this—the Government made available £60 million to offset the higher generation costs in Northern Ireland. I am told that only £15 million of that has been spent, with another £5 million spent on energy efficiency. There is £40 million left. Will the Minister assure us that the Government will not lose that money and the opportunity and commitment to offset the higher generation costs in Northern Ireland? It appears that it will be at least two and a half to three years before we see the Scottish connector and the competition that that will bring.
Perhaps I may say a brief word about the cross-border rail and road links, a subject which is being discussed by a committee of the British Irish Interparliamentary Body of which I am a member. There cannot be two cities in Europe of comparable size to Dublin and Belfast which still have such bad rail and road links, despite recent investment which was badly and incompetently underestimated. The problem is on both sides of the border. But can the Minister assure us that funds will be in place from whatever source to complete the dual carriageway and the full upgrading of the rail track north of the border and to provide a direct service to Dublin from Londonderry and all the towns on that route which represent a population base as large as Belfast? They are much needed.
The road system in Northern Ireland is also falling badly behind. I understand some private finance initiatives (PFIs) have been put forward for new road schemes. Will the Minister consider those favourably?
If we achieve a political settlement and a peace deal, there are enormous economic prizes to be won. Two major hotels, representing an investment of over £30 million from the private sector by Hilton International and Stakis, conceived during the last ceasefire, will open this year. I hope that the Government will be prepared to continue to back

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the Northern Ireland Tourist Board to help it seize a unique opportunity to bring more holiday visitors and tourism investment to Northern Ireland. I hope, too, that they are ready to back the Industrial Development Board to enable it to promote and advertise itself on the same level as is done by the equivalent authorities in Scotland and the Republic of Ireland.
Finally, from all the millions of pounds we are talking about this evening, can I refer to just one aspect? I congratulate the noble Lord, Lord Dubs, on his role as Minister of the Environment in Northern Ireland in which he has backed support for the Seniors British Golf Championship, I believe to the tune of £1 million. I am no golfer, I hasten to say. The event will be held at Royal Portrush for the next four years and will be televised live in the United States, Japan and many other countries. Let us hope that this will also open a window on a new dawn for tourism and industry in Northern Ireland.
11.13 p.m.
Baroness Denton of Wakefield: My Lords, it would be inappropriate to begin any speech in this House tonight without expressing regret and sadness to the families of the victims of the terrible tragedy. One feels so inadequate on such an occasion, which unfortunately has happened so many times. Each time we hope that we are talking about the last deaths so that those people's families can at least say, "From here we go forward", but then we go backwards again. But stupidity among those people who inflict those tragedies causes them to think that violence is the answer. It never has been; it never will be. One has to make assumptions that such action is based on pure evil, not on political issues. If the news is as good as we hear, we hope that the Government's efforts will bring progress. We can only wish the Secretary of State and her team every good fortune in moving the process forward, and acknowledge that it will not be easy.
I should also like to thank the Minister, since this is the first opportunity I have had, for his kind words after I left the Chamber last week. As the Minister knows, I still desperately envy him his job, so it was kind of him to say what he did. I hope he will appreciate that my comments are made in a spirit of concern for the Province. I am glad to say that the noble Lord, Lord Alderdice, and I are back on common ground on this occasion. I agree with him on every issue that he raised.
One of the major issues is: why are we doing this? Not, why are we doing it at this hour? But, why are we doing this? This is not an order that Scotland brings forward, or Wales brings forward. It is an order which must be an overhang from some Stormont legislation. How we, here, can sit and talk about moneys in hundreds of thousands of pounds and know anything about the matter, I find incredibly difficult to understand.
The noble Lord may say that I did that for three years. Indeed, I did. But the view from the Back Benches is rather clearer than sometimes it is when the paperwork
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keeps coming at you. I hope that that idea will not be put forward. I hope that this is an area that will be taken out of the process in future. But if not—and I hope that it is not an "if not"—perhaps I may suggest that the time spent between now and next year may be well spent on a miscellaneous order that says: "Let's look at it once. These figures of transfer should be for the people who know what they are doing." If the matter is not devolved next year, could we examine the cost of what is involved and examine how it can be done?
I tried to give the Minister notice of the questions I intended to raise, although I appreciate that on some matters he will still need to write to me. I should like to know what are the costs of doing all this, and whether there has been an opportunity to talk about all these figures—not in this House, but among the people it affects, those who live and work in Northern Ireland, those who understand this matter and will take it on.
The Minister will understand that I am slightly nervous of the figures he quoted in his opening remarks. He gave the unemployment figures for September 1997—and it is now March 1998. I know that the beginning of the year was not as happy as we should all have liked. I shall read Hansard carefully tomorrow and may write to him.
Examining the figures in the appropriation order—wide as they are—where are the benchmarks of achievement? How will the Government measure whether these transfers are the right use of money? The Prime Minister said yesterday that he will pass to industry what the local authorities do not carry out effectively. I hope that in Northern Ireland he might look at the reverse, and pass from central to local authorities what the central authorities may not be carrying out effectively. But benchmarks will be needed in order to do that. I also suggest that it is very difficult to ask people to be responsible without giving them responsibility.
Turning to individual areas—and I have the advantage over my colleagues in being relatively up to date—more support is added for the Department of Agriculture, but there is no indication as to where the help will be given. I share the concern of the noble Lord, Lord Alderdice, about farmers. Those with flagged herds have serious problems. We talk about farmers having a "cycle"; but these people have experienced only a downward spiral, and that will continue. I hope that the European news is as good as we are told, but that area of farming will still present difficulty.
An Answer given in this House on 3rd March indicated that the beef and sheep sectors in Scotland are due to receive a further £24 million. I hope that there will be a comparable figure somewhere in the accounts for the farmers of Northern Ireland. I should be interested to know what the figure is likely to be.
One of the areas where we have a wonderful example of the edge in Northern Ireland is in the clean and green product. What are the plans for expenditure on organic farming compared with the position in the rest of the United Kingdom? That is one area where the marketing of products would give wide opportunities.

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In the supplementaries we are looking for money to be transferred for central administration. Any private company would be taking out 10 per cent. of their overheads. Are we saying that in government that is added on?
During my period in office we promised to keep open the Omagh veterinary centre on the basis that the farmers contributed to the costs. That was not the year to ask farmers to contribute to the costs, but we had no money to do anything else. Ministers have changed, but the same officials gave the advice. I wonder where the money suddenly came from? Perhaps that is a matter on which the Minister can write to me.
Administrative costs grew in the DED headquarters. I hope that those costs are explainable. I know that there were the costs of obtaining fire certificates and fire certification for every government building. I hope that that is now done. There can be no greater crime than not ensuring that your employees are safe.
I share the concern of the noble Lord, Lord Rathcaven, that for over two years the department has been sitting on something like £40 million of energy efficiency money, which does not even earn interest. That money should be out with the people who are suffering from the high cost of energy in Northern Ireland. I wonder how long it will be before a decision is made to bring that money forward?
The noble Lord's colleague in another place gave a written Answer on 3rd March about inward investment from Japan, South Korea and Hong Kong, giving the number of new jobs promoted and jobs safeguarded. I think the figures cover three years. There are two sets of figures shown for 1996–97. I am not sure that even on any Asian calendar there are two of those years. If we assume that the figures cover three years, I should be interested to know what is happening now rather than what is projected to happen. One of the things that concerns me is that there are no jobs protected or brought in from Taiwan or Singapore, where the IDB has had offices for many years. Is the money being benchmarked and used efficiently? How do we make decisions about where it is invested? My instinct, like that of the noble Lord, Lord Alderdice, is that the United States wishes to come to Ireland—we hope to Northern Ireland. The corporation tax issue is of concern. I hope that the noble Lord's optimism about the Government's view is greater than mine.
There is a problem. We have brought investment into Northern Ireland as the gateway to Europe. If we are not part of the common currency, that investment will go south. That will affect Northern Ireland more than any other area. The attractions and relationships are strong. We have always fought against the moneys which the Irish Government have been able to put forward. That is a matter of great concern.
I wish to refer to two other issues with regard to inward investment. We have outstanding something like 1,800 jobs from Hualon. They were there; they went to the European Court; if they come back, they will need money cover. I see no indication in any of the papers on financial matters that the money is there. That is a lot of jobs for Northern Ireland, and it would be very good to have them.
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I understand that last year the chairman of the IDB and the permanent secretary of the DED visited New Zealand. There is no indication of inward investment from that country or exports to it. I wonder what was the purpose of that visit?
One of the points that concerns me in relation to the IDB is that there is no clawback of moneys. If we give moneys to companies and they make a great success, the money goes into people's private pockets; it goes on to the stock exchange. I believe that government money should be recirculated for the benefit of the economy; for the benefit of creating jobs. I wonder whether the Minister is prepared to look at that.
If we go to his other department, the Department of the Environment, the water infrastructure in Northern Ireland is in a desperate condition. The findings here in the rest of the UK when privatisation came through indicated that they were extremely desperate. There is a serious need for widespread infrastructure spend and I wonder where it is planned to come from.
Again, in the health figures, there is no mention of the rationalisation of the Belfast hospitals. Was the whole of the work on that wasted? Is it coming forward? Much time and money was spent and there is obviously a need.
Earlier this year, or at the end of last year, an asset register was published for Northern Ireland. It was published for the rest of the UK and I understand that the Government are trying to ensure that some of the money comes back and can be retained by departments, which makes it attractive to do it now. I wonder what plans are made to do that in Northern Ireland.
It was welcome news for everybody, I am sure, to hear this week that there would be new funds from Europe. I share the delight of the noble Lord, Lord Rathcaven, in what happens in the European Bank and the subsidised loan scheme. I would raise only one matter of concern. A lot of the money went to larger companies than had been intended. It was meant for small and medium enterprises. I hope that that money will not be frittered away; that it will make a big difference in Northern Ireland; that the problem of matching funds which stopped many people being able to touch it is addressed; and that it will not take as long as it did previously to reach the people concerned.
Northern Ireland does have money. We have been very fortunate. The support of Europe has been outstanding. No Northern Ireland Minister can be anti-European, because Europe has stayed with us through thick and thin. It has watched ceasefires come and go and not taken out its money. The question must be: how does Northern Ireland use it and how does it use it well?
11.27 p.m.
Lord Lyell: My Lords, I too thank the Minister for presenting the estimates so concisely. My noble friend Lady Denton had a particularly distinguished career in the department in which I served; on the other hand I had the opportunity to present these appropriation orders on six occasions. I did not make as good a fist of it as the Minister made tonight, let alone my noble friend.

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I appreciated the comments of the noble Lord, Lord Alderdice, and his joy at the thought that next year the estimates might be presented in a Northern Ireland assembly. I hope that his comments will be read with joy and happiness by whichever politician or candidate takes over the Department of Agriculture.
I must say to the noble Lord, Lord Alderdice, and your Lordships, that one of the first things that I had to do in April 1984 on going to the Department of Agriculture was to announce to the annual general meeting of the Ulster Farmers' Union that milk quotas would be imposed with fairly draconian severity. It is still imprinted upon my mind and that of the department—the Minister can check on this; presumably he can look back at what happened nearly 14 years ago—"Minister nil, Lions 2, still munching in extra time". I hope that those thoughts may go some way to assuage the happy politician who takes over the Department of Agriculture. It is certainly not a bed of roses. It is a fascinating place, but I believe it is known technically as having "downside" potential.
I was interested to see in Part I, Vote 1, of the Department of Agriculture, reference to "market support" and then lower down the paragraph, "market development". I think of two particular commodities. First of all, beef. Of course there has been wonderful news so far as BSE is concerned, although in the headquarters of the Department of Agriculture there was not unconfined happiness as to the ramifications. I understand there have been some complications, even with the good news. I hope, however, that the good news continues. The computerised database which got under way in 1988, is the basis of a model and we hope it will be a success throughout the rest of the United Kingdom.
Secondly, in market support and development, I think of chickens, referred to technically in Northern Ireland as "the fowl sector". I was particularly impressed, as were consumers throughout the world at large food fairs, with the standards of production in the chicken industry. I remember one brand which was marketed under the name "Poulet Noir". That was a clever and effective marketing device. I hope that the brand is still in evidence but I doubt that the company who marketed those chickens will be able to use the brand or similar marketing devices in future.
My noble friend who preceded me mentioned the importance as well as the success and pre-eminence of the department in its scientific and veterinary services. My noble friend mentioned the veterinary office in the veterinary centre in Omagh. I hope that the technical and commercial confidentiality of all the research that is done in these sectors will be closely protected. May I ask the Minister when he last visited the veterinary research laboratory. During my time at the Department of Agriculture, to go and speak to all the experts at the laboratory was a real reward. I hope that he can visit in the near future. I am sure that the time he spends there will be more than adequately rewarded.
I see further mention of market support. One particular event in my time at the department was an exhibition in Paris which went under the acronym of
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SIAL. If the exhibition or something like it takes place this year I hope that the noble Lord will attend. I shall certainly question him, both on the Floor of your Lordships' House and in writing, to make sure that he does. The exhibition provided a wonderful opportunity to present, first, the agricultural industry of Northern Ireland; secondly, the expertise in his own department; and thirdly, the general face of Northern Ireland abroad. It was an opportunity to show consumers and important businessmen around the world that Northern Ireland has an enormous future as an agricultural producer. as my noble friend pointed out. The industry is what the Americans love to call a "can do" industry. I give as an example the Anuga exhibition, which took place in Cologne in 1985. A small firm called Eagle Sea Foods, embarking somewhat wide-eyed upon the project, did Northern Ireland and the industry an enormous service. It was amazed at its achievements. The firm, located in Belfast, was importing and processing fish from Norway and Aberdeen. It was highly successful, gaining custom in Germany and—guess where—in Norway. The firm had not thought of that. It had fewer than 50 employees, which the noble Lord, Lord Alderdice, and the Minister will be able to check and confirm.
I thank the Minister for his comments. I wish him well in all he is doing. He has good fortune in not being on television in the political process. I and other noble Lords who have been in the department were able to prove that one could go anywhere in Northern Ireland. Like those in the old, traditional Olympics, we left our prejudices outside. I was reprimanded several times by my officials for repeating slogans such as. "Act fast while grants last." That brought every four-wheeled and two-wheeled vehicle to Dundonald House.
Nevertheless, it was a wonderful example of the political process. An example of what the Minister and the department are able to do in Northern Ireland is SIAL in Paris. I hope that the Minister manages to go there and that when the order comes before the House next year he will be able to give us better news and tell us of further successes—I will not say triumphs—of his excellent department.
11.37 p.m.
Viscount Brookeborough: My Lords, I thank the Minister for his presentation of the order and for the amount of effort and work he is putting into his two departments in Northern Ireland. Perhaps I may inform the House that he is becoming well respected and most popular. That may not be a good thing, but I congratulate him on it.
I wish to concentrate on the rural aspects of the administration of the funds. The agri-food industry is the most important single industry in Northern Ireland. Fifty-three per cent. of its £2.8 billion sales are exported. However, there was a dramatic 38 per cent. drop in farm income in 1997 and that has had serious consequences on the thousands of small rural businesses which rely on agricultural prosperity. That extends further into the towns because even in the middle of Belfast one is only 15 minutes from a farm. Therefore, farmers encroach into the urban areas for their purchases to a greater extent than might be the case in the heart of England.

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As regards the beef sector, we all welcome the possibility of good news from Europe. From the point of view of Northern Ireland, we must be particularly grateful not only to the present Minister but to previous Ministers and civil servants who originally instigated computerised tracing. Undoubtedly, it has been fundamental to whatever success we may gain.
In Fermanagh, where I live, the problems are very extreme. Surprisingly, due to the weather, there is no grain industry. Farmers rely predominantly on beef, dairy and sheep. Your Lordships are fully aware of the problems of the beef industry, but I wish to mention the dairy and sheep industries. The price of milk is now at its lowest for some time and with the reduction in the price of cull cows and calves due to the BSE crisis, profit margins are seriously reduced, if they exist at all. On the sheep side, fat lamb prices have plummeted to just over £30 and during last autumn farmers were buying store lambs for £40 to £42, and that is without the feed, overheads and everything else. So one can see that it is verging on disaster for them.
On top of all that the strength of the pound and the revaluation of the green pound, has meant a large reduction in the sheep annual premium paid on ewes. So many people relied on that. Can the Minister tell us what alternative strategies there may be to help hill farmers and those in less favoured areas? About 90 per cent. of the land west of the Bann consists of that. The department should be thinking of some form of rescue package for them.
The popular cry is for, and has been for a long time, farm diversification. Under the previous government there was a farm diversification scheme, which led to leader schemes for rural development. However, when this Government came to power they froze the new applications while a review was carried out. They even froze projects which had been approved through an expensive feasibility study process and where letters of offer had been issued, but were not yet signed up by the applicants. I understand that the review was to be published in May, but I now understand that it may be the autumn before it is published. Can the Minister give a more accurate timetable? Can he also reassure those who have already received letters of offer that they will be re-issued when the projects open up again? It is quite hard for farmers that by the autumn this Government will have been in power for a quarter of their term and projects are being frozen. If we change government at every election—perhaps we shall not at the next one—and projects are frozen for 25 per cent. of the time, we shall be in a sorry state.
Can the Minister also explain why, when much of this money is being targeted on community groups and is therefore EU-funded, projects with letters of offer have been frozen? It seems unreasonable and a waste of private enterprise, effort and money. One must remember that a lot of the feasibility studies are also grant-aided. So that is money either being locked up or wasted.
I turn to a slightly different but rural topic. The Minister is aware of the organisation FEAR, representing those people, mainly farmers, who, as a
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direct result of the violence and the current troubles, have to sell out or move away, and rent out their lands in Border areas. FEAR is putting a case to the Secretary of State—it met with her recently—for compensation for these victims of violence. For those who sold out there is a case for compensation, perhaps from a central fund.
However, there is another group. For those who moved out and are now returning, there is a totally different problem. They rented out their land and were therefore ineligible for the grants available at that time for such things as drainage, fencing, etc. In many cases their houses also became derelict. Land is rented out on that basis in a Border area and it is a dangerous area. It is dangerous even to go to check on what the farmer is doing. To be truthful, they do not take a great deal of care of the land. Therefore, this is severely run down land.
Does the Minister agree that it would be reasonable, especially as there are not many cases, for the Department of Agriculture to reinstate grants for this small number of people to enable them to get back into productive business quickly? The facts are there and they need very little verification. One has only to go and see. I ask the Minister to put this request on a fast track—definitely a faster track than the review on rural development. It should be put on a fast track to avoid a lengthy compensation claim procedure.
Connected with that but not directly with funds, is rural planning, which has a bearing on rural development. Planning applications in the Province are in the Minister's remit and in that of the Department of the Environment. Encouraging young farmers to continue to live in the countryside is a well-publicised aim of the European Union. To do that they must have homes for their young families, almost certainly while their parents are still alive and living on the farm. That is a particular problem. However, planning officers are all too often turning down applications for second dwellings on the same farms to enable this policy to come into effect. Can the Minister give an assurance that he is aware of the problem - now that I have told him - and that he will give it his attention? It will probably require his personal intervention as the response to applications seems to vary so much from one planning officer to another.
The last subject to which I should like quickly to refer is rural education. I believe that a government announcement last week stated that no rural school in Great Britain would be closed without the matter being referred right back up the line to the Minister, and that it is the Government's policy that, wherever possible, they will refrain from closing such schools. Can the Minister state that that policy will be extended to Northern Ireland? I should like to know whether the buck will stop with the Northern Ireland Minister or with the education department at Westminster. I conclude by thanking the Minister for his efforts. I wish him well in the new year.
11.45 p.m.
Lord Molyneaux of Killead: My Lords, I apologise genuinely for my failure to add my name to the list of speakers, although I have given the Minister advance

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notice of what I intend to say. I shall be very brief and adhere to the two-minute rule.
Under Vote 1, on expenditure on roads, while every community and council in Northern Ireland, like their opposite numbers in Great Britain, demands money for their local by-pass et cetera, there is one scheme which is vital to all who have an interest in the economy of Northern Ireland and recognise that the economy impacts in turn on every aspect of the lives of us all. That one scheme is the upgrading of the Euro Link, the A.8 road from Belfast to Larne, the major route for container traffic from the whole of Ireland. In past years, moneys have been spent on local road improvements in an unrelated fashion, but most of them have the effect of speeding traffic to the north east of the Province only to reduce the time that it takes to arrive at the bottleneck—or "choke" as the Royal Navy would say—on the approaches to Lame itself. It is true that some improvement has been made to the A.8, but there again the dual carriageway portion simply feeds traffic at higher speeds into the congested sections of that road.
With no element of vested interest whatsoever, I urge the Minister to take a fresh look at that all-important link between Ireland and Great Britain and thence to Europe. It follows on from the matter to which the noble Lord, Lord Rathcavan, drew attention with regard to communications southwards to Dublin. I can assure the Minister that he will have the full support of the entire population, who recognise the vital importance of that external linkage to the wider world.
Until last week, the Government—and the Treasury in particular—could have reiterated their dedication to the control of spending and keeping taxation low, but last week the President of the European Commission arrived in Belfast with an unexpected bonus, an injection of some £88 million. I suggest that that money should not this time be frittered away in penny packets, as on other occasions, but that the bulk of it should be devoted to the upgrading—the dual carriageway completion—of that vital Larne link, and then the penny packets and the confetti can go to worthy causes.
I have written to the Minister about the other matter that I wanted to raise, but as time is pressing, if he agrees. I shall send him some fuller notes on the subject which I and others have termed the "Belfast hills local plan 2001". It is a very important matter.
11.48 p.m.
Lord Cope of Berkeley: My Lords, it was good to have an encouraging report on the economy of Northern Ireland from the Minister, even if the unemployment figures seemed a bit out of date from what we have heard.
Perhaps I may say to my noble friend Lady Denton that we are right to consider this order. The control of expenditure is an important part of the work of Parliament, and the approval of the appropriation accounts is done for all parts of the United Kingdom—although this order is distinct because of the existence of a separate Northern Ireland Consolidated Fund which does not apply elsewhere.
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There are two reasons why in 12 months' time we may not be considering another order quite like this. The first is the hope of an assembly, to which reference has already been made by the noble Lord. Lord Alderdice. On page 15 of the order £173,000 for the coming year is requested to get it started. I hope that that is built upon. The second reason is that resource accounting is coming. This is a huge change in the way that the Government manage their money. It has been in the course of preparation for some years. Ultimately, it will make government accounts like companies' accounts and hence much more understandable to the outside world and better for the management of the public finances. I understand that resource accounting is due to be in place by next month, although legally or officially it will not be in full use for another 12 months. Some departments in Northern Ireland have been practising with it over the past 12 months. I would be interested to hear from the Minister how that experiment has proceeded. I believe that it is of great importance for the way in which public money is looked after.
Before we vote more money for these worthy purposes in Northern Ireland I should like to ask about some matters that have gone wrong in the past. There was a report last year from the Comptroller and Auditor General for Northern Ireland that the Department of Social Security had overpaid quite large sums on income support and disability living allowance and that that amount had increased compared with previous years, about which he also had criticisms. He hoped that in the year to which this order mostly applies, which ends at the end of this month, improvements would be forthcoming. The amount of the overpayment was estimated to be between 1 per cent. and 5 per cent. of the DSS's expenditure, or between £20 and £60 million. That is a not insignificant amount and is something about which we should be concerned.
The other matter, although smaller, has been hanging about for longer. It is a report of a fraud in the Department of Finance and Personnel of some £315,000. We heard some months ago that the police had submitted a case to the DPP. It would be helpful to know before voting more money for the DFP that that fraud had been successfully brought to court or at least that progress had been made upon it.
All in all, it is important that we provide the supplementary sums for 1997–98 and the sums under Part II on account for the financial year starting next month. I am grateful to the Minister for the way in which he introduced the order.
11.52 p.m.
Lord Dubs: My Lords, in this debate questions come fast and furious and it is difficult to answer all of them succinctly. If I miss any of the points I shall do my best to write to noble Lords, but it is fairly late in the evening and I have a mass of papers before me. To do justice to all of them will take some time. I shall rush straight into it and see how it goes.

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The noble Lord, Lord Alderdice, and other noble Lords referred to the encouraging news from Brussels about a possible lifting of the beef ban. The Government's view is that the news is encouraging, but until a firm decision is made by the Agriculture Council in a couple of weeks' time we cannot be certain. I advise all the farmers and others in Northern Ireland to keep their champagne ready but not to put it on ice just yet. We have had many disappointments and false dawns in the past in trying to get the ban lifted, but it appears to be more encouraging than ever before. If all the countries who voted to lift the ban two days ago in the Standing Veterinary Committee stick to their votes in the Agriculture Council we should be there.
That is only one of the two methods we are using to try and get the ban lifted, a point made by the noble Lord, Lord Lyell. The success of the certified herd scheme is based on computerised traceability. This scheme was introduced many years ago, not for BSE but for brucellosis and TB: it is now standing us in good stead as regards getting the ban lifted. In addition to the certified herd scheme the Government have also put to Brussels a date based scheme which the Commission is presently considering. Although it looks as if the certified herd scheme as regards Northern Ireland will win the day shortly—at least I hope it will—we may have to wait a hit longer for the date base scheme to come forward.
The noble Lord, Lord Alderdice, talked about the recovery of lost markets when the ban is lifted. My discussions with the meat exporters led me to believe that it may take about a year to get back 50 per cent. of their previous export markets, but it will take perhaps four or five years to recover the bulk of the remainder. Indeed, the original 100 per cent. is no longer there because in many of the export markets the total consumption of beef has fallen. It may be difficult for us to recover all our previous sales. It will be quite a long haul to win back the bulk of the previous export markets.
The Government will do their best to help and encourage the industry. I cannot offer any cash here and now, but I am aware that the industry will have to do a lot of very hard marketing to recover its previous sales, not only in Europe but in many other parts of the world. It will be tough and the Government will want to help.
The noble Lord, Lord Alderdice, also mentioned the problem facing flagged herds, as did the noble Baroness, Lady Denton of Wakefield, and one or two other noble Lords. I am aware of the particular difficulties facing farmers who have flagged herds. I have had meetings with them and I have been on one flagged farm. The Government are looking at ways to help them. They are in a particularly difficult situation and it will take them longer to get out of these difficulties than it will other farmers. It is very tough indeed for them.
The noble Lord, Lord Alderdice, talked about the need to encourage internal as well as external investment. I agree with him. I can assure him that the indigenous companies are not neglected by the industrial development agencies. The IDB has made substantial assistance available for local companies and the local
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enterprise development unit has a very good record in promoting and nurturing the small business sector. In 1996–97 LEDU recorded its best year to date, with client companies achieving a net increase in employment of 3,525 jobs, an increase of 15 per cent. over the previous year. The Government have recently launched a wide-ranging review of economic development strategy in Northern Ireland and this will include the balance between support for inward and home industry.
The noble Lord asked about the costs of education and health boards. I will write to him with information about the costs of these boards. It is the Government's policy to keep administrative costs to a minimum so that resources are directed to front-line services. My colleague, Tony Worthington, the Minister with responsibility for these issues, has been looking very hard at ways of saving on administrative costs in these particular areas.
The noble Lord also asked about funding for integrated education. The level of funding for integrated education is consistent with the Department of Education's statutory duty to encourage and support its development. The Government wish to maintain the momentum and, to this end, have established a working group which will explore ways of achieving this. Some of these points arose in a question I was asked about integrated education in the House not very long ago.
Regarding free fares for pensioners, to which the noble Lord referred, I recently visited Castlereagh council and announced that we would join with that council to set up an experimental scheme to see how much further we can support free fares for old-age pensioners. That council is keen to take part in such an experiment. That is an example of our willingness to explore the issue. There is a problem of affordability. There are significant cost implications for the Government or district councils. We move forward cautiously, but I am keen that we should examine all ways of taking that forward.
The noble Lord is worried about small companies. He made interesting points, and I shall bring them to the attention of my honourable friend Adam Ingram, who is the Minister responsible for the Department of Economic Development. The noble Lord mentioned the need for a fully integrated transport system. The Government are working towards the development of that. The creation of Translink, covering buses and trains, is an important step towards that goal. We have had a consultation process on transport. For the UK as a whole, and Northern Ireland in particular, we shall be publishing further proposals before too long. Alas, money is always a serious constraint. I sometimes say that we already have the makings of an integrated public transport system but that there is not all that much of it to integrate. That is one of the real difficulties.
I turn to the questions asked by the noble Lord, Lord Rathcavan. He talked about inward investment in Northern Ireland, and possible tax concessions by the Government to encourage it. He talked about a level playing field between Northern Ireland and the republic. The industrial development board can provide a

1429
competitive package for inward investors who are interested also in other attractions, such as the quality of the potential workforce. The issue of financial incentives will be studied in the review of economic development strategy which was announced last month.
The noble Lord talked also about money to offset electricity costs. The remaining £40 million for energy costs is pledged to actions which will help offset electricity costs in Northern Ireland. He commented on the interest rate subsidy scheme in the EU peace and reconciliation programme. The extension of the interest rate subsidy scheme to the next tranche of the EU peace and reconciliation programme is currently under consideration. He referred also to the transport infrastructure and the need to improve transport, particularly cross-border links. With respect to rail links, over £120 million in total has been spent in recent years on the Belfast to Dublin link, with generous support from Europe.
The trains are modern. The upgrade will be completed later this year when the total improvement of the track between Belfast and Lisburn is finished. That is the last stage remaining. The non-stop journey between the two capitals will then take just 100 minutes. It is an excellent train service. In Dundalk I opened the new service some months ago with my opposite number the Irish Minister. It is an excellent service. The usage is increasing. It is a pleasure to travel on that service. Bus services across the border are operated jointly by Ulster Bus and Bus Eireann. That is a good example of cross-border co-operation mirroring that of the railways. I am sure that the companies will react positively in terms of improved services to any evidence of an upturn in demand. There has in the recent past been a small fall off in bus passengers in Northern Ireland. That is something that worries me, because we want to encourage the use of public transport as much as possible.
With respect to cross-border roads, recent studies carried out on behalf of both Governments have identified the need to upgrade the Belfast to Dublin and the Londonderry to Dublin routes. Implementation of those proposed improvements will be dependent on the availability of funding.
It is a pleasure to see the noble Baroness, Lady Denton, back here with us on such good form. She made the very important point, with which I am sure the whole House will agree, about the recent tragedies in Northern Ireland and the need to express sympathy for those who were murdered in those tragedies and also for those who were injured.
I enjoyed her comment that having been a Minister for some years—in some senses, she was my predecessor—now she sees things differently from the Back-Benches. That is a good discipline. I hope that I have not lost that sense of seeing things from the Back-Benches in the sense of looking at matters critically. I understand what she says and I am sympathetic to some, if not all, of the points she made; and they were indeed many.
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I often wonder about this particular process. I do not know whether the noble Baroness was referring to the way in which the accounts are printed or whether she was referring to the process by which we discuss them at present, at this fairly late hour. From my much more limited experience of these matters than that of the noble Baroness, I am conscious that it is not a very satisfactory method of scrutiny. Frankly, I would wish to be sitting with my officials so that we could answer all the questions far more fully and immediately than is possible in the way it is being done here. But it may well be that if things work out well in Northern Ireland, by next year the process will have been taken over by a locally devolved assembly, and therefore the matter will be out of the Government's hands as regards Westminster. If it is not, I should wish to see if there is any way in which we can simplify the process and be more helpful to Members of this House. Indeed, that point would apply also to the other place.
In fact, the Estimates are presented in the same simplified format as those for other Whitehall and territorial departments. In March 1995, the Government, in the form of the then Treasury and Civil Service Committee and the Public Accounts Committee, approved the introduction of simplified estimates. It may be that the noble Baroness thinks that they have not been simplified enough.
Baroness Denton of Wakefield: My Lords, I checked this matter before I raised it in the House. I am told by the offices of this House that there are no equivalents to these orders from any other parts of the United Kingdom. It is suggested that this may be a hangover from the days of the Stormont parliament. That is why I said we cannot possibly know the detail. That is why I raised the matter.
Lord Dubs: My Lords, I thank the noble Baroness for that comment. If I was not quite accurate in what I said, I shall look into the matter and write to the noble Baroness with the more accurate position.
I have referred already to the difficulties facing the flagged herds. The noble Baroness asked a very specific question about the particular support that was available last year and not this year. The position is that the payments made to flagged herd owners in 1996–97 were made under a European Community regulation which allowed for a one-off exceptional payment to address the difficult market circumstances brought about by the BSE crisis. All the aid allowed under that regulation has been paid. The aid package announced by my right honourable friend the Minister of Agriculture on 22nd December will he funded under a different scheme; that is, under the EU agrimonetary compensation schemes. The rules for that are very clear and aid is available only to offset the effects of sterling green rate revaluations. It will not allow for aid to be skewed to particular groups within an eligible sector. That is the difficulty with which we have been faced. I had originally wanted to provide more help for the farmers with flagged herds, as was possible when the noble Baroness was the Minister responsible.

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However, I have been told that it is not possible under the system and it is the Brussels arrangements which prevent that.
The noble Baroness asked also about central administration costs and why there is money included for them in the supplementary estimates. The money included for administration reflects the take-up of the end-year flexibility scheme, a number of transfers from GB departments, including administration costs for the Welfare to Work programme and reallocations within Northern Ireland departments.
The noble Baroness asked about the Omagh Veterinary Centre's costs. My department, DANI, is planning to introduce charges for its veterinary diagnostic services later this year. The department will monitor income against the cost of providing that service at the Stormont and Omagh laboratories.
The noble Baroness referred to overseas companies and asked about the position of Hualon. The company remains committed to investing in Northern Ireland but the exact timing and level of such investment are not clear. IDB remains in close contact with the company. On 6th October 1997 the European Court dismissed a final appeal mounted by the Trade Industry Association. The IDB has continued to maintain close contact with the company since that decision was taken. However, since the Asian crisis, the general situation in the world textile market has changed. Asia has become much more competitive for labour-intensive industries, such as garment manufacturing, and this has had a knock-on effect on textile companies such as Hualon. The current level of provision for selective financial assistance takes account of all known projects. There is no specific provision set aside for individual projects.
The noble Baroness asked about claw-back from successful IDB companies. This proposal would be seen by companies as penalising success and would adversely affect the competitive position of IDB. Such an IDB policy change would be seized upon and exploited by IDB's international competitors. The proposal would restrict industrial development activity in Northern Ireland at a time when we are seeking to maximise such activity.
Companies consider that the Government secure their return through taxes paid by both the company and its employees. The introduction of claw-back of grant where companies achieve profits above the agreed equity costs of capital would be regarded as government doubly penalising their success—taking a share of the profits as well as receiving more tax revenues. By seeking to clawback funds and profits, the amount of funding available to reinvest in business would be reduced. This would be particularly difficult to defend if employment in the company was also above target. Projects being considered by IDB for support have varying degrees of risk and uncertainty as to the eventual outcome. This proposal would, I fear, introduce further uncertainties into these projects.
The noble Baroness raised the issue of the provision and funding of water and sewage services. When I had the fortune to be appointed to my present responsibilities, I was given a number of presentations
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in the DoE about the various services and activities of the department. I was more shocked by the situation as regards the water and sewage services in Northern Ireland than by anything else. I have to tell the noble Baroness that my understanding is that there were years of neglect by her government of the water and sewage services. The money was simply not made available and the sewage services in particular are in a very unsatisfactory state.
I am looking at the options for the future organisational and charging arrangements for the provision of water and sewage services in Northern Ireland. That is to say, I am reviewing them at present. In the near future, I hope to publish a consultation paper seeking views about the provision of such services, including methods of raising money to pay for them, leading to decisions about the way ahead by the summer of 1998. This is a very difficult area and it is urgent for us to take decisions to ensure that we maintain high standards in the water and sewage services.
I believe that the noble Baroness also asked about the Assets Register and the arrangements that have been made in that respect. The comprehensive spending review requires departments to examine whether they are making the best use of their assets and to identify surplus assets which could be sold. The Assets Register is a vital tool in the process and departments are examining all their assets as part of the review. That is very much underway at the moment.
As regards the rationalisation of hospital services in Belfast, my honourable friend who is responsible for the Department of Health and Social Services is currently considering these proposals. They give rise to difficult issues which it is important for us to take time to get right. I am sure that the noble Baroness will be in agreement with that.
The noble Baroness also asked about the inward investment effort and questioned why we had poor results from Singaporean and Taiwanese companies. We attempt to make a balanced effort to attract inward investment from around the world and we remain flexible in targeting effort and resources to areas where the prospects are best. Clearly we will have to look at all the countries from which we can attract more inward investment.
The noble Baroness also asked about public consultation on expenditures. The Government believe in consultation, and a very extensive consultation on the comprehensive spending review was undertaken last year. This is being considered in the review.
I thank the noble Lord, Lord Lyell, for the good wishes he expressed and I note his eagerness to have me go to the exhibition in Paris. My officials will take note of that and I shall have to see what advice they give me. I have to be careful about how many trips I go on because I do not want to be absent from Northern Ireland more than I need. Otherwise, people might start talking.
The noble Lord talked about the take-up of agricultural grants. I recognise the importance of grants to the farming industry. The main capital grants being paid to farmers at the moment under SPARD, FACES

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and the Farm and Conservation Grant Scheme are oversubscribed, and DANI is therefore unable to improve on the take-up rate.
The noble Lord referred to LEADER. I am not sure whether I have misunderstood him. I had the feeling that some of the things he said referred to the SPARD scheme, which is the one that was immediately oversubscribed when it was opened, before I took office. It was oversubscribed within two days and had to be closed simply because there was not the money to pay. We are now paying it off year by year. The difficulty with the scheme is that it was open-ended and had very few criteria which could limit the demand. That has been a real difficulty. However, as I said in my introduction, I have managed to take £5 million from next year into this year so as to pay off more of the farmers who have been waiting very patiently.
The noble Viscount, Lord Brookeborough, made the point that farm incomes have dropped rapidly. I am aware of that and have had many discussions with the UFU, NIAPA and individual farmers about the difficulties they are facing. The problem is that they are facing these difficulties across the whole sector of agriculture and not just in any one part of it. I was at a meeting not long ago when the Prime Minister met farming unions from all over the UK, including from Northern Ireland, and we had a discussion about this. Some money has been made available by my right honourable friend the Minister of Agriculture. He made an announcement before Christmas and some further announcements have been made. We are doing the best we can to help, but it is difficult because some of the problem stems from the value of the pound sterling against other currencies. That affects all sectors of the economy and not just agriculture.
The noble Viscount, Lord Brookeborough, referred to farm diversification and the LEADER programme. I wonder whether he was talking about SPARD rather than the LEADER programme. If I have misunderstood him, I shall write and let him know. The review of SPARD has to take account of the fact that all financial provisions under the scheme have been committed by applications received up to 24th March 1995. The review includes in its remit the question of additional funding. Everyone whose application has been acknowledged will be entitled to grant aid if they do the work and submit a claim as per the SPARD scheme.
The noble Viscount also referred to LEADER and rural development applications being frozen. I am not aware of any grants that have been frozen where letters of offer have been issued.
The noble Viscount also talked about the FEAR—Fear Encouraged Abandoning Roots—scheme. The Government are aware of the difficulties faced by those who were displaced. Indeed, the Secretary of State has recently met with the FEAR group to hear their concerns. As matters stand at present, there is no provision for retrospectively claiming grants or subsidies in these circumstances. But I know the
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Government are aware of the difficulties facing these people and I shall certainly reconsider the position in the light of what the noble Viscount said.
As regards alternative strategies for hill farmers, the agri-monetary package announced by Ministers in December includes supplementary payments to suckler cow premium and sheep annual premium claimants. A significant number of these are hill farmers. In particular, the additional sheep payment includes an increase in the rural world supplement paid to less favoured area producers. We have tried to target the help where it is most needed. I hope the noble Lord will accept that that is an effective way of doing it.
The noble Lord asked about additional houses on farms and planning permission. Planning permission may be granted for a house on a farm where it is essential to the needs of the farm, but what we cannot do is simply say that all planning controls in the countryside will no longer apply. We have to be careful that we retain the beauties of the countryside. However, planning permissions certainly are granted from time to time where they meet the criteria. I have just indicated an example of that.
The noble Lord asked why planning implementation is different in different areas. The planning service aims to treat all applications fairly. If the noble Lord can provide me with details of specific cases where that appears not to be the case, I shall be happy to have them investigated. As regards the closure of rural schools, proposals for the closure of any school in Northern Ireland are subject to ministerial approval, as they are in Britain. I think that is the assurance that the noble Lord seeks.
The noble Lord, Lord Molyneaux, asked about the Belfast to Larne road and whether it would be upgraded. While the existing Belfast to Larne road is considered capable of carrying current and projected traffic volumes, the long-term benefits of further dualling the route are recognised. Schemes to achieve this are included in the six to 15 year major roadworks programme, where they will be implemented at a pace dictated by the level of finance available and the competition from other schemes across the whole of Northern Ireland. In case the noble Lord thinks that is utterly pessimistic, in the context of the comprehensive spending review we have been looking at all these matters and, although I cannot give him any particular hope, I am aware through my visits to councils all over Northern Ireland that there is much pressure for improvements, upgrading and dualling of roads. I have had several discussions with councillors about that road and I am well aware of local concerns, but at this stage I cannot offer the noble Lord any more immediate comfort.
As regards the announcement made by the president of the European Union, Jacques Santer, on the additional £88 million under the peace and reconciliation scheme, that has to be spent in terms of the criteria for peace and reconciliation. I very much doubt whether they would extend to the road scheme that has been suggested. I do not think that will work but it was a good effort on the noble Lord's part!

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The noble Lord, Lord Cope, said there may be an assembly next year and some of these debates will no longer take place here. We hope that will be the case. He asked about resource accounting. The resource accounting and budgeting process continues in line with the timetable set out in the July 1995 White Paper, Better Accounting for the Taxpayers' Money. Generally all departments are on target to have the necessary accounting systems in place by April 1998 so as to produce resource accounts for the year ending 31st March 1999. He asked about unemployment figures. The employment figures that I mentioned refer to September 1997, but the unemployment figure of 7.9 per cent. refers to January 1998, which I think is as up to date as we can get.
The noble Lord also referred to criticisms of over payments by the Department of Social Security, which does not, of course, operate in Northern Ireland. In Northern Ireland responsibility for the administration of Disability Living Allowance and Income Support rests with the Social Security Agency. We are, of course, careful to ensure that such payments are made properly. The agency has in place a strategy to tackle the problem of incorrect payments and to detect and prevent fraud. This also involves action to improve adjudication standards to ensure that people receive the benefits to which they are entitled. He also asked about fraud in the Department of Finance and Personnel. This is an intricate fraud involving collusion between a civil servant and outside suppliers. The collusion consisted primarily of falsifying invoices, some in the names of fictitious companies. Investigation of the fraud has been conducted by the Royal Ulster Constabulary, and the Director of Public Prosecutions' review of the evidence is at an advanced stage.
I think that I have dealt with all the points. In so far as I have not, I shall ensure that I write to noble Lords. I regret that I have taken rather long on this but noble Lords asked the questions and I felt that I had to give the answers.
On Question, Motion agreed to.

Financial Provisions (Northern Ireland) Order 1998
12.25 a.m.
Lord Dubs Lord Dubs rose to move, That the draft order laid before the House on 17th December 1997 be approved.
The noble Lord said: My Lords, I can be somewhat briefer on this occasion than I was in relation to the matter we have just debated.
This is the latest in a series of orders required at intervals of every two to three years to adjust certain statutory financial limits and to deal with other routine financial matters. It may be helpful to your Lordships if I describe briefly the purposes of the order.
The draft order covers two main items. First, it proposes the restructuring of the annual set of central government accounts prepared by the Department of
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Finance and Personnel. The changes will take effect from 1st April 1998, will abolish the accounts of capital receipts and payments; the civil contingencies fund and its account; and the consolidated fund services account. This information will in future be contained in an expanded public income and expenditure account. To allow for all of this information to be included in the account, the time limits relating to the preparation and certification of the account have been extended slightly. The proposed changes, which have the full approval of the Northern Ireland Audit Office, will ensure greater clarity and reduce administrative effort.
As part of this restructuring, it is proposed to abolish the Northern Ireland civil contingencies fund. The fund exists to make repayable advances to Northern Ireland departments for urgent services in anticipation of Parliament approving the necessary funds in an appropriation order. The fund has a fixed capital of only £750,000, which is not sufficient to meet requests for advances. At present the shortfall is made good by advances from the Northern Ireland consolidated fund. From 1st April 1998, repayable advances to departments will be made directly from the Northern Ireland consolidated fund. The criteria governing such advances, as set out in Article 6 of the draft order, will remain unchanged.
The second item in the draft order is an amendment to the legislation governing trading fund accounts. The Financial Provisions (Northern Ireland) Order 1995 requires certified copies of a trading fund's accounts to be laid before the Northern Ireland Assembly.
This is at variance with current practice relating to the accounts of executive agencies which, in the absence of a Northern Ireland Assembly, are laid before Parliament. The draft order provides that trading fund accounts should also be laid before Parliament. Should a Northern Ireland Assembly be established, it is intended that all relevant financial accounts should be laid before the Assembly.
I hope that this short summary of the proposals contained in the draft order is helpful. I commend the order to your Lordships. I beg to move.
Moved, That the draft order laid before the House on 17th December 1997 be approved. (Lord Dubs.)
12.27 a.m.
Lord Alderdice: My Lords, I seek reassurance from the Minister on only one matter. It is a technical order, and is largely the measure of professional advice, with the approval of the Audit Office.
I seek reassurance as regards the extension of time limits for the publication of the income and expenditure accounts. Is there likely to be any

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difficulty about leaving a longer time during which irregularities or difficulties may emerge? There was mention earlier of concerns about moneys going astray, and so on. I wish to be reassured that leaving longer time for the publication of these matters does not also leave a longer time for irregularities to surface. Apart from that, we support the order.
12.28 a.m.
Lord Cope of Berkeley: My Lords, the Minister has described the provisions extremely helpfully. In the course of his introduction, he has answered the questions that I had proposed to put to him. In another place we did not regard this as a particular late hour of the night. However, I have to tell both the noble Lord on the Woolsack and the Minister, that since they left another place the noble Lord, Lord Jopling, mucked about with it all, and nowadays this hour is regarded as rather late, even in another place! Either way, we are extremely grateful to the Minister for the way in which he has handled all the Northern Ireland business this evening.
12.30 a.m.
Lord Dubs: My Lords, I thank the noble Lord, Lord Cope, for those words. Perhaps I may deal with the point raised by the noble Lord, Lord Alderdice, on the question of the time limit. I am advised that this is required to allow more time for the collection of the relevant information and has no direct implications for the detection of irregularities. The accounts will, however, continue to be audited by the Comptroller and Auditor General for Northern Ireland, who has agreed that the extension is necessary to enable proper accounts to be prepared.
It may not be late by the standards of the other place, but by the standards of the civilised world, it is fairly late.
On Question, Motion agreed to.

London Local Authorities Bill
Reported from the Select Committee with amendments and recommitted to an Unopposed Bill Committee.
House adjourned at half past midnight.